/raid1/www/Hosts/bankrupt/TCR_Public/201209.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, December 9, 2020, Vol. 24, No. 343
Headlines
06-010 GRIDLEY: January 27, 2021 Plan Confirmation Hearing Set
305 PETROLEUM: Unsecureds to Get Share of Income for 3 Years
33 QUINCY AVENUE: Hires Michael Jay Berger as Counsel
5BARZ INTERNATIONAL: Unable to Fund Plan; Counsel Exits
AFFILIATE SERVICES: March 1, 2021 Disclosure Statement Hearing Set
AFFILIATE SERVICES: Unsecureds to Be Paid in Full in 12 Months
ALLAN B. PLAMSER: $845K Sale of East Brunswick Property Approved
AMERICAN TIRE: Moody's Upgrades CFR to Caa1, Outlook Stable
ANNAGEN LLC: Trustee Seeks to Hire Gibraltar IT as Consultant
ARCH RESOURCES: Moody's Downgrades CFR to B2, Outlook Stable
ARCHDIOCESE OF NEW ORLEANS: Selling New Orleans Property for $70K
ASCENA RETAIL: U.S. Trustee Slams Chapter 11 Sale Speed
ASSUREDPARTNERS INC: Moody's Rates New $500MM Unsec. Notes 'Caa2'
AUSTIN HOLDCO: S&P Assigns 'B' ICR Amid Baring Private Transaction
B&G FOODS: Moody's Lowers Ratings on First Lien Loans to Ba2
BALLY'S CORP: S&P Cuts ICR to 'B' on High Leverage, Outlook Stable
BAY CLUB OF NAPLES: Taps Becker & Poliakoff as Special Counsel
BEN F. BLANTON: Hires McCarthy Leonard as Special Counsel
BETHEL CHURCH: Case Summary & 28 Largest Unsecured Creditors
BLESSINGS INC: Hires Lang & Klain as Special Counsel
BLOUNT INTERNATIONAL: Moody's Affirms B1 CFR, Outlook Stable
BRETHREN VILLAGE: Fitch Affirms BB+ Rating on Revenue Bonds
BRIGGS & STRATTON: Seeks to Hire Special Counsels
CALIBRE ACADEMY: Fitch Affirms B- Rating on $14.9MM Revenue Bonds
CANO HEALTH: Moody's Assigns B3 CFR, Outlook Positive
CCI BUYER: Moody's Assigns B2 CFR, Outlook Stable
CEDAR HAVEN: Seeks to Hire SSG Advisors as Investment Banker
CF INDUSTRIES: Fitch Affirms BB+ IDR; Alters Outlook to Stable
CHESAPEAKE ENERGY: May Miss Court's Restructuring Deadline
CHRISVIC BY THE SEA: Disclosure Statement Hearing Dec. 9, 2020
COACHELLA VINEYARD: To Pay Creditors From Property Sale/Refinancing
COVIA HOLDINGS: Pushes Ahead Chapter 11 Plan After SEC Settlement
COVIA HOLDINGS: Unsecureds to Get $36M in Amended Plan
CRED INC: U.S. Trustee Wans Outsider to Handle Chapter 11 Case
DESTINATION HOPE: Dec. 10 Auction of Substantially All Assets
DIOCESE OF BUFFALO: Seeks to Hire Bonadio & Co. as Accountant
DIOCESE OF ROCKVILLE: Insurers Fight Over Abuse Claims Filing
DXP ENTERPRISES: S&P Rates New $330MM Sr. Secured Term Loan 'B'
EMPIRE COMMUNITIES: Fitch Assigns B-(EXP) LT IDR, Outlook Stable
ENCORE CAPITAL: Fitch Assigns BB+ Rating on GBP300MM Secured Notes
ENDEAVOR ENERGY: S&P Alters Outlook to Positive, Affirms 'BB-' ICR
ENFRAGEN LLC: Moody's Assigns Ba3 CFR, Outlook Stable
EXTRACTION OIL: Loses Bid to Reject Transportation Service Deal
FALL CREEK PLAZA: Has Until Jan. 8, 2021 to Confirm Plan
FIBERCORR MILLS: Sets Bidding Procedures for All Assets
FIRST CHOICE: Seeks to Hire Sichenzia Ross as Securities Counsel
FORTOVIA THERAPEUTICS: Plan Filing Deadline Extended to Jan. 29
FRANCESCA'S HOLDINGS: To Close About 100 More Stores
GARRISON SHORTSTOP: Seeks to Hire Baker Firm as Legal Counsel
GIBSON FARMS: Gets OK to Hire Frost PLLC as Accountant
GOLDEN ENTERTAINMENT: S&P Affirms 'B' ICR, Outlook Negative
GOLDEN GROUP: Voluntary Chapter 11 Case Summary
GRACIE'S VENTURES: Restaurant Hits Bankruptcy, Plans to Reopen
GUITAR CENTER: Announces Offering of $335M Senior Secured Notes
HARRODS CLUB: Selling Georgetown Property for $3.75 Million
HENRY FORD VILLAGE: Hires Dykema Gossett as Legal Counsel
HERITAGE RAIL: Trustee Selling 5 Vehicles to SLRG for $33K
HERTZ CORPORATION: Hires Moelis & Company as Investment Banker
HERTZ CORPORATION: Panel Hires Prime Clerk as Noticing Agent
INTELLIGENT PACKAGING: Moody's Assigns B3 CFR, Outlook Stable
J.C. PENNEY: Operating and Retail Assets to Emerge from Chapter 11
JACKSON, MS: S&P Lowers Water/Sewer Revenue Bond Rating to 'BB+'
JEFFERSON COUNTY: Fitch Affirms BB+ Rating on Series 2013-B Debt
L BRANDS: Moody's Affirms B2 CFR; Alters Outlook to Positive
LAKES EDGE: Trustee Taps Blanco Tackabery as Attorney
LAS VEGAS MONORAIL: Files Payout Plan After Sale to LVCVA
LBM ACQUISITION: Moody's Assigns B2 CFR, Outlook Stable
LRGHEALTHCARE: Seeks to Hire Baker Newman Noyes as Accountant
MAGNOLIA ASSOCIATES: Plan & Disclosures Due Feb. 2, 2021
MALLINCKRODT PLC: Judge Wants Motion for Equity Committee
MATADOR INVESTMENTS: Seeks to Hire B David Sisson as Legal Counsel
MICRON DEVICES: Case Summary & 20 Largest Unsecured Creditors
MIDWAY MARKET: Hires Tarter Krinsky & Drogin as Legal Counsel
MILK SPECIALTIES: Moody's Affirms B2 CFR; Alters Outlook to Stable
NATIONSTAR MORTGAGE: Moody's Rates New $650MM Unsecured Notes B2
NEWPORT PARENT: Moody's Assigns B2 CFR, Outlook Stable
NORTHWEST HARDWOODS: S&P Lowers ICR to 'D' on Chapter 11 Filing
NPC INTERNATIONAL: Plan Confirmation Hearing Reset to Jan. 15, 2021
ORANGE COUNTY BAIL: Disclosures Hearing Continued to Dec. 17
ORANGE COUNTY BAIL: Global Fugitive Says Plan Not Feasible
ORANGE COUNTY BAIL: Subchapter V Plan to Pay 100% of Claims
PACIFIC PLEASANT: Unsecureds to Get Share of Income for 3 Years
PALLETCO INC: Seeks to Hire Seiller Waterman as Bankruptcy Counsel
PARADISE REDEVELOPMENT: Affirms 'BB' Rating on Tax Allocation Bonds
PLEASANT POINT: Unsecureds to Get Share of Income for 3 Years
PLYMOUTH PLACE: Fitch Affirms BB+ Rating on Series 2013 Rev. Bonds
PREGIS TOPCO: Moody's Assigns B2 Rating on New 1st Lien Term Loan
PRO-PHARMA ADVISORY: Hires Slatkin & Reynolds as Attorney
PROFESSIONAL FINANCIAL: Hires Kimball Tirey as Special Counsel
PTC INC: S&P Upgrades ICR to 'BB+' on Strong Business Execution
PUERTO RICO HOSPITAL: Unsecureds Will Recover 5% in Plan
QUIKRETE HOLDINGS: S&P Alters Outlook to Pos., Affirms 'BB-' ICR
QUORUM HEALTH: Moody's Assigns Caa1 CFR, Outlook Stable
RACEDAY CYCLE: Seeks to Hire Reynolds Law Corp. as Legal Counsel
RACQUETBALL INVESTMENT: Hires Parker & Lipton as Counsel
RADIO DESIGN: Unsecureds to Recover 100% in 6 Years Under Plan
RADIOLOGY PARTNERS: Moody's Alters Outlook on Caa1 CFR to Positive
REALOGY GROUP: Moody's Affirms B2 CFR; Alters Outlook to Stable
RED PLUM LG: Seeks to Hire Power Law as Counsel
RED ROSE: Stalking Horse APA with ACF on All Assets Sale Terminated
REDFISH COMMONS: Jan. 13, 2021 Disclosure Statement Hearing Set
REDFISH COMMONS: Unsecured Creditors to Recover 100% in 2 Years
REDRHINO: Seeks to Hire Michael Jay Berger as Legal Counsel
RESIDENCE GROUP: Seeks to Hire Michael Jay Berger as Counsel
ROSEGOLD HOTELS: Court Confirms Revised Exit Plan
RS IVY: Fitch Assigns BB LT IDR, Outlook Stable
RTI HOLDING: Seeks to Hire Epiq as Administrative Advisor
RXB HOLDINGS: Moody's Assigns B3 CFR, Outlook Stable
SANTA BARBARA LAND: Voluntary Chapter 11 Case Summary
SEADRILL PARTNERS: Milbank LLP Represent TLB Group
SEADRILL PARTNERS: Receives 'First Day' Motions Court Approval
SEAGATE HDD: Moody's Downgrades Senior Unsecured Rating to Ba1
SEAGATE TECHNOLOGY: Fitch Cuts IDR to BB+; Alters Outlook to Neg.
SELECTIVE INSURANCE: Moody's Rates $200MM Preferred Stock Ba1(hyb)
SOURCEONE HOLDINGS: Hires C. Taylor Crockett as Legal Counsel
SPEEDCAST INT'L: Centerbridge Accused of Buying Votes
SUPERIOR AMERIHOST: To Seek Plan Confirmation Jan. 13, 2021
SUPERIOR AMERIHOST: Unsec. Creditors to Recover 20% in 10 Years
SUPERIOR ENERGY: Files for Chapter 11 With $1.3B Debt-Swap Plan
TAMARAC 10200: Case Summary & 20 Largest Unsecured Creditors
TASEKO MINES: Fitch Assigns B- LT IDR, Outlook Stable
TEMPLE UNIVERSITY: Moody's Affirms Ba1 Rating on Outstanding Debt
TESTER DRILLING: Case Summary & 20 Largest Unsecured Creditors
TRAVEL CONCEPTS: Seeks to Hire Baerga & Quintana as Special Counsel
UNIPHARMA LLC: Sets Bidding Procedures for Substantially All Assets
UNIVERSAL TOWERS: Dec. 16 Disclosure Statement Hearing Set
UNIVERSAL TOWERS: Expects Sale Plan to Pay 100% to Unsecureds
UNIVERSAL TOWERS: Hires Fisher Auction as Auctioneer
UNIVERSAL TOWERS: Holiday Says Crowne License Sale Needs Consent
UNIVERSAL TOWERS: Ignores Constrazza's Judgment Creditor Status
URSA PICEANCE: Sale or Equitization Plan to Give 1% to Unsecureds
US VIRGIN ISLANDS WPA: Fitch Maintains CCC Rating on Revenue Bonds
VANDEVCO LIMITED: Case Summary & 3 Unsecured Creditors
VANTAGE POINT: U.S. Trustee Says Disclosures Inadequate
VANTAGE POINT: Unsecureds to Get 2% or 4% in Plan Treatments
VILLA TAPIA: Unsecureds to Recover 100% in Step-Up Plan
VISKASE COMPANIES: Moody's Withdraws Caa2 CFR on Debt Repayment
VISUAL COMFORT: S&P Alters Outlook to Stable, Affirms 'B' ICR
VRAI TABERNACLE: Hires Continental Properties as Realtor
WELD NORTH: S&P Affirms 'B-' ICR on Debt Issuance, Outlook Stable
ZAYAT STABLES: Lenders Sue Owner for $24 Million
[*] Commercial Chapter 11 Filings Rise 45% in November Y/Y
*********
06-010 GRIDLEY: January 27, 2021 Plan Confirmation Hearing Set
--------------------------------------------------------------
On Nov. 25, 2020, the U.S. Bankruptcy Court for the District of
Nevada held a hearing to consider approval of the Amended
Disclosure to accompany Chapter 11 Plan of Reorganization of Debtor
06-010 Gridley Business Trust.
On Dec. 3, 2020, Judge August B. Landis approved the Amended
Disclosure Statement and established the following dates and
deadlines:
* Jan. 27, 2021 at 1:30 p.m. is the confirmation hearing to
consider Debtor's Chapter 11 Plan of Reorganization.
* Jan. 12, 2021 at 5:00 p.m. is the deadline for holders of
Claims to vote on the Plan and to transmit ballots such that they
received by Debtor's counsel.
* Jan. 12, 2021 is the deadline for filing objections to
confirmation of the Plan.
* Jan. 21, 2021 is the deadline for the Debtor to file a ballot
tabulation.
* Jan. 21, 2021 is the deadline for filing a reply to objections
to confirmation and a brief in support of confirmation.
Attorney for Debtors:
Timothy P. Thomas, Esq.
Law Office of Timothy P. Thomas, LLC
1771 E. Flamingo Rd. Suite B-212
Las Vegas, NV 89119
Tel: (702) 227-0011
Fax: (702) 227-0334
E-mail: tthomas@tthomaslaw.com
About 06-010 Gridley Business Trust
06-010 Gridley Business Trust, based in Las Vegas, NV, filed a
Chapter 11 petition (Bankr. D. Nev. Lead Case No. 14-14028) on June
6, 2014. In its petition, the Debtor disclosed $1.21 million in
assets, and $694,384 in liabilities. The petition was signed by
Peter J. Becker, managing member of Trustee, Mesa Asset Management,
LLC. The Hon. August B. Landis oversees the case. The LAW OFFICES
OF TIMOTHY P. THOMAS, LLC, serves as bankruptcy counsel to the
Debtor.
305 PETROLEUM: Unsecureds to Get Share of Income for 3 Years
------------------------------------------------------------
305 Petroleum, Inc., filed with the U.S. Bankruptcy Court for the
Northern District of Mississippi a Plan of Reorganization and an
explanatory Disclosure Statement on December 4, 2020.
The Debtor borrowed money from First Security Bank in order to
finance its operations and, as of the Petition Date, the Bank was
owed $1,951,612. It holds the first mortgage upon the Debtor's
real property.
The Debtor also received a loan from Vikram Patel which has
apparently been assigned to an entity that he, on information and
belief, owns or controls, known as Premier Capital Investment, LLC.
The loan from Vikram is an unsecured loan.
The Debtor is considering and reviewing transfers made in the
ninety days prior to the filing of the Petition, one year prior to
the filing of the petition and two years prior to the filing of the
petition for preferential transfers that may have been made to
arm's length creditors, to insiders or to third parties. A
significant part of that analysis depends upon whether Vikram is an
insider as he apparently contends. In any event, those cause of
action are owned by the debtor-in-possession, will continue to be
reviewed and evaluated by the debtor-in-possession and prosecuted
by the debtor-in-possession if it turns out that they are viable
and worth pursuing.
The Debtor will continue to operate its business in the ordinary
course. The Plan provides that the Debtor will continue paying the
normal monthly installment of principal and interest to the Bank,
that is consistent with an adequate protection order that was
entered by the Court in November of 2020.
The Debtor proposes to pay its projected disposable income over the
three-year life of the Plan to its unsecured creditors on a pro
rata basis. Once the amount of the Vikram indebtedness has been
determined, it will be paid accordingly along with any other
unsecured claims that may exist. Debtor also reserves the right to
reclassify all claims of Vikram, subject to the outcome of the
litigation.
The Debtor's equity security holder will maintain his ownership of
the Debtor.
A full-text copy of the Disclosure Statement dated December 4,
2020, is available at https://tinyurl.com/y5pmjhp7 from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Craig M. Geno
LAW OFFICES OF CRAIG M. GENO, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: 601-427-0048
Fax: 601-427-0050
E-mail: cmgeno@cmgenolaw.com
About 305 Petroleum
305 Petroleum, Inc., owns a convenience store, gasoline facility
and a wine and liquor store located at 5028 Highway 305 in Olive
Branch, Mississippi.
305 Petroleum filed a Chapter 11 petition (Bankr. N.D. Miss. Case
No. 20-11593) on April 20, 2020. In the petition signed by Nrupesh
Patel, president, the Debtor was estimated to have $1 million to
$10 million in both assets and liabilities. The Debtor hired the
LAW OFFICES OF CRAIG M. GENO, PLLC, as bankruptcy counsel.
33 QUINCY AVENUE: Hires Michael Jay Berger as Counsel
-----------------------------------------------------
33 Quincy Avenue LLC seeks authority from the U.S. Bankruptcy Court
for the Central District of California to employ the Law Office of
Michael Jay Berger, as counsel to the Debtor.
33 Quincy Avenue requires Michael Jay Berger to:
(a) communicate with creditors of the Debtor;
(b) review the Debtor's chapter 11 bankruptcy petition and
all supporting schedules;
(c) advise the Debtor of its legal rights and obligations
in a bankruptcy proceeding, working to bring the Debtor
into full compliance with reporting requirements of the
Office of the United States Trustee;
(d) prepare status reports as required by the Court and
respond to any motions filed in the Debtor's bankruptcy
proceeding;
(e) respond to creditor inquiries;
(f) review proofs of claim filed in the Debtor's
bankruptcy;
(g) object to inappropriate claims;
(h) prepare notices of automatic stay in all state court
proceedings in which the Debtor is sued during the pending
of Debtor's bankruptcy proceeding; and
(i) if appropriate, prepare a Disclosure Statement and Plan
of Reorganization for the Debtor.
Michael Jay Berger will be paid at these hourly rates:
Attorneys $350 to $595
Paralegals $200 to $225
The Debtor paid Michael Jay Berger a retainer of $15,000. After
deducting fees and expenses, the remaining retainer balance of
$12,303.50 is held in the Firm's trust account.
Michael Jay Berger will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Michael Jay Berger, Esq. has no interest materially adverse to the
interest of the estate or of any class of creditors or equity
security holders, by reason of any direct or indirect relationship
to, connection with, or interest in, the Debtor, or for any other
reason.
The firm may be reached at:
Michael Jay Berger, Esq.
Law Offices of Michael Jay Berger
9454 Wilshire Boulevard, 6th Floor
Beverly Hills, CA 90212-2929
Tel: (310) 271-6223
Fax: (310) 271-9805
E-mail: michael.berger@bankruptcypower.com
About 33 Quincy Avenue LLC
33 Quincy Avenue LLC, based in Long Beach, CA, filed a Chapter 11
petition (Bankr. C.D. Cal. Case No. 20-20260) on Nov. 16, 2020.
The petition was signed by Jon Udoff, managing member. In its
petition, the Debtor was estimated to have $500,000 to $1 million
in assets and $1 million to $10 million in liabilities. The Hon.
Neil W. Bason presides over the case. The Law Offices Of Michael
Jay Berger, serves as bankruptcy counsel.
5BARZ INTERNATIONAL: Unable to Fund Plan; Counsel Exits
-------------------------------------------------------
5Barz International Inc. submitted on Oct. 14, 2020, a Second
Amended Chapter 11 Plan of Reorganization but the case may now be
headed for dismissal or Chapter 7 liquidation.
Under the Plan, (i) the Debtor's business operations will be
continued, preserved and managed by the Reorganized Debtor owned by
the same stockholders of the Debtor, whose stock interests will be
preserved and retained unaffected by the Plan; (ii) general
unsecured claims held by the SDNY receivership creditors consisting
of Receiver, its counsel and the two SDNY receivership
beneficiaries (Blue Citi, LLC and EMA Financial, LLC), will receive
a 25% distribution from a cash reserve of $133,237.93 to be
contributed by a group of Debtor's existing stockholders; (iii)
other general unsecured claims will share proportionately in an
additional cash amount of $100,000 to be contributed by a group of
Debtor's existing stockholders; (iv) Debtor will receive a full
discharge and release from all creditors and claims; and (v) the
Court will retain jurisdiction to, among other things, adjudicate
any remaining claims objections after plan confirmation &
consummation.
In a notice filed in the case on Nov. 18, 2020, the Debtor has not
deposited sufficient funds to confirm its chapter 11 plan or
reorganization prior to the deadline set by paragraph 7 of the
Court's October 23, 2020 order. Therefore, Debtor will be unable
to proceed to plan confirmation on Nov. 20, 2020, leaving dismissal
or conversion the only viable alternatives, according to its
attorney.
Due to irreconcilable differences, Mancuso Law, P.A., informed the
Court Nov. 19 that it believes it necessary to withdraw as counsel
of record for Debtor in this case.
On Nov. 19, 2020, the Subchapter V Trustee Aleida Martinez-Molina
filed a motion to convert the case to a Chapter 7 liquidation.
The SubV Trustee requests immediate conversion of this case, and
for a chapter 7 trustee to take over the Debtor's limited
operations. "Debtor does have accounts, personal property,
including intellectual property and other rights which, pursuant to
the Debtor's schedules, have value in excess of $7,000,000.
Conversion is also in the best interests of the vast majority of
creditors and of the estate, as the Debtor's principals have
constructively expressed their unwillingness to carry out the
fiduciary duties imposed upon management of 5Barz," the SubV
Trustee said.
Creditors Blue Citi, LLC, EMA Financial, LLC, Andrew K. Levi, and
Mark Migdal & Hayden LLC have filed a renewed motion to dismiss the
case.
The firm can be reached at:
Nathan G. Mancuso, Esq.
MANCUSO LAW, P.A.
Boca Raton Corporate Centre
7777 Glades Road, Suite 100
Boca Raton, Florida 33434
Tel: 561-245-4705
Fax: 561-226-2575
E-mail: ngm@mancuso-law.com
About 5Barz International
5Barz International Inc. is a technology company that designs,
manufactures, and sells a line of cellular network infrastructure
devices referred to as "Network Extenders" for use in the home and
office.
5Barz International filed a Chapter 11 petition (Bankr. S.D. Fla.
Case No. 20-14866) on Apr. 30, 2020. At the time of the filing,
Debtor had estimated assets of less than $50,000 and estimated
liabilities of between $1 million and $10 million. The petition was
signed by Daniel Bland, Debtor's chief executive officer.
Judge Robert A. Mark oversees the case.
The Debtor is represented by Nathan G. Mancuso, Esq., at Mancuso
Law, P.A.
AFFILIATE SERVICES: March 1, 2021 Disclosure Statement Hearing Set
------------------------------------------------------------------
On Nov. 24, 2020, debtor Affiliate Services, LLC filed with the
U.S. Bankruptcy Court for the Southern District of West Virginia a
Disclosure Statement in support of Chapter 11 Plan of
Reorganization.
On Dec. 3, 2020, Judge David L. Bissett ordered that:
* Dec. 31, 2020 is set as the last day to file and serve any
written objection to the proposed Disclosure Statement.
* March 1, 2021, at 10:00 a.m. in the U.S. Bankruptcy Courtroom,
Robert C. Byrd U.S. Courthouse, 300 Virginia Street East, Sixth
Floor, Charleston, West Virginia is the hearing to consider and act
upon approval of the proposed Disclosure Statement and any timely
filed objection.
A full-text copy of the order dated December 3, 2020, is available
at https://tinyurl.com/yytgkw4z from PacerMonitor at no charge.
A full-text copy of the Disclosure Statement dated November 24,
2020, is available at https://tinyurl.com/yycn74mj from
PacerMonitor at no charge.
Attorneys for Debtor:
Stephen L. Thompson, Esq.
BARTH & THOMPSON
P.O. Box 129
Charleston, WV 25321
Telephone: (304) 342-7111
Facsimile: (304) 342-6215
W. Bradley Sorrells, Esq.
ROBINSON & McELWEE, PLLC
700 Virginia Street East, Suite 400
Charleston, WV 25301
Telephone: (304) 347-8343
About Affiliate Services
Affiliate Services, LLC is a limited liability company organized
under the laws of the State of West Virginia. Affiliate Services
operated from offices at 400 2nd Avenue, South West in South
Charleston, West Virginia, owned by affiliate, E & G, Inc.
Affiliate Services acts as the administrative entity which provides
accounting, payroll, bill payment, and similar and related services
to a number of its affiliates, and serves as the employer for
entities for which its parent, Monarch Holdings, LLC is the owner.
It functions as the single, centralized employer, and administrator
of the real estate, retail and hospitality businesses owned by
Monarch.
Affiliate Services filed a Chapter 11 bankruptcy petition (Bankr.
S.D.W.V. Case No. 20-20277) on July 28, 2020. Judge David L.
Bissett oversees the case. Stephen L. Thompson, Esq. of BARTH &
THOMPSON and W. Bradley Sorrells, Esq. of ROBINSON & McELWEE, PLLC
are the Debtor's counsel.
AFFILIATE SERVICES: Unsecureds to Be Paid in Full in 12 Months
--------------------------------------------------------------
Affiliate Services, LLC filed with the U.S. Bankruptcy Court for
the Southern District of West Virginia a Disclosure Statement in
support of Chapter 11 Plan of Reorganization.
The Debtor has arranged for an Emergence Credit Facility from its
parent, Monarch Holdings, LLC, which is also a Plan Sponsor with
the Debtor of its Plan. The Debtor believes that the flexibility
provided by this Credit Facility will provide the Debtor with
adequate working capital without the attendant delays which often
accompany debtor financings, in return for which the lender will
have court-approved super-priority liens.
Under the Plan, the Plan Sponsor intends to focus the Reorganized
Debtor upon providing centralized employment and administrative
services to the real estate, retail and hospitality businesses
owned by Monarch Holdings, LLC.
Class 3 consists of all Allowed General Unsecured Claims of
Non-Insiders against the Debtor. The Holders of Allowed Class 3
Claims will paid $100.00 in Cash on the Effective Date with any
balance due payable in twelve equal monthly installments following
the Effective Date together with simple monthly interest at the
Case Interest Rate on the outstanding balance, provided, however,
that to the extent that funds in excess of those needed to satisfy
the Class 2 claim, once liquidated, are available to the Debtor
from the Debtor's Bad Faith Insurance Proceeds, then the Debtor
shall immediately pay any remaining balance owed to Class 3
creditors from such available proceeds.
Class 4 consists of the all General Unsecured Claims of Insiders
against the Debtor that are Allowed Claims. On the Effective Date,
the Holders of Insider General Unsecured Claims shall receive no
distribution upon their respective claims subject solely to the
availability of Debtor's Bad Faith Insurance Proceeds following
satisfaction of any liquidated Class 2 Claim, and any remaining
Class 3 Claims.
Class 5 consists of all Allowed Interests in the Debtor. On the
Effective Date, the holders of all Interests in the Debtor will be
cancelled, and replaced by Reorganized Debtor Interests. Interests
in the Debtor shall not receive distributions of any property of
the Debtor's Estate or property of Reorganized Debtor under the
Plan.
All Cash required for the payments to be made under the Plan shall
be obtained from sources including the following: (i) pre-funded
draws under the Emergence Credit Facility which may occur prior to
the Confirmation Date and/or draws under the Emergence Credit
Facility on and after the Effective Date; (ii) with respect to the
Class 2 Unsecured Claim of Richard M. Rashid, a portion of the Cash
paid on the Effective Date will be derived from proceeds of
post-Petition Date accounts receivable or of the Emergence Credit
Facility. Once liquidated, any remaining portion of the Allowed
Unsecured Class 2 Claim will be payable from the Debtor's Insurance
Coverage Proceeds then available to the Debtor for such purposes,
as well as the segregated Debtor's Bad Faith Insurance Claim
Proceeds; (iii) with respect to the Class 3 Non-Insider General
Unsecured Claims, all payments will be made from proceeds of
post-Petition Date accounts receivable, the Emergence Credit
Facility loans, operating revenue, or any balance remaining in the
segregated account containing the Debtor's Bad Faith Insurance
Claim Proceeds after satisfaction of any liquidated Class 2 Claim;
and (iv) with respect to any payments made by Reorganized Debtor
after the Effective Date, proceeds of operations of Reorganized
Debtor and any balance remaining in the segregated account
containing the Debtor's Bad Faith Insurance Proceeds after
satisfaction of any liquidated Class 2 Claim and Class 3 Claims.
A full-text copy of the Disclosure Statement dated November 24,
2020, is available at https://tinyurl.com/yycn74mj from
PacerMonitor at no charge.
Attorneys for Debtor:
Stephen L. Thompson, Esq.
BARTH & THOMPSON
P.O. Box 129
Charleston, WV 25321
Telephone: (304) 342-7111
Facsimile: (304) 342-6215
W. Bradley Sorrells, Esq.
ROBINSON & McELWEE, PLLC
700 Virginia Street East, Suite 400
Charleston, WV 25301
Telephone: (304) 347-8343
About Affiliate Services
Affiliate Services, LLC is a limited liability company organized
under the laws of the State of West Virginia. Affiliate Services
operated from offices at 400 2nd Avenue, South West in South
Charleston, West Virginia, owned by affiliate, E & G, Inc.
Affiliate Services acts as the administrative entity which provides
accounting, payroll, bill payment, and similar and related services
to a number of its affiliates, and serves as the employer for
entities for which its parent, Monarch Holdings, LLC is the owner.
It functions as the single, centralized employer, and administrator
of the real estate, retail and hospitality businesses owned by
Monarch.
Affiliate Services filed a Chapter 11 bankruptcy petition (Bankr.
S.D.W.V. Case No. 20-20277) on July 28, 2020. Judge David L.
Bissett oversees the case. Stephen L. Thompson, Esq. of BARTH &
THOMPSON and W. Bradley Sorrells, Esq. of ROBINSON & McELWEE, PLLC
are the Debtor's counsel.
ALLAN B. PLAMSER: $845K Sale of East Brunswick Property Approved
----------------------------------------------------------------
Judge Michael B. Kaplan of the U.S. Bankruptcy Court for the
District of New Jersey authorized the private sale by Allan Bruce
Plumser and Diane Cheryl Plumser of the real property located at 27
Independence Drive, East Brunswick, New Jersey to Yakov Rybakov and
Nedezhda V. Rybakov for $845,000, on the terms of their Contract of
Sale.
The following will be paid in full from the sale proceeds: (i) all
real property taxes, and any other liens; the mortgage of Blue
Foundry Bank; and (iii) the lien of the Internal Revenue Service.
The Notice of Proposed Private Sale included a request to pay the
real estate broker and the Debtors' real estate attorney at
closing. Therefore, the following professional(s) may be paid at
closing: (i) Coldwell Banker Res. Brokerage - 5% of Sales Price
(for Listing, Showing and Selling the Property, as well as other
usual and customary services provided by realtors; and (ii) Fellen
& Fallen, LLC - $1,450 plus expenses (for Negotiation of Contract
of Sale, Preparation of sales documents, attendance at closing and
other usual and customary services provided by closing attorneys).
The Debtors' bankruptcy counsel will be paid $1,500 which includes
expenses, in connection with the Motion. The other reasonable and
customary costs incurred in connection with the closing may be
paid. The amount of $50,300 claimed as exempt may be paid to the
Debtor. The remainder of the sales proceeds will be held in the
attorney trust account of the Debtors' bankruptcy counsel pending
further Order of the Court.
The Debtor will include a copy of the settlement/closing statement
of the sale in the monthly operating report filed following the
sale. Further, all subsequent disbursements will be reported in
the monthly reports.
A hearing on the Motion was held on Dec. 3, 2020 at 10:00 a.m.
A copy of the Contract is available at https://tinyurl.com/y3nakqxm
from PacerMonitor.com free of charge.
Allan Bruce Plumser and Diane Cheryl Plumser sought Chapter 11
protection (Bankr. D.N.J. Case No. 19-25198) on Aug. 6, 2019. The
Debtors tapped Dean G. Sutton, Esq., as counsel.
AMERICAN TIRE: Moody's Upgrades CFR to Caa1, Outlook Stable
-----------------------------------------------------------
Moody's Investors Service upgraded the ratings for American Tire
Distributors, Inc., including: the corporate family rating (CFR)
and senior secured first-out term loan due 2023 to Caa1 from Caa3,
the senior secured second-out term loan to Caa2 from Ca and the
probability of default rating (PDR) to Caa1-PD from Caa3-PD. The
outlook is stable.
The ratings upgrade reflects Moody's view that American Tire will
maintain adequate liquidity, positive free cash flow, with
productivity efficiencies to reduce debt/EBITDA to the mid-6x range
by the end of 2021. American Tire's performance for 2020 has
outpaced Moody's expectations. This sets the basis for the company
to operate through the uncertainty that will persist into 2021 from
pandemic concerns and anticipated tariffs on certain tire imports.
The following rating actions were taken:
Upgrades:
Issuer: American Tire Distributors, Inc. (New)
Corporate Family Rating, Upgraded to Caa1 from Caa3
Probability of Default Rating, Upgraded to Caa1-PD from Caa3-PD
Senior Secured 1st Lien Bank Credit Facility, Upgraded to Caa1
(LGD4) from Caa3 (LGD4)
Senior Secured 1st Lien Second-Out Lien Bank Credit Facility,
Upgraded to Caa2 (LGD5) from Ca (LGD5)
Outlook Actions:
Issuer: American Tire Distributors, Inc. (New)
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
American Tire's ratings, including the Caa1 CFR, reflect the
company's high financial risk with elevated leverage and weak
interest coverage, competitive industry dynamics, and thin
operating margin profile. Nonetheless, the company has a strong
market position as a distributor of consumer replacement tires,
with a large national footprint and considerable scale. Cost saving
efforts have been implemented, and liquidity is better than early
in 2020 with positive free cash flow expected to be maintained.
American Tire has managed the 2020 demand volatility effectively,
as Moody's expects units shipped to be up in the low-single digit
range for the year. This is well-ahead of replacement tire
shipments for the broader U.S. industry, which were down about 10%
through the first nine months of 2020. American Tire's results are
from solid underlying demand in its independent retail channel,
although this demand has partially benefitted from mass
merchandisers' auto centers remaining closed for parts of the
year.
Moody's believes that American Tire's revenue will grow in the
mid-single digit range for 2021. However, near-term challenges,
including ongoing pandemic concerns and anticipated tariffs on
certain tire imports, could create some demand volatility in the
first half of 2021.
Moody's expects American Tire to sustain many of its cost-saving
initiatives it has enacted in 2020, including optimizing its
network routes and scaling its salesforce. These productivity
efforts should drive moderate improvement in the company's
operating margin and improve leverage from just above 7x
debt/EBITDA expected for 2020 towards the mid-6x range by the end
of 2021.
Moody's expects American Tire's liquidity to be adequate through
2021. The company has made substantial improvement over the course
of 2020 in managing its working capital efficiently, resulting in
positive free cash flow expected for 2020. Moody's anticipates the
company to continue to generate positive free cash flow in 2021 at
about $30 million as the company normalizes its capital
expenditures and incurs some deferred cash costs from 2020.
A significant component of American Tire's liquidity is
availability under its approximately $1 billion asset-based lending
facility (ABL). Moody's expects the company to maintain adequate
availability through 2021, with highest period of borrowing during
the first quarter as the company typically burns cash to build up
inventory.
The stable outlook reflects Moody's expectation for American Tire's
leverage profile to improve to below 7x debt/EBITDA and generate
positive free cash flow in 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if American Tire demonstrates
profitable revenue growth while sustaining its productivity cost
saving initiatives such that debt/EBITDA is expected to be
maintained below 6.5x and EBITA/interest expense above 1.0x.
Maintaining an adequate liquidity profile, reflected by continual
positive free cash flow and RCF/debt above 10%, could also result
in an upgrade.
The ratings could be downgraded if American Tire experiences a
deterioration in unit volumes -- particularly if it loses a major
supplier or customer -- or if it cannot generate positive free cash
flow and maintain adequate liquidity. Persistently negative free
cash flow generation and/or diminished liquidity for any reason
(including reduced availability under the company's revolver), more
broadly, could also result in a ratings downgrade.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
Headquartered in Huntersville, North Carolina, American Tire
Distributors, Inc. is a wholesale distributor of tires (97% of net
sales), custom wheels, and related tools. It operated about 140
distribution centers in the US and Canada and generated about $4.8
billion of revenue for the twelve-month period ending October 3,
2020.
The company went through a Chapter 11 restructuring in the US
bankruptcy courts in late-2018 which resulted in the conversion of
more than $1 billion of subordinated debt claims into equity.
Post-restructuring, the company is subsequently majority-owned by a
large consortium of investors.
ANNAGEN LLC: Trustee Seeks to Hire Gibraltar IT as Consultant
-------------------------------------------------------------
Lawrence Frank, the appointed trustee in the Chapter 11 case of
Annagen, LLC, seeks approval from the U.S. Bankruptcy Court for the
Middle District of Pennsylvania to retain Gibraltar IT, LLC, to
provide management and consulting services.
From Oct. 21, 2020 through April 30, 2021, Tom Hogue will serve as
manager and CEO of Annagen. Mr. Hogue and Gibraltar shall seek to:
a. restore and rebuild the Debtor's staff morale, triage and
maintain its client base;
b. develop and maintain systems for accurate financial
reporting, and cooperate with forensic financial investigations and
audits;
c. conduct human resource functions, including hiring and
firing employees and other outside consultants as warranted;
d. manage all accounting and financial matters;
e. manage all vendor relationships and contracts; and
f. meet and negotiate with creditors.
Gibraltar shall be entitled to $3,000 per month.
Gibraltar is entitled to a prorated payment of $900 for services
provided during Oct. 20, 2020 which shall be included in the
Debtor's initial payment to Gibraltar.
Mr. Hogue assures the court that he is a disinterested person
within Section 101(14) of the Bankurptcy Code.
The firm can be reached through:
Tom Hogue
Gibraltar IT, LLC
P.O. Box 629
Machanicsburg, PA 17055
Phone: (866) 888-4427
Fax: (717) 798-9699
About Annagen LLC
Annagen, LLC is a privately held corporation that provides
colocation, infrastructure and application hosting services that
work side by side with a large variety of industries including
healthcare, financial, education, transportation and government to
accelerate their technology evolution from the ground to the cloud.
It operates a data center in Harrisburg, Pa. Visit
https://www.netrepid.com for more information.
Annagen filed a Chapter 11 petition (Bankr. M.D. Pa. Case No.
19-03631) on Aug. 27, 2019. The petition was signed by Annagen
President Samuel D. Coyl. At the time of the filing, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. Judge Henry W. Van Eck oversees the case.
The Debtor has tapped Purcell, Krug & Haller and the Law Offices of
John M. Hyams as its bankruptcy counsel; Thomas, Thomas & Hafer,
LLC as its special counsel; and RSB & Associates, P.C. as its
accountant.
On October 14, 2020, Lawrence G. Frank, Esq., was appointed as
trustee in Debtor's Chapter 11 case.
ARCH RESOURCES: Moody's Downgrades CFR to B2, Outlook Stable
------------------------------------------------------------
Moody's Investors Service downgraded Arch Resources, Inc.'s
Corporate Family Rating to B2 from B1 and senior secured ratings to
B2 from B1. The Speculative Grade Liquidity Rating is unchanged at
SGL-2. The rating outlook is stable.
"Arch remains committed to starting production at Leer South in the
third quarter of 2021. Given recent weakness in global
metallurgical coal pricing and significant competitive issues in
the Powder River Basin thermal coal production region, Moody's
expects that the company will have higher net debt balances when
the project is completed," said Ben Nelson, Moody's Vice President
-- Senior Credit Officer and lead analyst for Arch Resources, Inc.
Downgrades:
Issuer: Arch Resources, Inc.
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Senior Secured Bank Credit Facility, Downgraded to B2 (LGD4) from
B1 (LGD4)
Issuer: WEST VIRGINIA ECONOMIC DEVELOPMENT AUTHORITY
Senior Secured Revenue Bonds, Downgraded to B2 (LGD4) from B1
(LGD4)
Outlook Actions:
Issuer: Arch Resources, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Moody's expects a challenging condition for the coal industry will
extend into 2021 following a very difficult 2020 driven by the
global outbreaks of Coronavirus. Domestic demand for thermal coal,
particularly in the Power River Basin region, is constrained by
falling demand for coal for power generation and high inventory
levels. Moody's believes this region will remain oversupplied in
2021. Domestic and international demand for metallurgical coal is
recovering heading into 2021 but pricing remains weak and recent
disruption in the seaborne market is compounding the situation.
Moody's downgraded Arch's rating to reflect substantive weakening
in credit metrics and low likelihood of meaningful improvement in
the first half of 2021. Moody's expects that the company's EBITDA
will fall below $50 million in 2020 and, based on export
metallurgical coal pricing moving toward the midpoint of Moody's
range of $100-160 per metric ton (CFR Jingtang), improve into the
range of $125-175 million in 2021. Moody's expects that the company
will burn cash and adjusted financial leverage will increase above
10 times (Debt/EBITDA) by the end of 2020. Capital spending for the
Leer South project will remain elevated over the next few quarters
and result in a meaningful increase in net debt from substantially
no net debt at the end of 2019 to more than $400 million by the
third quarter of 2021.
Moody's believes that investor concerns about the coal industry's
ESG profile are intensifying and coal producers will be
increasingly challenged by access to capital issues, especially in
North America. An increasing portion of the global investment
community is reducing or eliminating exposure to the coal industry
with greater emphasis on moving away from thermal coal. The
aggregate impact on the credit quality of the coal industry is that
debt capital will become more expensive over this horizon,
particularly in the public bond markets, and other business
requirements, such as surety bonds, will together lead to much more
focus on individual coal producers' ability to fund their
operations and articulate clearly their approach to addressing
environmental, social, and governance considerations.
The B2 CFR reflects a diverse platform of eight coal mining assets
in the United States capable of strong cash flow generation. The
company's approach to maintaining low debt levels and a significant
liquidity cushion helped the company withstand difficult industry
conditions despite severe earnings compression. Operational risk is
a constraint, with meaningful concentration of earnings and cash
flow at two specific mining sites: Black Thunder thermal coal mine
in the Powder River Basin and Leer mining complex in Northern
Appalachia. Credit quality is constrained more significantly by the
inherent volatility of the global metallurgical coal industry,
ongoing secular decline in the US thermal coal industry, and ESG
factors. The rating also takes into consideration that some mining
assets have less favorable operating prospects in the coming years
and, therefore, could be subject to more significant
reclamation-related spending over the rating horizon.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The SGL-2 reflects its expectation for good liquidity to support
operations over the next 12-18 months. Moody's expects that the
company will burn cash in 2020 due to heavy expansionary capital
spending on the Leer South mine project. The primary source of
liquidity beyond internally-generated free cash flow is the
company's cash balance combined with modest availability under an
account's receivables securitization facility and an unrated
inventory-based revolving credit facility. Arch's recent issuance
of convertible notes helped bolster available liquidity to about
$400 million. The SGL rating could be downgraded to SGL-3 if
available liquidity falls below $250 million.
Environmental, social, and governance factors are important factors
influencing Arch's credit quality. The company is exposed to ESG
issues typical for a company in the coal mining industry, including
increasing global demand for renewable energy that is detrimental
to demand for thermal coal, especially in the United States and
Western Europe. From an environmental perspective, the coal mining
sector is also viewed as: (i) very high risk for air pollution and
carbon regulations; (ii) high risk for soil and water pollution,
land use restrictions, and natural and man-made hazards; and (iii)
moderate risk for water shortages. Social issues include factors
such as community relations, operational track record, and health
and safety issues associated with coal mining such as black lung
disease. Through capital investment in the Leer South project, Arch
Resources has been reducing exposure to thermal coal, which carries
greater ESG-related risks, and increasing exposure to metallurgical
coal, which carries lower ESG-related risks. Arch Resources sold
its last thermal coal mine in Appalachia in December 2019 -- a
surface mine called Coal-Mac -- and has signaled an intention to
reduce emphasis on thermal coal mining in other regions.
Governance-related risks are representative of a publicly traded
coal company with an ongoing emphasis on maintaining balance sheet
cash and good liquidity. However, Arch returned more than $900
million of cash to shareholders since 2017 and the decision to
increase debt levels to complete the Leer South project is deemed
as financially aggressive. Arch also reported $529 million of
reclamation-related surety bonds and $114 million of surety bonds
for other obligations.
The stable outlook balances expectations for continued earnings
compression and weak credit metrics with the company's substantial
liquidity position. Moody's could downgrade the rating with further
weakness or lack of recovery in metallurgical coal pricing,
expectations for available liquidity to fall below $175 million, or
any meaningful operational issues at the company's Black Thunder or
Leer mines. Moody's could upgrade the rating with expectations for
free cash flow generation above $100 million, meaningful debt
reduction, and financial policies consistent that support
maintaining a low net debt position in the medium-to-long term.
Arch Coal is one of the largest coal producers in the United
States. The company has two mining complexes in the Powder River
Basin, four mining complexes in Appalachia, and two more mines in
Illinois and Colorado. The company generated about $2.3 billion of
revenue in 2019.
The principal methodology used in these ratings was Mining
published in September 2018.
ARCHDIOCESE OF NEW ORLEANS: Selling New Orleans Property for $70K
-----------------------------------------------------------------
The Roman Catholic Church of the Archdiocese of New Orleans asks
the U.S. Bankruptcy Court for the Eastern District of Louisiana to
authorize the sale of its immovable property legally described as
the certain piece or portion of the ground, together with all the
buildings and improvements thereon, situated in the Third District
of the City of New Orleans, in that part thereof known as New
Orleans East, designated as Lot 38-A on a plan of resubdivision of
Lot 38 into Lots 38 A and 38 A-1 prepared by Gandolfo, Kuhn, Luecke
and Associates, Surveyors, certified by John D. Luecke on Feb. 23,
1978, approved by the City Planning Commission on March 23, 1978
and registered in COB 749, folio 494, on April 25, 1978, as more
particularly described in the Agreement to Purchase and Sell
Property, to Michael McFarland for $70,000, cash.
Pursuant to the Purchase Contract, the Buyer has agreed to purchase
the Property. Pursuant to the Listing Agreement, the Debtor has
agreed to pay a commission of 9% of the gross sale price to Mr.
Juge upon the closing of the sale transaction. The sale will be
free and clear of all liens, interests, and encumbrances, with such
liens, interests, and encumbrances to be referred to the Purchase
Price.
The Purchase Contract was negotiated, proposed, and entered into
without collusion and in good faith, and constitutes an
arms'-length transaction. Further, the proposed Purchase Price is
a fair offer based on market conditions and comparable
transactions.
The Official Committee of Unsecured Creditors has been provided a
draft of the Motion and has been provided with a copy of the Juge
Affidavit. Based on the circumstances of the transaction, the
Committee does not oppose the relief sought by the Motion.
The Debtor has a sound business justification for selling the
Property. Specifically, the Property is a vacant parcel of
property that has been available for years. Allowing the Debtor to
sell the Property now will allow it to obtain cash and to monetize
the asset at the highest possible price.
Finally, the Debtor asks the Court to waive the 14 day stay
pursuant to Bankruptcy Rule 6004(h).
A hearing on the Motion is set for Dec. 17, 2020 at 1:30 p.m. by
telephone through the dial-in for Section A 1-888-684-8852;
Conference Code 9318283.
About the Archdiocese of New Orleans
The Roman Catholic Church of the Archdiocese of New Orleans is a
non-profit religious corporation incorporated under the laws of the
State of Louisiana. For more information, visit
https://www.nolacatholic.org/
Created as a diocese in 1793, and established as an archdiocese in
1850, the Archdiocese of New Orleans has educated hundreds of
thousands in its schools, provided religious services to its
churches and provided charitable assistance to individuals in need,
including those affected by hurricanes, floods, natural disasters,
war, civil unrest, plagues, epidemics, and illness. Currently, the
archdiocese's geographic footprint occupies over 4,200 square Miles
in southeast Louisiana and includes eight civil parishes --
Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John
the Baptist, St. Tammany, and Washington.
The Roman Catholic Church for the Archdiocese of New Orleans sought
Chapter 11 protection (Bankr. E.D. La. Case No. 20-10846) on May 1,
2020. The archdiocese was estimated to have $100 million to $500
million in assets and liabilities as of the bankruptcy filing.
Judge Meredith S. Grabill oversees the case.
The archdiocese is represented by Jones Walker LLP. Donlin, Recano
& Company, Inc. is the claims agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 20, 2020. The committee is represented by
Pachulski Stang Ziehl & Jones, LLP and Locke Lord, LLP. Berkeley
Research Group, LLC is the committee's financial advisor.
ASCENA RETAIL: U.S. Trustee Slams Chapter 11 Sale Speed
-------------------------------------------------------
Law360 reports that the Office of the U. S. Trustee has pushed back
on Ascena Retail Group's plans for a $540 million bankruptcy sale
of its Ann Taylor and Lane Bryant stores to an affiliate of private
equity firm Sycamore Partners, saying the company's proposed time
frame doesn't give creditors enough time to weigh in.
Bankruptcy rules require 21 days' notice to creditors and other
parties regarding asset sales, yet Ascena wants to "short-circuit"
those requirements and unload the stores on a "mere" 12-day notice,
according to an objection filed Thursday on behalf of John P.
Fitzgerald III, Region 4's acting U.S. trustee.
About Ascena Retail Group Inc.
Ascena Retail Group, Inc. (Nasdaq: ASNA) is a national specialty
retailer offering apparel, shoes, and accessories for women under
the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey), Plus
Fashion (Lane Bryant, Catherines and Cacique), and Value Fashion
(Dressbarn) segments, and for tween girls under the Kids Fashion
segment (Justice). Ascena, through its retail brands, operates
ecommerce websites and approximately 2,800 stores throughout the
United States, Canada, and Puerto Rico. Visit
http://www.ascenaretail.com/for more information.
Ascena Retail reported a net loss of $661.4 million for the fiscal
year ended Aug. 3, 2019, a net loss of $39.7 million for the year
ended Aug. 4, 2018, and a net loss of $1.06 billion for the year
ended July 29, 2017.
On July 23, 2020, Ascena Retail Group and its affiliates sought
Chapter 11 protection (Bankr. E.D. Va. Case No. 20-33113). As of
Feb. 1, 2020, Ascena Retail had $13,690,710,379 in assets and
$12,516,261,149 in total liabilities.
The Hon. Kevin R. Huennekens is the case judge.
The Debtors tapped Kirkland & Ellis LLP and Cooley LLP as
bankruptcy counsel, Guggenheim Securities, LLC, as financial
Advisor, and Alvarez and Marsal North America, LLC as
restructuring
advisor. Prime Clerk, LLC is the claims agent.
* * *
In September 2020, FullBeauty Brands Operations, LLC, won an
auction to acquire Ascena's Catherines intellectual property assets
for a base purchase price of $40.8 million and potential upward
adjustment for certain inventory.
In November 2020, Ascena won approval to to sell the intellectual
property of its Justice Brand and other Justice brand assets to
Justice Brand Holdings LLC, an entity formed by Bluestar Alliance
LLC (a leading brand management company), for $90 million.
The Company continues to operate its Ann Taylor, LOFT, Lane Bryant,
and Lou & Grey brands as normal through a reduced number of retail
stores and online.
ASSUREDPARTNERS INC: Moody's Rates New $500MM Unsec. Notes 'Caa2'
-----------------------------------------------------------------
Moody's Investors Service has affirmed the B3 corporate family
rating and B3-PD rating of AssuredPartners, Inc. following the
company's announcement that it plans to issue $500 million of new
senior unsecured notes, which Moody's has rated Caa2. The rating
agency also upgraded AssuredPartners' senior secured credit
facilities to B1 from B2 based on the change in the funding mix.
The company will use net proceeds from the senior unsecured notes
to fund acquisitions, add cash to the balance sheet, and pay
related fees and expenses. The rating outlook for AssuredPartners
is stable.
RATINGS RATIONALE
AssuredPartners' ratings reflect its growing presence in middle
market insurance brokerage, its good mix of business across
property & casualty insurance and employee benefits, and its
healthy EBITDA margins. The company has made organizational changes
to support organic revenue growth in recent periods, and has seen
an increase in organic growth over the last few months as the
economy has improved. The EBITDA margin has expanded this year due
to increased revenue and lower personnel and travel and
entertainment-related costs. AssuredPartners is an active acquirer,
however, it slowed the pace of acquisitions during the depths of
the recession, but now has a robust acquisition pipeline. The
company allows acquired brokers to operate fairly autonomously
under local and regional brands, while the group centralizes
accounting and control functions and certain carrier
relationships.
Credit challenges for the group include aggressive financial
leverage, execution risk associated with acquisitions, and
significant cash outflows to pay contingent earnout liabilities.
Like its peers, AssuredPartners also faces potential liabilities
from errors and omissions in the delivery of professional
services.
Moody's estimates that AssuredPartners' pro forma debt-to-EBITDA
ratio will remain around 7.5x after giving effect to the proposed
incremental borrowing. Pro forma (EBITDA - capex) interest coverage
will be around 2x, and the free-cash-flow-to-debt ratio will be in
the low single digits. These pro forma metrics include Moody's
adjustments for operating leases, deferred earnout obligations,
run-rate earnings from completed and pending acquisitions, certain
non-recurring costs, and excess cash held to boost liquidity.
Moody's expects AssuredPartners to reduce its debt-to-EBITDA ratio
below 7.5x over the next few quarters.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade of AssuredPartners' ratings
include: (i) debt-to-EBITDA ratio below 6x, (ii) (EBITDA - capex)
coverage of interest exceeding 2x, and (iii) free-cash-flow-to-debt
ratio exceeding 5%.
Factors that could lead to a rating downgrade include: (i)
debt-to-EBITDA ratio remaining above 7.5x, (ii) (EBITDA - capex)
coverage of interest below 1.2x, or (iii) free-cash-flow-to-debt
ratio below 2%.
Moody's has affirmed the following ratings (and loss given default
(LGD) assessment):
Corporate family rating at B3;
Probability of default rating at B3-PD;
$500 million senior unsecured notes maturing
in August 2025 at Caa2 (LGD5);
$475 million senior unsecured notes maturing in
May 2027 at Caa2 (LGD5).
Moody's has assigned the following rating (and loss given default
(LGD) assessment):
$500 million eight-year senior unsecured notes at
Caa2 (LGD5).
Moody's has upgraded the following ratings (and loss given default
(LGD) assessments):
$414.5 million senior secured revolving credit facility
maturing in February 2025 to B1 (LGD2) from B2 (LGD3);
$2.106 billion senior secured term loan maturing in
February 2027 to B1 (LGD2) from B2 (LGD3);
$298.5 million senior secured term loan maturing in
February 2027 to B1 (LGD2) from B2 (LGD3);
$248.3 million senior secured delayed draw term loan
maturing in October 2024 to B1 (LGD2) from B2 (LGD3).
The rating outlook for AssuredPartners, Inc remains stable.
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in June 2018.
Based in Lake Mary, Florida, AssuredPartners ranks among the 15
largest US insurance brokers. The company generated revenue of $1.5
billion for the 12 months through September 2020.
AUSTIN HOLDCO: S&P Assigns 'B' ICR Amid Baring Private Transaction
------------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Austin
HoldCo Inc. (dba Virtusa Corporation), a global provider of digital
engineering and information technology outsourcing services.
S&P is also assigning its 'B+' issue-level and '2' recovery ratings
to the company's first-lien debt, and its 'CCC+' issue-level and
'6' recovery ratings to the unsecured notes.
The stable outlook reflects S&P's expectation that the company's
cost-optimization efforts will lead to a material improvement in
EBITDA margins and reduce leverage toward the low-5x area by the
end of 2021.
Austin HoldCo Inc. entered into a definitive agreement to be
acquired by Baring Private Equity Asia. The company will fund the
transaction with approximately $1.18 billion of sponsor equity, a
$600 million first-lien term loan, $300 million of senior unsecured
notes, $231 million of cash, and an undrawn $125 million revolver.
The 'B' issuer credit rating reflects Virtusa's high initial S&P
Global Ratings-adjusted leverage (excluding planned cost control)
in the high-6x area at transaction close, relatively small scale
within a competitive market environment, and its highly
concentrated client base. This is partly offset by good top-line
growth in recent years, strong relationships with customers, and
opportunity to significantly optimize costs.
Virtusa provides services across the entire spectrum of the IT
services lifecycle, generating roughly 56% of revenue from
application outsourcing and 44% of revenue from consulting
services, and three large end markets comprised of Banking,
Financial Services and Insurance (55% of revenue); Communications
and Technology (24% of revenue); and Healthcare (14% of revenue).
Clients in these end markets manage heavy on-premise workloads and
Virtusa specializes in bridging their legacy systems with highly
specialized front-end platforms. We expect IT spend by large banks
to continue to grow in the mid-single-digit-percent area, driven by
increasing penetration of digital channels among customers.
Although Virtusa is susceptible to IT spending trends that can be
cyclical, its emphasis on digital transformation and process
automation tends to be more resilient.
With $1.3 billion of revenue, Virtusa's top five clients account
for about 40% of revenue. However, the company's expansive
project-based recurring revenue stream leads to highly sticky
customer relationships, evidenced by the over 15-year average
length among these top five clients. Additionally, 96% of annual
revenues come from existing customers as Virtusa focuses on repeat
business, thus providing revenue visibility and affording an
organic compound annual growth rate of 12.3% over the last five
years.
S&P said, "We expect the company's revenue to increase by the
high-mid-single-digit-percent range over the next 12 months,
underpinned by digital and cloud transformational services and
additional sales to its existing clients. Although the company was
hindered by COVID-19 as its clients put projects on hold and it
experienced a temporary drop in utilization rates, we expect
Virtusa to capitalize on a healthy pipeline of growth prospects and
leverage its services as companies adapt to the pandemic. We also
expect Virtusa's EBITDA margins to improve to 13% in 2021 on
enhanced utilization rates and reduced costs. These cost reductions
will mostly come from a restructuring of its employee headcount as
well as elimination of public company costs, most of which have
already been actioned and will be realized over the next 12
months.
"Our assessment of Virtusa's financial risk profile reflects its
initial S&P Global Ratings-adjusted leverage of high-6x at
transaction close. We expect the company to reduce its leverage to
the high-5x area by the end of 2021 on EBITDA expansion, primarily
stemming from cost reductions, of which 90% have already been
enacted, coupled with good revenue growth. We expect Virtusa to
generate free cash flow of $75 million-$85 million over the coming
year as synergy realization is offset by certain one-time costs and
higher interest expense. The strong cash generation, even through
the pandemic, is supported by lower days sales outstanding as the
company focused on its cash collection cycle and reducing accounts
receivable.
"Our stable outlook on Virtusa reflects our expectation that the
company's mid- to high-single-digit-percent revenue growth and
improvement in EBITDA margins through cost-reduction efforts will
enable it to reduce leverage to the low-5x area by the end of
2021.
"We could lower the rating if sales decline due to poor
macroeconomic conditions, execution missteps during cost cuts leads
to material EBITDA margin compression, or if the company
experiences material customer losses, such that adjusted leverage
exceeds the 7x area or free cash flow to debt reduces to the
mid-single digits. Additionally, should the company more
aggressively issue debt, whether to fund shareholder returns or for
mergers and acquisitions, resulting in leverage over the 7x area,
we may consider lowering the rating.
"Although unlikely over the next 12 months, we could raise the
rating if the company demonstrates a commitment to reduce and
sustain adjusted leverage below 5x incorporating acquisition and
shareholder return spending, while maintaining consistent
mid-high-single-digit-percent revenue growth and stable EBITDA
margins."
B&G FOODS: Moody's Lowers Ratings on First Lien Loans to Ba2
------------------------------------------------------------
Moody's Investors Service affirmed B&G Foods, Inc.'s B1 Corporate
Family Rating ("CFR"), B1-PD Probability of Default Rating and B2
senior unsecured ratings. Moody's also downgraded the ratings on
B&G's $700 million senior secured first lien revolving credit
facility due 2022 and upsized $671.625 million senior secured first
lien term loan due 2026 to Ba2 from Ba1. Moody's additionally
assigned a Ba2 rating to B&G's proposed new $800 million senior
secured first lien revolving credit facility due 2025. The Ba2
rating on B&G's existing revolver due 2022 will be withdrawn once
the new facility closes. The outlook remains stable and the
Speculative Grade Liquidity Rating remains SGL-1.
The rating actions are in response to B&G's financing for the $550
million acquisition of the Crisco brands of oil and shortening from
J.M. Smucker Company. B&G financed the acquisition with a
combination of revolver draw and cash on hand.
Moody's affirmed B&G's B1 CFR and maintained the stable outlook
because Crisco is a strong well-established brand in shortening and
vegetable oil that enhances the company's scale and product
diversity, and Moody's expects leverage to remain within
expectations for the rating given the company's operating profile.
B&G is also generating strong growth and higher free cash flow in
2020 because the coronavirus pandemic has caused an increase in
at-home food consumption. Moody's projects a gradual return to more
balanced at-home/out-of-home food consumption will lead to
mid-to-high single digit organic revenue and EBITDA declines in
2021. However, Moody's expects that B&G will maintain very good
liquidity, generate $70-80 million of free cash flow in 2021 and
sustain debt-to-EBITDA leverage below 6x over the next 12 to 18
months. Moody's projects that debt-to-EBITDA leverage will increase
from an estimated 5.7x at close (LTM October 3, 2020 pro forma for
the Crisco acquisition) to 5.9x in 2021, which is a level that
provides limited flexibility for additional debt-funded
acquisitions within Moody's expectations for the B1 rating.
For the quarter ended October 3, 2020, revenues increased about 22%
year-over-year and Moody's adjusted EBITDA increased about 20%
year-over-year compared to the prior year's quarter.
The downgrade of B&G's senior secured first lien credit rating to
Ba2 from Ba1 reflects a higher mix of secured debt in the capital
structure as a result of the company's $300 million senior secured
first lien term loan add-on. The higher level of secured debt
weakens recovery prospects for secured debt in the event of a
default.
The following ratings/assessments are affected by the actions:
New Assignments:
Issuer: B&G Foods, Inc.
Senior Secured 1st Lien Revolving Credit Facility, Assigned Ba2
(LGD2)
Ratings Affirmed:
Issuer: B&G Foods, Inc.
Corporate Family Rating, Affirmed at B1
Probability of Default Rating, Affirmed at B1-PD
GTD Senior Unsecured Notes, Affirmed at B2 (LGD5)
Ratings Downgraded:
Issuer: B&G Foods, Inc.
Senior Secured 1st Lien Term Loan, Downgraded to Ba2 (LGD2) from
Ba1 (LGD2)
Senior Secured 1st Lien Revolving Credit Facility, Downgraded to
Ba2 (LGD2) from Ba1 (LGD2)
Outlook Actions:
Issuer: B&G Foods, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
B&G's B1 CFR largely reflects the company's high, but declining,
financial leverage and relatively aggressive financial policies,
highlighted by large dividend payments and the periodic use of debt
to fund potentially large acquisitions. The rating also reflects
B&G's small but improving scale relative to more highly rated
industry peers and its acquisitive growth strategy. The company's
debt-to-EBITDA for the twelve months ended Oct. 3, 2020 was 5.2x on
a Moody's-adjusted basis, but is projected to increase to 5.9x in
2021 due to the Crisco acquisition and a reduction in revenue and
earnings in 2021 as at-home food consumption moderates along with
an easing of the coronavirus pandemic. The projected leverage
weakly positions the company within the B1 rating category. B&G's
credit profile benefits from relatively high margins, consistent
operating cash flow generation from a broad food product portfolio
with low cyclical demand volatility, and a largely successful track
record of integrating acquisitions. B&G's willingness to dividend a
high portion (targeted at roughly 50% - 65%) of its cash from
operations less capital spending is partially mitigated by the
consistency of its cash flow generation.
Moody's assumes in the B1 rating that B&G will remain
opportunistically acquisitive, and that debt to EBITDA will be
sustained below 6x over the next 12 to 18 months. B&G publicly
stated net debt to EBITDA guidance of 4.5x to 5.5x (based on
management's calculations) is an important factor in its leverage
projection and Moody's estimates net leverage on the company's
calculation basis is approximately 5.25x pro forma for the
acquisition.
B&G's SGL-1 rating reflects very good liquidity based on
approximately $15 million of existing cash, $78 million of annual
projected free cash flow in 2021, $580 million of remaining undrawn
capacity on the revolver, and no debt maturities through 2024. The
cash sources provide ample resources for the $7.5 million of
required annual term loan amortization, reinvestment needs and
potential acquisitions.
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
corporate assets 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.
Notwithstanding, B&G and many other packaged food companies are
likely to be more resilient than companies in other sectors,
although some volatility can be expected through 2021 due to
uncertain demand characteristics, channel shifting, and the
potential for supply chain disruptions and difficult comparisons
following these shifts. Moody's regards the coronavirus outbreak as
a social risk under its ESG framework, given the substantial
implications for public health and safety.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
B&G's ratings could be upgraded if the company is able to sustain
debt-to-EBITDA below 5.0x while pursuing its acquisition-based
growth strategy, improve retained cash flow (RCF)-to-net debt such
that it approaches 10%, and maintain very good liquidity.
Alternatively, ratings could be downgraded if adjusted
debt-to-EBITDA is sustained above 6.0x, RCF-to-net debt is
sustained below 5%, or if liquidity deteriorates.
B&G Foods, Inc. based in Parsippany, New Jersey, is a
publicly-traded manufacturer and distributor of a diverse portfolio
of largely branded, shelf-stable food products, many of which have
leading regional or national market shares in niche categories. The
company also has a significant presence in frozen food following
the 2015 acquisition of Green Giant and maintains a small presence
in household products. B&G's brands include Back to Nature, B&G,
B&M, Cream of Wheat, Dash, Green Giant, Las Palmas, Le Sueur, Mama
Mary's, Maple Grove Farms, New York Style, Ortega, Polaner, Spice
Islands, and Victoria, among others. B&G sells to a diversified
customer base including grocery stores, mass merchants,
wholesalers, clubs, dollar stores, drug stores, the military and
other foodservice providers. B&G generated net sales for the twelve
months ended Oct. 3, 2020 of approximately $2.2 billion pro forma
for the Crisco acquisition.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
BALLY'S CORP: S&P Cuts ICR to 'B' on High Leverage, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S. gaming
operator Bally's Corp. to 'B' from 'B+'.
Bally's Corp. (formerly known as Twin River Worldwide Holdings
Inc.) recently announced the acquisition of Tropicana Evansville's
operations from Caesars Entertainment Inc. and the sale of the real
estate assets of its Dover Downs Hotel & Casino to Gaming & Leisure
Properties Inc. (GLPI). Additionally, Bally's will enter into a
long-term lease with GLPI. for Dover Downs and Tropicana
Evansville. S&P include its estimate of the lease obligation the
company will incur in this transaction in our measure of adjusted
debt.
Bally's also announced the acquisition of Bet.Works, a U.S.-based
sports betting platform provider, for $125 million, half of which
will be paid in cash and half in equity.
Additionally, Bally's entered into a long-term strategic
partnership with Sinclair Broadcast Group to integrate Bally's
brand and content across Sinclair's television network.
S&P said, "Notwithstanding our belief that the recently announced
acquisitions and partnership agreement will modestly improve the
company's geographical diversification and scale while reducing its
reliance on Rhode Island (its largest market), we believe
lease-adjusted leverage will increase above our revised 5.5x
threshold at the 'B+' rating. Therefore, we are lowering our issuer
credit rating on the company to 'B' from 'B+'."
S&P said, "The downgrade reflects our expectation for
lease-adjusted leverage to be above our 5.5x revised downgrade
threshold in 2021. We expect lease-adjusted leverage to increase
to the high-5x area in 2021, following the announcement of a number
of transactions which we consider leveraging, including the
acquisition of the gaming operations of Tropicana Evansville for
$140 million, the sale of the real estate assets of Dover Downs,
and the acquisition of Bet.Works for $125 million. This compares to
our previous expectation that leverage would be in the high-4x area
in 2021. Bally's is selling the real estate assets of Dover Downs
to fund its purchase of the gaming operations of Tropicana
Evansville. Bally's is entering into a long-term triple-net lease
arrangement with GLPI for the use of the real estate assets of
Tropicana Evansville and Dover Downs Hotel & Casino. The master
lease will have an initial annual rent of approximately $40 million
and is subject to annual rent escalations. The lease has an initial
term of 15 years, with four five-year renewal options. S&P Global
Ratings' adjusted debt includes our estimate of the lease
obligation the company will incur in this transaction. We estimate
this finance lease obligation will be between $380 million and $400
million and comprise about a quarter of our adjusted debt measure.
The acquisition of Tropicana Evansville, will result in an
additional $60 million of EBITDAR (based on 2019 operating
performance), resulting in a lease adjusted multiple of about 7x,
which is leveraging. Additionally, Bally's will acquire Bet.Works
for $125 million, to be funded 50% in cash and 50% in equity. We
don't expect the Bet.Works acquisition will materially impact
Bally's cash flow in 2021 as the company builds out its sport
betting presence and spends on customer acquisition.
"Bally's has historically operated with lower leverage compared
with other similar gaming peers, but has recently been more
aggressive with its acquisition strategy. Although we believe
management will most likely focus on integrating the operations of
its pending acquisitions and rolling out a consistent property-wide
brand strategy, we expect the company will remain opportunistic in
adding to its portfolio of gaming assets.
"We believe the acquisitions improve Bally's long-term business
risks but heightens short-term execution risks. Bally's has
announced a number of acquisitions over the past 12 months,
including the recent announced acquisition of gaming operations in
Indiana. We believe these acquisitions modestly improve the
company's geographical diversification." The acquisition of the
gaming operations of Tropicana Evansville represents its entry into
its 10th state and its 14th property. The company's five other
pending acquisitions expected to close between late-2020 and
mid-2021 add New Jersey, Illinois, Nevada, and Louisiana, to the
company acquired assets in Colorado, Mississippi (Vicksburg), and
Missouri earlier this year. At the start of 2020, Bally's owned and
operated two casinos in Rhode Island, one in Biloxi, and one in
Delaware.
Additionally, Bally's acquisition of Bet.Works, its partnership
with Sinclair Broadcast Group, and the acquisition of the Bally's
brand from Caesars positions the company to grow into the
relatively young sports betting and igaming space.
Bally's acquisition and growth strategy continues to improve its
geographic diversity, which can help mitigate some of the effects
of regional economic weakness, changes in the competitive
landscape, and other event risks in a single market, in an
otherwise healthy macroeconomic environment. In addition to
improving the company's geographical diversification, S&P believes
the closing of the pending acquisitions will increase the company's
overall scale, and reduce its concentration in Rhode Island.
S&P said, "We believe upon closing these acquisitions, business
risks will likely be modestly improved leading to greater EBITDA
and cash flow generation and potentially lower volatility over
future economic cycles despite being in highly competitive
geographies. Additionally, the company recently acquired the
Bally's brand, which will allow the company to roll out a
consistent and recognizable brand across its portfolio of
properties, and an integrated rewards program. As a result of these
factors, we raised our adjusted debt-to-EBITDA downgrade threshold
for Bally's at the previous 'B+' rating. However, we downgraded the
issuer rating one notch to 'B' because we expect the company's
leverage in 2021 will exceed 5.5x.
Despite improving geographic diversification and scale, Bally's
existing gaming properties, and many of its pending acquisitions,
face a high level of competition nearby and are not typically
leaders in their respective markets. S&P said, "Additionally, we
expect integration and execution risks from the acquisitions will
be heightened over the next year given the uncertain macroeconomic
environment and Bally's aggressive growth strategy, including its
capital spending plans across the portfolio and our expectation
that Bally's could pursue additional acquisition opportunities to
expand its geographic footprint."
Bally's will likely have adequate liquidity. S&P said, "Pro forma
for the close of the pending acquisitions, we estimate Bally's had
about $127.5 million of available liquidity, including cash on hand
and full availability under its $250 million revolving facility, as
of Sept. 30, 2020. We believe this provides the company with
adequate liquidity to withstand temporary disruptions in operations
in its gaming markets from rising coronavirus cases across the U.S.
However, we do acknowledge that a more aggressive stance toward
acquisitions and investment spending over the next 12 months than
we are currently forecasting could pressure existing liquidity
should there be incremental measures enacted by states to combat
the spread of the coronavirus that led to property closures or
increased operating restrictions, as evidenced by Rhode Island's
recent two-week statewide pause that closed casinos.
Notwithstanding the Rhode Island closure, we expect casino closures
over the coming months will be more targeted, as opposed to the
widespread casino closures earlier this year."
S&P said, "The stable outlook reflects our base-case forecast for
adequate liquidity while leverage is weak over the next several
quarters, and a recovery in regional gaming cash flow in 2021 that
will result in Bally's lease-adjusted leverage in the high-5x area,
which we believe provides sufficient cushion compared to our 6.5x
lease-adjusted leverage downgrade threshold to absorb some
operating weakness relative to our forecast or modest possible
additional acquisitions. Notwithstanding, there remains significant
uncertainty about the effective containment and treatment of
COVID-19, including the potential for additional waves of
infections, tighter operating restrictions across gaming markets
over the coming months, and the continued implementation of social
distancing measures, which may impair consumer discretionary
spending.
"We could lower our ratings on Bally's if we no longer believe pro
forma lease-adjusted leverage will improve below 6.5x next year.
This could occur if its recovery is materially slower than we
expect because of persistent high unemployment or changes in
customer behavior stemming from the coronavirus or if an increasing
number of virus cases in its primary markets lead to additional
property closures or more stringent operating restrictions. We
could also lower our ratings if Bally's undertakes further
leveraging acquisitions, or if Bally's adopted a more aggressive
financial policy than we are incorporating with regard to capital
spending or shareholder returns.
"We could consider raising our Bally's rating once we are more
certain the coronavirus has been contained, Bally's has effectively
integrated pending acquisitions, and its operating performance has
recovered in a manner that supports leverage improving below 5.5x.
Still, we believe an upgrade is unlikely over the next few quarters
given rising COVID-19 cases across the U.S., which may lead to
additional containment measures that may impair customer visitation
and spending at its casinos, and the number of pending acquisitions
the company will need to integrate next year."
BAY CLUB OF NAPLES: Taps Becker & Poliakoff as Special Counsel
--------------------------------------------------------------
The Bay Club of Naples, LLC, and its affiliates received approval
from an amended application they filed to the U.S. Bankruptcy Court
for the Middle District of Florida to employ Becker & Poliakoff,
P.A. as its special counsel.
Prior to these Chapter 11 cases, the Debtors were defendants in a
pending foreclosure suit (the "State Court Litigation") filed by
their secured lender, Acres Capital, LLC ("Acres").
Very recently, the Debtors and Acres entered into a mediated
settlement that will resolve the Appeal, the Adversary Proceeding
and Acres' objection to the Debtors' confirmation through a largely
consensual plan.
This mediated resolution is currently being reduced to a written
term sheet, and the Debtors anticipate that extensive documentation
of the parties' resolution will be required prior to or in
connection with confirmation.
Accordingly, the Debtors seek to expand the scope of Becker's
retention to include transaction counsel for the Debtors to draft
Transaction Plan Documents.
The proposed services are to be billed at standard hourly rates of
the respective attorneys and paralegal professionals of Becker,
which rates range from $650 for partners, $400 for associates and
$175 for paralegal professionals.
Jon Polenberg, Esq., a partner of the law firm Becker & Poliakoff,
P.A., 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:
Jon Polenberg, Esq.
BECKER & POLIAKOFF, P.A.
1 East Broward Blvd., Suite 1800
Ft. Lauderdale, FL 33301
Telephone: (954) 364-6037
Facsimile: (954) 985-4176
E-mail: jpolenberg@beckerlawyers.com
About The Bay Club of Naples
The Bay Club of Naples, LLC is a Florida limited liability company
based in Naples engaged in the business of real estate
development.
The Bay Club of Naples, LLC and its debtor affiliate, The Bay Club
of Naples II, LLC, concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Lead Case No. 20-05008) on June 29, 2020. The petitions were signed
by Harry M. Zea, manager. At the time of the filing, each Debtor
disclosed estimated assets of $10 million to $50 million and
estimated liabilities of the same range.
The Debtors tapped Underwood Murray, P.A. as counsel and Becker &
Poliakoff, P.A., led by Jon Polenberg, as their special counsel.
BEN F. BLANTON: Hires McCarthy Leonard as Special Counsel
---------------------------------------------------------
Ben F. Blanton Construction, Inc., seeks authority from the U.S.
Bankruptcy Court for the Eastern District of Missouri to employ
McCarthy Leonard & Kaemmerer, L.C., as special counsel to the
Debtor.
The Debtor continues to bid for new contracts, negotiate disputes
on existing contracts, pursue claims against insurance carriers,
and enforce its rights as to contracts and claims against owners
and subcontractors by filing mechanics liens and pursuing
arbitration proceedings.
In addition, the Debtor remains a party to an insurance coverage
action in the adversary proceeding Ben F. Blanton Construction,
Inc. v. Traveler's Property Casualty Company of America, Cause No.
4:20-cv-01141 (the "Coverage Action"), which had been pending in
St. Louis County Circuit Court for several years prior to the
commencement of this case and the Firm is intimately familiar with
the facts and issues in the Coverage Action.
Further, the Debtor has ongoing disputes with respect to a contract
executed on or about June 25, 2015, with BCC Partners, LLC under
the terms of which Debtor agreed to build certain multifamily
residential housing, as well as the Debtor's indemnity under a
payment and performance bond was issued for the VUE Project by
Fidelity and Deposit Company of Maryland.
The Debtor wishes to retain the Firm, as special counsel to advise
the Debtor and provide the Debtor legal services in connection with
the drafting of new contracts, negotiations with respect to
existing contracts, the filing of mechanics liens to enforce
Debtor's rights under pending contracts, to pursue the Coverage
Action and assist it with meeting its non-financial obligations
under the payment and performance bond was issued for the VUE
Project by Fidelity and Deposit Company of Maryland.
McCarthy Leonard will be paid at the hourly rate of $250 to $300.
McCarthy Leonard will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Matthew D. Menghini, partner of McCarthy Leonard & Kaemmerer, L.C.,
assured the Court that the firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code and does
not represent any interest adverse to the Debtor and its estates.
McCarthy Leonard can be reached at:
Matthew D. Menghini, Esq.
MCCARTHY LEONARD & KAEMMERER, L.C.
825 Maryville Centre Drive, Suite 300
Town and Country, MO 63017
Tel: (314) 392-5200
About Ben F. Blanton Construction
Ben F. Blanton Construction, Inc., is a construction management,
design/build, and general contracting company with headquarters in
the greater metropolitan St. Louis, Mo. area. Visit
https://www.blantonconstruction.com for more information.
Ben F. Blanton Construction filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mo. Case No.
20-43555) on July 16, 2020. The petition was signed by Jeffrey M.
Blanton, president. At the time of filing, the Debtor estimated $10
million to $50 million in both assets and liabilities.
The Debtor tapped Wendi Alper-Pressman, Esq., at Lathrop GPM LLP,
as counsel and Mueller Prost, PC as accountant.
BETHEL CHURCH: Case Summary & 28 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: The Bethel Church of Miami, Inc.
Bethel Missionary Baptist Church of Richmond Heights
Bethel Full Gospel Baptist Church Inc.
Bethel Missionary Baptist Church Inc
Bethel Baptist Church
The Bethel Church of Miami
Bethel Baptist Church
14440 Lincoln Blvd.
Miami, FL 33176
Case No.: 20-23302
Business Description: The Bethel Church of Miami, Inc. is a tax-
exempt religious organization that operates
a Baptist church.
Chapter 11 Petition Date: December 6, 2020
Court: United States Bankruptcy Court
Southern District of Florida
Debtor's Counsel: Monique D. Hayes, Esq.
GOLDSTEIN & MCCLINTOCK LLLP
777 Brickell Ave., Suite 500
Miami, FL 33131
Tel: (305) 216-6366
Email: moniqueh@goldmclaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Carlos Malone, president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 28 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/OHIACCQ/The_Bethel_Church_of_Miami_Inc__flsbke-20-23302__0001.0.pdf?mcid=tGE4TAMA
BLESSINGS INC: Hires Lang & Klain as Special Counsel
----------------------------------------------------
Blessings, Inc. filed an amended application seeking approval from
the United States Bankruptcy Court for the District of Arizona of
Arizona to hire the law firm of Lang & Klain, P.C. as its special
counsel.
Lang & Klain will be assisting the Debtor in responding to
discovery requests in the Chapter 11 case and any potential
adversary proceedings arising out of the case, and, if necessary,
assisting in litigating any future issues with regard to creditor
Ocean Garden Products, Inc. (OGP), including but not limited to
filing a potential objection to any claim OGP may assert against
Blessings in this case.
The Debtor seeks to employ Lang & Klain on an hourly basis, at
attorney hourly rates ranging from $450 to $200 per hour.
Lang & Klain does not hold or represent any interest adverse to the
estate and is a disinterested person within the meaning of 11
U.S.C. Sec. 101(14), according to court filings.
The counsel can be reached through:
Zachary Rosenberg, Esq.
William Klain, Esq.
Lang & Klain, P.C.
6730 N Scottsdale Rd #101
Scottsdale, AZ 85253
Phone: (480) 534-4900
About Blessings, Inc.
Blessings, Inc. filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-10797) on
Sep. 24, 2020. The petition was signed by David Mayorquin,
president and CEO. At the time of filing, the Debtor estimated
$3,889,514 in assets and $6,770,256 in liabilities. John C. Smith,
Esq. at SMITH & SMITH PLLC represents the Debtor as counsel.
BLOUNT INTERNATIONAL: Moody's Affirms B1 CFR, Outlook Stable
------------------------------------------------------------
Moody's Investors Service affirmed Blount International, Inc.'s B1
Corporate Family Rating (CFR) and B1-PD Probability of Default
Rating (PDR). Moody's also affirmed the B1 ratings on Blount's $75
million 1st lien senior secured revolving credit facility expiring
2022 and $627 million 1st lien senior secured term loan due 2023.
The outlook is stable.
The affirmation of the B1 CFR reflects Moody's expectation that
credit metrics will benefit from a recovery in global economies and
recently completed cost-cutting initiatives. Additionally, Blount's
primary end market, forestry, is expected to recover from
coronavirus pandemic shutdowns and continued growth in new housing
starts. Moody's expects debt to LTM EBITDA to decline to 5.2x and
free cash flow to debt to be 5.5% by the end of 2021. Additionally,
Blount is expected to have full availability under its revolver and
$76 million in cash as of September 30, 2020 pro forma for the $60
million dividend paid from cash in October 2020.
The stable outlook reflects Moody's expectation of a gradual
reduction in leverage levels through a combination of debt
amortization and EBITDA growth while the company maintains a solid
margin profile.
Affirmations:
Issuer: Blount International, Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Gtd. Senior Secured 1st Lien Revolving Credit Facility, Affirmed B1
(LGD3)
Gtd. Senior Secured 1st Lien Term Loan, Affirmed B1 (LGD3)
Outlook Actions:
Issuer: Blount International, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Weaknesses in Blount's credit profile include the company's high
debt leverage, need for continued investment into R&D to stay ahead
of competition and low growth in the company's primary end markets
(forestry and agriculture). Additionally, the forestry end market
can be cyclical given the impact of the housing market on demand
for lumber. Blount will need to continue to make in investments in
R&D and develop innovative new products to maintain its competitive
advantage over less sophisticated competitors.
Strengths in the company's credit profile include consistent free
cash flow, recurring revenue streams, dominant global market share
along with strong brand recognition, and wide array of products.
Blount generates a high percentage of revenue from consumable
products such as chain saw chains and lawnmower blades which wear
out and must be replaced frequently providing a recurring revenue
stream. The company has a reputation for high quality, highly
engineered products and continues to invest in new product
development to maintain its competitive position in the industry.
Governance risks are heightened given Blount's private equity
ownership. This carries the risk of an aggressive financial policy,
which could include debt-funded acquisitions or additional
dividends. Blount has executed three shareholder distributions
totaling $230 million since 2017 and has maintained high leverage
between 5.0-5.7x. Moody's notes the potential for future
debt-funded shareholder distributions as a key risk.
Moody's expects Blount to maintain a good liquidity profile over
the next 12 to 18 months. This is supported by Moody's expectation
of good free cash flow, a significant cash balance and full
availability under the company's revolving credit facility. The
credit agreement includes a springing financial maintenance
covenant that requires the company's total net leverage ratio to
remain below 6.25x if at least $22.5 million is drawn on the
revolver. Moody's projects that Blount will maintain compliance
with this covenant over the next 12 to 18 months. Foreign assets
are excluded from the collateral pledged leaving some alternate
source of liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be downgraded if there is any deterioration in
credit metrics, liquidity or the competitive environment.
Additionally, acquisitions that alter the company's business and
operating profile, significant debt financed acquisitions or
shareholder distributions may also prompt a downgrade.
Specifically, the ratings could be downgraded if:
-- Adjusted debt to EBITDA is above 5.5x
-- Adjusted EBITA coverage of interest is below 3.0x
-- Free cash flow to debt is below 5.5%
The rating could be upgraded if Blount sustainably improves credit
metrics within the context of a stable competitive environment. The
company will also need to maintain good liquidity, adopt more
conservative financial policies and continue to make investments in
R&D to maintain its competitive position. Specifically, the ratings
could be upgraded if:
-- Adjusted debt to LTM EBITDA is below 4.5x
-- Adjusted EBITA coverage of interest is above 4.5x
-- Free cash flow to debt is above 6.5%
Blount International, Inc. is headquartered in Portland, Oregon and
is a manufacturer of equipment and replacement parts for the
forestry and agriculture industries. Revenues for the LTM period
ended Sept. 30, 2020 were $717 million. As a private company,
Blount's financial results are not publicly available.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
BRETHREN VILLAGE: Fitch Affirms BB+ Rating on Revenue Bonds
-----------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' rating on the following bonds
issued by Lancaster County Hospital Authority (PA) on behalf of
Brethren Village (BV):
-- $93.6 million revenue bonds, series 2017;
-- $9.3 million revenue bonds, series 2015.
The Rating Outlook is Stable.
SECURITY
The bonds are secured by a mortgage on BV's main campus, a security
interest in pledged assets (including gross receipts) and debt
service reserve funds.
KEY RATING DRIVERS
STABLE DEMAND PROFILE: BV's favorable service area, long operating
history and expansive service offerings have translated into strong
demand across all service lines. Over the last three fiscal years,
BV has averaged a strong 95% occupancy in both its independent
living units (ILUs) and assisted living units (ALUs). In FY18 (YE
June 30), BV successfully completed and filled a 72-unit IL
expansion project, which continues to demonstrate solid demand
indicators. While the census in BV's skilled nursing facility (SNF)
has historically averaged around 95%, it has deteriorated in FY20
due to nearby hospitals' deferral of elective procedures and
management's decision to reserve SNF beds for possible coronavirus
quarantining. As a result, census dipped to an average of 70% as of
June 2020, but has somewhat improved to 78% as of September 2020.
Despite softer SNF occupancy levels, BV maintains a robust ILU
waitlist of over 588 people.
HIGH DEBT BURDEN: BV's debt burden remains elevated given capital
plans in recent years funded with bond proceeds. Maximum annual
debt service (MADS) of $8.7 million equates to a high 17.4% of
total fiscal 2020 revenues which compares unfavorably to Fitch's
'below investment grade' ('BIG') category median of 16.4%. However,
Fitch believes the debt burden should gradually decrease as newer
projects continue to be cash flow accretive.
ADEQUATE DEBT SERVICE COVERAGE: Although BV has some elevated
leverage, it has historically maintained a sufficient debt service
coverage ratio, most recently posting a 1.7x MADS coverage in FY20.
Fitch will continue to monitor this metric going forward as
management reports that it has 49 refundable entrance fee contracts
that were sold to help finance its 2009 campus expansion project.
Management expects these refundable contracts to come due in coming
years as these ILUs turn over because of normal attrition. These
particular contracts equate to about a $7.8 million refund
liability that could cause some fluctuations in cash flow and
temporary dips in debt service coverage over the next several
years. Given BV's constant monitoring of the issue and strong
demand indicators for its services, Fitch does not believe the
liability will significantly impair BV's ability to cover MADS. In
addition, because BV's revenue only MADS coverage has averaged 0.9x
over the last three fiscal years (which is favorable to the BIG
median of 0.6x), Fitch believes consistently solid core operations
will mitigate potential fluctuations in entrance fee cash flows.
However, any unexpected large call of refunds in a given period
could lead to some brief covenant violations, where coverage falls
below the required 1.2x.
CONSISTENT OPERATING PERFORMANCE; MINIMAL PANDEMIC DISRUPTION: BV's
strong demand across all service lines and enhanced pricing
flexibility has supported sufficient profitability levels for its
rating level in recent years. Over the last three fiscal years, BV
has averaged a 98.0% operating ratio, 10.7% net operating margin
(NOM), and 20.0% NOM-adjusted (NOMA) which all compare favorably to
Fitch's 'BIG' medians of 101.2%, 4.8% and 17.7%, respectively. Even
though the pandemic caused increased labor and supply expenses, as
well as softer SNF census levels, BV was only about $100,000
underbudget in FY20. Challenges with SNF occupancy were the main
drivers of unexpected operating losses, where revenues were
underbudget by about $1.7 million. These losses were mitigated by
ILU operations outperforming budgeted expectations by about
$970,000 and the recognition of $878,000 in Coronavirus Aid,
Relief, and Economic Security (Cares) Act provider relief funds.
Management further notes that it still has another approximately
$1.1 million in Cares Act payments it will likely recognize in
FY21, further supporting operations.
SUFFICIENT, GROWING LIQUIDITY: BV has demonstrated solid growth in
unrestricted cash and investments since FY19, adequately
positioning its balance sheet at the current rating level. As of
the three-month interim period (ending Sept. 30, 2020), BV posted
$40.9 million in unrestricted liquidity, which represents just over
a 20% increase since FYE 2019, and translates to 382 days cash on
hand, 34.2% cash-to-debt, and 4.7x cushion ratio. All three metrics
are favorable to Fitch's 'BIG' medians. Fitch largely attributes
this improvement to the successful completion of its recent
expansion project that has led to both the elimination of
project-related expenses and the realization of new cash flows.
ASYMMETRIC RISK CONSIDERATIONS: There are no asymmetric risk
factors affecting the rating determination.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Improved, sustained operating performance that results in an
operating ratio of 95%-97% and NOMA of 23%-25%;
-- While Fitch believes this would take several years given BV's
large debt burden, reaching 65%-70% cash-to-debt could put upward
pressure on the rating.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- A significant decline in unrestricted liquidity due to
underperforming operations, resulting in days cash on hand falling
below 250 and cash-to-debt dipping below 25%;
-- Unexpected spikes in entrance fee refunds for refundable 2009
contracts coupled with lower-than-expected sales to refill said
vacated units could result in prolonged debt service coverage
violations and thus negative rating pressure.
CREDIT PROFILE
BV operates a life plan community (LPC) with 577 ILUs, 141 ALUs,
120 SNF beds, and a 20-bed short-stay rehabilitation center. It is
located on a 96-acre campus in Manheim Township, PA, about four
miles north of the city of Lancaster. BV currently offers 90%
refundable and nonrefundable entrance fee residency agreements,
with three types of contracts for its ILU residents:
fee-for-service, modified lifecare and lifecare. A majority of ILU
residents have nonrefundable entrance fee agreements and about 86%
are on fee-for-service contracts.
In addition to BV, Rehabilitation Center at Brethren Village, a
limited liability company owned by BV that operates the short-stay
rehabilitation center, is a member of the obligated group (OG).
Three other BV affiliates that operate affordable housing complexes
and own real estate are not OG members. The OG represents about 97%
of total system assets and 98% of total system revenues in fiscal
2020 (June 30 year-end). Fitch began using OG financial statements
in fiscal 2016 as a basis for its analysis and metrics.
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.
BRIGGS & STRATTON: Seeks to Hire Special Counsels
-------------------------------------------------
Briggs & Stratton Corporation, and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Eastern District
of Missouri to employ Perkins Coie LLP; Kohner, Mann & Kailas,
S.C.; and Polsinelli PC, as special counsels to the Debtors.
The Firms assist the Debtors in the ongoing class-action antitrust
cases filed in 2006 and pending in the Western District of
Wisconsin, captioned as Arandell Corporation, et al., v. XCEL
Energy, Inc., et al. (Case No. 07-cv-00076), consolidated with
NewPage Wisconsin System Inc., v. CMS Energy Resource Management
Company, et al. (Case No. 09-cv-00240).
The Firms will be paid a contingency fee of 35% of any recovery,
whether by settlement or verdict, after expenses incurred by the
Firms are reimbursed.
To the best of the Debtors' knowledge the firms are a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code and does not represent any interest adverse to
the Debtors and their/its estates.
The Firms can be reached at:
Christopher Hanewics, Esq.
PERKINS COIE LLP
33 East Main Street, Suite 201
Madison, WI 53703
Tel: (608) 663-7468
Fax: (608) 283-4468
E-mail: chanewicz@perkinscoie.com
- and -
Robert L. Gegios, Esq.
KOHNER MANN & KAILAS, S.C.
4560 N. Port Washington Road
Milwaukee, WI 53212
Tel: (414) 962-5110
E-mail: rgegios@kmksc.com
- and -
Russell S. Jones, Jr.
POLSINELLI PC
900 West 48 th Place, Suite 900
Kansas City, MO 64157
Tel: (816) 374-0532
E-mail: rjones@polsinelli.com
About Briggs & Stratton Corporation
Briggs & Stratton Corporation -- https://www.basco.com -- is a
producer of gasoline engines for outdoor power equipment and a
designer, manufacturer, and marketer of power generation, pressure
washer, lawn and garden, turf care, and job site products. The
Company's products are marketed and serviced in more than 100
countries on six continents through 40,000 authorized dealers and
service organizations.
Briggs & Stratton Corporation and four affiliates concurrently
filed voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Mo. Lead Case No. 20-43597) on July
20, 2020. The petitions were signed by Mark A. Schwertfeger, senior
vice president, and chief financial officer. At the time of the
filing, Briggs & Stratton Corporation disclosed total assets of
$1,589,398,000 and total liabilities of $1,350,058,000 as of March
29, 2020.
Judge Barry S. Schermer oversees the cases. The Debtors tapped
Weil, Gotshal & Manges LLP as bankruptcy counsel; Carmody MacDonald
P.C. as local counsel; Foley & Lardner LLP as corporate counsel;
Houlihan Lokey Inc. as investment banker; Ernst & Young, LLP as
restructuring and tax advisor; Deloitte LLP as auditor and tax
consultant; and Kurtzman Carson Consultants, LLC as claims and
noticing agent.
The U.S. Trustee appointed a committee to represent unsecured
creditors in Debtors' Chapter 11 cases.
CALIBRE ACADEMY: Fitch Affirms B- Rating on $14.9MM Revenue Bonds
-----------------------------------------------------------------
Fitch Ratings has affirmed its 'B-' rating on the following revenue
refunding bonds issued by the Industrial Development Authority of
Pima County, AZ on behalf of Calibre Academy, AZ (fka Carden
Traditional Schools):
-- $14,980,000 education revenue refunding bonds (Carden
Traditional Schools Project), series 2012.
In addition, Fitch has affirmed Calibre Academy's 'B-' Issuer
Default Rating (IDR), reflecting the credit quality of the combined
entity consisting of Calibre Academy and E-Institute Charter
School, Inc. (EICS).
The Rating Outlook on the IDR and revenue bond rating is Negative.
SECURITY
The bonds are an absolute and unconditional obligation of the
borrower (Calibre) and the guarantor, EICS, payable from all
legally available revenues, and are further secured by a first lien
on facilities owned by the borrower and a cash-funded debt service
reserve sized to transaction maximum annual debt service (TMADS).
There is an intercept mechanism in place directing monthly state
funding disbursements to the trustee to cover debt service on the
bonds before funds are released to the school for operations.
Fitch's rating assumptions do not consider the intercept mechanism
to add to the bonds' credit quality.
Fitch views Calibre and EICS (the charter schools) as a combined
entity for the purposes of its rating analysis, given the security
structure and related party transactions between Calibre and EICS.
Fitch has combined the financial statements of Calibre and EICS in
its rating analysis.
ANALYTICAL CONCLUSION
The 'B-' IDR and revenue bond rating reflects the charter schools'
continued enrollment declines and expectations for financial
performance to remain pressured in the near term, with very slim to
negative operating margins. The 'b' financial profile assessment
considers weaker revenue defensibility and midrange operating risk
assessments.
The Negative Rating Outlook reflects concerns that further declines
in average daily membership (ADM) counts at both Calibre and EICS
will be greater than the declines Fitch expects, putting pressure
on cashflow available for debt service (CFADS) and leverage.
Furthermore, Fitch anticipates the schools will be challenged to
meet the debt service coverage ratio (DSCR) financial covenant
(pledged revenues at least equal to 1.0x debt service). The DSCRs
in fiscal years 2018 and 2019 were 1.04x and 1.03x, respectively,
compared to 1.87x in fiscal 2017. The school has not yet reported
audited fiscal 2020 results. A DSCR below 1.0x is considered an
event of default under the indenture, which could result in the
acceleration of principal.
KEY RATING DRIVERS
Revenue Defensibility -- Weaker: The weaker revenue defensibility
assessment reflects the volatile and declining enrollment trend at
both Calibre and EICS.
Operating Risk -- Midrange: Fitch believes the charter schools have
midrange flexibility to vary costs with enrollment shifts and
expects, on a consolidated basis, fixed carrying costs for TMADS
and operating lease charges to remain high.
Financial Profile -- 'b': On a combined basis, Fitch expects the
charter schools' leverage metrics, including both debt and
capitalized operating leases, to increase gradually.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Stabilization of enrollment at all schools.
-- Sustained improvement in operating margins, DSCRs and CFADS.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A decline in enrollment and/or per-pupil funding that is more
significant than what Fitch currently anticipates in its base case
scenario, leading to lower annual free cashflow and coverage.
-- Failure to manage budgetary pressures associated with
enrollment declines.
-- A violation of the DSCR or combined days' cash-on-hand
financial covenants without obtaining a waiver from bondholders
would trigger accelerated redemption provisions, likely leading to
a bond default.
CREDIT PROFILE
Calibre Academy serves grades K-8 in Surprise, AZ, about 20 miles
northwest of Phoenix. EICS, the financial guarantor for Calibre's
rated debt, serves grades 9-12 and maintains six physical campuses
in the greater Phoenix metro area, along with a virtual campus.
The schools maintain separate financial statements; however, their
governance structures are intertwined, since a single education
management organization (EMO), Learning Matters Educational Group,
Inc. (LMEG), manages both schools' financial operations and charter
agreements. Therefore, Fitch analyzes the schools' key rating
drivers on a consolidated basis.
Both Calibre and EICS were initially authorized by the Arizona
State Board for Charter Schools (ASBCS, or the authorizer) with
15-year terms that expired in 2015. Both charters have since been
renewed for additional 20-year terms ending in 2035.
CURRENT DEVELOPMENTS
Sectorwide Coronavirus Implications
The ongoing coronavirus pandemic and related government containment
measures worldwide have created an uncertain global environment for
U.S. state and local governments and related entities. Fitch's
ratings are forward-looking in nature; as such, Fitch will monitor
the severity and duration of the budgetary impact on state and
local governments and incorporate revised expectations for future
performance and assessment of key risks.
While the initial phase of economic recovery has been faster than
expected, GDP in the U.S. is projected to remain below its 4Q19
level until at least 4Q21. In its baseline scenario, Fitch assumes
continued strong GDP growth in 3Q20 followed by a slower recovery
trajectory from 4Q20 onward amid persisting social distancing
behavior and restrictions, high unemployment and a further pullback
in private-sector investment. Additional details, including key
assumptions and implications of the baseline scenario and a
downside scenario, are described in the report entitled.
Calibre Academy and E-Institute Charter Schools Coronavirus Update
On March 11, 2020, Arizona's governor declared a state of emergency
due to the then-emerging pandemic. Accompanying legislation
continued funding to schools at the same level for the 2019-2020
school year. After the initial stay-at-home order, a subsequent
executive order delayed the start of in-person K-12 education until
Aug. 17, 2020. On Aug. 6, 2020, the Arizona Department of Health
Services released benchmarks for achieving phased, safe in-person
re-openings for schools.
Calibre Academy transitioned to a fully remote learning
environment, utilizing management learning systems to assist in
delivering instructional content to students and providing printed
workbooks to help facilitate specific instruction when necessary.
Meanwhile, E-Institute Charter Schools (EICS) was already an
online-based system and did not require any material changes during
the statewide closures.
Both schools have yet to release audited financial results for
fiscal 2020; however, management anticipates that fiscal 2020 ended
with positive net income (on a pre-depreciation basis). Both
schools saw continued enrollment declines in fiscal 2020, leading
to revenues underperforming budget at both the individual school
level and on a consolidated basis. On the expenditure side, Calibre
Academy ended the year slightly ahead of budget, mainly due to the
additional costs associated with the statewide shutdown and
transition to a remote learning environment. However, E-Institute
ended fiscal 2020 slightly below budgeted expenditures, as they did
not need to make substantial investments or undertake additional
costs that a traditional brick-and-mortar charter school may
require. To help offset the additional costs and manage through the
added enrollment volatility related to the pandemic, the schools
received from the Elementary and Secondary School Emergency Relief
(ESSER) Education Stabilization Fund approximately $250,000 on a
combined basis. The schools also received approximately $840,000 in
a Paycheck Protection Program loan, which the schools expect to be
forgiven. In addition, Arizona's governor established an Enrollment
Stabilization Grant funded through the Coronavirus Aid, Relief and
Economic Security (CARES) Act, designed to offset the loss of state
formula funding for enrollment declines, as well as costs
associated with distance learning and other pandemic-related
expenses. Both Calibre and EICS were recently approved for funding
through the Enrollment Stabilization Grant program, and they
anticipate receiving approximately $316,000 in funding via the
program.
Management reports that, on a combined basis, the schools had
approximately $2.5 million in unrestricted cash available
(approximately 91 days' cash on hand) as of Nov. 30, 2020 and do
not anticipate any near-term liquidity issues.
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.
CANO HEALTH: Moody's Assigns B3 CFR, Outlook Positive
-----------------------------------------------------
Moody's Investors Service assigned a B3 Corporate Family Rating
(CFR) and B3-PD Probability of Default Rating to Cano Health, LLC.
At the same time, Moody's assigned B3 ratings to the company's
senior secured first lien credit facilities, comprised of a $30
million revolving credit facility, $480 million term loan, and $175
million delayed draw term loan. The rating outlook is positive.
Proceeds from the credit facilities will initially be used to repay
existing debt, fund a $100 million shareholder distribution, pay
related fees and expenses and for working capital and general
corporate purposes. The delayed draw term loan will primarily be
used to fund acquisitions or deferred acquisition consideration.
The B3 CFR reflects Moody's expectation that Cano will operate with
high financial leverage and aggressive financial policies. Pro
forma for the debt financing, debt to EBITDA is around 7 times.
While planned acquisitions will add scale, there is integration
risk and execution risk given the acquisitions will be expanding
Cano's footprint into new geographies.
The positive outlook reflects Moody's view that Cano will
experience rapid growth and reduce its high geographic and customer
concentration risk over the next 12-18 months. Further, the
positive rating outlook reflects Cano Health's pending business
combination with special purpose acquisition company (SPAC) Jaws
Acquisition Corp., which the company expects will close in late Q1
2021/early Q2 2021. If completed in its currently contemplated
form, this transaction would facilitate significant deleveraging
and add a minimum of $300 million of cash to the balance sheet,
that would be a credit positive. That said, Cano and the SPAC's
owners have not publicly divulged a plan for managing Cano's
financial leverage and are likely to pursue aggressive growth
through acquisitions and possibly making future shareholder
distributions -- which could result in the enterprise re-leveraging
itself.
Ratings Assigned:
Cano Health, LLC
Corporate Family Rating at B3
Probability of Default Rating at B3-PD
Senior Secured 1st Lien Revolving Credit Facility at B3 (LGD3)
Senior Secured 1st Lien Term Loan at B3 (LGD3)
Senior Secured 1st Lien Delayed Draw Term Loan at B3 (LGD3)
Outlook Actions:
Issuer: Cano Health, LLC
Outlook, Assigned Positive
RATINGS RATIONALE
The B3 CFR is constrained by Cano's high financial leverage, with
pro forma adjusted debt to EBITDA of around 6.3 times, moderate
scale, and weak free cash flow. The CFR is also constrained by
significant geographic concentration, given that a significant
majority of its business is generated in Florida. Further, Cano's
high reliance on Humana for more than half of its Medicare
Advantage members reflects material customer concentration risk.
Moody's expects these exposures to remain high over the next 12-18
months, but to moderate over time as Cano enters new states and
expands its relationships with other Medicare Advantage plan
providers. An inherent challenge within Cano's business model is
that it requires the company to aggressively manage the cost of
patient care and other expenses, given that it earns revenues on a
capitated basis from Medicare Advantage plan providers. The
company's ambitious plans for growth through organic and
acquisitive means will give rise to a significant amount of
execution and integration risk. The rating agency anticipates the
company to operate with aggressive financial policies over the next
12-18 months.
The B3 CFR is supported by the company's rapid pace of organic
growth and its focus on treating patients with Medicare Advantage
health insurance plans in a cost-effective manner. Moody's expects
enrollment of retirees in Medicare Advantage plans to continue
outstripping that of Medicare fee-for-service plans by a wide
margin. This represents a significant opportunity for good
performing, value-based providers that can offer low costs to
payers.
The positive outlook reflects Moody's view that Cano will gain
greater scale and reduce its high geographic and customer
concentration risk over the next 12-18 months. It also reflects the
possibility that the company will operate with materially lower
financial leverage post-SPAC transaction closing.
Moody's anticipates that Cano will maintain adequate liquidity,
supported by an undrawn $30 million committed revolving credit
facility and about $10 million of cash. Successful closing of the
SPAC transaction would add a minimum of $300 million of cash to the
balance sheet. Moody's expects that Cano will continue to be
acquisitive, and as a result will be modestly free cash flow
negative in 2021. Cano expects to have a maximum first lien net
leverage covenant with step-downs over time, but Moody's expects
the company to maintain an adequate cushion.
Moody's considers Cano to face social risks such as the rising
concerns around the access and affordability of healthcare
services. However, Moody's does not consider Cano to face the same
level of social risk as many other healthcare providers, like
hospitals. Given its high percentage of revenue generated from
Medicare Advantage, Cano is exposed to regulatory changes and state
budget challenges. From a governance perspective, Moody's expects
Cano's financial policies to remain aggressive due to its
acquisition led growth strategy. The contemplated transaction is
particularly aggressive as Cano is issuing debt to in part fund a
$100 million dividend.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Cano's operating performance
deteriorates, or if it experiences material integration related
disruptions. Additionally, the ratings could be downgraded if
Moody's expects debt/EBITDA to be sustained above 7.0 times or the
company's liquidity erodes. Further, debt-funded shareholder
returns could also result in a downgrade.
The ratings could be upgraded if Cano achieves greater diversity by
state and customer, and improves its profitability and cash flow.
Cano will also need to establish a longer track record of
effectively managing its aggressive acquisition-led growth strategy
before Moody's would consider a higher rating. An upgrade would
also be supported by the company adopting more conservative
financial policies and maintaining debt/EBITDA below 5.5 times.
Cano management expects the first lien term loan and first lien
delayed draw term loan to have no financial maintenance covenants
while, prior to the closing of the SPAC transaction, the revolving
credit facility will contain a maximum net first lien leverage
ratio financial covenant of 7.5 times with step-downs. After the
SPAC transaction closes, the revolving credit facility will contain
a maximum net first lien leverage ratio financial covenant that
will be springing and tested when the revolver is more than 35%
drawn. In addition, prior to the closing of the SPAC transaction,
the first lien credit facilities contain incremental facility
capacity up to $50 million subject to pro forma net first lien
leverage ratio under 6.1x (if pari passu secured); or after the
SPAC transaction closes, the greater of $90 million or 100%
consolidated EBITDA, plus an additional amount subject to a 2.75x
net first lien leverage ratio (if pari passu secured). There are no
"blocker" provisions providing additional restrictions on top of
the covenant carve-outs to limit collateral leakage through
transfers of assets to unrestricted subsidiaries. Only wholly-owned
subsidiaries must provide guarantees and partial dividends or
transfers of ownership interests could jeopardize guarantees
subject to limitations on guarantee releases that restrict releases
unless the released subsidiary becomes non-wholly-owned pursuant to
an arm's length sale to a bona fide third-party purchaser. There
are no leverage-based step-downs in the asset sale prepayment
requirement.
Through its network of approximately 560 physicians, Cano Health's
clinics provide primary care health services to more than 100,000
members in Florida, Texas, California, and Nevada, with a focus on
Medicare Advantage beneficiaries. Cano's LTM revenue as of June 30,
2020 was approximately $513 million. Cano is currently indirectly
majority-owned by ITC Rumba, LLC (InTandem Capital Partners).
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CCI BUYER: Moody's Assigns B2 CFR, Outlook Stable
-------------------------------------------------
Moody's Investors Service assigned a first-time B2 Corporate Family
Rating and B2-PD Probability of Default Rating to CCI Buyer, Inc.
Moody's also assigned B1 ratings to the company's proposed
first-lien credit facilities, consisting of a $100 million revolver
(undrawn at close) due 2025 and a $1,100 million term loan due
2027. Moody's also assigned a Caa1 rating to the $300 million
second-lien term loan due 2028. Proceeds from the new term loans in
addition to a common equity contribution and $200 million of PIK
preferred equity will fund the company's leveraged buyout by the
private equity firm GTCR. The rating outlook is stable.
The ratings are contingent upon Moody's review of final
documentation and no material change in the terms and conditions of
the debt as provided to Moody's.
Assignments:
Issuer: CCI Buyer, Inc.
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B1
(LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Assigned Caa1 (LGD5)
Outlook Actions:
Issuer: CCI Buyer, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
Consumer Cellular's B2 CFR reflects its high Debt/EBITDA, which
Moody's estimates to be around 7.3x pro forma for the debt issuance
and including Moody's standard adjustments for LTM September 30,
2020., Moody's projects that the company will be able to delever to
Debt/EBITDA in the 5-6x range (Moody's adjusted) over the next
12-18 months supported mainly by EBITDA growth, even as growth
moderates to high-single digit range. The ratings are also
constrained by its niche position in an intensively competitive
market and reliance on two key channel partners for the majority of
its revenues.
Consumer Cellular has demonstrated robust annual revenue and
subscriber growth of roughly 19% and 15%, respectively, since 2017.
However, competition is intensifying among other resellers of
wireless services pursuant to Mobile Virtual Network Operator, or
MVNO, agreements, and Moody's expects Consumer Cellular's growth
will moderate to high single digits percentage rate over the next
12-18 months. A number of larger scale cable companies have been
aggressively growing and marketing their wireless plans with
aggressive pricing. The company's marketing spend has grown
strongly over the last few years and there is the risk that further
increases in marketing spend will be required to support growth
amid intensifying competition which could pressure margins. There
is some execution risk in the company's ability to adapt to the
changing competitive landscape under new management and with a high
debt burden. The company's historical monthly churn rate of
1.5%-1.7% is lower than that of post-paid operators but high
relative to other wireless carriers and there is a risk that churn
will increase as some subscribers migrate to other value-oriented
MVNOs.
Consumer Cellular will continue to benefit from its partnership
with AARP (American Association of Retired Persons) in reaching its
customer demographic and with Target Corporation (Target, A2
stable) for retail distribution of its phones and services;
however, its dependence on such arrangements is meaningful and
introduces risk. Consumer Cellular has strong relationships with
both partners yet the partnerships are not exclusive and would be
disruptive for Consumer Cellular should the partners eventually
decide to discontinue the relationship. The company offers device
financing to its customers and manages it on its own balance sheet,
assuming certain financing risk.
The rating is supported by a highly recurring revenue model, strong
free cash flow generation on growing (though at rates expected to
slow to high-single digit from over 20% in 2018 and 2019) revenue
and attractive EBITA margins in the 15%-17% range (Moody's
adjusted). The company benefits from its MVNO agreements with AT&T
Inc. (Baa2 stable) and T-Mobile USA, Inc. (Ba2 stable) that affords
Consumer Cellular nationwide coverage. There is a risk of the
carrier(s) terminating their relationship with Consumer Cellular,
but Moody's believes the termination of the arrangements has a low
probability over the next 2-3 years as carriers receive a
high-margin revenue stream that requires little to no incremental
cost or operational work on their part.
The company's credit profile is further supported by its high brand
awareness among its target market, reputation for good customer
service that generates customer loyalty and highly variable cost
structure (nearly 90% of costs are variable). As a MVNO, Consumer
Cellular does not own or operate its own wireless network. As such,
it benefits from low capital spending of under 1% of revenue, which
together with good margins, result in meaningful free cash flow,
projected to be around 7%-10% of debt (Moody's adjusted).
Consumer Cellular has very good liquidity, supported by the
company's undrawn revolver, lack of funded debt maturities until
2027, minimal capex requirements and solid free cash flow. Even
after accounting for the increased interest expense related to a
higher debt burden, we expect the company to generate at least $100
million of free cash flow over the next 12 months, which
comfortably meets the its basic cash obligations consisting of $11
million term loan amortization and $4 million capex. In addition,
the company will have an undrawn $100 million revolving credit
facility due 2025 and roughly $20 million of cash on the balance
sheet at close.
The proposed first and second lien term loans are expected to have
no financial maintenance covenants while the proposed revolving
credit facility will contain a springing maximum first lien
leverage ratio of 8.35x that will be tested when the revolver is
more than 35% drawn. The proposed credit agreement is expected to
have an excess cash flow sweep provision of 50% with step downs to
25% and 0% upon achievement of first lien leverage ratio of 5.25x
and 5.00x, respectively.
The stable outlook reflects Moody's expectation that Consumer
Cellular will generate high-single digit percent revenue growth
over the next 12-18 months despite the intensifying competition. It
also incorporates Moody's expectations the company will maintain
good liquidity and delever to under 6x by the end of 2021.
STRUCTURAL CONSIDERATIONS
The instrument ratings reflect the probability of default of the
company, as reflected in the B2-PD Probability of Default Rating,
an average expected family recovery rate of 50% at default given
the mix of first and second lien secured debt in the capital
structure, and the particular instruments' ranking in the capital
structure. The proposed first lien senior secured credit facilities
($1.1 billion term loan due 2027, $100 million revolver due 2025)
are rated B1 and reflect loss absorption in a distress scenario
from the second lien term loan. The rating on the proposed $300
million of second lien term loan is Caa1, reflecting its junior
position in the capital structure.
Following are some of the preliminary credit agreement terms, which
remain subject to market acceptance.
The credit agreement provides covenant flexibility for transactions
that could adversely affect creditors, including incremental
facility capacity of up to the greater of $200 million or 100% of
consolidated EBITDA, plus an additional amount subject to either:
1) a 5.50x pro forma First Lien Leverage Ratio (for pari passu
first lien debt); 2) a 6.85x Senior Secured Leverage Ratio (for
junior priority debt to the first lien), or 3) either 7.25x Total
Leverage Ratio, or a 2.00x Cash Interest Coverage Ratio (for
unsecured debt). There is an inside maturity sublimit allowing this
starter amount to be incurred with an earlier maturity date than
the existing debt obligation. In addition, there are no "blocker"
provisions providing additional restrictions on top of the covenant
carve-outs to limit collateral leakage through transfers of assets
to unrestricted subsidiaries. Subsidiaries are only required to
provide guarantees if wholly-owned, raising the risk that a sale or
disposition of partial equity interests could trigger a guarantee
release. Within the first lien credit agreement, there will be
leverage-based step-downs in the asset sale prepayment requirement.
If the First Lien Leverage Ratio is equal to or less than 5.00:1.00
the requirement steps down to 50% of asset sale proceeds and it
steps down to 0% if the ratio is at or below 4.50:1.00. Less
restrictive thresholds apply to the second lien term loan.
ESG CONSIDERATIONS
Consumer Cellular's corporate governance presents risks through
both the high financial leverage 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 Consumer Cellular's
ability to continue investing in platform modernization that might
otherwise help the company be competitive.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Consumer Cellular is likely to
sustain subscriber and revenue growth at least in the high single
digit while maintaining EBITA margin above 25%. An upgrade will
require that the company maintains leverage below 5x and free cash
flow to debt above 10%, with good liquidity. All metrics are
calculated using Moody's standard accounting adjustments.
Moody's would consider a downgrade if operating performance or
market share is materially weakened as a result of increased
competition or a loss of a wireless carrier partner, leading to
subscriber or revenue declines. Additionally, a more aggressive use
of financial leverage such that adjusted Debt / EBITDA is sustained
above 6x could pressure the rating. A deterioration of liquidity
could also lead to a downgrade.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CCI Buyer, Inc. is a holding company for Consumer Cellular
Incorporated, a nationwide mobile virtual network operator that
provides postpaid wireless services. The company targets users over
50 through its approach to marketing, device offerings, and lower
data usage plans. Pro forma for the pending acquisition, the
company will be majority-owned by private equity firm GTCR. Revenue
for the last twelve months ended Sept. 30, 2020 was about $1.3
billion.
CEDAR HAVEN: Seeks to Hire SSG Advisors as Investment Banker
------------------------------------------------------------
Cedar Haven Acquisition, LLC, seeks approval from the U.S.
Bankruptcy Court for the District of Delaware to hire SSG Advisors,
LLC as its investment banker effective as of Jan. 1, 2021.
Cedar Haven requires SSG Advisors to:
-- prepare an information memorandum describing the Debtor, its
historical performance and services, including existing beds,
payors, contracts, marketing and sales, labor force, management,
and financial projections;
-- assist the Debtor in compiling a data room of any necessary and
appropriate documents related to the Sale;
-- assist the Debtor in developing a list of suitable potential
buyers who will be contacted after approval by the Debtor and
update and review such list with the Debtor on an on-going basis;
-- coordinate the execution of confidentiality agreements for
potential buyers wishing to review the information memorandum;
-- assist the Debtor in coordinating site visits for interested
buyers and work with the management team to develop appropriate
presentations for such visits;
-- solicit competitive offers from potential buyers;
-- advise and assist the Debtor in structuring the Sale and
negotiating the transaction agreements; and
-- otherwise assist the Debtor and its other professionals, as
necessary, through closing on a best-efforts basis.
The Debtor has agreed to pay SSG:
1. Monthly Fees. Monthly fees of $15,000 per month payable
beginning January 1, or Feb. 1, 2021 (subject to the then impact of
Covid related issues at Cedar Haven, and as determined by the
Debtor) and continuing each month thereafter on the first (1st) of
the month during the Engagement Term, as defined in the Engagement
Letter.
2. Sale Fee. Upon the consummation of a Sale to any party,
the Debtor shall pay SSG a fee, payable in cash, in federal funds
via wire transfer or certified check at and as a condition of
closing, equal to:
(a) $150,000 for Total Consideration up to $1,000,000;
plus
(b) 5 percent of Total Consideration between $1,000,000
and $2,000,000; plus
(c) 10 percent of Total Consideration between $2,000,000
and $3,000,000; plus
(d) 15 percent of Total Consideration in excess of
$3,000,000.
SSG Advisors, LLC is a "disinterested person," as such term is
defined in Section 101(14) of the Bankruptcy Code, as modified by
Section 1107(b) of the Bankruptcy Code, and, as required by Section
327(a) and referenced by Section 328(c) of the Bankruptcy Code.
The firm can be reached through:
J. Scott Victor
SSG ADVISORS, LLC
300 Barr Harbor Drive, Suite 420
West Conshohocken, PA 19428
Telephone: (610) 940-1094
Facsimile: (610) 940-4719
E-mail: jsvictor@ssgca.com
About Cedar Haven Acquisition
Cedar Haven Acquisition, LLC -- https://cedarhaven.healthcare/ --
is a licensed skilled nursing facility located in Lebanon, Pa.,
that offers professionally supervised nursing care and related
medical and health services to persons whose needs are such that
they can only be met in a nursing facility on an inpatient basis
because of age, illness, disease, injury, convalescence or physical
or mental infirmity. It was formed in 2014 through the sale of
Cedar Haven Healthcare Center by the Lebanon County Commissioners
to Cedar Haven.
Cedar Haven Acquisition and its affiliates filed Chapter 11
petitions (Bankr. D. Del. Lead Case No. 19-11736) on Aug. 2, 2019.
At the time of the filing, Cedar Haven Acquisition estimated assets
of between $1 million and $10 million and liabilities of between
$10 million and $50 million. The cases are assigned to Judge
Christopher S. Sontchi. William E. Chipman Jr., Esq., at Chipman
Brown Cicero & Cole, LLP, represents the Debtors.
Andrew Vara, acting U.S. trustee for Region 3, appointed a
committee of unsecured creditors on Aug. 20, 2019. The committee
tapped Potter Anderson & Corroon LLP as its legal counsel, and
Ryniker Consultants LLC as its financial advisor.
CF INDUSTRIES: Fitch Affirms BB+ IDR; Alters Outlook to Stable
--------------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Ratings (IDR) of CF
Industries Holdings, Inc. and CF Industries, Inc. at 'BB+'.
Fitch revised the Rating Outlook to Stable from Positive. While
leverage should benefit from the repayment of the remaining $250
million senior secured notes due in 2021, weak nitrogen fertilizer
markets have pressured earnings resulting in LTM Sept. 30, 2020 FFO
net leverage of 3.6x and Fitch expects leverage to remain above
positive sensitivities until 2022-2023. Fitch expects operating
EBITDA of roughly $1.3 billion in 2020 and $1.4 billion in 2021
compared with LTM Sept. 30, 2019 operating EBITDA of about $1.5
billion.
KEY RATING DRIVERS
De-leveraging: CF Industries repaid $1.1 billion in debt in 2017,
$750 million in debt in 2019, and is expected to repay a further
$250 million in 2021 from cash on hand. Fitch believes FFO net debt
best reflects CF's leverage because it captures distributions to
CHS Inc. (LTM Sept. 30, 2020 $174 million) and cash-build in
advance of debt maturities. Fitch expects FFO net leverage to drop
below 3.0x in 2021 and 2.5x in 2022.
Nitrogen Fertilizer Coronavirus Impact: Fertilizers are considered
an essential industry and did not see production impacts from
shut-downs. Before the pandemic, Fitch expected nitrogen fertilizer
prices to increase in 2020, compared with the 2019 average on
improved demand. The negative effect the coronavirus had on demand
for fuel resulted in lower feedstock prices for nitrogen
fertilizers (natural gas in Europe and the U.S.) and thermal coal
(China). In addition, industrial use of ammonia dropped
substantially due to significantly disrupted manufacturing
activity.
The ammonia market is oversupplied by regions rich in gas, such as
the CIS and Middle East, despite increased fertilizer demand from
the US due to improved weather conditions and larger crop acreage.
Fitch has reduced its medium- and long-term price assumptions by
USD20/tonne to reflect Fitch's lower gas price assumptions. Fitch's
nitrogen fertilizer price assumptions (published Sept. 8, 2020) and
natural gas price assumptions (published Sept. 8, 2020) are as
follows:
-- Ammonia - FOB Black Sea $/tonne: 200 in 2020; 220 in 2021; 230
in 2022; and 240 in 2023.
-- Urea - FOB Black Sea $/tonne: 230 in 2020; 235 in 2021; 240 in
2022; and 245 in 2023.
-- Natural Gas Henry Hub $/mcf: 2.10 in 2020; $2.45 in 2021 and
thereafter.
Size, Scale, Low Cost: CF Industries Holdings, Inc. benefits from
its position as the largest nitrogen fertilizer producer in North
America and world's largest ammonia producer, as well as its
position as one of the lower-cost producers globally, given the
shale gas advantage. The company operates five nitrogen fertilizer
production facilities in the U.S., two in Canada and two in the
U.K. CF accounted for 39% of the North American ammonia capacity
and 42% of North American granular urea capacity in 2019. The bulk
of the company's urea production is first quartile and the bulk of
ammonia production is in the lowest half of the global cost curve
per CRU.
Strong FCF: Capital spending in 2020 is guided to $350 million and
thereafter should remain in the $450 million or below range. Cash
flows benefit from solid profitability; LT M Sept. 30, 2020
operating EBITDA margins were nearly 37% and Fitch expects margins
to return to that level in 2022. Fitch expects FCF after dividends
and distributions to be about $325 million per year on average
during 2021 through 2023.
Management recently announced a $100 million investment in a
20,000-ton green ammonia project at its Donaldsonville complex
which is expected to be within its annual capex guidance. While
spending on such projects could accelerate, Fitch expects such
spending to be within excess cash generation until the market
develops further.
Shareholder Friendly Financial Policies: Through Sept. 30, 2020, CF
repurchased 10.2 million shares for approximately $437 million
leaving $563 million under the current $1 billion share repurchase
authorization through 2021. No shares were repurchased in 2Q20 or
3Q20. The company recently stated that its primary use of cash
would be to support its strategic focus on clean hydrogen and
ammonia projects. Fitch expects share-buybacks will be limited over
the ratings horizon. Fitch expects the company to continue to
maintain its quarterly common dividend at current levels of
$0.30/share ($258 million for LTM Sept. 30, 2020).
DERIVATION SUMMARY
CF Industries has a strong operating profile relative to fertilizer
peers ICL Group Ltd. (BBB-/Stable), OCI N.V. (BB/Negative) and OCP
S.A. (BB+/Stable) and The Mosaic Company (BBB-/Stable). CF
Industries' EBITDAR margins troughed at 31% in 2017 are expected to
be in the mid-high 30% compared with peers ranging from the low 20%
for ICL, the high 20% to low 30% for OCI and OCP and mid-20% for
The Mosaic Company, when markets stabilize. CF Industries'
financial profile is better than OCI's and OCP's but slightly
weaker than 'BBB-' peers. CF Industries' FFO net leverage was 3.6x
at Sept. 30, 2020 compared with 2.5x at ICL at Dec. 31, 2019 and
3.5x at Mosaic for LTM June 30, 2020.
CF Industries, Inc.'s IDR is linked to parent company CF Industries
Holdings, Inc.'s IDR.
KEY ASSUMPTIONS
-- Henry Hub gas price of $2.45/mcf from 2021;
-- Average product prices at $209/ton in 2021, and roughly $220
in 2022 and 2023;
-- Capital spending at or below $450 million per year;
-- Debt repaid at maturity.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Continued focus on low fixed charges to maintain long-term
flexibility through the cycle;
-- Capital allocation policies consistent with maintenance of an
investment-grade financial profile;
-- FFO net leverage managed to below 2.5x on a sustained basis;
-- Total debt to EBITDA managed to below 2.5x on a sustained
basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Increase of fixed charges or capital expenditures indicating
deviation from financial policies;
-- Net debt materially above $3.8 billion;
-- Available liquidity expected to be less than $1 billion on
average;
-- Inability to bring FFO net leverage sustainably below 3.5x;
-- Inability to bring total debt to EBITDA sustainably below
3.5x.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: As of Sept. 30, 2020, CF had $553 million in cash
on hand and its $750 million secured revolver due Dec. 5, 2024 was
fully available. The revolver has a maximum total net leverage
ratio of 3.75x and a minimum interest coverage ratio of 2.75x.
Fitch estimates Sept. 30, 2020 compliance with the maximum total
net leverage ratio at 2.6x based on stated adjusted EBITDA, face
amount of debt and reported cash. Fitch expects annual FCF to be
about $325 million during 2021 through 2023 and for the company to
remain in compliance with its covenants.
CF Industries has stated its intention to repay the $250 million
remaining of the senior secured notes due in December 2021 from
cash on hand.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch has made no material adjustments that are not disclosed
within the company's public financial statements.
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.
CHESAPEAKE ENERGY: May Miss Court's Restructuring Deadline
----------------------------------------------------------
Steven Church of Bloomberg News reports that a trial starting later
in December 2020 in the biggest oil and gas bankruptcy in 20 years
may drag on so long that the company, Chesapeake Energy Corp., may
miss a deadline to win court approval of its reorganization plan.
On Dec. 15, 2020, a committee of unsecured creditors and Chesapeake
will start a multi-day court fight over whether the debt-cutting
plan unfairly boosts repayment to senior lenders including Franklin
Resources by nearly wiping out lower-ranking creditors.
About Chesapeake Energy Corp.
Headquartered in Oklahoma City, Chesapeake Energy Corporation's
(NYSE: CHK) operations are focused on discovering and developing
its large and geographically diverse resource base of
unconventional oil and natural gas assets onshore in the United
States.
Chesapeake Energy reported a net loss of $308 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2019, the company had $16.19
billion in total assets, $2.39 billion in total current
liabilities, $9.40 billion in total long-term liabilities, and
$4.40 billion in total equity.
Chesapeake Energy and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-33233) on June 28, 2020, after
reaching terms of a Chapter 11 plan of reorganization to eliminate
approximately $7 billion of debt.
The Debtors tapped Kirkland & Ellis LLP as legal counsel, Jackson
Walker LLP as co-counsel and conflicts counsel, Alvarez & Marsal as
restructuring advisor, Rothschild & Co and Intrepid Financial
Partners as financial advisors, and Reevemark as communications
advisor. Epiq Global is the claims agent, maintaining the page
http://www.chk.com/restructuring-information
Wachtell, Lipton, Rosen & Katz serves as legal counsel to
Chesapeake Energy's Board of Directors.
MUFG Union Bank, N.A., the DIP facility agent and exit facilities
agent, has tapped Sidley Austin LLP as legal counsel, RPA Advisors
LLC as financial advisor, and Houlihan Lokey Capital Inc. as
investment banker.
Davis Polk & Wardell LLP and Vinson & Elkins L.L.P. serve as legal
counsel to an ad hoc group of first lien last out term loan lenders
while Perella Weinberg Partners and Tudor, Pickering, Holt & Co.
serve as the group's investment bankers.
Franklin Advisers, Inc., has tapped Akin Gump Strauss Hauer & Feld
LLP as legal counsel, FTI Consulting, Inc. as financial advisor,
and Moelis & Company LLC as investment banker.
On July 9, 2020, the Office of the U.S. Trustee appointed a
committee to represent unsecured creditors in Debtors' Chapter 11
cases. The unsecured creditors' committee has tapped Brown
Rudnick, LLP and Norton Rose Fulbright US, LLP as its legal
counsel, and AlixPartners, LLP as its financial advisor.
On July 24, 2020, the bankruptcy watchdog appointed a committee of
royalty owners. The royalty owners' committee is represented by
Forshey & Prostok, LLP.
CHRISVIC BY THE SEA: Disclosure Statement Hearing Dec. 9, 2020
--------------------------------------------------------------
The Court has ordered that the hearing on approval of the
disclosure statement scheduled for November 24, 2020, is
rescheduled, for cause, for December 9, 2020, at 9:00 AM, via Skype
for Business. All parties that wish to appear at the Skype for
Business hearing must familiarize themselves and follow the
Procedures for Remote Appearances, found on the homepage of the
Court's Website at https://www.prb.uscourts.gov/.
The Court filed a Plan and a Disclosure Statement on Oct. 13,
2020.
Oriental Bank, owed $334,569, will be paid, starting on Oct.
15,2020, monthly postpetition mortgage payments of the loan in the
amount of $1,525 outside of the Plan, per the terms of the mortgage
modification entered on March 31, 2017. There are prepetition
arrears in the amount of $53,226. The prepetition arrears claim
will be paid by monthly payments of $300 for 60 months and on lump
sum payment of $35,226 to be made at month 61 from refinancing of
the property or from a capital contribution of the Debtor's
shareholders.
There are no non-priority unsecured claims in this case.
A copy of the Disclosure Statement is available at:
https://www.pacermonitor.com/view/MZ5RO3Y/CHRISVIC_BY_THE_SEA_CORP__prbke-19-07109__0061.0.pdf?mcid=tGE4TAMA
About Chrisvic by the Sea
Chrisvic by the Sea, Corp., is engaged in real estate leasing with
a residential property located at Villa C4 Carr. 4466 KM 1.9
Interior Aguadilla, PR 00605, which is leased to the Hotel known as
Villa Montana Beach Resort located in Aguadilla, Puerto Rico.
Chrisvic by the Sea, Corp., filed a voluntary Chapter 11 petition
(Bankr. D.P.R. Case No. 19-07109) on Dec. 4, 2019, and is
represented by Enrique M. Almeida Bernal, Esq. and Zelma Davila
Carrasquillo, Esq., at Almeida & Davila, P.S.C. The Debtor was
estimated to have under $500,000 in both assets and liabilities.
COACHELLA VINEYARD: To Pay Creditors From Property Sale/Refinancing
-------------------------------------------------------------------
Coachella Vineyard Luxury RV Park LLC filed with the U.S.
Bankruptcy Court for the Central District of California, San
Fernando Valley Division, a Disclosure Statement describing Chapter
11 Plan of Reorganization on December 3, 2020.
The Debtor is managed by Abraham Gottlieb, a licensed general
contractor with more than 30 years experience. The Debtor owns a
large parcel of vacant land near Indio, California. The Debtor
intends to develop that land into a luxury RV park. The Debtor
believes the land is worth at least $6 million up to as much as $9
million as is. At this time there are approximately $4.5 million in
disputed claims secured by the land. The Debtor is working on a
construction loan to do the development at this time. The
construction loan will pay the disputed liens in full. The Debtor
is also working on getting a refinancing loan to pay off the
existing secured claims.
To show good faith, the Debtor will choose a real estate broker no
later than January 31, 2021 and enter into a listing agreement to
sell the property. If the Debtor does not enter into a sale
contract with a buyer by June 1, 2021 or have otherwise obtained
the new loan commitment, the Debtor will, within 60 days after June
1, 2021, accept any offer it receives at $5 million or more and ask
the court to approve that sale subject to overbids. If the Debtor
has entered into a contract to sell the property for at least $5
million by August 1, 2021, the secured creditors will be entitled
to relief from stay to proceed with their rights to foreclose under
California law.
Class 4A consists of General Unsecured Claims. In the present case,
the Debtor estimates that Class 3A general unsecured debts total
approximately $35,000. The Debtor will pay the Class 4A claim in
full upon the sale of the real property or upon a refinance of the
real property.
Class 4B consists of Insider Unsecured Claims. In the present case,
the Debtor estimates that Class 4B insider unsecured debts total
approximately $375,000. These insider claims are subordinated to
the claims held by Class 4A claims such that these insider claims
will be paid only in the event that all other Class 4A general
unsecured claims have first been satisfied.
Debtor's owner will retain their ownership interest in the Debtor.
A full-text copy of the disclosure statement dated December 3,
2020, is available at https://tinyurl.com/yy87kdof from
PacerMonitor at no charge.
Attorneys for Debtor:
M. Jonathan Hayes
Matthew D. Resnik
RESNIK HAYES MORADI LLP
17609 Ventura Blvd., Suite 314
Encino, CA 91316
Telephone: (818) 285-0100
Facsimile: (818) 855-7013
E-mail: jhayes@RHMFirm.com
Matt@RHMFirm.com
About Coachella Vineyard Luxury RV Park
Coachella Vineyard Luxury RV Park LLC owns a large parcel of
vacant land near Indio, California. It intends to develop that land
into a luxury RV park.
Coachella Vineyard Luxury RV Park LLC filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D.
Cal. Case No. 20- 11615) on Sept. 4, 2020. The petition was signed
by Abraham Gottlieb, managing member. At the time of the filing,
the Debtor disclosed $1 million to $10 million in both assets and
liabilities. Judge Victoria S. Kaufman oversees the case. Resnik
Hayes Moradi LLP serves as the Debtor's bankruptcy counsel.
COVIA HOLDINGS: Pushes Ahead Chapter 11 Plan After SEC Settlement
-----------------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that bankrupt frack sand
producer Covia Holdings Corp. moved closer to confirming its
Chapter 11 reorganization plan after winning court approval of a
$17 million settlement with the SEC.
The Securities and Exchange Commission settlement, which resolves
an investigation into publicly made statements about sand products,
is one of the last "puzzle pieces" that Covia needed to complete
its bankruptcy plan, Covia's attorney, Benjamin M. Rhode of
Kirkland & Ellis LLP, said at a hearing Monday, December 7, 2020.
Judge David R. Jones of the U.S. Bankruptcy Court for the Southern
District of Texas approved the settlement at the hearing.
Covia Holdings Corporation
Covia Holdings Corporation and its affiliates --
http://www.coviacorp.com/-- provide diversified mineral-based and
material solutions for the energy and industrial markets. They
produce a specialized range of industrial materials for use in the
glass, ceramics, coatings, foundry, polymers, construction, water
filtration, sports and recreation, and oil and gas markets.
Covia Holdings Corporation, based in Independence, Ohio, and its
affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case
No. 20-33295) on June 29, 2020.
In its petition, Covia disclosed $2,504,740,814 in assets and
$1,903,952,839 in liabilities. The petition was signed by Andrew D.
Eich, executive vice president, chief financial officer, and
treasurer.
The Hon. Marvin Isgur presides over the case.
The Debtors tapped KIRKLAND & ELLIS LLP, and KIRKLAND & ELLIS
INTERNATIONAL LLP, as counsel; JACKSON WALKER L.L.P., as
co-counsel; KOBRE & KIM LLP, as special litigation counsel; PJT
PARTNERS LP, as investment banker; ALIXPARTNERS, LLP, as financial
advisor; and PRIME CLERK LLC, as claims and noticing agent.
COVIA HOLDINGS: Unsecureds to Get $36M in Amended Plan
------------------------------------------------------
Covia Holdings Corporation and its Debtor Affiliates filed the
Modified First Amended Joint Chapter 11 Plan of Reorganization on
December 4, 2020.
Class 5A consists of all Claims against Covia that are General
Unsecured Claims. Each Holder of a Claim against Covia that is an
Allowed General Unsecured Claim shall receive, in full and final
satisfaction of such Allowed Claim, its Pro Rata share of the
Parent Unsecured Claims Cash Pool.
Class 5B consists of all Claims against TechniSand that are General
Unsecured Claims. Each Holder of a Claim against TechniSand that is
an Allowed General Unsecured Claim shall receive, in full and final
satisfaction of such Allowed Claim, its Pro Rata share of the
TechniSand Unsecured Claims Cash Pool.
Class 5C consists of all Claims against Debtors other than Covia,
and TechniSand that are General Unsecured Claims. All Other General
Unsecured Claims shall be discharged, cancelled, released, and
extinguished as of the Effective Date, and will be of no further
force or effect, and Holders of Allowed Other General Unsecured
Claims will not receive any distribution on account of such Allowed
Other General Unsecured Claims.
On the Effective Date, the Debtors shall establish and fund the
General Unsecured Recovery Cash Pool Account with Cash in an amount
equal to the General Unsecured Recovery Cash Pool, which shall be
held in trust for distributions to Holders of Allowed General
Unsecured Claims in Class 5A and Class 5B. The General Unsecured
Recovery Cash Pool Account (1) shall not be and shall not be deemed
property of the Debtors or the Reorganized Debtors, the Term Loan
Lenders, the holders of the Swap Agreements, or the L/C Facility
Lender, (2) shall be held in trust to fund distributions, and (3)
no Liens, Claims, or Interests shall encumber the General Unsecured
Recovery Cash Pool Account in any way (whether on account of the
New Term Loan, the Exit Facility, the Management Incentive Plan, or
otherwise).
The Plan defines "General Unsecured Recovery Cash Pool" cash in the
amount equal to $36,000,000.
A full-text copy of the Modified First Amended Joint Plan of
Reorganization dated Dec. 4, 2020, is available at
https://www.pacermonitor.com/view/3N3HWAI/Covia_Holdings_Corporation_et__txsbke-20-33295__0944.0.pdf?mcid=tGE4TAMA
Co-Counsel to the Debtors:
Matthew D. Cavenaugh
Vienna F. Anaya
Genevieve M. Graham
Victoria N. Argeroplos
JACKSON WALKER L.L.P.
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Telephone: (713) 752 -4200
Facsimile: (713) 752-4221
Email: mcavenaugh@jw.com
vanaya@jw.com
ggraham@jw.com
vargeroplos@jw.com
- and -
Jonathan S. Henes, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Email: jonathan.henes@kirkland.com
- and -
Benjamin M. Rhode
Scott J. Vail
300 North LaSalle Street
Chicago, Illinois 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Email: benjamin.rhode@kirkland.com
scott.vail@kirkland.com
About Covia Holdings Corporation
Covia Holdings Corporation and its affiliates
--http://www.coviacorp.com/-- provide diversified mineral-based
and material solutions for the energy and industrial markets. They
produce a specialized range of industrial materials for use in the
glass, ceramics, coatings, foundry, polymers, construction, water
filtration, sports and recreation, and oil and gas markets.
Covia Holdings Corporation, based in Independence, Ohio, and its
affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case
No. 20-33295) on June 29, 2020.
In its petition, Covia disclosed $2,504,740,814 in assets and
$1,903,952,839 in liabilities. The petition was signed by Andrew D.
Eich, executive vice president, chief financial officer, and
treasurer.
The Hon. Marvin Isgur presides over the case.
The Debtors tapped KIRKLAND & ELLIS LLP, and KIRKLAND & ELLIS
INTERNATIONAL LLP, as counsel; JACKSON WALKER L.L.P., as
co-counsel; KOBRE & KIM LLP, as special litigation counsel; PJT
PARTNERS LP, as investment banker; ALIXPARTNERS, LLP, as financial
advisor; and PRIME CLERK LLC, as claims and noticing agent.
CRED INC: U.S. Trustee Wans Outsider to Handle Chapter 11 Case
--------------------------------------------------------------
Law360 reports that the U. S. Trustee's Office is calling for the
appointment of a trustee to take over Cred Inc.'s Chapter 11 case,
saying the cryptocurrency investment platform shouldn't be trusted
to managers who can't explain how they lost $66 million in less
than two years.
In a motion filed Friday, December 4, 2020, U. S. Attorney Andrew
Vara said in addition to losing millions to investment scams and
making an uncollectible loan to a firm insider, Cred's management
misinformed investors and creditors about the company's financial
state.
About CRED Inc.
Cred Inc. is a cryptocurrency platform that accepts loans of
cryptocurrency from non-U.S. persons and pays interest on those
loans. Cred -- https://mycred.io -- is a global financial services
platform serving customers in over 100 countries. Cred is a
licensed lender and allows some borrowers to earn a yield on
cryptocurrency pledged as collateral.
Cred Inc. and its affiliates sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 20-12836) on Nov. 7, 2020. Cred was estimated
to have assets of $50 million to $100 million and
liabilities of $100 million to $500 million as of the bankruptcy
filing.
The Debtors have tapped Paul Hastings LLP as their bankruptcy
counsel, Cousins Law LLC as local counsel, and MACCO Restructuring
Group, LLC as financial advisor. Donlin, Recano & Company, Inc. is
the claims agent.
DESTINATION HOPE: Dec. 10 Auction of Substantially All Assets
-------------------------------------------------------------
Judge Peter D. Russin of the U.S. Bankruptcy Court for the Southern
District of Florida authorized Destination Hope, Inc.'s bidding
procedures in connection with the sale of substantially all assets
to Regard Recovery, LLC for $4.8 million, subject to overbid.
The Assets are listed and described as follows:
a. The real property leasehold interests as to the Debtor's
two locations: 6460 NW 5th Way, Fort Lauderdale, FL, 33309 and 8301
W. McNab Road, Tamarac, FL, 33321.
b. The personal property located at the Ft. Lauderdale
Location and the Tamarac Location, as listed in Schedule A/B of the
Debtor’s bankruptcy schedules, except for the Excluded Assets,
including but not limited to: Security deposits; 4 Ford vans;
Accounts receivable; Licenses, permits, and accreditations;
Trademarks and service marks; Goodwill; URLs and websites; and
Unexpired leases and executory contracts as listed in Schedule
2.1(B) of the attached APA.
The Stalking Horse Contract is approved as the Stalking Horse
Contract and the Debtor is authorized to enter into said contract,
subject to final review by the parties that attended the Hearing.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: Dec. 9, 2020
b. Initial Bid: An amount equal to or greater than the sum of
(i) $100,000 more than the Stalking Horse Bid plus (ii) the Breakup
Fee
c. Deposit: $250,000
d. Auction: The Assets will be sold at an auction to take
place via Zoom on Dec. 10, 2020 at 9 a.m. and will be conducted by
the Debtor's counsel. The video of the Auction will be recorded
and the proceedings of the Auction will be transcribed by a court
reporter. The link for the Auction is as follows:
https://us02web.zoom.us/j/86170549893. The Meeting ID and Passcode
can be obtained by contacting the Debtor's counsel.
e. Bid Increments: $100,000
f. Sale Hearing: Dec. 10, 2020 at 12:00 noon
g. Sale Objection Deadline:
h. Closing: Dec. 31, 2020
i. Break-up Fee: 2% of the Stalking Horse Bid, plus
reimbursement of expenses not to exceed $25,000
j. The Assets will be transferred on an "as is" and "where is"
basis.
k. The sale will be free and clear of all liens, claims and
encumbrances, and any valid liens will attach to the net sale
proceeds.
l. The Debtor will notify all Qualified Bidders, no later than
5:00 p.m. (ET) three days before the Auction that they may
participate in the Auction. SG Credit and Newtek will each be
deemed to be a Qualified Bidder pursuant to their credit bid
rights.
A hearing on the Motion was held on Dec. 2, 2020 at 1:30 p.m.
A copy of the Agreement is available at
https://tinyurl.com/y4357yfl from PacerMonitor.com free of charge.
The Purchaser:
REGARD RECOVERY, LLC
c/o Dentons Cohen & Grigsby, P.C.
625 Liberty Avenue
Pittsburgh, PA 15222
Attn: Matthew H. Clark, Esq.
E-mail: matthew.clark@dentons.com
About Destination Hope
Based in Fort Lauderdale, Fla., Destination Hope, Inc. offers
comprehensive drug rehab and mental health programs, with a special
focus on dual diagnosis while providing clients with the knowledge
and tools to overcome their addiction. Visit
https://destinationhope.com for more information.
Destination Hope sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 20-19402) on Aug. 28,
2020. The petition was signed by Benjamin Brafman, the company's
president.
At the time of the filing, Debtor had estimated assets of between
$500,000 and $1 million and liabilities of between $10 million and
$50 million. Judge Peter D. Russin oversees the case. Wernick Law,
PLLC is the Debtor's legal counsel.
DIOCESE OF BUFFALO: Seeks to Hire Bonadio & Co. as Accountant
-------------------------------------------------------------
The Diocese of Buffalo, N.Y. seeks approval from the U.S.
Bankruptcy Court for the Western District of New York to employ
Bonadio & Co., LLP as its accountant.
Services Bonadio will render are:
a. issuance of the audit report for fiscal year ending [August
31, 2020];
b. preparation of additional auditor’s reports that become
due during this Chapter 11 Case;
c. provision of accounting advice as necessary; and
d. performance of accounting services as required by the
Diocese from time to time in the ordinary course of its business.
The firm's hourly rates are:
Mario P. Urso $425
Justin N. Reid $350
Grace Walker $200
Tax partner $325
Quality partner $350
Other partners $300
Other manager $200
Senior $150
Experienced staff $95
Staff $80
Bonadio & Co. received a retainer in the amount of $54,000.
Justin N. Reid, a partner at Bonadio & Co., disclosed in court
filings that the firm is "disinterested" within the meaning of
Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Justin N. Reid
Bonadio & Co., LLP
171 Sully's Trail
Pittsford, NY 14534
Phone: (585) 249-2750
About The Diocese of Buffalo N.Y.
The Diocese of Buffalo, N.Y., is home to nearly 600,000 Catholics
over eight counties in Western New York. The territory of the
diocese is co-extensive with the counties of Erie, Niagara,
Genesee, Orleans, Chautauqua, Wyoming, Cattaraugus and Allegany in
New York State, comprising 161 parishes. There are 144 diocesan
priests and 84 religious priests who reside in the Diocese.
The diocese through its central administrative offices (a) provides
operational support to the Catholic parishes, schools and certain
other Catholic entities that operate within the territory of the
Diocese "OCE"; (b) conducts school operations through which it
provides parish schools with financial and educational support; (c)
provides comprehensive risk management services to the OCEs; (d)
administers a lay pension trust and a priest pension trust for the
benefit of certain employees and priests of the OCEs; and (e)
provides administrative support for St. Joseph Investment Fund,
Inc.
Dealing with sexual abuse claims, the Diocese of Buffalo sought
Chapter 11 protection (Bankr. W.D.N.Y. Case No. 20-10322) on Feb.
28, 2020. The diocese was estimated to have $10 million to $50
million in assets and $50 million to $100 million in liabilities as
of the bankruptcy filing.
The Hon. Carl L. Bucki is the case judge.
Bond, Schoeneck & King, PLLC, led by Stephen A. Donato, Esq., is
the diocese's counsel; Connors LLP is its special litigation
counsel; and Phoenix Management Services, LLC is its financial
advisor. Stretto is the claims agent, maintaining the page
https://case.stretto.com/dioceseofbuffalo/docket.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on March 12, 2020. The committee is represented by
Pachulski Stang Ziehl & Jones, LLP and Gleichenhaus, Marchese &
Weishaar, PC.
DIOCESE OF ROCKVILLE: Insurers Fight Over Abuse Claims Filing
-------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that creditors of the bankrupt
Roman Catholic Diocese of Rockville Centre charged that its
insurers are asking child sexual abuse victims with bankruptcy
claims to provide overly burdensome and unnecessary information.
Victims shouldn't have to provide more details about their alleged
abuse than what was initially proposed by the diocese in its
Chapter 11 case, a creditors' committee said in a Dec. 4, 2020
filing. The diocese comprises the Catholic church's operations in
Long Island, N.Y.
Lloyd's of London, Arrowood Indemnity Insurance Co., and other
insurance providers are asking the U.S. Bankruptcy Court for the
Southern District of New York to approve abuse claim filings.
About Diocese of Rockville Centre
The Roman Catholic Diocese of Rockville Centre, New York is the
seat of the Roman Catholic Church on Long Island. The diocese has
been under the leadership of Bishop John O. Barres since February
2017. The State of New York established the diocese as a religious
corporation in 1958. The diocese is one of eight Catholic dioceses
in New York, including the Archdiocese of New York. The diocese's
total Catholic population is approximately 1.4 million, roughly
half of Long Island's total population of 3.0 million. It is the
eighth largest diocese in the United States when measured by the
number of baptized Catholics.
The Roman Catholic Diocese of Rockville Centre, New York filed a
Chapter 11 petition (Bankr. S.D.N.Y. Case No. 20-12345) on Sept.
30, 2020. The diocese was estimated to have $100 million to $500
million in assets and liabilities as of the filing.
The Hon. Shelley C. Chapman is the case judge.
The diocese tapped Jones Day as legal counsel; Alvarez & Marsal
North America, LLC, as restructuring advisor; Sitrick and Company,
Inc., as communications consultant; and Nixon Peabody LLP as
special counsel. Epiq Corporate Restructuring, LLC, is the claims
agent.
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in the diocese's Chapter 11 case. The committee
is represented by Pachulski Stang Ziehl & Jones LLP.
DXP ENTERPRISES: S&P Rates New $330MM Sr. Secured Term Loan 'B'
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '3'
recovery rating to Houston-based industrial supplier DXP
Enterprises Inc.'s (B/Stable) proposed $330 million senior secured
term loan B due 2027. The '3' recovery rating indicates our
expectation for meaningful (50%-70%; rounded estimate: 65%)
recovery in the event of a default. The first-tier distributor of
industrial products will use the proceeds from this term loan to
refinance its existing term loan ($218 million outstanding) and
fund acquisitions.
S&P said, "At the same time, we are revising our recovery rating on
the company's existing term loan to '3' from '2' to reflect the
increase in its amount of secured term loan debt.
"We expect the company to finish 2020 with adjusted debt leverage
close to 5x, which is about half a turn above our previous
expectation, due to the uptick in debt as a result of the
transaction. We anticipate S&P-adjusted EBITDA will contract by
approximately 35%, in line with our previous expectations, as a
result of aggressive capital spending cuts in the oil and gas
industry, which accounts for about 40% of sales and the
pandemic-driven decline in industrial activity. Consistent with our
previous estimates we anticipate DXP's margins will contract by 150
basis points (bps)-200 bps in 2020 due to lower fixed-cost
absorption from its reduced revenue. However, because of DXP's
countercyclical working capital requirements amid a period of low
oil and gas prices we expect its free operating cash flow to
increase to $80 million-$90 million in 2020, up from $19.2 million
in 2019." Furthermore, DXP's revenue, EBITDA, and EBITDA margins
have been relatively less affected than those of other industrial
distributors that offer off-the-shelf commoditized products. The
company focuses on value-added distribution (40%-50% of sales are
customized integrated services) and maintenance, repair, and
operations (MRO), which enables it to generate superior adjusted
EBITDA margins.
DXP's strategy is to acquire local distributors to expand its
geographic footprint and compete in the original equipment
manufacturers' (OEMs) closely guarded territories. S&P sadi,
"Following this transaction, we expect that the company will
continue to consolidate the fragmented industrial distribution
market. In addition, we believe DXP will likely enhance its
position in more stable end markets, such as food and beverage and
general industrial, and pivot toward other sectors such as water
and wastewater."
Pro forma for the transaction, DXP will have full availability
under its $135 million revolving credit facility (limited by $120
borrowing base), which--along with approximately $200 million cash
balance as of the end of 2020--will provide it with ample liquidity
for potential acquisitions targets in the next 12 months. S&P
expects the company to have headroom of at least 30% under its
covenants pro forma for the transaction.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a prolonged
recession and weakness in the energy and industrial end markets
(especially oil and gas), which reduces the demand for the
company's products and services. Facing deteriorating liquidity,
DXP would reach a point in 2023 where it determines a default is
unavoidable.
-- S&P assesses its recovery prospects on the basis of a
going-concern value of $319 million, assuming emergence EBITDA of
$58 million and a 5.5x EBITDA multiple. This multiple is consistent
with the multiples we use for its industry peers. The upward
revision of our gross enterprise value estimate reflects the value
of the company's anticipated near-term acquisitions.
-- S&P assumes approximately 60% of the $135 million ABL credit
facility due August 2022 would be drawn in the default year.
-- DXP's capital structure comprises a $330 million senior secured
term loan B due in December 2027.
-- All debt amounts include six months of prepetition accrued
interest.
Simulated default assumptions
-- Year of default: 2023
-- Emergence EBITDA: $58 million
-- Valuation multiple: 5.5x
-- Gross enterprise value: $319 million
Simplified waterfall
-- U.S./foreign obligor split: 90%/10% ($288 million/$32 million)
-- Net enterprise value at default (after 5% administrative
costs): $303 million
-- Priority claims and adjustments (usage under asset-based
lending [ABL] facility): $79 million
-- Total collateral value available for secured debt: $114
million
-- Total senior secured term loan claims: $335 million
--Recovery expectations: 50%-70% (rounded estimate: 65%)
EMPIRE COMMUNITIES: Fitch Assigns B-(EXP) LT IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has assigned Empire Communities Corp. a first-time
Long-term Issuer Default Rating (IDR) of 'B-(EXP)' pending the
completion of its proposed refinancing transactions. Fitch also
assigned an expected senior secured rating of 'BB-(EXP)'/'RR1' to
Empire's planned USD225 million senior secured revolving credit
facility and a 'B-(EXP)'/'RR4' rating to the company's proposed
USD500 million senior unsecured notes. The Rating Outlook is
Stable.
The 'B-(EXP)' IDR reflects the company's high leverage, its limited
geographic diversity, exposure to high-rise condominium projects
and long land position. The company's long history and leadership
position in its Canadian housing markets, high EBITDA margins and
good financial flexibility are also factored into the expected
ratings. The Stable Outlook reflects Fitch's expectation for a
modest residential housing growth in the U.S. and Canada through
2021.
The expected ratings are predicated on the completion of the
proposed refinancing transactions. The expected ratings will be
converted to final ratings after the transactions are completed and
upon receipt of final documentation conforming materially to
information already received.
KEY RATING DRIVERS
High Leverage: As of Sept. 30, 2020, Empire's net
debt-to-capitalization (excluding non-controlling equity interest
and CAD35 million of cash classified by Fitch as not readily
available for working capital) was 78.2%. The company has a
meaningful land position in Canada, which management believes has
appraised values that are significantly higher than their book
values. Empire's pro forma total debt-to-operating EBITDA for the
LTM period ending Sept. 30, 2020 was 6.0x. Fitch expects Empire's
net debt-to-capitalization will settle around 78% at YE 2020 and
about 77% at the end of 2021. Total debt-to-operating EBITDA is
forecast to be 6.1x at the end of 2020 and around 6.4x at YE 2021.
The company's high leverage is somewhat counterbalanced by its good
financial flexibility.
Good Financial Flexibility: Empire will have good financial
flexibility following the close of the proposed transactions due to
its adequate liquidity position and extended debt maturity
schedule. Pro forma for the proposed transactions, Empire will have
about CAD193.6 million of cash and no borrowings under its USD225
million revolving credit facility that matures in three years.
High EBITDA Margins: Empire's EBITDA margin is at the high-end of
the homebuilders in Fitch's coverage, due in part to its land
strategy that provides for a developer's margin, similar to other
U.S. builders like Toll Brothers, Inc. and PulteGroup, Inc.
Empire's Fitch-calculated EBITDA margin for the LTM period ending
Sept. 30, 2020 was 15.7% and is projected to range between 15% and
16% during the forecast period.
Limited Geographic Diversification: As of Sep. 30, 2020, Empire
offered homes for sale in 77 communities across four markets in the
U.S. (Austin, San Antonio and Houston, TX and Atlanta, GA) and
operations in the Greater Golden Horseshoe (including the Greater
Toronto area) in the Southern Ontario region of Canada. The company
is meaningfully less geographically-diversified compared with most
of the homebuilders in Fitch's coverage. Empire's geographic
concentration in these select markets leaves the company exposed to
an outsized impact to earnings and credit metrics if any of these
markets were to experience a regional downturn.
Strong Local Market Position in Canada: Empire was the number one
ranked low-rise builder in the Greater Golden Horseshoe region in
2019 and is the number 4 ranked low-rise builder in the combined
Greater Golden Horseshoe and Greater Toronto Area. Empire is
predominantly a second-tier player (top 20 builder) in its U.S.
markets given that it has only recently entered the U.S.
Exposure to High-Rise Condominium Projects: Empire currently has
six high-rise condominium projects, contributing about 28% of 3Q20
YTD revenues and 15.6% of gross profit. These projects typically
require significant upfront capital before generating revenues. A
majority of these projects also take an extended period of time to
construct, thus increasing the risk, particularly in a housing
downturn. This is somewhat mitigated by the high pre-sale's levels
for these properties, with about 89% of the units pre-sold as of
Sept. 30, 2020. Additionally, sales of high-rise units typically
require at least a 20% down payment and developers typically have
recourse to the buyers should they decide to walk away from these
contracts.
Land Strategy: As of Sept. 30, 2020, Empire controlled 15,842 lots,
including 1,419 lot equivalents for its high-rise business. The
company has a 6.9-year land supply (including high-rise units and
lot sales) but is heavily weighted towards owned lots, accounting
for almost 93% of its total lots controlled or a 6.4-year supply
based on LTM closings. This is due to its exposure to the
land-constrained Greater Golden Horseshoe market (including its
high-rise operations) as well as its land development operations.
When isolating its U.S. operations, Empire has a lower land
position relative to the public builders in Fitch's coverage,
including 3.6 years of total controlled lot supply and 1.7 years of
owned lot supply. Nevertheless, the company's long land position
makes the company susceptible to meaningful impairment charges if
housing market conditions were to meaningfully deteriorate.
Cash Flow: Empire has generated negative cash flow from operations
(CFFO) during the past three years as it built out its U.S.
presence and added to its land supply in Canada. The company's
receivables were also elevated at the end of 2019. Through the
first nine months of 2020, Empire reported CFFO of CAD369.7 million
(compared with negative CAD219.2 million last year) as the company
reduced land spending and froze spec construction during the
pandemic and also monetized its receivables. Fitch expects Empire
will generate about CAD300 million of CFFO this year. Fitch
forecasts a modest improvement in housing activity next year, and
Fitch's base case forecast assumes that the company will return to
being CFFO negative in 2021 as it resumes spending on land and
development as well as housing and condominium units. Fitch is
comfortable with this strategy given management's appropriate
response to land and housing spending during the pandemic.
The expected rating reflects Fitch's expectation that management
will lower inventory spending if market conditions deteriorate and
monetize its housing inventory. This should allow Empire to
generate strong cash flow and use these to pay down debt or build
cash on the balance sheet during housing downturns. However, given
the company's exposure to high-rise projects, the ability to
generate cash may not be as immediate as homebuilders focused on
single-family homes, as the high-rise projects, which take longer
to construct, would need to be completed before Empire can monetize
its backlog.
DERIVATION SUMMARY
Empire Communities is meaningfully smaller and less geographically
diversified when compared with the U.S. homebuilders in Fitch's
coverage. The company's net debt-to-capitalization ratio of 78% and
debt-to-operating EBITDA of 6.1x is meaningfully higher than its
peers, including M/I Homes, Inc. (BB-/Stable), whose net
debt-to-cap is 29.6% as of Sept. 30, 2020 and reported
debt-to-operating EBITDA of 2.6x for the LTM ending June 30, 2020.
The company's land position is also longer than its peers, although
its land position in the U.S. is shorter than its U.S. peers.
Lastly, Empire's risk profile is higher given its exposure to
high-rise projects as well as its land development operations. The
company's EBITDA margin is better than all of the homebuilders in
Fitch's coverage given its strong position in the land-constrained
Canadian market and also the benefit of developing its own land.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Agency's Rating Case for the
Issuer
-- Revenues grow 28% in 2020 and increases 6%-8% in 2021;
-- EBITDA margins of 15%-16% in 2020 and 2021;
-- Total Debt/Operating EBITDA of 6.1x at YE2020 and 6.0x-6.5x at
YE2021;
-- Inventory/debt in the low- to mid-1x range in 2020 and 2021;
-- Net debt-to-capitalization ratio of about 78% at YE2020 and
77% at YE2021;
-- Empire generates cash flow from operations of CAD275 million
to CAD325 million in 2020 and will be cash flow negative in 2021.
RECOVERY ANALYSIS ASSUMPTIONS
The recovery analysis assumes that Empire would be reorganized as a
going-concern (GC) in bankruptcy rather than liquidated. Fitch
assumed a 10% administrative claim.
GC Approach
-- The GC EBITDA estimate of CAD140 million reflects Fitch's view
of a sustainable, post reorganization EBITDA level, upon which the
agency bases the enterprise value (EV). The GC EBITDA is about 19%
lower than the company's LTM EBITDA;
-- An EV multiple of 6.0x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization EV. The choice of the multiple
considered the following factors:
-- Transactions involving homebuilding companies include a 9.5x
enterprise value to EBITDA multiple on the 2018 acquisition of
CalAtlantic Homes by Lennar Corporation (based on a transaction
value of USD9.3 billion at the time of the announcement and
Fitch-calculated EBITDA of USD981 million for CalAtlantic Homes for
the LTM ending June 30, 2017);
-- Trading multiples (EV/EBITDA) for public homebuilders
currently average about 6.9x and has been in the 5x-11x range for
the past 12 months;
-- The senior secured revolving credit facility is assumed to be
75% drawn upon default. Fitch assumes that the borrowing base would
shrink as the company monetizes its inventory in a housing
downturn. The secured credit facility and Empire's high-rise
project loans are senior to the company's proposed unsecured notes
in the waterfall;
-- The allocation of the value in the liability waterfall results
in a recovery corresponding to an 'RR1' for the senior secured
revolving credit facility and a recovery corresponding to an 'RR4'
for the unsecured notes. A material increase in the secured
high-rise debt without a corresponding increase in Fitch's EV
assumptions in a recovery scenario could lead to negative rating
action on the unsecured notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Net debt-to-capitalization below 65% and total debt/operating
EBITDA is consistently below 6x and the company maintains a healthy
liquidity position;
-- Fitch may also consider positive rating actions if the company
further diversifies its operations in the U.S. while maintaining a
leadership position in the Greater Golden Horseshoe and Greater
Toronto areas, while reporting net debt-to-capitalization
approaching 65% and total debt/operating EBITDA around 6.0x.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- Inventory to debt consistently below 1.0x;
-- Net debt to capitalization consistently above 80%;
-- Empire consistently generates negative cash flow from
operations, leading to a deterioration of its liquidity profile,
including EBITDA to interest paid sustaining below 1.25x.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Empire will have good financial flexibility
following the close of the proposed transactions due to its
adequate liquidity position and extended debt maturity schedule.
Pro forma for the proposed transactions, Empire will have about
CAD193.6 million of cash and no borrowings under its USD225 million
revolving credit facility that matures in three years. Fitch
forecasts EBITDA-to-interest paid to be sustained around 2.5x
during 2020 and 2021.
Repayment under Empire's high-rise project debt (which is dependent
on timing of completion) is manageable and is estimated to be about
CAD51 million in 2021, CAD54 million in 2022 and CAD26 million in
2023.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
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
ENCORE CAPITAL: Fitch Assigns BB+ Rating on GBP300MM Secured Notes
------------------------------------------------------------------
Fitch Ratings has assigned Encore Capital Group, Inc.'s
(BB+/Stable) GBP300 million 5.375% senior secured notes due
February 2026 (ISINs: XS2258992747, XS2258992317) a final rating of
'BB+'.
The final rating is in line with the expected rating Fitch assigned
to Encore's initially planned GBP250 million issue on Nov. 11,
2020.
KEY RATING DRIVERS
Under Encore's recently implemented global funding structure, the
senior secured notes are guaranteed by most Encore subsidiaries and
rank equally with other senior secured obligations. Their rating is
equalised with Encore's Long-Term Issuer Default Rating (IDR),
reflecting the prior claim on available security of a
higher-ranking super-senior debt level. This results in Fitch
expecting average rather than above-average recoveries for Encore's
senior secured notes.
Encore's Long-Term IDR reflects its leading franchise in the debt
purchasing sector in its chosen markets, its strong recent
profitability and its low leverage by the standards of the sector.
The rating also takes into account the concentration of Encore's
activities within debt purchasing and the potential for a prolonged
COVID-19-driven economic downturn to weaken collections performance
and portfolio asset quality.
It further factors in the need over the longer term for debt
purchasers to maintain adequate access to funding with which to
replenish their stocks.
RATING SENSITIVITIES
The notes' rating is primarily sensitive to changes in Encore's
Long-Term IDR. However, a downgrade of Encore's IDR would not
automatically lead to negative rating action on the notes,
depending on Fitch's view of the likely impact on recoveries of the
circumstances giving rise to the downgrade. Changes to Fitch's
assessment of relative recovery prospects for senior secured debt
in a default (e.g. as a result of a material shift in the
proportion of Encore's debt that is either unsecured or
super-senior secured) could also result in the senior secured debt
rating being notched up or down from the IDR.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Given the current economic backdrop, an upgrade of Encore's IDR is
unlikely in the short term. Over the medium to long term, positive
rating action would be subject to:
- Maintenance of gross debt/adjusted EBITDA consistently below
2.5x, while also developing a significant tangible equity position
via retention of profits; and
- Demonstration of collections and earnings resilience throughout
the course of the current global economic dislocation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A sustained fall in earnings generation, particularly if
leading to a weakening in key debt service ratios or other
financial efficiency metrics;
- Failure to adhere to management's public leverage guidance of
maintaining a net debt-to-adjusted EBITDA of 2x-3x;
- A weakening in asset quality, as reflected in acquired debt
portfolios significantly underperforming anticipated returns or
requiring material write-downs in expected recoveries; or
- An adverse operational event or significant disruption in
business activities (for example arising from regulatory
intervention in key markets adversely impacting collection
activities), thereby undermining franchise strength and
business-model resilience.
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
Encore Capital Group, Inc.: Customer Welfare - Fair Messaging,
Privacy & Data Security: 4, Financial Transparency: 4
Fitch has assigned Encore an ESG relevance score of '4' in relation
to 'Customer Welfare - Fair Messaging, Privacy & Data Security', in
view of the importance of fair collection practices and consumer
interactions and the regulatory focus on them. Fitch has also
assigned an ESG relevance score of '4' for 'Financial
Transparency', in view of the significance of internal modeling to
portfolio valuations and associated metrics such as estimated
remaining collections. These factors have negative influences on
the rating, but their impacts are only considered moderate, and
they are features of the debt purchasing sector as a whole, and not
specific to Encore.
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.
ENDEAVOR ENERGY: S&P Alters Outlook to Positive, Affirms 'BB-' ICR
------------------------------------------------------------------
S&P Global Ratings affirmed the issuer credit rating on Endeavor
Energy Resources L.P. at 'BB-' and revised the outlook to positive
from negative.
S&P said, "We are affirming the 'BB-' issue-level rating on the
company's unsecured debt. The recovery rating remains '3';
reflecting our expectation of meaningful (50%-70%; rounded
estimate: 65%) recovery in the event of a payment default.
"The positive outlook reflects our view that Endeavor will continue
to develop its asset base and expand production to levels more
comparable with higher-rated peers while aligning its capital
spending with internally generated cash flow. We forecast average
FFO to debt of around 60% over the next two years, with leverage
ratios improving significantly in 2021 from weaker metrics in
2020.
"We expect Endeavor's financial metrics will be much stronger in
2021 while production and reserves continue to grow. We expect
funds from operations (FFO) to debt and debt to EBITDA will rebound
to more conservative levels, averaging around 60% and 1.5x over the
next two years, respectively, compared to substantially weaker
metrics and greater cash outflows in 2020. Furthermore, the
company's newly instated hedge book provides downside risk
mitigation with almost 35% of estimated 2021 oil production covered
at above $40 per barrel (bbl). Endeavor's capital efficiency has
improved along with steadily decreasing operating expenses,
highlighted by lease operating costs of $6.10 per barrel of oil
equivalent (boe) in the third quarter, which have decreased nearly
30% from first-quarter 2019. We also believe it will continue to
build scale, with 5%-10% annual production growth from over 165
Mboe/d this year and a proved reserve base that has already
exceeded 700 million boe as of June." Granted, production remains
below several higher-rated peers and the reserve base is somewhat
less developed (58% PDP), but Endeavor's overall scale is becoming
increasingly competitive with that group.
Cash flow outspend is subsiding and liquidity has improved. S&P
said, "After several years of funding large cash flow deficits with
debt, we expect Endeavor's capital expenditures to be more closely
tied to internally generated cash flow in 2021. The company
previously cut its 2020 capital budget to around $1.05 billion in
response to lower oil and gas prices, and we expect the budget will
remain flexible going forward, with more than 95% of the company's
378,000 acres in the Midland Basin already held by production. We
view liquidity as strong, with over $390 million of cash on hand at
the end of the third quarter, along with a virtually undrawn $1.5
billion revolving credit facility commitment and no near-term debt
maturities. The company issued $600 million of 6.625% unsecured
notes due 2025 in June, with a portion of the proceeds used to
repay revolver borrowings at that time. The credit facility does
not expire until 2023 and Endeavor's next bond maturity is in 2025.
We believe borrowing base redetermination risk is minimal given
that the $2 billion borrowing base is well above the committed
amount and was raised considerably in October."
S&P said, "The positive outlook reflects our view that Endeavor
will continue to develop its asset base and expand production to
levels more comparable with higher-rated peers while aligning its
capital spending with internally generated cash flow. We forecast
average FFO to debt of around 60% over the next two years, with
leverage ratios improving significantly in 2021 from weaker metrics
in 2020."
S&P could lower the rating if FFO to debt falls below 30% on a
sustained basis, or if liquidity meaningfully deteriorates. This
would most likely occur if:
-- Commodity prices fall below our price deck assumptions;
-- The company does not meet our production growth expectations;
or
-- It becomes more aggressive with capital expenditures and
distributions.
An upgrade would be possible if the company increases production to
levels more comparable with 'BB' rated peers while maintaining
strong liquidity, FFO to debt comfortably above 60%, and avoiding
significant cash flow outspend. This would most likely occur if:
-- Operational execution meets our expectations; and
-- Its financial policy continues to be relatively conservative.
ENFRAGEN LLC: Moody's Assigns Ba3 CFR, Outlook Stable
-----------------------------------------------------
Moody's Investors Service assigned first-time Ba3 corporate family
rating to EnfraGen LLC and to its proposed $710 million 10-year
bullet Senior Secured Notes issued by EnfraGen Energia Sur, S.A.U.
A stable outlook has been assigned to both entities.
The notes will be issued, jointly and severally by EnfraGen Energia
Sur, S.A.U., Prime Energia SpA and EnfraGen Spain, S.A.U. (the
co-issuers), three privately-held companies and subsidiaries of
EnfraGen, the parent company. The senior secured notes will rank
pari passu with a 5-year $ 725 million senior secured loan, or a
total outstanding debt of $1,435 million. Proceeds of the
transaction will be used to refinance existing debt, fund the
acquisition of a portfolio of operational solar projects in Chile,
fund the acquisition of project Phoenix, reserves and pay
transaction costs and other transaction expenses.
RATINGS RATIONALE
The assigned ratings reflect the issuer's well-diversified
operations in the power markets in three different jurisdictions in
Latin America (Government of Colombia Baa2 Stable, Government of
Chile A1 Negative and Government of Panamá Baa1 Negative). The
regulatory frameworks in those countries are developed,
well-designed and with a track record of supportive regulations
that Moody's expects to remain largely in place over the coming
years. Importantly, most of the company's future revenues will be
derived from reliability and capacity charges designed to provide
security to the power markets in which it operates, that are mainly
dependent on highly variable energy sources (hydro and solar).
Furthermore, EnfraGen's Chilean operations will support the
country's decarbonization plans through the penetration of solar
and the accelerated retirement of coal facilities. Nevertheless,
the credit profile also incorporates the challenges that evolving
market dynamics could present over a longer time horizon given
Enfragen's fuel concentration in gas and diesel. Further expansion
in the renewable space while positive, provides limited credit
uplift given their still relatively low share within the overall
business mix.
The assigned ratings also consider the company's relatively simple
investment plan in terms of technology, which nevertheless calls
for a rapid expansion of its current installed capacity. The
adequate historical operating performance of the assets in the
portfolio is also factored in its credit view.
The ratings are tempered by an aggressive financing structure that
entails very high initial leverage, with a ratio of debt to EBITDA
(before all projects become operational) of 9 times, little
amortization of the debt over the life of the notes -via cash
sweeps- and large distributions to shareholders during the initial
years of the transaction. High leverage will pressure credit
metrics over the life of the transaction with an average interest
coverage in the range of 1.8 to 2.0 times; cash from operations to
debt in the 4.5%-6% range and negligible retained cash flow to debt
during the first years of the financing due to distributions of
excess cash (in the 3% range thereafter). While cash sweeps and
mandatory amortization will result in a reduction of leverage (debt
to EBITDA around 5 times in 2030), the total debt amortization is
expected to reach 35% of initial debt by year 10, exposing
noteholders to material refinancing risks.
Nevertheless, the assigned ratings take into consideration the
several structural protections included in the financial documents
that provide enhancement to creditors, namely a six-month debt
service reserve account, a one month O&M reserve account
limitations to additional debt; limitations to business activity;
restricted payments test and several cash sweep mechanisms,
starting in year 3, that seek to reduce debt by 35% by the bond's
maturity date.
Rating Outlook
The stable outlook reflects its view that EnfraGen will maintain
sound operations across its portfolio and stable cash flows mainly
from regulated reliability and capacity charges. Specifically,
Moody's expects EnfraGen will be able to produce CFO (pre working
capital) to debt in the range of 3.5 to 4.5%, interest coverage
above 1.5 times and positive levels of retained cash flow (RCF).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given its expectation of weak credit metrics, Moody's sees limited
potential for an upgrade. However, if EnfraGen is able to reduce
debt faster than expected, leading to a ratio of CFO to debt and
RCF to debt higher than 8% and 5% respectively Moody's could
upgrade the ratings.
Moody's could downgrade the ratings if the operating performance of
the assets is below expectations or if an adverse market or
regulatory development were to weaken EnfraGen's cash flow
generation. Specifically, interest coverage below 1.3 times, CFO to
debt below 3%, or negative retained cash flow for could creative
negative pressure on the ratings.
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in May 2017.
EXTRACTION OIL: Loses Bid to Reject Transportation Service Deal
---------------------------------------------------------------
Law360 reports that the owner of a Colorado pipeline lost its bid
Monday to stay an order allowing bankrupt energy exploration
company Extraction Oil & Gas Inc. to reject a transportation
services agreement, with a Delaware federal judge saying it likely
won't succeed on its appeal of the order.
In an opinion from U.S. District Court Judge Colm F. Connolly, the
court said Platte River Midstream LLC was unlikely to win its
appeal of the bankruptcy court order allowing Extraction to escape
the onerous minimum oil requirements contract it signed with Platte
River because the agreement did not create a binding covenant.
About Extraction Oil & Gas Inc.
Denver-based Extraction Oil & Gas, Inc. --
http://www.extractionog.com/-- is an independent energy
exploration and development company focused on exploring,
developing, and producing crude oil, natural gas, and NGLs
primarily in the Wattenberg Field in the Denver-Julesburg Basin of
Colorado.
Extraction Oil & Gas and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No.
20-11548) on June 14, 2020. At the time of the filing, the Debtors
disclosed $1 billion to $10 billion in both assets and
liabilities.
Judge Christopher S. Sontchi oversees the cases. The Debtors tapped
Kirkland & Ellis, LLP, Kirkland & Ellis International, LLP and
Whireford, Taylor & Preston, LLC as legal counsel; Alvarez & Marsal
North America, LLC as restructuring advisor; and Moelis & Company
and Petrie Partners Securities, LLC as investment banker and
financial advisor. Kurtzman Carson Consultants, LLC is the claims
and balloting agent and administrative advisor and
PricewaterhouseCoopers LLP (PwC) is the Debtors' independent audit
services provider.
FALL CREEK PLAZA: Has Until Jan. 8, 2021 to Confirm Plan
--------------------------------------------------------
Judge Christopher Lopez has entered an order within which the
deadline for debtors Fall Creek Plaza 1, LP, Fall Creek Plaza 2, LP
and Fall Creek Plaza 3, LP to confirm a plan is extended from
December 6, 2020 to January 8, 2021.
A full-text copy of the order dated December 3, 2020, is available
at https://tinyurl.com/yy95eg83 from PacerMonitor at no charge.
The Debtors are represented by:
Dean W. Greer, Esq.
Law Offices of Dean W. Greer
2929 Mossrock, Ste. 117
San Antonio, TX 78230
Tel.: (210) 342-7100
Fax: (201) 342-3633
About Fall Creek
Fall Creek owns and operates a shopping center in Humble, Texas. It
was built in three phases and under three different partnerships
who are the proposed joint debtors.
Fall Creek Plaza, I, LP and Fall Creek Plaza II, LP & Fall Creek
Plaza, III, LP, filed their voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-32989) on June 9, 2020. At the time of filing, the Debtors
estimated 10,000,001 to $50 million in both assets and liabilities.
Dean W Greer, Esq. represents the Debtors as counsel.
FIBERCORR MILLS: Sets Bidding Procedures for All Assets
-------------------------------------------------------
Fibercorr Mills, LLC and its affiliates ask the U.S. Bankruptcy
Court for the Northern District of Ohio to authorize the bidding
procedures in connection with the sale of substantially all assets
of Fibercorr and Cherry Springs of Massillon II, LLC to Green
Shield Limited, L.L.C. or its designee for $5.1 million, subject to
higher and better offers.
The Debtors recognize that the sale of substantially all of their
assets is, from their creditors' perspective, one of the most
important events in their cases. To that end, they ask the Court's
approval of the Bidding Procedures to sell substantially all of the
assets of Fibercorr Fibercorr and Cherry Springs.
To maximize the prospect of competitive bidding and obtain the
highest value for the assets to be sold at auction, the Debtors ask
the Court's approval of a bidding process by which interested
bidders may submit to the Debtors a written offer to purchase the
Sale Assets that contains all of the bid components required by the
Bidding Procedures.
To provide adequate notice to interested parties of the opportunity
to submit a qualified bid for the Sale Assets, the Debtors ask
approval of the Bid Procedures Notice. The Bid Procedures Notice
will contain the time of the Auction Sale, as well as all relevant
hearing and objection dates with regard to the Sale Motion.
After consultation with the Debtor's senior secured lender Premier
Bank and the Official Committee of Unsecured Creditors, the Debtors
entered into that the Asset Purchase Agreement, dated Dec. 7, 2020.
The purchase price for the Sale Assets is $5.1 million, subject to
adjustment pursuant to the terms of the Stalking Horse APA.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: No later than noon (EST) on Dec. 23, 2020
b. Initial Bid: At least $150,000 greater than the Stalking
Horse Bid
c. Deposit: $100,000
d. Auction: The Auction Sale will be conducted virtually by
video conference commencing at 10:00 a.m. (EST) on Dec. 28, 2020.
e. Bid Increments: $25,000. Any successive bid by the
Stalking Horse Bidder may include a credit bid of $95,000,
reflecting the amount of the Breakup Fee
f. Sale Hearing: Dec. 30, 2020 at 10:00 a.m. (ET)
g. Break-Up Fee: $95,000
The sale will be free and clear of liens, claims, encumbrances, and
interests.
At the closing, the Debtors intend to assume and assign to the
Prevailing Bidder certain executory contracts and unexpired leases
to be identified in a notice of the Debtors to assume and assign
certain contracts. A list of all of the Debtors' executory
contracts and unexpired leases that will be assumed and assigned is
included in the Cure Notice.
A copy of the Bidding Procedures is available at
https://tinyurl.com/y5kect8x from PacerMonitor.com free of charge.
About Fibercorr Mills
FiberCorr Mills is a Massillon-based manufacturer of corrugated
cardboard products. The Shew family bought the FiberCorr business
from Georgia-Pacific in February 2000. Cherry Springs of
Massillon
II is the owner of real property consisting of FiberCorr's business
premises. Shew Industries, LLC is the parent company of the other
debtors. Visit http://www.fibercorr.comfor more information.
Fibercorr Mills and its affiliates filed Chapter 11 petitions
(Bankr. N.D. Ohio Lead Case No. 20-61029) on June 17, 2020. At the
time of the filing, Fibercorr Mills had estimated assets of between
$1 million and $10 million and liabilities of between $1 million
and $10 million.
Judge Russ Kendig oversees the case.
The Debtors tapped Anthony J. Degirolamo, Attorney At Law as their
bankruptcy counsel; and The Phillips Organization as their
financial advisor.
The U.S. Trustee for Region 9 appointed a committee to represent
unsecured creditors in Debtors' Chapter 11 cases. The committee is
represented by Lewis Brisbois Bisgaard & Smith, LLP.
FIRST CHOICE: Seeks to Hire Sichenzia Ross as Securities Counsel
----------------------------------------------------------------
First Choice Healthcare Solutions, Inc. seeks approval from the
U.S. Bankruptcy Court for the Middle District of Florida to hire
the law firm of Sichenzia Ross Ference LLP as its special
securities counsel.
Sichenzia will assist the Debtor in the preparation of necessary
securities documents for the capital raise and
regulatory filings in connection therewith.
The employment of the Sichenzia will be based on their hourly
rates, subject to a 15 percent discount. The engagement agreement
provides for a retainer of $5,000.
The attorneys at Sichenzia working on the case will primarily be
Arthur Marcus who has an hourly rate of $650 which when discounted
by 15 percent as agreed equals $552.50/hour and Jacob Tabman whose
billing rate is $325/hour which when discounted by the agreed upon
15 percent is 276.25/hour.
Mr. Marcus disclosed in a court filing that his firm does not hold
or represent any interest adverse to the Debtor and its estate.
The firm can be reached through:
Arthur Marcus, Esq.
Jacob Tabman, Esq.
Sichenzia Ross Ference Kesner LLP
1185 Avenue of Americas, 37th Floor
New York, NY 10036
Phone: (212) 930-9700 x 621
About First Choice Healthcare Solutions
Headquartered in Melbourne, Fla., First Choice Healthcare Solutions
is implementing a defined growth strategy aimed at building a
network of localized, integrated care platforms comprised of
non-physician-owned medical centers, which concentrate on treating
patients in the following specialities: orthopaedics, spine
surgery, neurology, interventional pain management and related
diagnostic and ancillary services in key expansion markets
throughout the Southeastern U.S. Visit https://www.myfchs.com for
more information.
First Choice Healthcare Solutions and its affiliates concurrently
filed voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Lead Case No. 20-03355) on June
15, 2020. The petitions were signed by Phillip J. Keller, interim
chief executive officer and chief financial officer.
Judge Karen S. Jennemann oversees the cases.
At the time of the filings, First Choice Healthcare Solutions had
total assets of $1,283,553 and total liabilities of $1,855,427;
First Choice Medical Group of Brevard, LLC had total assets of
$2,260,116 and total liabilities of $3,016,161; FCID Medical, Inc.
had total assets of $1,832,489 and total liabilities of $642,515;
and Marina Towers, LLC had total assets of $6,149,380 and total
liabilities of $6,558,440.
Debtors have tapped Akerman LLP as their bankruptcy counsel, Trenam
Kemker Scharf Barkin Frye O'Neil & Mullis, P.A. and Patel Law
Group, P.A. as special counsel, and CBIZ MHM, LLC as accountant.
Aaron Cohen has been appointed the Subchapter V trustee.
FORTOVIA THERAPEUTICS: Plan Filing Deadline Extended to Jan. 29
----------------------------------------------------------------
Judge Stephani W. Humrickhouse has entered an order that Fortovia
Therapeutics, Inc., may have an extension of time of 60 days, up to
and including Friday, January 29, 2021, of the deadline to file a
Plan of Reorganization and Disclosure Statement.
About Fortovia Therapeutics
Fortovia Therapeutics, Inc., is an oncology supportive care
pharmaceutical and medical device company headquartered in Raleigh,
North Carolina.
Fortovia Therapeutics filed a Chapter 11 petition (Bankr. E.D.N.C.
Case No. 20-02970) on Aug. 31, 2020. At the time of filing, the
Debtor had $1 million to $10 million in assets and liabilities.
The Hon. Stephani W. Humrickhouse oversees the case. William P.
Janvier, Esq. of JANVIER LAW FIRM, PLLC, is the Debtor's counsel.
FRANCESCA'S HOLDINGS: To Close About 100 More Stores
----------------------------------------------------
Jeremy Hill of Bloomberg News reports that Francesca's Holdings
Corp. closed 137 stores prior to its bankruptcy filing and will
shutter almost 100 more "underperforming" locations during the
Chapter 11 process, court papers show.
The retailer operated 558 stores across the U.S. as of Dec. 1,2020,
according to the court declaration from Chief Executive Officer
Andrew Clarke.
TerraMar Capital LLC has offered to buy Francesca's as a going
concern.
The purchase price is $23 million but is subject to a smattering of
adjustments, including cure costs and a working capital adjustment,
per court papers.
About Francesca's Holdings
Francesca's Holdings Corporation -- http://www.francescas.com/--
is a specialty retailer which operates a nationwide-chain of
boutiques providing customers a unique, fun and personalized
shopping experience. The merchandise assortment is a diverse and
balanced mix of apparel, jewelry, accessories and gifts. Today,
francesca's operates approximately 702 boutiques in 47 states and
the District of Columbia and also serves its customers through
http://www.francescas.com/
Francesca's reported a net loss of $25.02 million for the fiscal
year ended Feb. 1, 2020, compared to a net loss of $40.94 million
for the fiscal year ended Feb. 2, 2019.
Ernst & Young LLP, in Houston, Texas, the Company's auditor since
2010, issued a "going concern" qualification in its report dated
May 1, 2020, citing that the COVID-19 pandemic has caused a
material adverse effect on the Company's sales, results of
operations, and cash flows, and the Company has stated that
substantial doubt exists about its ability to continue as a going
concern.
GARRISON SHORTSTOP: Seeks to Hire Baker Firm as Legal Counsel
-------------------------------------------------------------
Garrison Shortstop, LLC filed an amended application seeking
authority from the U.S. Bankruptcy Court for the Eastern District
of Kentucky to hire The Baker Firm PLLC as its counsel.
Baker will provide these services:
(a) general legal advice and representation;
(b) representation at the 341(a) meeting of creditors;
(c) advice and representation regarding all interactions with
the U.S. trustee, or any duly appointed Chapter 11 trustee;
(d) advice and representation regarding the sale, recovery, or
surrender of any assets of Debtor;
(e) work related to the proposal, confirmation and
consummation of a Chapter 11 plan, or other final disposition of
the case; and
(g) adversary proceedings deemed necessary for the Debtor's
Reorganization.
Baker received a retainer of $15,000 on Nov. 27, 2020, which was
deposited into the firm's IOLTA.
The firm has agreed to charge an hourly rate of up to $300 for
attorneys work, plus reimbursement of work-related expenses, and up
to $75 for non-attorney staff.
In court filings, Michael Baker, Esq. disclosed that his firm is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Michael B. Baker, Esq.
THE BAKER FIRM, PLLC
301 W. Pike Street
Covington, KY 41011
Phone: (859) 647-7777
Fax: (859) 647-7799
Email: mbaker@bakerlawky.com
About Garrison Shortstop, LLC
Garrison Shortstop, LLC filed its voluntary Chapter 11 petition
(Bankr. E.D. Ken. Case No. 20-10262) on Dec. 1, 2020. At the time
of filing, the Debtor estimated $100,001 to $500,000 in assets and
$1,000,001 to $10 million in liabilities. Michael B. Baker, Esq. at
THE BAKER FIRM, PLLC represents the Debtor as counsel.
GIBSON FARMS: Gets OK to Hire Frost PLLC as Accountant
------------------------------------------------------
Gibson Farms and its affiliates received approval from the U.S.
Bankruptcy Court for the Northern District of Texas to employ
Frost, PLLC as their accountants.
The Debtors assert that it is necessary to retain an accountant in
the administration of this estate for the purpose of preparing
financial statements, cash flow projections and any additional
financial advice, preparation of tax returns and providing any
information or assistance as may be requested by the Debtors.
Frost, PLLC will charge based off of their hourly rates:
Partner $405
Manager $300
Supervisor $230
Senior $200
Staff $180
Administrative $103
Frost, PLLC is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code, according to court
filings.
The tax accountant may be reached at:
Robert Wolfe
Dennis Cooper
Frost, PLLC
425 W. Capitol Ave., Suite 3300
Little Rock, AR 72201
Tel: (501) 376-9241
Fax: (501) 374-5520
About Gibson Farms
Gibson Farms and its affiliates filed voluntary petitions for
relief under Chapter 11 of Bankruptcy Code (Bankr. N.D. Tex. Lead
Case No. 20-20271) on Oct. 5, 2020. Paula Gibson, partner, signed
the petitions.
At the time of the filing, the Debtors had estimated assets of
between $1,000,001 and $10,000,000 and liabilities of between
$10,000,001 and $50,000,000.
Judge Robert L. Jones oversees the cases.
The Debtors have tapped Mullin Hoard & Brown, LLP as legal counsel;
Clint W. Bumguardner of W.T. Appraisal, Inc. as real estate
appraiser; and Frost, PLLC as accountant.
GOLDEN ENTERTAINMENT: S&P Affirms 'B' ICR, Outlook Negative
-----------------------------------------------------------
S&P Global Ratings affirmed its ratings on Nevada-based gaming
operator Golden Entertainment Inc., including its 'B' issuer-credit
rating, and removed all ratings on the company from CreditWatch,
where S&P placed them with negative implications on March 20,
2020.
Golden Entertainment Inc.'s third-quarter 2020 EBITDA grew modestly
year over year, despite substantially lower revenue, due to cost
cuts and a mix shift to higher-margin gaming revenue. S&P believes
these trends will continue through most of 2021 and support
leverage declining toward the mid-6x area by the end of next year.
However, modest underperformance relative to our forecast would
result in leverage at the end of next year close to S&P's 7x
downgrade threshold.
S&P said, "The rating affirmation reflects our forecast for cost
cuts and a mix shift toward higher-margin gaming revenue to
continue over the next several quarters, supporting an improvement
in S&P Global Ratings-adjusted leverage toward the mid-6x area by
the end of 2021. Nevertheless, we believe Golden's adjusted
leverage will remain elevated above our 7x downgrade threshold in
the next few quarters, and there remains some uncertainty as to the
company's recovery path given the potential for additional
operating restrictions because of rising COVID-19 cases.
"Although we expect 2021 EBITDA to be only modestly below that of
2019 under our base case, there is substantial uncertainty as to
the sustainability of Golden's recovery given the potential for
further capacity restrictions or shutdowns. Our current base-case
forecast assumes 2021 revenue is about 5%-15% below 2019, and
EBITDA is flat to down 10%. Our revenue forecast incorporates our
assumption that 2021 food and beverage (F&B), hotel room, and some
distributed gaming revenue will be down in 2021, relative to 2019,
since we expect Golden to keep many of these lower-margin amenities
closed until capacity restrictions are lifted and those amenities
can become more profitable. We also believe recent increases in
COVID-19 cases will translate into reduced visitation to casinos in
the next few quarters as consumers may have fears of being in
enclosed public spaces. Further, in November, Nevada announced
tighter capacity limits at casinos, bars and restaurants, reducing
capacity to 25% from 50%. We expect these new capacity restrictions
will result in lower visitation, relative to the third quarter of
2020, at Golden's properties, particularly at its Las Vegas Strip
property, the STRAT, which accounts for about 20% of EBITDA. As
cases of COVID-19 continue to rise, states could impose further
restrictions or new lockdowns, which would result in performance
deviating from our base-case forecast and leverage nearing our 7x
downgrade threshold.
"We expect the reduced revenue in 2021, relative to 2019, to be
partially offset by our assumption that Golden, like many other
gaming operators, will continue to benefit from cost reductions
made over the past several months, particularly in terms of labor
and marketing. We believe the company will continue to realize some
cost savings by keeping some lower-margin amenities closed and by
keeping marketing at reduced levels. We believe that since leisure
alternatives may be somewhat limited in Golden's markets and since
many gaming competitors have also reduced marketing spending,
Golden will be able to sustain marketing reduction until its
operating markets become more competitive following broader
openings of leisure alternatives and less-stringent social
distancing requirements, which we assume may be in the second half
of 2021. Further, we believe a mix shift toward higher-margin
gaming revenue will support higher EBITDA margin in 2021 relative
to 2019, despite a decline in absolute EBITDA levels. Nevertheless,
we believe some costs could begin to creep up as occupancy at the
STRAT increases, which would put pressure on margins.
"We believe the drive-to nature of the majority of Golden's
properties, its concentration in Nevada, which has a relatively low
gaming-tax rate, and the lack of high fixed-rent payments, will
support its recovery in 2021. We believe the Las Vegas local and
regional gaming markets will continue to see higher levels of
customer visitation compared to destination markets given consumer
fears around air travel, and limited airline capacity. We believe
Golden will continue to benefit from its ability to draw customers
from within driving distances since around 80% of its EBITDA is
derived from its local and regional gaming operations. We believe
the location of many of Golden's properties in less densely
populated markets, like its casino in Rocky Gap, Md., and markets
that are tailored to road trip customers, like its Lakeside Casino
& RV Park in Pahrump, Nev., benefit from customers seeking leisure
alternatives away from city centers, which customers may perceive
as riskier in terms of contracting the virus. Further, Golden's Las
Vegas Strip property, the STRAT, is less reliant, compared to most
operators on the Strip, on group and international travel, which we
expect to continue to be weak through at least the first half of
2021 due to reduced airlift, gathering restrictions, lower
corporate travel budgets and corporate travel restrictions, and our
belief that group organizers will remain cautious in light of
increasing virus cases.
"Further, we believe Golden's recovery will also benefit from a
concentration of its operations in Nevada, which has a lower gaming
tax rate relative to many other states, which should help drive a
greater conversion of revenue to cash flow. Golden also benefits
from a lack of significant fixed rent payments, relative to other
regional gaming operators. Therefore, we believe Golden will have
more flexibility to continue to reduce costs, or be able to
maintain reduced levels of marketing spending, even in a scenario
of declining revenue.
"We believe Golden has sufficient liquidity to weather another
temporary shutdown. We estimate that Golden should have sufficient
liquidity to absorb cash losses for approximately two years in a
zero-revenue scenario. This stems from the company's liquidity
position on Sept. 30, 2020, of $300 million, which includes $100
million of cash on hand and full availability under the company's
$200 million revolver, and our estimate for total monthly cash burn
(including operating expenses, interest expense, amortization, and
maintenance levels of capital expenditures) of about $10
million-$11 million."
Environmental, Social, and Governance (ESG) credit factors for this
credit rating change:
-- Health and safety.
S&P said, "The negative outlook reflects our forecast for adjusted
leverage to remain above our 7x downgrade threshold over the next
few quarters, and uncertainty around the sustainability of Golden's
recovery in light of rising COVID-19 cases, the potential for
further operating restrictions on gaming operators, and the
potential for changing consumer behavior because of continued high
virus cases and expected weak economic conditions into 2021.
"We could lower the rating on Golden if we no longer believe
adjusted leverage will improve below 7x by the end of 2021 or if we
expect adjusted EBITDA coverage of interest to fall below 1.5x.
These credit measures would likely result from a ramp in revenue
and EBITDA that is modestly weaker than we are expecting, either
because of further restrictions on capacity, another shutdown in
operations, or generally weaker demand.
"We would consider stabilizing the outlook if Golden is able to
stabilize or grow its EBITDA such that leverage falls below 7x and
we had more certainty around the company's recovery prospects
following the pandemic. This is unlikely until the coronavirus is
effectively contained and there is limited risk of additional
property closures or significant continuing operating
restrictions."
GOLDEN GROUP: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: The Golden Group Realty Inc.
70 South 8 Street
Brooklyn, NY 11249
Business Description: The Golden Group Realty Inc. is engaged in
activities related to real estate. The
Debtor is a corporation currently under
contract purchase the real property located
at 90 Wauregan Road, Killingly, Connecticut.
The Property is currently owned by Siri
Manufacturing Co. Inc.
Chapter 11 Petition Date: December 6, 2020
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 20-44188
Judge: Hon. Nancy Hershey Lord
Debtor's Counsel: Fred B. Ringel, Esq.
ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK
P.C.
875 Third Avenue
New York, NY 10022
Tel: (212) 603-6300
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Samuel Guttman, sole shareholder.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
List of Debtor's 20 Largest Unsecured Creditors:
https://www.pacermonitor.com/view/PYUP3CA/The_Golden_Group_Realty_Inc__nyebke-20-44188__0001.0.pdf?mcid=tGE4TAMA
GRACIE'S VENTURES: Restaurant Hits Bankruptcy, Plans to Reopen
--------------------------------------------------------------
Ted Nesi and Kim Kalunian of WPRI.com report that one of
Providence, Rhode Island's best-known restaurants has filed for
bankruptcy, as restrictions tied to the coronavirus pandemic take a
heavy toll on one of the capital city’s most important
industries.
Court documents show Gracie's Ventures Inc., the parent company of
Gracie's on Washington Street as well as the nearby café Ellie's,
filed for Chapter 11 protection in U.S. Bankruptcy Court on Nov.
30, 2020. The company reported over $1 million in liabilities owed
to over 50 creditors, including $614,663 tied to two emergency U.S.
Small Business Administration loans given out during the pandemic.
Ellen Slattery, who opened Gracie's in 1998 and remains its owner,
said filing for Chapter 11 will allow the company to restructure
its balance sheet, and is "the only way" her establishment can
survive.
"We need relief so we can continue to grow Gracie’s Ventures in a
positive direction and come out of this stronger to withstand what
we are headed for in our industry for years to come," Slattery told
12 News in an email. "We will continue to persevere. If any team
has the grit to do it, we do."
Gracie's will remain closed for the month of December due to the
tightened restrictions imposed by Gov. Gina Raimondo amid rising
coronavirus cases, but Slattery said she hopes to reopen in January
2021 "depending on industry regulations at the time." Ellie's
remains open for takeout and holiday orders.
"We have been a part of the community for 22 years," Slattery said.
"We have fought through the recession, 9/11, guests feeling unsafe
to come downtown. We have built a network of dedicated farmers,
friends, and family in the community. We work to give back to our
community and those in need. We are here to keep fighting."
Writing on Twitter, Providence Warwick Convention & Visitors Bureau
CEO Kristen Adamo warned that more restaurants could be in trouble
without action by the government to assist them:
Angus Davis, the Providence entrepreneur who founded restaurant
technology company Upserve, was listed as one of the creditors owed
money by Gracie's Ventures. He said he has asked the company to
wipe out any debt owed to him.
"Gracie's is one of the best restaurants in Rhode Island," David
said in an email. "I am proud of Ellen and her team. This
bankruptcy was not her fault. Gracie's transports its guests to
another place, a magical place, if even just for an hour or two."
"I am grateful to have had the opportunity to be a small part of
Ellen's incredible restaurant, and I look forward to continuing to
be her friend, supporter and patron moving forward," he continued.
"I expect Gracie’s to re-emerge on the other side of this
reorganization ready to serve guests once again with amazing food
and unparalleled hospitality."
Davis added, "I will remark some other time about the incompetence
of our government and its unwillingness to help the restaurant
industry it shut down, which is criminal."
About Gracie's Ventures
Gracie's Ventures Inc. owns restaurant Gracie's on Washington
Street in Providence, Rhode Island, as well as the nearby cafe
Ellie's.
Gracie's Ventures filed for Chapter 11 protection (Bankr. D.R.I.
Case No. 20-11269) on Nov. 30, 2020. The Hon. Diane Finkle is the
case judge. McLAUGHLINQUINN LLC, led by Thomas P. Quinn, is the
Debtor's counsel. The Debtor was estimated to have assets of up to
$50,000 and liabilities of $1 million to $10 million as of the
bankruptcy filing.
GUITAR CENTER: Announces Offering of $335M Senior Secured Notes
---------------------------------------------------------------
Guitar Center, Inc., on Dec. 7, 2020, announced that its indirect
wholly owned subsidiary Guitar Center Escrow Issuer II, Inc. (the
"Issuer") intends to offer, subject to market conditions and other
considerations, $335 million in aggregate principal amount of
senior secured notes due 2025 (the "Notes").
The offering is part of a series of transactions (the
"Restructuring Transactions"), including exit financing
transactions, being undertaken in connection with the financial
restructuring of the Company and certain of its subsidiaries to be
effectuated through a pre-packaged plan of reorganization (the
"Plan") under Chapter 11 of the U.S. Bankruptcy Code as filed with
the U.S. Bankruptcy Court for the Eastern District of Virginia on
November 21, 2020. If the Notes are issued prior to satisfaction of
certain conditions, which includes the occurrence of the effective
date of the Plan (the "Effective Date"), the Issuer will deposit
the gross proceeds of the offering of the Notes into an escrow
account (the "Escrow Account") and the Notes will be secured by a
lien on amounts deposited in the Escrow Account until such amounts
are released upon satisfaction of the escrow release conditions.
Subject to the occurrence of the Effective Date and certain other
conditions, on the escrow release date (the "Escrow Release Date"),
the Issuer will be merged with and into the Company (or the
Company's successor), with the Company (or such successor)
surviving and assuming all obligations under the Notes.
Concurrently on the Escrow Release Date, the Notes will be jointly
and severally and fully and unconditionally guaranteed on a senior
secured basis by certain of the Company's subsidiaries (subject to
certain exceptions) and will be secured on a first-priority basis
by substantially all of Company's assets (subject to certain
exceptions) which do not secure its new $375 million secured asset
based financing facility (the "ABL Facility") on a first-priority
basis and will be secured on a second-priority basis by all of the
Company’s assets (subject to certain exceptions) which secure its
ABL Facility on a first-priority basis.
On and following the Escrow Release Date, the net proceeds from
this offering, together with other cash proceeds from the other
Restructuring Transactions, will be used (i) to repay all amounts
outstanding, if any, under a secured asset based
debtor-in-possession facility and a secured debtor-in-possession
term facility, (ii) to repay its senior secured superpriority notes
due 2022, (iii) to pay the cash portion of the consideration
holders of the Company’s 9.500% senior secured notes due 2021
will receive in settlement of their claims, (iv) to pay related
fees, interest and expenses incurred (if not previously repaid) in
connection with the Restructuring Transactions and the proceedings
under Chapter 11 of the U.S. Bankruptcy Code and (v) for general
corporate purposes.
The Notes will not be registered and will only be offered to
persons reasonably believed to be "qualified institutional buyers"
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act") and certain non-U.S. persons outside the
United States in accordance with Regulation S under the Securities
Act and may not be offered or sold in the United States absent
registration or an exemption from the registration requirements of
the Securities Act and applicable state securities laws. This press
release does not constitute an offer to sell or the solicitation of
an offer to buy any security, nor shall there be any sale of the
Notes or any other security of the Company, in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
the registration or qualification under the securities laws of any
such jurisdiction.
About Guitar Center
Guitar Center, Inc., headquartered in Westlake Village, Cal., is
the largest musical instrument retailer with 312 stores and a
direct response segment, which operates its Web sites. It operates
three distinct musical retail business -- Guitar Center (about 70%
of revenue), Music & Arts (about 7% of revenue), and Musician's
Friend (its direct response subsidiary with 24% of revenue). Total
revenue is about $2 billion.
Guitar Center disclosed a net loss of $72.16 million in 2012, a net
loss of $236.93 million in 2011 and a $56.37 million net loss in
2010.
Guitar Center, Inc., and 7 of affiliates sought Chapter 11
protection (Bankr. E.D. Va. Lead Case No. 20-34656) on Nov. 21,
2020.
Guitar Center was estimated to have $1 billion to $10 billion in
assets and liabilities as of the bankruptcy filing.
The Hon. Kevin R. Huennekens is the case judge.
The Debtors tapped MILBANK LLP as general bankruptcy counsel;
HOULIHAN LOKEY, INC. as restructuring advisor; and BERKELEY
RESEARCH GROUP, LLC, as operational and financial advisor. HUNTON
ANDREWS KURTH LLP is the Debtors' local bankruptcy counsel. LYONS,
BENENSON & COMPANY INC. is the compensations consultant. PRIME
CLERK LLC is the claims agent.
Stroock & Stroock & Lavan LLP is serving as legal counsel to an ad
hoc group of Secured Noteholders and Province is serving as
financial advisor. Kirkland & Ellis LLP is serving as legal
counsel to Ares Management Corporation. Debevoise & Plimpton LLP
is serving as legal counsel to Brigade Capital Management and GLC
Advisors & Co. is serving as financial advisor. Paul, Weiss,
Rifkind, Wharton & Garrison LLP is serving as legal counsel to The
Carlyle Group.
HARRODS CLUB: Selling Georgetown Property for $3.75 Million
-----------------------------------------------------------
Harrods Club, LLC, asks the U.S. Bankruptcy Court for the Eastern
District of Kentucky the private sale of its real property which
consists of approximately 150 undeveloped acres located on Old
Oxford Road, Georgetown, Scott County, Kentucky for $3.75 million,
free and clear of all liens, claims and encumbrances.
Prior to the filing of the Petition, the Debtor entered into the
following agreements with two purchasers for the sale and purchase
of all of the Property:
a. Agreement for the Purchase and Sale of Subdivision
Lots with MND Holdings, LLC for the purchase of approximately 37
acres of the Property for the purchase price of $2.1 million
(Exhibit A).
b. Agreement for the Purchase and Sale of Subdivision
Lots with Pleasant Valley Development, LLC and United Property
Holdings, LLC for the remaining acres of the Property for the
purchase price of $1.65 million (Exhibit B).
Neither Purchase Agreement is contingent on financing. Each
Purchase Agreement provides 15 days for the Purchaser to obtain
title insurance. The Purchase Agreement with MND requires the
Debtor to obtain approval of the plat attached thereto as Exhibit A
Tract 2 by the staff of the Georgetown Scott Count Planning
Commission so that the Debtor is able to convey the approximately
37 acres separately from the whole of the Property. Each Purchase
Agreement requires an earnest money deposit of $100,000.
Traditional Bank filed suit against Robert C. Sims, Dorothea R.
Sims, Harrods Club, LLC and Santa Barbara Land Corporation in the
Fayette Circuit Court, Civil Action No., 20-CI-692 to foreclose on
six (6) properties securing indebtedness of said defendants to
Traditional Bank.
On Nov. 17, 2020, the Fayette Circuit Court entered Summary
Judgment, Order of Sale and Appointment of Licensed Auctioneer
Pursuant to KRS 426.522 authorizing the Master Commissioner of the
Fayette Circuit Court to auction said six properties at noon on
Dec. 7, 2020.
Those six properties have been appraised by two disinterested
housekeepers per direction of the Master Commissioner as follows
(Total Appraised Value: $5.965 million):
a. 150 +/- acres on Old Oxford Rd, Scott County, KY - $3.75
million
b. 2.78 +/- acres commercial lot on Outlet Center Dr, Scott
County, KY - $835,000
c. 11.157 +/- acres industrial lot on E. Yusen Way, Scott
County, KY - $325,000
d. 1218 S. Broadway, Suite 150, Fayette County, KY - $235,000
e. 1218 S. Broadway, Suite 110, Fayette County, KY - $245,000
f. 1155 Jonestown Lane, Fayette County, KY - $440,000
g. 40 Wichita Drive, Jessamine County, KY - $135,000
On Dec. 3, 2020, Traditional Bank advised the Fayette Circuit
Court, by pleading, that the balance due it as of Dec. 4, 2020 is
$3,652,977 with interest accruing at $236 per day. Sale of the
property under the foregoing Purchase Agreements will result in
full payment of Traditional Bank.
Traditional Bank has expressed its concern that sale of a portion
of the Property, particularly the sale of the approximately 37
acres separately, would depreciate the value of the remainder of
the tract. The Purchasers and the Debtor are willing to agree that
closing under each Purchase Agreement will be held simultaneously
and that closing will not be held under one Purchase Agreement
unless closing is held at the same time under both Purchase
Agreements.
Irrespective of the foregoing agreement of simultaneous closing,
Traditional Bank was not willing to suspend the sale scheduled by
the Master Commissioner. For a sale by the Master Commissioner to
be confirmed by the Fayette Circuit Court, the bid for each
property
need be at least 2/3ds of appraised value, which would result in a
substantial loss to the Debtor.
The sale as described is in the best interest of the Debtor and its
creditor as it provides for full payment of Traditional Bank.
Finally, Debtor asks that the Court authorizes it at closing to pay
the proceeds, after usual and customary closing costs and real
property taxes, to Traditional Bank in satisfaction of the
indebtedness due it.
Objections, if any, must be filed within 21 days from the date of
the Motion.
A copy of the Agreements is available at
https://tinyurl.com/y5onmxc2 from PacerMonitor.com free of charge.
The Purchasers:
MND HOLDINGS, LLC
523 Wellington Way, Suite 160
Lexington, KY 40503
Attn: Derrick Ritchie
Telephone: (859) 229-2636
Facsimile: (859) 227-8901
E-mail: derrick@mndholdings.com
PLEASANT VALLEY DEV'T., LLC
1332 Cahill Drive
Lexington, KY 40504
Attn: Jerry Woodall
Telephone: (859) 221-2909
E-mail: jwoodall@woodallconst.com
About Harrods Club
Harrods Club, LLC, sought Chapter 11 protection (Bankr. E.D. Ky.
Case No. 20-51647) on Dec. 7, 2020. The petition was signed by
Robert C. Sims, manager. The Debtor was estimated assets and
liabilities in the range of $1 million to $10 million. The case is
assigned to Judge Tracey N. Wise. The Debtor tapped Taft A.
McKinstry, Esq., at Fowler Bell PLLC as counsel.
HENRY FORD VILLAGE: Hires Dykema Gossett as Legal Counsel
---------------------------------------------------------
Henry Ford Village, Inc., filed an amended application seeking
authority from the U.S. Bankruptcy Court for the Eastern District
of Michigan to employ Dykema Gossett PLLC as its legal counsel.
The Debtor files this amended application with additional
information and disclosures in compliance with the United States
Trustees' Guidelines, including the Large Case Fees Guidelines.
Henry Ford Village requires Dykema Gossett to:
a. assist in the preparation, filing, and prosecution of
Debtor's bankruptcy petitions, schedules, statements of financial
affairs, and various motions essential to or required in this
Chapter 11 Case;
b. assist in the preparation, filing, and defense of
objections to various motions, claims, and actions by creditors and
parties-in-interest;
c. negotiate with various creditors, including any creditor
committees;
d. negotiate with potential plan proponents and/or purchasers
of Debtor's assets, and the preparation of related agreements;
e. advise on matters regarding the restructuring of debts and
financial structure; and
f. provide any other bankruptcy related administrative matters
arising during the court of this Chapter 11 Case.
Dykema Gossett will be paid at these hourly rates:
Members $415 to $675
Associates $330 to $375
Paralegals $190
The names, positions, and current hourly rates of those Dykema
lawyers currently expected to spend significant time on this
Chapter 11 Case are:
Sheryl L. Toby, Member $675
Ann D. Fillingham, Member $675
Phyllis D. Adams, Member $595
Patrick L. Huffstickler, Member $545
Jeanne M. Whalen, Member $460
Jong-Ju Chang, Member $415
Danielle N. Rushing, Associate $330
Diane Guerrero, Paralegal $190
Dykema Gossett received a retainer of $261,168.19 from the Debtor
to prepare and file the Chapter 11 Case. As of the Petition Date,
Dykema Gossett held the remaining balance of the retainer in the
amount of $201,983.69 in its trust account.
Dykema Gossett will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Sheryl L. Toby, partner of Dykema Gossett PLLC, assured the court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Dykema Gossett can be reached at:
Sheryl L. Toby, Esq.
Jong-Ju Chang, Esq.
DYKEMA GOSSETT PLLC
39577 Woodward Avenue, Suite 300
Bloomfield Hills, MI 48304
Tel: (248) 203-0700
Fax: (248) 203-0763
E-mail: SToby@dykema.com
JChang@dykema.com
About Henry Ford Village
Henry Ford Village, Inc. is a non-profit, non-stock corporation
established to operate a continuing care retirement community
located at 15101 Ford Road, Dearborn, Mich. It provides senior
living services comprised of 853 independent living units, 96
assisted living unites and 89 skilled nursing beds.
Henry Ford Village sought Chapter 11 protection (Bankr. E.D. Mich.
Case No. 20-51066) on Oct. 28, 2020. In the petition signed by CRO
Chad Shandler, Henry Ford Village was estimated to have $50 million
to $100 million in assets and $100 million to $500 million in
liabilities.
The Hon. Mark A. Randon is the case judge.
The Debtor has tapped Dykema Gossett PLLC as its legal counsel and
FTI Consulting, Inc., as its financial advisor. Kurzman Carson
Consultants, LLC, is the claims agent.
HERITAGE RAIL: Trustee Selling 5 Vehicles to SLRG for $33K
----------------------------------------------------------
Tom Connolly, the Chapter 11 Trustee of Heritage Rail Leasing, LLC,
asks the U.S. Bankruptcy Court for the District of Colorado to
authorize the sale of the following vehicles to San Luis & Rio
Grande Railroad, Inc. ("SLRG") for $33,000: (i) 2003 Chevy Suburban
Hi-rail, (ii) 2011 Chevy Silverado 3500, (iii) 2003 Ford Truck,
(iv) 2011 Chevy Silverado 1500, and (v) Big Tex Trailer.
Heritage owns rail cars, locomotives, rolling stock and equipment
that it used in connection with its rail car leasing business. A
significant portion of its equipment and rail cars are stored with
SLRG on SLRG's property. Additionally, a small portion of
Heritage's equipment is used by the SLRG Trustee in the ongoing
operations of the railroad.
The Trustee and William A. Brandt, the Chapter 11 Trustee for SLRG,
have been having ongoing discussions as to how to disentangle the
affairs and assets of the estates, in particular those assets upon
which both estates have claims. The Motion will be the first of
several that attempt to unwind a portion of the estates' affairs.
Heritage's schedules and statements of affairs were filed on Octo.
7, 2020. Included on the Debtor's Schedule of Assets are five
vehicles which are being used by SLRG in its ongoing operation of
the railroad and the values listed are those taken directly from
the Heritage schedules: (i) 2003 Chevy Suburban Hi-rail valued at
$6,000, (ii) 2011 Chevy Silverado 3500 valued at $7,000; (iii) 2003
Ford Truck valued at $2,500, (iv) 2011 Chevy Silverado 1500 valued
at $5,000, and (v) Big Tex Trailer valued at $2,000.
The SLRG Trustee is in the process of marketing the railroad.
Potential purchasers have informed the SLRG Trustee that title to
the Heritage Vehicles would allow the purchaser to maintain
uninterrupted operations of the railroad without the need to
immediately
purchase replacement vehicles.
Neither the SLRG Trustee nor the Heritage Trustee is confident that
the values listed in the Heritage Schedules represent the fair
market value for the Heritage Vehicles. The Kelly Blue Book
Values are as follows: (i) 2003 Chevy Suburban Hi-rail valued at
$4,845, (ii) 2011 Chevy Silverado 3500 valued at $9,462, (iii) 2003
Ford Truck valued at $10,390, (iv) 2011 Chevy Silverado 1500 valued
at $7,782, and (v) Big Tex Trailer – no value listed (because of
the age of the trailer).
Accordingly, the SLRG Trustee has offered and the Trustee has
accepted an offer of $33,000 for the Heritage Vehicles. The
purchase price is based upon and will be allocated for each vehicle
based upon its Blue Book value, with $521 allocated to the Big Tex
Trailer. Except for the trailer, the Heritage Vehicles are titled.
No notations appear on the titles; therefore, the Trustee believes
that they are unencumbered.
The Agreement is as follows:
a. The Agreement is subject to, and will not become
effective, until it is approved in its entirety by two final,
written, non-appealable Order of the Bankruptcy Court issued in the
Heritage and SLRG bankruptcy case.
b. The SLRG Trustee will pay Heritage $33,000 for title
to the Heritage Vehicles. The purchase price will be allocated for
each vehicle based upon its Blue Book value, with $521 allocated to
the Big Tex Trailer.
c. The sale is "as is, where is." The Trustee and the
SLRG Trustee, respectively, release each other's estates as to any
claims with respect to the Heritage Vehicles. The release does not
effect in any way either the SLRG Trustee's or the Trustee's rights
as to any other equipment.
As Heritage is not actively operating, the Heritage Vehicles are
not necessary for use by the Heritage estate. Sale is therefore an
appropriate step. The price for the Heritage Vehicles is fair to
the best of the Trustee's ability to determine value. A successful
sale transaction for SLRG is in Heritage's interest since, among
other things, both Debtors are co-borrowers on the secured loan to
Big Shoulders Capital, LLC. Accordingly, it is the Trustee's
business judgment that the sale is in the best interest of the
creditors and the Debtor's estate, as it provides the Trustee with
the best strategy for maximizing the value of the railroad to an
potential purchaser of the operations.
About Heritage Rail Leasing
Heritage Rail Leasing, LLC leases rail rolling stocks, locomotives
and track equipment.
On Aug. 21, 2020, Portland Vancouver Junction & Railroad Inc.,
Vizion Marketing LLC and D.L. Paradeau Marketing LLC filed a
Chapter 11 involuntary petition against Heritage Rail Leasing.
The
creditors are represented by Michael J. Pankow, Esq., at Brownstein
Hyatt Farber Schreck, LLP.
Judge Thomas B. McNamara oversees the case.
L&G Law Group LLP and Moglia Advisors serve as the Debtor's legal
counsel and restructuring advisor, respectively. Alex Moglia of
Moglia Advisors is the Debtor's chief restructuring officer.
On Oct. 19, 2020, the Office of the U.S. Trustee appointed a
committee to represent unsecured creditors in the Debtor's Chapter
11 case. The committee is represented by Goldstein & McClintock
LLLP and the Law Offices of Douglas T. Tabachnik, P.C.
On Oct. 28, 2020, the Court approved the appointment of Tom H.
Connolly as the Debtor's Chapter 11 trustee. The trustee tapped
Brownstein Hyatt Farber Schreck, LLP as his counsel.
HERTZ CORPORATION: Hires Moelis & Company as Investment Banker
--------------------------------------------------------------
The Hertz Corporation, and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the District of Delaware to
employ Moelis & Company LLC, as investment banker to the Debtors.
After the commencement of these Chapter 11 Cases, and after careful
consideration, including in consultation with Moelis & Company on
July 16, 2020, the Debtors identified market conditions that could
result in a sale of, or other transaction with respect to (a
"Business Transaction"), all or a significant portion of the
assets, properties or business of, their wholly-owned subsidiary,
Donlen Corporation ("Donlen Corp.").
Hertz Corporation requires Moelis & Company to:
a. assist the Debtors in conducting a business and financial
analysis of Donlen Corp.;
b. identify and evaluate candidates for a Business
Transaction;
c. contact potential third party purchasers that the Firm and
the Debtors have agreed may be appropriate for a Business
Transaction ("Acquirers"), and meet with and provide
potential Acquirers such information about Donlen Corp. as
may be appropriate;
d. assist the Debtors in preparing a marketing plan and
information materials describing Donlen Corp. for Moelis to
distribute to potential Acquirers;
e. assist the Debtors in developing a strategy to effectuate a
Business Transaction;
f. assist the Debtors, upon further request, in structuring,
and negotiating a Business Transaction and participating in
such negotiations as requested; and
g. meet with the Debtors' Board of Directors to discuss any
proposed Business Transaction and its financial
implications.
Moelis & Company will be paid at these hourly rates:
-- 0.75% of Transaction Value for amounts up to and including
$1.00 billion; plus
-- 5% of Transaction Value for amounts in excess of $1 billion
up to and including $1.05 billion; plus
-- 3% of incremental Transaction Value in excess of $1.05
billion.
Moelis & Company will also be reimbursed for reasonable
out-of-pocket expenses incurred.
William Q. Derrough, managing director and Global Co-Head of
Recapitalization & Restructuring of Moelis & Company LLC, assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
Moelis & Company can be reached at:
William Q. Derrough
MOELIS & COMPANY LLC
399 Park Avenue, 5th Floor
New York, NY 10022
Tel: (212) 883-3800
About The Hertz Corporation
Hertz Corp. and its subsidiaries -- http://www.hertz.com/--
operate a worldwide vehicle rental business under the Hertz,
Dollar, and Thrifty brands, with car rental locations in North
America, Europe, Latin America, Africa, Asia, Australia, the
Caribbean, the Middle East, and New Zealand. They also operate a
vehicle leasing and fleet management solutions business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court for
the District of Delaware (Bankr. D. Del. Case No. 20-11218).
Judge Mary F. Walrath oversees the cases. The Debtors have tapped
White & Case LLP as their bankruptcy counsel, Richards, Layton &
Finger, P.A. as local counsel, Moelis & Co. as investment banker,
and FTI Consulting as financial advisor. The Debtors also retained
the services of Boston Consulting Group to assist the Debtors in
the development of their business plan. Prime Clerk LLC is the
claims agent.
The U.S. Trustee for Regions 3 and 9 appointed a Committee to
represent unsecured creditors in Debtors' Chapter 11 cases. The
Committee has tapped Kramer Levin Naftalis & Frankel LLP as its
bankruptcy counsel, Benesch Friedlander Coplan & Aronoff LLP as
Delaware counsel, UBS Securities LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Ernst & Young
LLP provides audit and tax services to the Committee.
HERTZ CORPORATION: Panel Hires Prime Clerk as Noticing Agent
------------------------------------------------------------
The Official Committee of Unsecured Creditors of The Hertz
Corporation, and its debtor-affiliates, seeks authorization from
the U.S. Bankruptcy Court for the District of Delaware to retain
Prime Clerk LLC, as claims and noticing agent to the Committee.
The Committee requires Prime Clerk to:
a. establish and maintain a website for the Committee (the
"Creditor Website") and provide related technology and
communications services to facilitate the Committee's
communications with the Debtors' unsecured creditors; and
b. prepare and serve required notices and pleadings on behalf
of the Committee in accordance with the Bankruptcy Code,
the Bankruptcy Rules, the Local Rules, and all applicable
orders entered by the Court, all in the form and manner
directed by the Committee.
Prime Clerk will be paid at these hourly rates:
Director of Solicitation $210
Solicitation Consultant $190
COO and Executive VP No charge
Director $175-$195
Consultant/Senior Consultant $65-$165
Technology Consultant $35-$95
Analyst $30-$50
Prime Clerk will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Benjamin J. Steele, partner of Prime Clerk LLC, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and (a) is not creditors,
equity security holders or insiders of the Debtors; (b) has not
been, within two years before the date of the filing of the
Debtors' chapter 11 petition, directors, officers or employees of
the Debtors; and (c) does not have an interest materially adverse
to the interest of the estate or of any class of creditors or
equity security holders, by reason of any direct or indirect
relationship to, connection with, or interest in, the Debtors, or
for any other reason.
Prime Clerk can be reached at:
Benjamin J. Steele
PRIME CLERK LLC
830 3rd Avenue, 9th Floor
New York, NY10022
Tel: (212) 257-5450
E-mail: bsteele@primeclerk.com
About The Hertz Corporation
Hertz Corp. and its subsidiaries -- http://www.hertz.com-- operate
a worldwide vehicle rental business under the Hertz, Dollar, and
Thrifty brands, with car rental locations in North America, Europe,
Latin America, Africa, Asia, Australia, the Caribbean, the Middle
East, and New Zealand. They also operate a vehicle leasing and
fleet management solutions business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court for
the District of Delaware (Bankr. D. Del. Case No. 20-11218).
Judge Mary F. Walrath oversees the cases. The Debtors have tapped
White & Case LLP as their bankruptcy counsel, Richards, Layton &
Finger, P.A. as local counsel, Moelis & Co. as investment banker,
and FTI Consulting as financial advisor. The Debtors also retained
the services of Boston Consulting Group to assist the Debtors in
the development of their business plan. Prime Clerk LLC is the
claims agent.
The U.S. Trustee for Regions 3 and 9 appointed a Committee to
represent unsecured creditors in Debtors' Chapter 11 cases. The
Committee has tapped Kramer Levin Naftalis & Frankel LLP as its
bankruptcy counsel, Benesch Friedlander Coplan & Aronoff LLP as
Delaware counsel, UBS Securities LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Ernst & Young
LLP provides audit and tax services to the Committee.
INTELLIGENT PACKAGING: Moody's Assigns B3 CFR, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service assigned ratings to Intelligent Packaging
HoldCo Issuer LP, consisting of a B3 corporate family rating (CFR),
B3-PD probability of default rating and a Caa2 rating to its
proposed $125 million senior unsecured PIK Toggle Notes. Moody's
also affirmed the B3 rating on Intelligent Packaging Limited Finco
Inc.'s senior secured notes. IP HoldCo's outlook is stable.
Upon the closing of the transaction, the B2 CFR and B2-PD
probability of default rating currently assigned to IPL Finco will
be withdrawn. The outlook for IPL Finco will remain stable.
Proceeds from the proposed PIK Toggle Notes will be used to fund a
dividend payment to the equity owners of IP HoldCo.
"The corporate family rating is being moved to IP Holdco from IPL
Finco as IP Holdco will become the most senior company with rated
debt," said Louis Ko, Moody's analyst. He added, "The corporate
family rating is being downgraded one notch because leverage is
being increased close to two turns to 7.4X through several
financial transactions since the initial rating was assigned on
August 21, 2020."
Assignments:
Issuer: Intelligent Packaging HoldCo Issuer LP
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Unsecured Regular Bond/Debenture, Assigned Caa2 (LGD6)
Affirmations:
Issuer: Intelligent Packaging Limited Finco Inc.
Senior Secured Regular Bond/Debenture, Affirmed B3 (LGD3 from
LGD4)
Outlook Actions:
Issuer: Intelligent Packaging HoldCo Issuer LP
Outlook, Assigned Stable
To Be Withdrawn at Close:
Issuer: Intelligent Packaging Limited Finco Inc.
Corporate Family Rating, B2
Probability of Default Rating, B2-PD
RATINGS RATIONALE
IP HoldCo's B3 rating is constrained by: (1) relatively small scale
of its operating entity (adjusted EBITDA about $100 million); (2)
pro-forma leverage (adjusted debt/EBITDA) of 7.4x at transaction
close and our expectation that the metric will remain elevated
above 7x over the next 12 to 18 months; (3) the aggressive
acquisition strategy and demonstrated willingness of the new
controlling PE owner to releverage for shareholder distributions;
(4) the fragmented and competitive nature of the plastics packaging
industry with low organic growth; and (5) moderate environmental
risks related to the use of plastics in the manufacturing process.
However, IP HoldCo benefits from: (1) a diversified business model
through three main business segments with geographical
diversification; (2) high exposure to relatively stable end markets
including food packaging, environmental solutions and agricultural
consumers; (3) diverse long-term customer relationships which
include a number of large retailers and food manufacturers; (4)
strong market positions in Canada and the UK supported by IPL
Plastics' ability to customize its end products for its customers;
and (5) good liquidity.
IP HoldCo has good liquidity. The company's sources of liquidity
are approximately $215 million while it does not have any mandatory
repayments on the senior notes over the next 12 months. IP HoldCo's
liquidity is supported by cash of approximately $70 million (post
transaction net of cash used for financing fees and potential
acquisitions), full availability under its $125 million ABL
revolver due September 2025 (subject to a borrowing base), and our
expected free cash flow around $20 million through the next 4
quarters. IP HoldCo does not have to comply with any financial
covenants unless ABL availability falls below 10% of the lesser of
the borrowing base and the commitment amount, which mandates
compliance with a minimum fixed charge coverage ratio of 1x. We do
not expect this covenant to be applicable in the next 4 quarters.
IP HoldCo has limited ability to generate liquidity from asset
sales as its assets are encumbered. IP HoldCo has no refinancing
risk until 2025 when its ABL facility will come due.
IP HoldCo's stable outlook reflects Moody's view that it will
maintain its leverage above 7x as the ability to slowly delever
from free cash flow is offset by expected future acquisitions and
relevering shareholder distributions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if IP HoldCo sustains adjusted
Debt/EBITDA below 6.0x (projected to be 7.3x for 2021E, pro forma
for acquisitions), EBITDA/Interest above 2.5x (projected to be 2.2x
for 2021E, pro forma for additional PIK toggle notes interest
payments) and free cash flow to debt above 5% (projected to be 2%
for 2021E).
The rating could be downgraded if IP HoldCo sustains adjusted
Debt/EBITDA above 8.0x (projected to be 7.3x for 2021E, pro forma
for acquisitions) and EBITDA/Interest below 2.0x (projected to be
2.2x for 2021E, pro forma for additional PIK toggle notes interest
payments), or if liquidity weakens materially, possibly due to a
prolonged period of negative free cash flow.
As a plastic packaging manufacturer, IPL Plastics has moderate
environmental risks given increasing regulatory and consumer
concerns about plastic packaging. However, the concerns have
revolved primarily around single-use plastics which are not the
focus of IPL Plastics' business. The majority of IPL Plastics'
products are 100% recyclable and the company has worked with its
global brand customers to achieve their required recyclable
plastics content ahead of their 2025 commitments. Having said that,
IPL Plastics' business model is exposed to innovation of
alternative packaging materials which could potentially replace
plastic packaging in the future, which could affect IPL Plastics'
volumes. However, this risk is currently considered low as the
replacement of plastics remain inefficient in terms of energy usage
and amounts of alternative materials required to replace the amount
of resin materials needed for plastic packaging. Overall, the
company has shown the willingness and ability to innovate and adapt
to its customers' requirements which helps mitigate the
environmental risks it faces in the long run.
The governance matters we considered in IPL Plastics' credit
profile include private-equity ownership and the potential for an
aggressive capital structure in comparison to public corporations,
as evidenced by the debt-financed equity distribution being funded
with the PIK notes transaction. We also considered the reduced
financial disclosure requirements for a private company in
comparison to a publicly-traded entity.
The senior secured notes at IPL Finco are rated at the same level
as the CFR because they rank behind the $125 million ABL facility
and ahead of the proposed $125 million IP Holdco PIK Toggle Notes.
IP Holdco's debt is rated two notches below the CFR because it is
junior to all other liabilities at the opcos and IPL Finco.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
IP HoldCo and operating subsidiaries provides plastic packaging and
containers used in the food, consumer, agricultural, logistics and
environment end markets. Revenues for the twelve months ended Sept.
30, 2020 was approximately $600 million. IP HoldCo is a Canadian
limited partnership with headquarters in Dublin, Ireland. It is
wholly-owned by private equity firms Madison Dearborn Partners and
Caisse de dépôt et placement de Québec.
J.C. PENNEY: Operating and Retail Assets to Emerge from Chapter 11
------------------------------------------------------------------
JCPenney on Dec. 7, 2020, announced that it has completed its
previously announced sale, under which Simon Property Group and
Brookfield Asset Management, Inc. have acquired substantially all
of JCPenney's retail and operating assets ("OpCo"). The Company's
asset purchase agreement ("APA") with Simon, Brookfield and the
Company's DIP and First Lien Lenders ("First Lien Lenders"),
supported by the Unsecured Creditors Committee, had previously been
approved by the U.S. Bankruptcy Court for the Southern District of
Texas on November 9, 2020.
"Today is an exciting day for our company, as we have accomplished
our goal of putting JCPenney on a secure path for the future as a
private company so that we can continue to serve our loyal
customers," said Jill Soltau, Chief Executive Officer of JCPenney.
"With this closing, our operating company has exited Chapter 11 and
is continuing under new ownership and the JCPenney banner. This
milestone would not be possible without the commitment and hard
work of our associates and the support of our vendor partners.
Throughout the 2020 holiday season and beyond, we remain focused on
implementing our Plan for Renewal to Offer Compelling Merchandise,
Drive Traffic, Deliver an Engaging Experience, Fuel Growth and
Build a Results-Minded Culture."
"We have always been firm believers in JCPenney, and are very
pleased to help preserve this iconic institution and save tens of
thousands of jobs," said David Simon, Chairman, Chief Executive
Officer and President of Simon Property Group. "JCPenney is now
poised for a future focused on innovation and consumers, while
continuing to navigate through the pandemic. We are excited about
JCPenney's future growth and look forward to collaborating with the
JCPenney team to serve its customers and communities."
"We are excited to help lead the turnaround of a storied
institution while saving tens of thousands of jobs and continuing
to serve over 35 million customers," said Brian Kingston, CEO of
Real Estate at Brookfield Asset Management. "This is exactly the
type of investment our Retail Revitalization Program was designed
to make and along with our partner Simon we have a successful
blueprint in place to deploy our collective operational expertise
and industry relationships to transform JCPenney through new
innovations and offerings."
In addition, on November 24, 2020, the Court approved the Company's
Plan of Reorganization to create separate property holding
companies (“PropCos”) comprising 160 of the Company's real
estate assets and all of its owned distribution centers, which will
be owned by the Company's DIP and First Lien Lenders. The OpCo will
enter into master leases with the PropCos and JCPenney will
continue to operate the properties and distribution centers moved
into the PropCos. The PropCos are expected to complete the
Court-supervised restructuring process and emerge from Chapter 11
bankruptcy protection in the first half of 2021.
OpCo Financing Update
With the completion of the sale, JCPenney has access to
approximately $1.5 billion of new financing. This includes a new
ABL Facility, which was led by Wells Fargo, and the recently funded
FILO Facility, on which Pathlight Capital ("Pathlight") is serving
as the FILO Agent.
"We are pleased to lead such an important financing for this iconic
American retailer, to not only support our long-term client through
their reorganization, but also provide Simon Property Group and
Brookfield Asset Management the financial flexibility they need as
they transition JCPenney into its next phase," said David Marks,
head of Wells Fargo Commercial Capital.
"Pathlight is pleased to support JCPenney through their emergence
and future growth," said Dan Platt, CEO at Pathlight Capital. "We
are looking forward to working with the management team and new
equity partners as they continue to implement their transformation
strategy and focus on enhancing the shopping experience of their
loyal customer base."
Additional Information
Additional information regarding JCPenney's financial restructuring
is available at jcprestructuring.com. Court filings and information
about the claims process are available at
cases.primeclerk.com/JCPenney, by calling the Company’s claims
agent, Prime Clerk, toll-free at 877-720-6576, or by sending an
email to JCPenneyinfo@primeclerk.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 in November 2020 won approval to sell substantially all
of its retail and operating assets ("OpCo") to a group formed by
landlords Brookfield Asset Management, Inc. and Simon Property
Group and senior lenders through a combination of cash and new term
loan debt.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal
counsel and BRG Capital Advisors, LLC is serving as financial
adviser to Simon and Brookfield.
JACKSON, MS: S&P Lowers Water/Sewer Revenue Bond Rating to 'BB+'
----------------------------------------------------------------
S&P Global Ratings lowered its long-term ratings on various series
of bonds issued by the Mississippi Development Bank and payable by
Jackson, Mississippi's water and sewer revenues to 'BB+' from
'BBB-'. At the same time, S&P removed the ratings from CreditWatch
with negative implications, where they had been placed on Sept. 22,
2020. The outlook on the ratings is stable.
"The downgrade reflects the existence of a prolonged period of
revenue shortfalls, exacerbated by metering system implementation
delays, bond covenant violations, litigation, and looming consent
order costs," said S&P Global Ratings credit analyst Scott
Garrigan. "We have not lowered the rating further because the city
has, in our view, taken significant positive steps in 2020 to start
remediating these problems."
If negative revenue variances occur that are not being recoverable
through system infrastructure and metering improvements, expense
adjustments, rate adjustments, or a combination of all these, S&P
could lower the rating.
Future reliance on draws to either the O&M or contingent fund to
make timely debt service payments, combined with an inability to
replenish those draws from recurring operating revenues within the
same fiscal year (in essence, relying on those funds to support
debt service requirements but not maintaining compliance with the
general bond ordinance requirements), would also likely lead to our
lowering of the rating.
A higher rating will be predicated on the city being able to
achieve sustained financial results that are compliant with all of
its bond covenants, both for debt service coverage and full funding
of its various required reserve funds. For evidence of this, we
would continue to utilize both auditor findings and management
representations.
Stronger financial performance includes a reduction or elimination
of auditor findings, asset management improvements which improve
water loss and sewer overflows, and finalizing the consent decree.
JEFFERSON COUNTY: Fitch Affirms BB+ Rating on Series 2013-B Debt
----------------------------------------------------------------
Fitch Ratings has affirmed the following ratings for Jefferson
County, AL's warrants:
-- $395 million senior-lien sewer revenue current interest
warrants, series 2013-A at 'BB+';
-- $79 million senior-lien sewer revenue capital appreciation
warrants, series 2013-B at 'BB+';
-- $220 million senior-lien sewer revenue convertible capital
appreciation warrants, series 2013-C at 'BB+';
-- $774.1 million subordinate-lien sewer revenue current interest
warrants, series 2013-D at 'BB';
-- $78.6 million subordinate-lien sewer revenue capital
appreciation warrants, series 2013-E at 'BB';
-- $505.8 million subordinate-lien sewer revenue convertible
capital appreciation warrants, series 2013-F at 'BB'.
In addition, Fitch has assessed the standalone credit profile (SCP)
of the county's sewer system (the system) at 'bb'.
The Rating Outlook is Stable.
ANALYTICAL CONCLUSION
The 'BB+' and 'BB' ratings on the senior- and subordinate-lien
warrant ratings, respectively, and 'bb' SCP reflect the system's
financial profile in the context of the system's midrange revenue
defensibility (assessed at 'bbb') and midrange operating risk
profile (also assessed at 'bbb'). The system maintains favorable
service area characteristics although rate flexibility is somewhat
constrained, with elevated affordability concerns. The 'bbb'
operating risk assessment reflects a very low operating cost
burden, offset by elevated life cycle investment needs. Leverage,
represented by net adjusted debt-to-adjusted funds available for
debt service (FADS), has been stable at around 12x and continues to
remain in that range over the rating cycle.
System leverage will be a key credit concern for some time given
the use of capital appreciation warrants and the back-loaded debt
structure that yields a minimal principal amortization rate. Debt
service increases about 50% in fiscal 2024 from the prior year and
then continues to escalate 3% annually through fiscal 2039. At this
level annual cash flow may not be adequate to fully fund the
system's known capital needs given the pace of annual rate
increases enacted in the approved rate structure (ARS) through the
term of the warrants. Favorably, the system has no variable
interest rate risk or exposure to swap termination payments, both
of which were major contributors to the county's prior bankruptcy
filing in 2011. Management reports that warrants can be called in
2023 and a refunding of some or all of the obligation is expected
prior to that time. Presently the amount and scope of the refunding
is unknown.
Fitch makes a one-notch distinction between the senior- and
subordinate-lien obligations given that the difference in the
financial profile between the two liens is considered meaningful
and the priority of payment to senior-lien warrantholders is
preserved in all circumstances. The senior-lien debt accounts for
about one-third of total obligations and is expected to stay at
that level given the warrants amortization structure.
CREDIT PROFILE
Jefferson County (Issuer Default Rating AA-/Stable) is located in
the north-central part of the state at the southern end of the
Appalachian Mountains. With an estimated population of close to
659,000 the county is the most populous in the state with 44
incorporated and unincorporated cities and towns, including
Birmingham, the largest city in the state and home to the
University of Alabama at Birmingham.
The system provides retail wastewater collection, treatment, and
disposal service to a 440-square-mile area that includes 23
municipalities within the county (including the cities of
Birmingham and Bessemer) as well as unincorporated parts of the
county and very small portions of Shelby and St. Clair counties.
Service is provided via nine wastewater treatment plants (WWTPs)
with a combined average daily treatment capacity of 259 million
gallons per day, more than 2x fiscal 2019 flows.
Coronavirus Considerations
The recent outbreak of coronavirus has not shown significant
impairment to the system's revenue or cost profiles although a
downturn in consumption has been reported. The system remains
somewhat insulated from delinquencies as the majority of billing is
handled through Birmingham Waterworks Board (BWWB) which by
contract assumes the county's delinquency risk. However, Fitch's
ratings remain forward-looking in nature, and Fitch will continue
to monitor developments related to the severity and duration of the
virus outbreak, as well as revise expectations for future
performance as appropriate.
KEY RATING DRIVERS
Revenue Defensibility 'bbb'
Favorable Service Area; Limited Rate Flexibility
Favorable service area characteristics are supported by midrange
customer growth, income and employment assessments. Rates are high
for a significant portion of the population.
Operating Risks 'bbb'
Very low operating cost burden; elevated capital needs.
The system's low operating cost burden if offset by countervailing
capital needs. Capital investment, while increasing, has
continually lagged depreciation. An asset management plan is in
effect.
Financial Profile 'bb'
Stable Leverage
Leverage has remained constant the past five years and is expected
to stay at similar levels over the rating cycle. Debt service
increases beginning in fiscal 2024 may impact financial
performance.
Jefferson County, AL has an ESG Relevance Score of '4' for Human
Rights, Community Relations, Access & Affordability due to product
affordability, which has a negative impact on the credit profile,
and is relevant to the rating in conjunction with other factors.
ASYMMETRIC ADDITIVE RISK CONSIDERATIONS
The unique structure of the capital appreciation warrants with very
slow amortization is considered an asymmetric risk although it does
not constrain the rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The SCP could move upward with sustained net leverage under 9x
in Fitch's base and stress cases, provided maintenance of current
revenue defensibility and operating risks assessments;
-- Refunding of outstanding warrants such that improving FADS
results in lower leverage.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The SCP could move downward with sustained net leverage
approximating 14x or above in Fitch's base and stress cases,
provided maintenance of current revenue defensibility and operating
risks assessments;
-- Failure to enact rate increases necessary to provide for
increased debt service costs and adequate capital investment.
SECURITY
The senior-lien warrants are payable from gross system revenues of
the county's sanitary fund, which does not include sewer tax
revenues that are used for operations. The subordinate-lien
warrants are payable from system revenues after payment of the
senior-lien warrants.
REVENUE DEFENSIBILITY
Revenue defensibility is assessed at 'bbb' with all of the system's
revenue derived from services or business lines exhibiting
monopolistic characteristics in a service area with favorable
demographic trends. Customer growth, considered midrange, registers
a five-year compound growth rate of 0.1%. Income and unemployment
levels are also considered midrange, with income and unemployment
86% and 78% of the national average, respectively.
The cities of Birmingham and Bessemer bill customers directly for
sewer service on behalf of the county and account for 91% of
customers. Under an arrangement with BWWB, the county pays an
annual fee and receives all revenue whether or not collected. BWWB
shoulders the responsibility for uncollected and delinquent
accounts.
The ARS was adopted by the county commission in October 2013. The
resolution allowed for four annual rate increases of 7.89%
effective from fiscals 2015 through 2018, with annual 3.49%
increases beginning Oct. 1, 2018 and continuing as long as the 2013
sewer revenue warrants remain outstanding. The commission retains
its ability to make additional rate adjustments through resolution
as long as the rate covenant is maintained. Based on 6,000 gallons
per month (gpm) of sewer flows, charges are considered affordable
for about half of the population, although average residential
consumption registers closer to 4,500 gpm.
OPERATING RISKS
The system's operating risk is assessed at 'bbb', which takes into
consideration a very low operating cost burden at $5,071 per
million gallons in fiscal 2019, assessed at 'aa'. This is offset by
capital planning and management assessed at 'bb'. The system's
life-cycle ratio of 56% indicates elevated capital needs with a
five-year capital/depreciation spend ratio at 39% signaling
extremely weak capital investment. Planned five-year (2020-2024)
capital spending is sizable at close to $431.5 million, yet
spending is not anticipated to keep up with annual depreciation,
which will keep the life-cycle ratio elevated over the near term.
The system reports adherence to an asset management plan, however,
with no reported performance concerns.
The fiscal 2020-2024 capital improvement plan (CIP) includes
expenditures for plant renewal work, ongoing maintenance and
remediation. The largest spending categories include sanitary sewer
overflow (SSO) abatement, plant repair, replacement and renewal and
collection system rehabilitation. The system is a party to a
consent decree (CD) dating to 1996 requiring the county to
eliminate all SSOs and bypasses. To date, the county has completed
all construction projects required and five of the nine basins
included in the CD have been removed from any further CD
requirements. While there are no additional construction projects
outstanding, collection system maintenance, and/or capacity
improvements are needed to fully achieve the requirements related
to the four remaining basins and fully terminate the CD. Expected
phosphorus regulation has been delayed and permits will include a
five-year extension until 2028. The county had met compliance
targets for the past five years and additional anticipated
regulatory expenditures are not included in the CIP providing some
relief in spending over the near term.
The CIP is strictly cash funded from reserves amassed by annual
surplus revenue. While the reduced CIP is a benefit, eventually the
capital issues will need to be addressed as increasing debt service
costs will reduce margins, leaving less cash available for capex.
FINANCIAL PROFILE
The financial profile is assessed at 'bb'. Leverage is considered
weak and was 11.9x in fiscal 2019. Fitch-calculated total debt
service coverage for fiscal 2019 was 2.0x.
With 67 days cash on hand and coverage of full obligations at 2.0x,
the liquidity profile is considered neutral despite being less than
Fitch's 90-day minimum. Fitch's liquidity calculations are based
solely on undesignated operating reserves. However, per the warrant
indenture, surplus funds available for capital improvements are
recorded as restricted cash or investments. With over $300 million
in fiscal 2019, ample cash reserves are available. Restricted
amounts may also be used to pay debt service or operating expenses
if needed. For these reasons, liquidity is considered neutral to
the rating.
Fitch Analytical Stress Test (FAST)
The FAST considers the potential trend of key ratios in a base case
and a stress case. The base and stress cases were informed by the
issuer's CIP and Fitch's standard forecast assumptions apart from
county-provided operating expense growth for fiscal years 2022
through 2024. The stress case is designed to impose a capital cost
increase of 10% above expected levels and evaluate potential
variability in projected key ratios. Fitch also applied a
sensitization adjustment in FAST to account for the potential of
lower revenues driven by the coronavirus pandemic.
Fitch's base case indicates that leverage remains largely stable
over the forecast period. Although outstanding debt increases with
the delayed principal payment structure and accretion of the
warrants, offsetting growth in FADS results in leverage remaining
around 12x. The stress case yields similar results with resulting
net leverage peaking at 12.5x. Both cases remain supportive of the
current rating. The sensitized base case did not produce a material
change from the FAST stress case and was less of a consideration in
the rating.
ASYMMETRIC ADDITIVE RISK CONSIDERATIONS
The series 2013-B and 2013-E are capital appreciation warrants and
the series 2013-C and 2013-F are convertible capital appreciation
warrants. Because capital appreciation warrants accrete in value,
long term debt outstanding increases over time rather than
amortizing. This is captured in Fitch's leverage calculations and
does not constrain the final rating.
SOURCES OF INFORMATION
In addition to the sources of information identified in Fitch's
applicable criteria specified below, this action was informed by
information from Lumesis.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Jefferson County, AL has an ESG Relevance Score of '4' for Human
Rights, Community Relations, Access & Affordability due to product
affordability, which has a negative impact on the credit profile,
and is relevant to the rating in conjunction with other factors.
Except for the matters discussed, 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.
L BRANDS: Moody's Affirms B2 CFR; Alters Outlook to Positive
------------------------------------------------------------
Moody's Investors Service affirmed all ratings of L Brands, Inc.
including its corporate family rating at B2 and its probability of
default rating at B2-PD. The company's existing senior secured
notes were affirmed at Ba2. The company's existing senior unsecured
guaranteed notes were also affirmed at B2 and the senior unsecured
unguaranteed notes were affirmed at Caa1. The speculative grade
liquidity rating remains SGL-2. The outlook was changed to positive
from negative.
"L Brands has been able to improve its operational performance and
extend debt maturities as it navigates the disruption of the
pandemic," stated Senior Vice President, Christina Boni. "Bath and
Body Works has experienced outsized growth as consumers flock to
its key categories of home, personal care and sanitization during
the pandemic, while Victoria's Secret has benefitted from lower
inventory levels and better execution," stated Senior Vice
President, Christina Boni.
Affirmations:
Issuer: L Brands, Inc.
Probability of Default Rating, Affirmed B2-PD
Corporate Family Rating, Affirmed B2
Senior Secured Regular Bond/Debenture, Affirmed Ba2 (LGD2)
GTD Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD4)
Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD6)
Outlook Actions:
Issuer: L Brands, Inc.
Outlook, Changed To Positive From Negative
RATINGS RATIONALE
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Its analysis has considered the effect on the performance of L
Brands including the positive effect on its Bath & Body Works
divisions from the pandemic balanced by 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.
L Brands' B2 CFR rating is supported by its strong Bath & Body
Works operations, which generate significant free cash flow, offset
by the weak but improving operations at Victoria's Secret. L Brands
benefits from significant scale with October 31, 2020 LTM revenues
of about $11.7 billion. Its merchandising strategy and supply chain
have historically enabled the company to ensure product freshness
and higher inventory turns relative to other specialty retail
operators. The termination of the sale of Victoria's Secret has led
to a focus on decentralizing the business such with the ultimate
goal of separating its two divisions.
The positive outlook reflects the outsized performance of Bath and
Body Works which has benefitted from significant tailwinds from a
change in consumer spending caused by COVID-19 as well as the
recent improvement in operations at Victoria's Secret, both of
which Moody's expects to be sustained. The positive outlook also
reflects Moody's expectation that the company will continue to
reduce debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded should operations be positioned to return
to 70% of fiscal 2019 EBITDA, the company maintains good liquidity
and a conservative financial policy, and near-term debt maturities
are addressed. A suspension of its common dividend is expected to
continue until sales and operating performance at both Bath and
Body and Victoria's Secret return to a consistent positive trend.
Ratings could be downgraded if liquidity deteriorates and near-term
debt maturities are not addressed well in advance or financial
policy becomes more aggressive. Quantitatively, ratings could be
also be downgraded should operations not be positioned to return to
60% of fiscal 2019 EBITDA.
Headquartered in Columbus, Ohio, L Brands, Inc. operates 2,681
company-owned specialty stores in the United States, Canada, and
Greater China, and its brands are also sold in 743 franchised
locations worldwide as of October 31, 2020. Its brands include
Victoria's Secret, Bath & Body Works, and PINK.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
LAKES EDGE: Trustee Taps Blanco Tackabery as Attorney
-----------------------------------------------------
Ashley S. Rusher, Chapter 11 Trustee for the Lakes Edge Group, LLC,
received approval from the U.S. Bankruptcy Court
for the Middle District of North Carolina to retain the law firm of
Blanco Tackabery & Matamoros, P.A. as her attorneys.
The Trustee requires Blanco Tackabery to:
a. give the Trustee legal advice with respect to her duties
and powers;
b. assist in identifying the potential legal problems which
may arise in the administration of the Chapter 11 case;
c. assist the Trustee in the operation of Debtor's business,
including an evaluation of the desirability of the continuance of
such business, the ability and means by which some or all of the
assets could be refinanced or liquidated to generate cash for the
payment of such claims as may be allowed in this proceeding, and
any other matters relevant to the case;
d. assist and advise the Trustee in the examination and
analysis of the conduct of Debtor's affairs and the causes of
insolvency;
e. assist and advise the Trustee with regard to communications
to the general creditor body regarding any matters of general
interest and the plan of reorganization and other causes of
action;
f. prepare, review and analyze all applications, orders,
statements of operations, and schedules previously filed with the
Court by Debtor or other third parties;
g. perform such other legal services as may be requited and in
the interest of the Trustee, including but not limited to the
commencement and pursuit of such adversary proceedings as may be
authorized, and the pursuit of such civil actions as may be pending
as of the Petition Date.
Blanco Tackabery represents no other entity in connection with this
case, represents or holds no interest adverse to the interest of
the estate with respect to the matters on which the firm are to be
employed, and is a disinterested party as that term is defined in
11 U.S.C. Sec. 101, according to court filings.
The firm can be reached through:
Ashley S. Rusher, Esq.
BLANCO TACKABERY
& MATAMOROS, P.A.
P. 0. Drawer 25008
Winston-Salem, NC 27114-5008
Tel: (336) 293-9000
Fax: (336) 293-9030
E-mail: asr@blancolaw.com
About The Lakes Edge Group
The Lakes Edge Group, LLC classifies its business as single asset
real estate (as defined in 11 U.S.C. Section 101(51B)).
The Lakes Edge Group filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D.N.C. Case No.
20-50715) on Sept. 24, 2020. Mark Fletcher, authorized
representative, signed the petition.
At the time of the filing, the Debtor had estimated assets of less
than $50,000 and estimated liabilities of $1 million to $10
million.
Judge Lena M. James oversees the case.
Bennett-Guthrie PLLC is the Debtor's legal counsel.
On November 16, 2020, the court appointed Ashley S. Rusher as
Chapter 11 trustee for Debtor pursuant to Section 1104 of the
Bankruptcy Code.
LAS VEGAS MONORAIL: Files Payout Plan After Sale to LVCVA
---------------------------------------------------------
Las Vegas Monorail Company, a Nevada nonprofit corporation, filed
with the U.S. Bankruptcy Court for the District of Nevada, a Plan
of Reorganization and a Disclosure Statement on Dec. 3, 2020.
The Court has approved a sale of the Assets comprising the Monorail
System to the Las Vegas Convention and Visitors Authority (the
"LVCVA"), and for purposes of this Disclosure Statement and the
Plan it is assumed that the Sale scheduled to close no later than
Dec. 10, 2020, has been consummated. In conjunction with the Sale,
Debtor has assumed and assigned all easements, property rights and
Executory Contracts and Unexpired Leases to the LVCVA pursuant to
the Asset Purchase Agreement.
Upon the consummation of the Sale, Debtor's remaining assets will
be comprised of: (i) the Other Consideration; (ii) cash on hand of
approximately $125,000 plus insurance premium rebates of $50,000;
and (iii) cash Debtor anticipates receiving from Debtor's
professionals from the balances of pre-petition retainers. It is
anticipated that this will total approximately $2,027,000.
The primary objective of the Plan is to pay all Office of the
United States Trustee ("UST") Fees due because of the Sale and the
other Distributions due under the Plan, Allowed Administrative
Claims, and the balance pro rata to those Creditors with Allowed
Claims. The Debtor estimates that the UST Fees which will come due
as a result of the Sale and then Distributions to Allowed
Administrative Claims and Allowed General Unsecured Claims will be
approximately $250,000.
Class 3 consists of General Unsecured Claims. Each Holder of an
Allowed General Unsecured Claim, shall be paid in Cash its pro rata
share of the Creditor Fund after payment of Allowed Class 2
Priority Unsecured Claims.
A full-text copy of the Disclosure Statement dated December 3,
2020, is available at
https://www.pacermonitor.com/view/E4HFIAQ/LAS_VEGAS_MONORAIL_COMPANY__nvbke-20-14451__0290.0.pdf?mcid=tGE4TAMA
Attorneys for Debtor:
GARMAN TURNER GORDON LLP
GERALD M. GORDON
E-mail: ggordon@gtg.legal
MARK M. WEISENMILLER
E-mail: mweisenmiller@gtg.legal
7251 Amigo Street, Suite 210
Las Vegas, Nevada 89119
Telephone (725) 777-3000
Facsimile (725) 777-3112
About Las Vegas Monorail Company
Las Vegas, Nevada-based Las Vegas Monorail Company, organized by
the State of Nevada in 2000 as a nonprofit corporation, owns and
manages the Las Vegas Monorail. The monorail is a seven-stop,
elevated train system that travels along a 3.9-mile route near the
Las Vegas Strip. LVMC has contracted with Bombardier Transit
Corporation to operate the Monorail. Though it benefits from its
tax-exempt status due to being a nonprofit entity, LVMC claims to
be the first privately-owned public transportation system in the
nation to be funded solely by fares and advertising. LVMC says it
receives no governmental financial support or subsidies.
LVMC filed for Chapter 11 bankruptcy protection (Bankr. D. Nev.
Case No. 10-10464) on Jan. 13, 2010. It disclosed $395,959,764 in
assets and $769,515,450 in liabilities as of the petition date.
LVMC has tapped Garman Turner Gordon LLP as its bankruptcy counsel,
Alvarez & Marsal North America, LLC as financial advisor, and
Stradling Yocca Carlson & Rauth and Jones Vargas as special
counsel. Gordon Silver assists LVMC in its restructuring effort.
In April 2010, bondholder Ambac Assurance Corp. lost in its bid to
halt the bankruptcy after U.S. Bankruptcy Judge Bruce A. Markell
ruled that monorail isn't a municipality and is therefore entitled
to reorganize in Chapter 11. U.S. District Judge James Mahan in
Reno upheld the ruling in October 2010.
LBM ACQUISITION: Moody's Assigns B2 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating
(CFR) and B2-PD Probability of Default Rating to LBM Acquisition,
LLC dba US LBM, which will be the successor to LBM Borrower, LLC.
Moody's also assigned a B2 rating to the proposed senior secured
term loan and senior secured delayed draw term loan and a Caa1
rating to the proposed senior unsecured notes due 2028. The outlook
is stable.
Bain Capital Private Equity, LP, through its affiliates, is
acquiring US LBM for about $2.8 billion from affiliates of Kelso &
Company. US LBM's capital structure will consist of a $500 million
asset-based revolving credit facility expiring in 2025 with almost
$200 million outstanding at closing, a $1.2 million senior secured
term loan maturing 2027 and $390 million in unsecured notes due
2028. The $300 million senior secured delayed draw term loan
maturing 2027 will be undrawn at closing and used to fund future
acquisitions. Proceeds from the borrowings and a $1.085 billion
cash contribution in the form of common equity from Bain will be
used to acquire US LBM and repay the company's existing debt of
about $970 million.
"Despite Bain's sizeable equity contribution, which represents
almost 40% of the acquisition price, US LBM will remain highly
leveraged through 2021," according to Peter Doyle, a Moody's
VP-Senior Analyst.
When the financing transaction closes and all related debt
obligations are repaid, Moody's will withdraw all existing ratings
of LBM Borrower, LLC, including its B2 CFR, B2-PD PDR, SGL-3, and
the B2 senior secured first lien term loan rating and Caa1 senior
secured second lien term loan rating. Moody's will also withdraw
LBM Borrower's stable outlook.
The following ratings are affected by today's action:
Assignments:
Issuer: LBM Acquisition, LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Unsecured Regular/Bond Debenture, Assigned Caa1 (LGD6)
Senior Secured First Lien Delayed Draw Term Loan, Assigned B2
(LGD4)
Senior Secured First Lien Term Loan, Assigned B2 (LGD4)
Outlook Actions:
Issuer: LBM Acquisition, LLC
Outlook, Assigned Stable
RATINGS RATIONALE
US LBM's B2 CFR reflects Moody's expectation that the company will
remain highly leveraged. At closing, total adjusted debt is
increasing by almost 60% to about $2.0 billion from $1.3 billion at
Q3 2020. Moody's projects adjusted debt-to-LTM EBITDA will improve
to 5.8x at year-end 2021 from pro forma 6.5x at Q3 2020. Moody's
projects adjusted free cash flow-to-debt in the range of the 2% -
5% in 2021. Debt service requirements including cash interest
payments and term loan amortization will slightly exceed $100
million per year, constraining free cash flow and reducing
financial flexibility. At the same time US LBM will face challenges
integrating future acquisitions, which are to be funded with
proceeds from the senior secured delayed draw term loan, and
intense competition.
Providing an offset to the US LBM's leveraged capital structure is
reasonable profitability. Moody's forecasts adjusted EBITDA margin
in the range of the 7.5% - 10% for 2021, which is the company's
greatest credit strength. Profitability will benefit from higher
volumes from growth in end markets, resulting operating leverage
from that growth and the result of previous investments in SG&A to
meet future demand for its products. Moody's projects revenue will
grow to $4 billion for 2021 from pro forma $3.8 billion for LTM Q3
2020. Moody's also calculates interest coverage, measured as
EBITA-to-interest expense, will be around 2.2 x in late 2021, which
is reasonable given the company's considerable interest expense.
Also, Moody's forecasts that US LBM will have good liquidity over
the next two years, which is another key credit strength.
Substantial revolver availability and no near-term maturities
provide more than ample financial flexibility for US LBM to
integrate bolt on acquisitions and to contend with volatility in
end markets.
The domestic construction end markets, the driver of US LBM's
revenue, are showing resiliency during the coronavirus outbreak and
resulting economic concerns. New home construction accounts for
about two thirds of US LBM's revenue. Moody's has a stable outlook
for the US Homebuilding sector with modest growth expected. Repair
and remodeling activity, representing approximately 20% of revenue,
is exhibiting strong growth. As a national distributor with diverse
product offerings, US LBM should benefit from high levels of
spending in these end markets.
Governance characteristics we consider in US LBM's credit profile
include an aggressive financial strategy, evidenced by high
leverage. Moody's expects that the company will pursue bolt-on
acquisitions to build scale, using the senior secured delayed draw
term loan as the primary source of funding. In addition, the
company will likely use its revolver credit facility and free cash
flow to fund acquisitions. US LBM's Board of Directors has yet to
be finalized. Moody's believes that there will be at least one
independent director but control will likely reside with the
private equity sponsor.
The stable outlook reflects Moody's expectation that US LBM's
interest coverage will remain above 1.5x. A good liquidity profile
and Moody's expectation that US LBM will successfully integrate
future acquisitions without impacting operations further supports
the stable outlook.
The B2 rating assigned to US LBM's senior secured term loan and
delayed draw term loan, the same rating as the Corporate Family
Rating, results from their subordination to the company's
asset-based revolving credit facility but priority claim relative
to the company's senior unsecured notes. The term loans have a
first lien on substantially all noncurrent assets and a second lien
on assets securing the company's asset-based revolving credit
facility (ABL priority collateral).
The Caa1 rating assigned to the company's senior unsecured notes
due 2028, two notches below the Corporate Family Rating, results
from their subordination to the company's considerable amount of
secured debt.
The senior secured term loan is expected to contain certain
covenant flexibility for transactions that can adversely affect
creditors. An incremental secured facility can be incurred up to
the greater of $306 million and an amount equal to 100% of pro
forma consolidated EBITDA plus an amount up to pro forma 4.5x first
lien net leverage. The company may increase unsecured indebtedness
without causing the pro forma interest coverage ratio to be less
than 2.0x or pro forma consolidated total net leverage ratio (as
defined in the credit agreement) to exceed 6.30x. The EBITDA
definition includes add-backs such as equity-based compensation,
non-cash lease expenses, sponsor management fees, and
pre-acquisition results for historical acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade:
(All ratios incorporate Moody's standard adjustments)
-- EBITA-to-interest expense is sustained above 2.5x
-- Debt-to-LTM EBITDA is maintained below 5.0x
-- A good liquidity profile is preserved enhanced by improved
free cash flow generation and reduced borrowings under the
revolving credit facility
Factors that could lead to a downgrade:
(All ratios incorporate Moody's standard adjustments)
-- EBITA-to-interest expense is sustained below 1.5x
-- Debt-to-LTM EBITDA is expected to stay above 6.0x
-- The company's liquidity profile deteriorates
US LBM, headquartered in Buffalo Grove, Illinois, is a North
American distributor of building materials. US LBM is privately
owned and does not disclose financial information publicly.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
LRGHEALTHCARE: Seeks to Hire Baker Newman Noyes as Accountant
-------------------------------------------------------------
LRGHealthcare seeks approval from the U.S. Bankruptcy Court for the
District of New Hampshire to employ Baker Newman Noyes as its
accountant.
Services required of the accountant are:
Cost Reports Engagement Letter
-- Coordinate, gather, review and input necessary data to file
acceptable Medicare cost reports and cost statements;
-- If applicable, determine and request initial Medicare
settlement to be issued by the Medicare Administrative Contractor;
and
-- Provide support and instruction with Medicare program
instructions.
Tax Engagement Letter for Hillside ASC, LLC
-- Prepare 2020 federal and state income tax returns and related
tax consulting services.
Exempt Organization Tax Engagement Letter
-- Prepare LRGHealthcare federal Form 990 or Form 990-F and, if
applicable, Form 990-T and state income tax returns and related
services.
In addition, Baker Newman may also provide additional services to
Debtor for Medicaid audits and Medicaid DSH reviews.
Baker Newman will charge its standard hourly rates which ranges
from $235 to $300 for Cost Reports Engagement, $100 to $400 for Tax
Engagement, and $170 to $330 for Exempt Organization Tax
Engagement.
Baker Newman may also provide additional services for Medicaid
audits and Medicaid DSH reviews with hourly rates that range from
$235 to $400.
Dayton Benway, a managing principal of Baker Newman, attests that
the firm does not hold or represent any interest adverse to the
Debtor's estates and is a "disinterested person" as that phrase is
defined in Section 101(14) of
the Bankruptcy Code.
The accountant can be reached through:
Dayton Benway
Baker Newman Boyes
100 Arboretum Drive, Suite 204
Portsmouth, NH 03801
Phone: (603) 436-8200
About LRGHealthcare
LRGHealthcare -- www.lrgh.org -- is a not-for-profit healthcare
charitable trust operating Lakes Region General Hospital, Franklin
Regional Hospital, and numerous other affiliated medical practices
and service programs.
LRGH is a community-based acute care facility with a licensed bed
capacity of 137 beds, and FRH is a 25-bed critical access hospital
with an additional 10-bed inpatient psychiatric unit. In 2002,
Lakes Region Hospital Association and Franklin Regional Hospital
Association merged, with the merged entity renamed LRGHealthcare.
LRGHealthcare offers a wide range of medical, surgical, specialty,
diagnostic, and therapeutic services, wellness education, support
groups, and other community outreach services.
LRGHealthcare filed a Chapter 11 petition (Bankr. D.N.H. Case No.
20-10892) on October 19, 2020. The petition was signed by Kevin W.
Donovan, president and chief executive officer. At the time of the
filing, the Debtor estimated to have $100 million to $500 million
in both assets and liabilities.
Judge Bruce A. Harwood oversees the case.
The Debtor tapped Nixon Peabody LLP as counsel; Deloitte
Transactions and Business Analytics LLP and Kaufman, Hall &
Associates, LLC as financial advisors; and Epiq Corporate
Restructuring, LLC as claims, noticing, solicitation, and
administrative agent.
The U.S. Trustee for Region 1 appointed a committee of unsecured
creditors on Oct. 23, 2020. The committee is represented by Sills
Cummis & Gross P.C.
MAGNOLIA ASSOCIATES: Plan & Disclosures Due Feb. 2, 2021
--------------------------------------------------------
Judge Michael B. Kaplan has entered an order within which the
deadline for the jointly administered Debtors Azzil Granite
Materials, LLC and Magnolia Associates, LLC to file a Plan and
Disclosure Statement is extended from December 2, 2020 to February
2, 2021.
A full-text copy of the order dated December 3, 2020, is available
at https://tinyurl.com/yyngouqx from PacerMonitor at no charge.
About Lizza Equipment Leasing
Azzil Granite Materials is a supplier of high friction granite
aggregates for the New York City and Long Island market. Magnolia
Associates owns a 134-acre property with quarry located in White
Hall, N.Y., which is valued by the company at $15 million.
Based in Hackettstown, N.J., Lizza Equipment Leasing, LLC and its
affiliates, Azzil Granite Materials LLC and Magnolia Associates
LLC, sought Chapter 11 protection (Bankr. D.N.J. Lead Case No.
19-21763) on June 12, 2019. In the petitions signed by Carl J.
Lizza, co-managing member, Lizza Equipment Leasing disclosed $90 in
assets and liabilities of $987,830; Azzil Granite Materials
disclosed total assets of $813,825 and total liabilities of
$23,859,263; and Magnolia Associates disclosed total assets of
$15,317,480, and total liabilities of $13,137,533.
Judge Michael B. Kaplan oversees the cases.
Daniel M. Stolz, Esq., at Wasserman Jurista & Stolz, P.C., is the
Debtors' bankruptcy counsel.
Lizza Equipment won confirmation of its Liquidating Plan on Nov. 6,
2020.
MALLINCKRODT PLC: Judge Wants Motion for Equity Committee
---------------------------------------------------------
Jeremy Hill of Bloomberg News reports that the U.S. Bankruptcy
Judge John Dorsey put off a hearing on the formation of an official
stockholder group for Mallinckrodt Plc., saying in court Monday,
December 7, 2020, that a letter requesting a committee doesn't
count as a motion.
"I don't think there's a proper motion before the court," he said,
referring to a letter submitted by an asset management firm asking
for an official stockholder committee.
Other stockholders and at least one law firm filed papers
supporting the committee formation; Mallinckrodt filed an
objection.
Judge Dorsey said he'll take up the matter on Dec. 15, 2020 after a
motion is filed.
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.
MATADOR INVESTMENTS: Seeks to Hire B David Sisson as Legal Counsel
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Matador Investments, Ltd. seeks authority from the U.S. Bankruptcy
Court for the Western District of Oklahoma to hire the Law Offices
of B David Sisson as its legal counsel.
Matador requires the counsel to:
a. give Debtor legal advice with respect to its powers and
duties as debtor-in-possession in the continuing operation of its
business;
b. prepare on behalf of Debtor as debtor-in-possession all
necessary applications, answers, orders, pleadings, reports and
other legal papers; and
c. perform all other legal services for Debtor as
debtor-in-possession that may be necessary.
B David Sisson, Esq. will be the attorney primarily responsible for
this engagement. His normal hourly rate is $300.
The firm does not represent any interest adverse to the Debtor and
its bankruptcy estate, according to court filings.
The firm can be reached through:
B David Sisson, Esq.
Law Offices of B David Sisson
305 E Comanche St.
P.O. Box 534
Norman, OK 73070-0534
Phone: (405) 447-2521
Fax: (405) 447-2552
Email sisson@sissonlawoffice.comom
About Matador Investments, Ltd.
Matador Investments, Ltd. operates a commercial real estate leasing
business consisting of one commercial real property.
Matador Investments, Ltd. filed its voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code (Bankr. W.D.
Okla. Case No. 20-13815) on Dec. 1, 2020. At the time of filing,
the Debtor estimated $1,000,001 to $10 million in both assets and
liabilities. B David Sisson, Esq. at the Law Offices of B David
Sisson represents the Debtor as counsel.
MICRON DEVICES: Case Summary & 20 Largest Unsecured Creditors
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Debtor: Micron Devices, LLC
1521 Alton Road, Suite 417
Miami Beach, FL 33139
Business Description: Micron Devices, LLC manufactures medical
equipment and supplies.
Chapter 11 Petition Date: December 7, 2020
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 20-23359
Judge: Hon. Laurel M. Isicoff
Debtor's Counsel: Michael Gulisano, Esq.
GULISANO LAW, PLLC
5645 Coral Ridge Drive, Suite 207
Coral Springs, FL 33076
Tel: 954-947-3972
Fax: 954-947-3910
Email: michael@gulisanolaw.com
Total Assets: $2,520,764
Total Liabilities: $6,254,656
The petition was signed by Laura Perryman, 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/4RPSRVI/Micron_Devices_LLC__flsbke-20-23359__0001.0.pdf?mcid=tGE4TAMA
MIDWAY MARKET: Hires Tarter Krinsky & Drogin as Legal Counsel
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Midway Market Square Elyria LLC received authority from the U.S.
Bankruptcy Court for the Southern District of New York to hire
Tarter Krinsky & Drogin LLP as its counsel.
The professional services that said attorneys are to render are:
(a) give advice to the Debtor with respect to its powers and
duties as a debtor-in-possession in the continued operation of its
business and management of its property;
(b) negotiate with creditors of the Debtor in working out a
plan of reorganization, and to take necessary legal steps in order
to confirm said plan of reorganization, including, if need be,
negotiations in financing a plan of reorganization;
(c) prepare on behalf of Applicant, as debtor-in-possession,
necessary applications, answers, orders, reports and other legal
papers;
(d) appear before the bankruptcy judge and to protect the
interests of the debtor-in-possession before the bankruptcy judge,
and to represent the Debtor in all matters pending in the chapter
11 proceeding; and
(e) perform all other legal services for Applicant, as
debtor-in-possession, which may be necessary.
The firm will be paid at these hourly rates:
Partners $530 - $725
Counsel $445 - $665
Associates $338 - $530
Paralegals $260 - $325
Scott Markowitz, Esq., a member of Tarter Krinsky, disclosed in
court filings that the firm is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Scott S. Markowitz, Esq.
Alex Spizz, Esq.
Jill Makower, Esq.
Tarter Krinsky & Drogin LLP
1350 Broadway, 11th Floor
New York, NY 10018
Telephone: (212) 216-8000
Email: smarkowitz@tarterkrinsky.com
aspizz@tarterkrinsky.com
jmakower@tarterkrinsky.com
About Midway Market Square Elyria LLC
Midway Market Square Elyria LLC is a Single Asset Real Estate
debtor (as defined in 11 U.S.C. Section 101(51B)). The Company is
the owner of fee simple title to a property located at 1180 West
River Road Elyria, OH, having a current value of $25 million.
Midway Market Square Elyria LLC t filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code (Bankr.
S.D.N.Y. Case No. 20-23142) on Oct. 27, 2020. The petition was
signed by Chaim Lobl, vice president/managing member. At the time
of filing, the Debtor estimated $27,502,148 in assets and
$20,251,166 in liabilities. Scott S. Markowitz, Esq. at TARTER
KRINSKY & DROGIN LLP represents the Debtor as counsel.
MILK SPECIALTIES: Moody's Affirms B2 CFR; Alters Outlook to Stable
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Moody's Investors Service changed the rating outlook of Milk
Specialties Company to stable from negative, while affirming all
existing ratings, including its B2 Corporate Family Rating (CFR),
B2-PD Probability of Default Rating (PDR) and the B2 rating on its
first lien term loan. Moody's also assigned a B2 rating to Milk
Specialties' revolving credit facility which had its maturity date
extended from August 2021 to August 2023.
"The stabilization of the outlook reflects Milk Specialties'
stronger operating results and improved leverage, driven by the
recovery of demand for its human nutrition products," said Louis
Ko, VP-Senior Analyst with Moody's.
Assignments:
Issuer: Milk Specialties Company
Senior Secured First Lien Revolving Credit Facility, Assigned B2
(LGD4)
Affirmations:
Issuer: Milk Specialties Company
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured First Lien Term Loan, Affirmed B2 (LGD4)
Withdrawals:
Issuer: Milk Specialties Company
Senior Secured First Lien Revolving Credit Facility, Withdrawn,
previously rated B2 (LGD4)
Outlook Actions:
Issuer: Milk Specialties Company
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Milk Specialties' B2 CFR rating is constrained by (1) its
expectation that leverage (adjusted debt/EBITDA) will approximate
5X through FY2022 (June); (2) exposure to volatility in commodity
pricing of key inputs; (3) unpredictable market conditions as
witnessed by the negative impact from the African Swine fever in
2019; (4) narrow focus within the human and animal nutrition
segments; and (5) risk of aggressive financial strategies under
private equity ownership.
The company's rating benefits from (1) its solid market position as
an independent processor of whey protein in the US; (2) high
barriers to entry; (3) synergies realized between the company's
human and animal nutrition segments; (4) good customer
diversification; and (5) secure access to liquid whey and other raw
materials via strategically located plants and contracts with milk
processors.
Milk Specialties has good liquidity. Sources are approximately $135
million compared to about $5 million of cash usage over the next 12
months. Sources consist of $55 million in cash as at September 30,
2020, full availability under its $50 million revolving credit
facility due August 2023, and positive free cash flow of
approximately $30 million over the next twelve months. Milk
Specialties' cash usage includes approximately $5 million of
mandatory term loan amortization. Milk Specialties' revolver is
subject to a Net Leverage Ratio covenant of 5.75x if its revolver
exceeds 30% utilization. Moody's does not expect this covenant to
be applicable in the next four quarters, but there would be
sufficient cushion for the covenant should it become applicable.
Milk Specialties has limited flexibility to boost liquidity from
asset sales.
The stable outlook reflects Moody's expectation that Milk
Specialties' operating results will continue to improve, with
leverage expected to decrease to below 5X over the next 12 to 18
months. This is supported by the improvements in demand within the
human nutrition segment as sales volume recovers from the impact of
the African swine fever.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if there is an increase in scale and
product diversity, if leverage is sustained below 4x (5.2x for LTM
September 2020 and projected to be 4.8x for FY2022E) with the
company maintaining at least good liquidity and EBITDA margin in
excess of 12% (12.2% for LTM September 2020).
The ratings could be downgraded if leverage is sustained above 5.5x
(5.2x for LTM September 2020 and projected to be 4.8x for FY2022E),
or if liquidity deteriorates significantly, possibly due to a
prolonged period of negative free cash flow generation.
Social risk considerations for Milk Specialties include the
responsible production and safety of their products. The company
established programs and procedures to monitor the quality and
safety of their products from raw material evaluation through to
delivery. It has also instituted a comprehensive Quality Systems
program and works closely with a leader in the audit of food safety
systems.
The governance considerations include private equity ownership,
which may lead to aggressive financial policies and capital
structure in comparison to public corporations. If free cash flow
generation strengthens and leverage improves, the potential for
debt-funded acquisitions or dividends to the private equity owner
could increase leverage again.
The principal methodology used in these ratings was Protein and
Agriculture published in May 2019.
Headquartered in Eden Prairie, Minnesota, Milk Specialties is a
leading independent manufacturer of whey protein for human
nutrition (sports nutrition, health and wellness, infant formula,
food manufacturing) and animal nutrition end markets. Milk
Specialties is privately-owned by American Securities. Revenues for
the twelve months ended September 30, 2020 were approximately $725
million.
NATIONSTAR MORTGAGE: Moody's Rates New $650MM Unsecured Notes B2
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Moody's Investors Service assigned a B2 rating to Nationstar
Mortgage Holdings Inc.'s proposed $650 million senior unsecured
notes due in 2030. The rating outlook is stable.
Assignments:
Issuer: Nationstar Mortgage Holdings Inc.
Senior Unsecured Regular Bond/Debenture, Assigned B2
RATINGS RATIONALE
Moody's has rated the senior unsecured notes B2 based on
Nationstar's B2 standalone assessment and corporate family rating,
the notes' ranking and terms, and the strength of the notes' asset
coverage. The key terms of the notes are largely consistent with
Nationstar's existing senior unsecured notes. The company has
indicated that the proceeds of the notes, along with cash on hand,
will be used to redeem in full the company's outstanding 9.125%
senior unsecured notes due 2026.
Nationstar's B2 standalone assessment and corporate family rating
reflect the company's strong position in the U.S. residential
mortgage servicing market, which will allow it to continue to
benefit from profitability improvements due to high refinancing
volumes in the current low interest rate environment. It also takes
into consideration the risks to creditors from its modest, albeit
slightly improved, capitalization, which limits its ability to
absorb unexpected losses. It also reflects the risks associated
with the firm's growth of its servicing portfolio, which are
however mitigated by its solid track record of acquiring and
integrating residential mortgage servicing assets.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if the company continues to
demonstrate sustainable improvement in its financial performance,
such as achieving and maintaining capitalization as measured by
TCE/TMA of 15% or higher and maintaining core pretax income to
total assets of more than 1.5%, while preserving its servicing
performance and franchise value.
The ratings could be downgraded if the company's financial
performance materially deteriorates, for example, if capitalization
decreases to 7.5% or lower as measured by TCE/TMA or if core pretax
income to assets falls to less than 0.75% for an extended period of
time or if the company's liquidity position deteriorates beyond an
adequate buffer to its debt covenants. In addition, the ratings
could be downgraded in the event of material negative regulatory
actions that would impair its franchise and therefore its ability
to remain profitable.
The principal methodology used in this rating was Finance Companies
Methodology published in November 2019.
NEWPORT PARENT: Moody's Assigns B2 CFR, Outlook Stable
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Moody's Investors Service assigned a Corporate Family Rating (CFR)
of B2 and Probability of Default Rating (PDR) of B2-PD to Newport
Parent, Inc. in connection with the proposed merger transaction and
recapitalization by controlling shareholder Centerbridge Partners.
The company's proposed $500 million first lien credit facilities
($50 million revolver and $450 million term loan) were assigned a
rating of B2. The rating outlook is stable.
"Syncapay's solid niche positions result in good profitability and
cash flow generation" said Peter Krukovsky, Moody's Senior Analyst.
"Near-term revenue softness due to COVID will cause modestly
elevated leverage in early 2021 on a trailing twelve-month basis,
but recent business trends support a return to growth later in the
year reducing leverage to about 5.5x."
The following rating actions were taken:
Assignments:
Issuer: Newport Parent, Inc.
Probability of Default Rating, Assigned B2-PD
Corporate Family Rating, Assigned B2
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Outlook Actions:
Issuer: Newport Parent, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
Syncapay is the product of the pending merger of daVinci Payments
and North Lane Technologies. The company's credit profile reflects
relatively small business scale, high leverage and merger
integration risks. The credit profile is supported by solid
competitive positions in defensible growing niches in the
business-to-consumer payments sector, which benefits from the
ongoing secular trend of replacement of checks with prepaid cards
and other forms of electronic payments. However, the sector is
highly competitive with increasing penetration of push payment
services by industry leaders Visa, Mastercard and PayPal among
others. Prior to the coronavirus (COVID) pandemic, Syncapay's
revenue grew in the high single digits. Profitability is solid on a
pro forma basis even before taking into account merger synergies,
and free cash flow is ample at the contemplated level of financial
leverage.
COVID has had an adverse impact on Syncapay's Incentives and
Compensation segments, while the Disbursement business serving
stable customer categories has continued to grow. Moody's regards
the coronavirus outbreak as a social risk under the ESG framework.
Softness in Incentives will likely extend into early 2021 due to
the lag effect of the revenue model, and Compensation is unlikely
to recover meaningfully until 2022. However, strong load volumes in
Incentives in the fall of 2020 and continued stability and growth
in Disbursement will support a return to LTM EBITDA growth by the
second half of 2021, reducing leverage. Moody's expects the company
to operate at Moody's adjusted total leverage of less than 6x in
the ordinary course (synergies on as-realized basis). While an
acquisition increasing debt, levels is possible over time, Moody's
does not expect meaningful acquisitions in 2021 as the company
focuses on integration and achievement of synergies.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation of total leverage
sustained below 6.5x with potential for reduction to 5.5x area by
the end of 2021. The ratings could be upgraded if Syncapay
generates consistent revenue and EBITDA growth, and if Moody's
adjusted total leverage is reduced below 4.5x. The ratings could be
downgraded if Syncapay experiences a sustained revenue or
profitability decline, or if Moody's adjusted total leverage is
sustained above 6.5x.
Syncapay's good liquidity is supported by cash balances of $20
million and a revolving credit facility of $50 million which will
be undrawn at closing. We project free cash flow in 2021 of about
$28 million. The revolving credit facility will contain a first
lien secured leverage covenant of 7.3x with no stepdowns,
applicable only if outstanding balances exceed 35% of the committed
amount. The term loan will contain no financial covenants.
The first lien credit facility is expected to contain covenant
flexibility for transactions that could adversely affect creditors,
including incremental facility capacity, the ability to release a
guarantee when a subsidiary is not wholly owned, and lack of
"blocker" restrictions on collateral leakage through transfer to
unrestricted subsidiaries.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
NORTHWEST HARDWOODS: S&P Lowers ICR to 'D' on Chapter 11 Filing
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S&P Global Ratings lowered its issuer credit rating on U.S.-based
Northwest Hardwoods Inc. to 'D' from 'SD' (selective default). Its
'D' issue-level rating on the company's senior secured notes
remains unchanged.
On Nov. 23, 2020, Northwest Hardwoods Inc. commenced a voluntary
prearranged Chapter 11 bankruptcy filing.
Once implemented, the restructuring agreement will reduce the
company's debt burden to $110 million from $378 million currently.
In late October, the company entered into a restructuring agreement
with more than 95% of the holders of its 7.5% senior secured notes
due 2021 as well as most of its existing equity holders. To
implement the terms of the agreement, the company commenced a
voluntary prearranged Chapter 11 bankruptcy filing.
Once implemented, the agreement will enable its senior noteholders
to convert their $378 million of senior notes into $110 million of
new exit loans and 99% of the equity in the reorganized company.
The remainder of the reorganized equity will be allocated to the
existing equity holders. Further, the company will also refinance
its existing asset-based lending (ABL) facility to meet its working
capital needs.
S&P expects Northwest Hardwoods to maintain its normal operations
during the bankruptcy process.
Northwest Hardwoods is a manufacturer of hardwood lumber in North
America. The company operates a network of sawmills, lumber
concentration and dry kiln yards, merchandising log yards, and
remanufacturing plants and has sales offices in the U.S., Canada,
China, and Japan.
NPC INTERNATIONAL: Plan Confirmation Hearing Reset to Jan. 15, 2021
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NPC International, Inc. and its debtor affiliates sought amendments
from the U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, to certain hearing dates and deadlines relating
to the sale process and confirmation of the Plan.
On December 4, 2020, Judge David R. Jones ordered that:
* December 16, 2020 at 5:00 p.m. is the Sale Objection Deadline
and Contract Objection Deadline for objections.
* December 21, 2020 at 2:00 p.m. is the Sale Hearing.
* January 7, 2021 at 5:00 p.m. is fixed as the last day to file
objections to confirmation of the Plan.
* January 13, 2021 at 11:59 p.m. is fixed as the last day to
File Confirmation Brief and Reply to Plan Objections.
* January 15, 2021 at 9:00 a.m. is the Confirmation Hearing.
* December 21, 2020 is fixed as the last day to file Objections
to Standing Motion with Responsive Expert Reports.
A full-text copy of the order dated December 4, 2020, is available
at https://tinyurl.com/y22wh87k from PacerMonitor.com at no
charge.
About NPC International
NPC International, Inc. -- https://www.npcinternational.com/ -- is
a franchisee company with over 1,600 franchised restaurants across
two iconic brands -- Wendy's and Pizza Hut -- spanning 30 states
and the District of Columbia.
NPC International and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-33353) on July 1, 2020. At the time of the filing, Debtors
disclosed assets of between $1 billion and $10 billion and
liabilities of the same range.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges, LLP, as bankruptcy
counsel; Alixpartners, LLP as financial advisor; Greenhill & Co.,
LLC as investment banker; and Epiq Corporate Restructuring, LLC as
claims, noticing and solicitation agent and administrative advisor.
ORANGE COUNTY BAIL: Disclosures Hearing Continued to Dec. 17
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The U.S. Bankruptcy Court for the Central District of California,
Santa Ana Division, conducted a hearing to consider the request of
Debtor Orange County Bail Bonds, Inc. to continue the time to file
for an extension of time to file its its Amended Disclosure
Statement or, alternatively to continue hearing on Disclosure
Statement ("Motion").
On November 6, 2020, Judge Erithe Smith granted the motion and
ordered that:
* The hearing on the approval of Debtor's Amended Disclosure
Statement is continued from November 19, 2020 at 10:30 a.m. to
December 17, 2020 at 10:30 a.m.
* December 3, 2020 is fixed as the last day to file and serve
any opposition to the disclosure statement.
* December 10, 2020 is fixed as the last day for the Debtor to
file and serve any reply to opposition.
A full-text copy of the order dated November 6, 2020, is available
at https://tinyurl.com/y2wme297 from PacerMonitor at no charge.
About Orange County Bail Bonds
Orange County Bail Bonds Inc. -- http://www.bailall.com/-- is a
bail bond service headquartered in Santa Ana, Calif. The company is
family owned and operated, and specializes in bail bonds for
drug-related and drunk driving DUI offenses, spousal abuse and
domestic violence charges, prostitution solicitation charges,
felonies, and misdemeanors. Starting in 1963, the company has been
servicing Orange County, Los Angeles, Riverside, San Bernardino,
and San Diego.
Orange County Bail Bonds sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-12411) on June 21,
2019. At the time of the filing, the Debtor was estimated to have
assets of less than $1 million and liabilities of between $1
million and $10 million. The case is assigned to Judge Erithe A.
Smith. Marc Forsythe, Esq., at Goe & Forsythe, LLP, is the
Debtor's counsel; and Griffiths Diehl & Company, Inc., is the
accountant to the Debtor.
ORANGE COUNTY BAIL: Global Fugitive Says Plan Not Feasible
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Creditor Legal Services Bureau, Inc., d/b/a Global Fugitive
Recovery, objects to the Amended Disclosure Statement Describing
First Subchapter V Plan of Reorganization of Debtor Orange County
Bail Bonds, Inc.
Global claims that the Debtor has operated at nearly a $400,000
deficit during the pendency of this case. Such loss of assets
proves Debtor's proposed plan is not feasible.
Global points out that the Debtor's attorneys' fees in this case
grossly exceed the amount necessary to pay all other creditors in
full and make substantial distributions to Global.
Global asserts that the FADS and FAP fail to provide adequate
detail, as to how creditors of the estate would be benefited by
staying in bankruptcy where administrative expenses being incurred
far exceed Debtor's income. The continued diminution of Debtor's
assets is prejudicing creditors and supports dismissal not approval
of any disclosure statement.
Global further asserts that the Debtor cannot establish that the
First Amended Plan is proposed in good faith. Specifically, the
First Amended Plan and DS fail to address Global's previously
expressed concerns of disparate treatment.
Global states that the First Amended DS and Plan continue to
provide, "to be abundantly clear," that Mr. Miller's 1043 Civic
Center Drive, LLC "has not agreed to extend its lease to any other
person, entity and/or any of Debtor's creditors or if the
Bankruptcy Case ever converts to a Chapter 7," in effect locking up
the lease as improper leverage against creditors.
A full-text copy of Global's objection dated Dec. 3, 2020, is
available at https://tinyurl.com/y2yh5tq8 from PacerMonitor at no
charge.
Attorneys for Creditor:
D. EDWARD HAYS
LAILA MASUD
MARSHACK HAYS LLP
870 Roosevelt
Irvine, California 92620
Telephone: (949) 333-7777
Facsimile: (949) 333-7778
E-mail: ehays@marshackhays.com
lmasud@marshackhays.com
About Orange County Bail Bonds
Orange County Bail Bonds Inc. -- http://www.bailall.com/-- is a
bail bond service headquartered in Santa Ana, Calif. The company is
family owned and operated, and specializes in bail bonds for
drug-related and drunk driving DUI offenses, spousal abuse and
domestic violence charges, prostitution solicitation charges,
felonies, and misdemeanors. Starting in 1963, the company has been
servicing Orange County, Los Angeles, Riverside, San Bernardino,
and San Diego.
Orange County Bail Bonds sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-12411) on June 21,
2019. At the time of the filing, the Debtor was estimated to have
assets of less than $1 million and liabilities of between $1
million and $10 million. The case is assigned to Judge Erithe A.
Smith. Marc Forsythe, Esq., at Goe & Forsythe, LLP, is the
Debtor's counsel; and Griffiths Diehl & Company, Inc., is the
accountant to the Debtor.
ORANGE COUNTY BAIL: Subchapter V Plan to Pay 100% of Claims
-----------------------------------------------------------
Debtor Orange County Bail Bonds, Inc. filed with the U.S.
Bankruptcy Court for the Central District of California, Santa Ana
Division, an Amended Small Business Plan of Reorganization and a
corresponding Disclosure Statement on November 6, 2020.
The Debtor entered into Bond Agreements with Saddozai as bail for
the prisoner Shikeb Saddozai, in a cumulative amount not to exceed
$1,000,000 (the "Bond Amount"), plus costs. As security for the
Bond Amount, Saddozai executed a deed of trust upon the Saddozai
Residence. The Debtor intends to promptly foreclose upon the
Saddozai Residence.
Class 2 consists of General Unsecured Claims against the Estate
that the Debtor does not dispute. Allowed General Unsecured Claims
will accrue interest at the federal judgment rate and will receive
quarterly payments on a pro rata basis with Class 3 and 4,
beginning on the first date of each calendar quarter following the
Effective Date until their claims are paid in full.
When the Saddozai Residence is foreclosed upon, sold, and Debtor
obtains the Saddozai Proceeds, within ten (10) days of actual
receipt of the Saddozai Proceeds, Debtor will pay to Class 2
creditors their share of such remaining funds pro rata with Class 3
and 4.
Class 3 consists of the only disputed General Unsecured Claim
against the Estate – Global's Amended Claim No. 6 in the amount
of $545,879.23. Global will accrue interest at the federal judgment
rate. Pending the outcome of the Global Appeal, Debtor will pay
quarterly into the Global Escrow Account Plan Payments on a pro
rata bases with the Class 2 and 4, beginning on the first date of
each calendar quarter following the Effective Date until Class 3 is
paid in full. If Global prevails on the Global Appeal, then Debtor
will pay to Global all monies in the Global Escrow Account and
commence quarterly payments to Global from the Plan Payments on a
pro rata basis with Class 2 and 4 until Class 3 is paid in full. If
Debtor prevails on the Global Appeal, all funds in the Global
Escrow Account shall be turned over to Debtor.
Insider Unsecured Claimant has agreed to subordinate its claim to
be paid outside the plan, and to be paid after all Class 1, are
distributed to general unsecured creditors pursuant to the terms of
the Plan.
All Interests shall be retained.
This is a reorganizing Chapter 11 and will pay 100% of all Allowed
Claims. The Plan will be funded through the Saddozai Proceeds and
Debtor's operation and management of its business. Debtor believes
that the Saddozai Proceeds will be sufficient to pay off all
creditors other than the Class 2 and Class 3 creditors, who Debtor
proposes will be paid a portion of the Saddozai Proceeds sufficient
to pay $100,000 to Global and a corresponding pro rata distribution
to Class 2 creditors.
A full-text copy of the First Amended Disclosure Statement dated
November 6, 2020, is available at:
https://www.pacermonitor.com/view/SJRQOOA/Orange_County_Bail_Bonds_Inc__cacbke-19-12411__0209.0.pdf?mcid=tGE4TAMA
About Orange County Bail Bonds
Orange County Bail Bonds Inc. -- http://www.bailall.com/-- is a
bail bond service headquartered in Santa Ana, Calif. The company is
family owned and operated, and specializes in bail bonds for
drug-related and drunk driving DUI offenses, spousal abuse and
domestic violence charges, prostitution solicitation charges,
felonies, and misdemeanors. Starting in 1963, the company has been
servicing Orange County, Los Angeles, Riverside, San Bernardino,
and San Diego.
Orange County Bail Bonds sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-12411) on June 21,
2019. At the time of the filing, the Debtor was estimated to have
assets of less than $1 million and liabilities of between $1
million and $10 million. The case is assigned to Judge Erithe A.
Smith. Marc Forsythe, Esq., at Goe & Forsythe, LLP, is the
Debtor's counsel; and Griffiths Diehl & Company, Inc., is the
accountant to the Debtor.
PACIFIC PLEASANT: Unsecureds to Get Share of Income for 3 Years
---------------------------------------------------------------
Pacific Pleasant Investment, LLC filed with the U.S. Bankruptcy
Court for the Northern District of Mississippi a Plan of
Reorganization and a corresponding Disclosure Statement on Dec. 4,
2020.
The Debtor borrowed money from First Security Bank in order to
finance its operations and, as of the Petition Date, the Bank was
owed $3,151,000. It holds the first and second mortgages upon the
Debtor's real property. Graves Oil Company holds a third mortgage
upon the Debtor's property in the sum of $300,000.
The Debtor also received a loan from Vikram Patel which has
apparently been assigned to an entity that he, on information and
belief, owns or controls, known as Premier Capital Investment
Group, LLC. The loan from Vikram is an unsecured loan, purportedly
approved by Vikram. The Debtor vigorously disputes that claim. It
asserts that Vikram is only a lender and that he did not have
authority to obligate the Debtor to repay the Vikram Loan on the
terms reflected in the promissory note and related Vikram
agreements.
The Debtor is considering and reviewing transfers made in the
ninety days prior to the filing of the Petition, one year prior to
the filing of the petition and two years prior to the filing of the
petition for preferential transfers that may have been made to arms
length creditors, to insiders or to third parties. A significant
part of that analysis depends upon whether Vikram is an insider as
he apparently contends. In any event, those cause of action are
owned by the debtor-in-possession, will continue to be reviewed and
evaluated by the debtor-in-possession and prosecuted by the
debtor-in-possession if it turns out that they are viable and worth
pursuing.
The Debtor will continue to operate its business in the ordinary
course. The Plan provides that the Debtor will continue paying the
normal monthly installment of principal and interest to the Bank,
that is consistent with an adequate protection order that was
entered by the Court in November of 2020.
The Debtor proposes to pay its projected disposable income over the
three-year life of the Plan to its unsecured creditors on a pro
rata basis. Once the amount of the Vikram indebtedness has been
determined, it will be paid accordingly along with any other
unsecured claims that may exist. Debtor also reserves the right to
reclassify all claims of Vikram, subject to the outcome of the
litigation.
The Debtor's equity security holder will maintain his ownership of
the Debtor.
A full-text copy of the Disclosure Statement dated December 4,
2020, is available at https://tinyurl.com/y27x8qdw from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Craig M. Geno
LAW OFFICES OF CRAIG M. GENO, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: 601-427-0048
Fax: 601-427-0050
E-mail: cmgeno@cmgenolaw.com
About Pacific Pleasant Investment
Pacific Pleasant Investment, LLC, owns a convenience store and
gasoline facility located at 3278 Hwy. 309 North, Byhalia,
Mississippi.
Pacific Pleasant Investment filed a Chapter 11 petition (Bankr.
N.D. Miss. Case No. 20-11594) on April 20, 2020. In the petition
signed by Nrupesh Patel, manager, the Debtor was estimated to have
$1 million to $10 million in both assets and liabilities. Craig M.
Geno, Esq., at the Law Offices Of Craig M. Geno, PLLC, serves as
bankruptcy counsel to the Debtor.
PALLETCO INC: Seeks to Hire Seiller Waterman as Bankruptcy Counsel
------------------------------------------------------------------
Palletco, Inc. seeks authority from the U.S. Bankruptcy Court for
the Western District of Kentucky to hire Seiller Waterman LLC as
its bankruptcy counsel.
Palletco requires Seiller Waterman to:
a. give legal advice with respect to Debtor's powers and
duties as debtor in possession in the continued operations of its
business and management of its assets;
b. take all necessary action to protect and preserve Debtor's
estate, including the prosecution of actions on behalf of Debtor,
the defense of any actions commenced against Debtor, negotiations
concerning all litigation in which Debtor is involved, if any, and
objecting to claims filed against Debtor's estate;
c. prepare on behalf of Debtor all necessary motions, answers,
orders, reports and other legal papers in connection with the
administration of Debtor's estate; and
d. perform any and all other legal services for Debtor in
connection with this chapter 11 case and the formulation and
implementation of Debtor's chapter 11 plan.
Neil C. Bordy, member of Seiller Waterman, attests that the firm
neither holds nor represents any interest adverse
to the Debtor's estate and is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Neil C. Bordy, Esq.
Seiller Waterman LLC
Meidinger Tower - 22nd Floor 462 S. Fourth Street
Louisville, KY 40202
Tel: (502) 584-7400
Fax: (502) 583-2100
About Palletco, Inc.
Palletco, Inc. filed a voluntary petition for relief under chapter
11 of the Bankruptcy Code (Bankr. W.D. Ken. Case No. 20-32808) on
Nov. 23, 2020, listing under $1 million in both assets and
liabilities.
Neil Charles Bordy, Esq. at Seiller Waterman LLC serves as the
Debtor's counsel.
PARADISE REDEVELOPMENT: Affirms 'BB' Rating on Tax Allocation Bonds
-------------------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative and
affirmed its 'BB' long-term rating on Paradise Redevelopment
Agency, Calif.'s series 2009 refunding tax allocation bonds.
"Our outlook revision incorporates our view of the full payment of
debt service on the agency's bonds through state assistance as well
as the settlement reached with Pacific Gas & Electric, or PG&E, for
the sum of $270 million that could support longer-term stability in
the area," said S&P Global Ratings credit analyst Li Yang.
On Feb. 13, 2019, the state of California passed Assembly Bill (AB)
72, which authorizes it to use $31.331 million to reimburse seven
counties, including Butte County, for property tax losses that have
occurred due to the 2018 wildfires, including the Camp Fire, until
June 30, 2022. S&P said, "We understand the agency plans to use
this reimbursement to pay for debt service on the series 2009 tax
allocation bonds, and we believe that AB 72 somewhat mitigates the
risk of the agency's need to draw on its debt service reserve fund
(DSRF) in the near term to meet its debt service requirements on
these bonds. In addition, we understand the town of Paradise has
reached a settlement with PG&E for the sum of $270 million, and
that the town expects to receive about $240 million. While we have
not been able to confirm the receipt of these funds or whether a
formal plan of use of these funds has been established, we believe
the settlement with PG&E in favor of the town as a positive credit
factor for the outstanding bonds. Management indicated that they
made the full payment due Dec. 1, 2020, on the bonds without
needing to draw on the DSRF."
PLEASANT POINT: Unsecureds to Get Share of Income for 3 Years
-------------------------------------------------------------
Pleasant Point Investment, LLC filed with the U.S. Bankruptcy Court
for the Northern District of Mississippi a Plan of Reorganization
and a corresponding Disclosure Statement on December 4, 2020.
The Debtor borrowed money from BankPlus in the sum of $1,950,000 in
order to finance its operations and, as of the petition date,
BankPlus was owed $1,646,983.01. It holds the first mortgage upon
the Debtor's real property.
The Debtor also received a loan from Vikram Patel which has
apparently been assigned to an entity that he, on information and
belief, owns or controls, known as Premier Capital Investment
Group, LLC. The loan from Vikram is an unsecured loan, purportedly
approved by Vikram. The Debtor vigorously disputes that claim. It
asserts that Vikram is only a lender and that he did not have
authority to obligate the Debtor to repay the Vikram Loan on the
terms reflected in the promissory note and related Vikram
agreements.
The Debtor is considering and reviewing transfers made in the
ninety days prior to the filing of the Petition, one year prior to
the filing of the petition and two years prior to the filing of the
petition for preferential transfers that may have been made to arms
length creditors, to insiders or to third parties. A significant
part of that analysis depends upon whether Vikram is an insider as
he apparently contends. In any event, those cause of action are
owned by the debtor-in-possession, will continue to be reviewed and
evaluated by the debtor-in-possession and prosecuted by the
debtor-in-possession if it turns out that they are viable and worth
pursuing.
The Debtor will continue to operate its business in the ordinary
course. The Plan provides that the Debtor will continue paying the
normal monthly installment of principal and interest to the Bank,
that is consistent with an adequate protection order that was
entered by the Court in November of 2020.
The Debtor proposes to pay its projected disposable income over the
three-year life of the Plan to its unsecured creditors on a pro
rata basis. Once the amount of the Vikram indebtedness has been
determined, it will be paid accordingly along with any other
unsecured claims that may exist. Debtor also reserves the right to
reclassify all claims of Vikram, subject to the outcome of the
litigation.
The Debtor's equity security holder will maintain his ownership of
the Debtor.
A full-text copy of the disclosure statement dated December 4,
2020, is available at https://tinyurl.com/y5a4o7as from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Craig M. Geno
LAW OFFICES OF CRAIG M. GENO, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: 601-427-0048
Fax: 601-427-0050
E-mail: cmgeno@cmgenolaw.com
About Pleasant Point Investment
Pleasant Point Investment, LLC, owns and operates a convenience
stoer and accompanying gasoline station at 5337 Hwy. 72 in Mount
Pleasant, Mississippi. The company was created by Nrupesh Patel
and his spouse Tejal Patel.
Pleasant Point Investment filed a Chapter 11 petition (Bankr. N.D.
Miss. Case No. 20-11595) on April 20, 2020. In the petition signed
by Nrupesh Patel, manager, the Debtor was estimated to have $1
million to $10 million in both assets and liabilities. Craig M.
Geno, Esq., at the Law Offices Of Craig M. Geno, PLLC, serves as
bankruptcy counsel.
PLYMOUTH PLACE: Fitch Affirms BB+ Rating on Series 2013 Rev. Bonds
------------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' rating on approximately $25
million of series 2013 and $53 million of series 2015 fixed rate
revenue bonds issued by the Illinois Finance Authority on behalf of
Plymouth Place.
The Rating Outlook is Stable.
SECURITY
The bonds are secured by an interest in the gross revenues of the
obligated group (OG), a security interest in certain mortgaged
properties, and a debt service reserve fund (DSRF). Plymouth Place
is the sole member of the OG and accounts for 100% of consolidated
assets and operating revenues.
KEY RATING DRIVERS
GOOD OPERATING PROFILE: The service area around La Grange Park, IL
is sound. Property values are above average. Population growth and
other general economic indicators in metro Chicago are mixed, but
La Grange is among the wealthier communities in the area. The
Chicago metro area has many competitors for senior living, but
there are no new developments in the immediate service area.
ADEQUATE FINANCIAL PROFILE: Operating margins remain sound in
interim fiscal 2020, despite the coronavirus pandemic. Through nine
months fiscal 2020, the operating ratio and net operating margin
(NOM) measured roughly 103% and 9.0%, respectively. Liquidity
ratios remain adequate for a non-investment grade life plan
community (LPC) with cash on hand and cash-to-debt of approximately
365 days and 39%, respectively, at Sept. 30, 2020. Per Fitch
calculation, maximum annual debt service (MADS) coverage based on
interim fiscal 2020 results was modest at 0.7x (but a much better
1.4x per management calculation). Independent living unity (ILU)
occupancy rates remain good despite the pandemic.
MANAGEABLE CAPITAL SPENDING PLANS: Near-term capital spending plans
are limited and Plymouth Place's average age of plant measured less
than 11.0 years at FYE 2019. Management continues to evaluate
whether or not to expand the East Campus. Depending on the East
Campus feasibility study and the potential for fundraising,
management may consider debt options.
MANAGEABLE LONG-TERM LIABILITY PROFILE: Debt burden is manageable
for a non-investment grade LPC. MADS as a percentage of revenue
measured 18% in fiscal 2019. Plymouth Place does not have a defined
benefit pension plan or operating leases, so there are no debt
equivalents. Debt-to-net available was sound at less than 8x in
fiscal 2019, although this spiked to nearly 19x in interim fiscal
2020 as net entrance fee revenue declined considerably during the
pandemic.
ASYMMETRIC RISK FACTORS: There are no asymmetric risk factors
associated with Plymouth Place's rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Sustained operating metrics more in-line with an investment
grade LPC (e.g., operating ratio at or below 100% and NOM in the
5%-10% range), including a substantial rebound in NOM-adjusted.
-- Growth in liquidity, leading to cash-to-debt of approximately
50% or better.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Sustained weakening of operating metrics, leading to debt
service coverage with little headroom to covenants.
-- Weaker balance sheet metrics, particularly if cash-to-debt
approaches 30% or lower.
-- The coronavirus pandemic and related government containment
measures have created an uncertain environment for the LPC sector.
Top-line revenue pressure and added expenses could persist
depending on the degree and longevity of the pandemic and related
economic challenges. Fitch's ratings are forward-looking in nature,
and Fitch will monitor developments in the sector as a result of
the virus outbreak as it relates to severity and duration, and
incorporate revised expectations for future performance and
assessment of key risks.
CREDIT PROFILE
Plymouth Place operates a Type A LPC located in La Grange Park, IL,
roughly 15 miles west of downtown Chicago. The organization
operates 182 ILU apartments, 52 assisted living units (ALU), 26
memory support units, and 75 skilled nursing units (SNF). While
Plymouth Place offers an array of contracts (from 0% refundable to
90% refundable), most are 90% refundable types. Plymouth Place was
incorporated in 1939 and began operations in 1944. A replacement
facility opened in 2007. Total audited operating revenue measured
nearly $31 million in fiscal 2019 (Dec. 31 year-end).
GOOD OPERATING PROFILE
The service area around La Grange and La Grange Park, IL is sound.
Property values in the communities are above average. While
population growth and other economic indicators in metro Chicago
are mixed, La Grange and La Grange Park are among the wealthier
communities in the area with well above-average median household
income levels.
As a large and diversified area, Chicagoland has many competitors
for senior living options. Management notes that no known new
developments in the immediate La Grange Park service area are
planned and new developments in the broader area have been more
rental focused and therefore not directly competing for the same
resident population.
Plymouth Place's occupancy rates have held up reasonably well
despite the coronavirus pandemic. ILU occupancy remained at 90% as
of Sept. 30, 2020, and has averaged above 90% for years. Plymouth
Place reduced the number of SNF beds in response to the pandemic
(from 86 to 75), to guarantee all private rooms; SNF occupancy
measured 91% at Sept. 30, 2020. ALU occupancy understandably
declined as area hospitals had restrictions placed on elective
procedures in the spring, although the occupancy still measured a
sound 88% at Sept. 30, 2020 (down from a very high 98% at FYE
2019). Memory care occupancy remained quite high at Sept. 30, 2020,
measuring 96%. Management has implemented a number of patient and
staff health and safety protocols in response to the pandemic --
including installing hospital-grade ionization and ultraviolet air
filtration and cleaning systems -- which have yielded marketing
benefits.
MANAGEABLE CAPITAL SPENDING PLANS
Plymouth Place's near-term capital spending plans are manageable,
as routine annual capex should be in the $3 million range. The
average age of plant measured a good 10.8 years at FYE 2019 and
11.0 years at Sept. 30, 2020 (non-IG median is 11.7 years). As
noted, Plymouth Place invested in patient safety infrastructure as
a result of the pandemic (e.g., UV air filtration and cleaning
system).
Plymouth Place management and the board are analyzing whether or
not to expand the East Campus. That project, if it moves forward,
may include new money debt and/or be supported by fundraising.
Fitch will evaluate the credit implication of the project and any
related financing should the East Campus project move forward. At
this point, even if the project is approved, management does not
expect construction would begin for at least two years.
ADEQUATE FINANCIAL PROFILE
Plymouth Place's operating metrics remain sound in interim fiscal
2020, despite pressures from the coronavirus pandemic. Through
nine-months fiscal 2020, the operating ratio measured approximately
103%, just above the non-investment grade median of 101% and
in-line with the 103% that Plymouth Place averaged between fiscals
2015 and 2019. Plymouth Place's NOM measured a good 9% through
nine-months fiscal 2020 (well above the non-IG median of just under
5%).
These sound operating margins in interim fiscal 2020 were driven by
continued flexing of expenses (with only limited layoffs), the
aforementioned maintenance of sufficient occupancy rates, and
receipt of nearly $800,000 in CARES Act grants through Sept. 30.
One exception to sound operating metrics is NOM-adjusted. After
averaging a good nearly 20% over the last five years (non-IG median
is 18%), Plymouth Place's NOM-adjusted dropped considerably to
-3.2% through nine-months fiscal 2020. The reason for this, despite
continued adequate core operating margins, was a steep decline in
net entrance fees received, which dropped to -$2.5 million after
averaging nearly $5 million in fiscals 2018 and 2019. Particularly
in the early days of the pandemic, Plymouth Place's entrance fees
refunded exceeded entrance fees received. Plymouth Place adjusted
to virtual tours and referrals from current residents, and
management reports that demand from prospective residents has
rebounded in recent months.
Looking forward, Fitch expects Plymouth Place's operating metrics
in full-year fiscal 2020 will be at least as good as those recorded
through nine-months fiscal 2020, and longer-term margins should be
consistent with prior year trends.
Liquidity ratios remain sound for a non-IG LPC. At unaudited Sept.
30, 2020, cash on hand exceeded 365 days (non-IG median is 307
days) and cash-to-debt measured about 39% (non-IG median is 30%).
MADS coverage historically has been adequate for a non-IG LPC,
averaging 1.6x between fiscals 2017 and 2019. Per Fitch
calculation, coverage dropped to 0.7x in nine-months fiscal 2020
because of the steep decline in net entrance fees (per management
calculation, however, coverage measured 1.4x for the interim
period). Plymouth Place's minimum coverage covenant is 1.2x.
MANAGEABLE LONG-TERM LIABILITY PROFILE
Plymouth Place's debt burden is manageable for a non-IG LPC. MADS
as a percentage of revenue measured roughly 18% in fiscal 2019
(non-IG median is 16%). Debt-to-net available measured a good 7.6x
based on fiscal 2019 results (non-IG median is nearly 12x), but
increases to nearly 19x based on nine-months fiscal 2020. The
increase in interim fiscal 2020 is due to the aforementioned
decrease in net entrance fees received.
All Plymouth Place debt is fixed-rate and the organization does not
have interest rate swaps. Plymouth Place does not have a defined
benefit pension plan or operating leases, and therefore, there are
no debt 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
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.
PREGIS TOPCO: Moody's Assigns B2 Rating on New 1st Lien Term Loan
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Pregis TopCo,
LLC's proposed incremental first lien term loan. The company's
existing ratings, including the B3 Corporate Family Rating (CFR)
and B3-PD Probability of Default Rating (PDR), remain unchanged.
The outlook remains stable.
The proposed $233 million incremental first lien term loan in
combination with $80 million of incremental second lien term loan
(unrated) will be used to fund a dividend to shareholders, repay a
portion of revolver borrowings, fund transaction-related fees and
expenses, and for general corporate purposes. Pro forma the
additional $313 million of debt, debt to LTM EBITDA at September
30, 2020 increases to 7.3x from 5.4x. However, Moody's expects the
company to allocate free cash flow to debt reduction in 2021 and
2022.
The B2 rating assigned to the incremental term loan reflects the
first lien senior secured facilities' priority position in the
capital structure and the loss absorption provided in a distressed
scenario by the $295 million of second-lien term debt.
Assignments:
Issuer: Pregis TopCo LLC
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
RATINGS RATIONALE
Pregis' credit profile is constrained by high leverage, modest
scale and significant exposure to the cyclical protective packaging
market. The company has a minimal amount of contractual cost
pass-through mechanisms with customers to combat the volatility of
raw materials costs consisting mainly of polyethylene resin and
other chemicals. Protective packaging materials, such as sheet foam
and bubble wrap, are considered commodity in nature with
significant price competition.
The company benefits from recurring revenue opportunities with its
"razor/razor blade" approach, where its machines are installed in
customer facilities and the corresponding packaging material is
sold to them. Pregis is also focusing on expanding its presence in
the growing e-commerce market. Approximately 90% of Pregis's annual
revenue is generated in North America spanning across mature
markets like the big box retailers, distributors, and e-commerce.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be downgraded if debt to EBITDA is expected to be
sustained above 6.5x and EBITDA to interest expense falls below
2.0x. The ratings could be upgraded if debt to EBITDA was sustained
below 5.5x and EBITDA to interest expense improves to over 3.0x.
Pregis TopCo, LLC is a manufacturer of protective packaging
materials and equipment. Based in Deerfield, Illinois, the company
produces sheet foam, bubble wrap, engineered foam, adhesive films
for automotive, consumer products, electronics, furniture,
housing/construction industries in its manufactured product
segment. Pregis also sells packaging equipment that uses its
packaging materials. The company has 14 manufacturing plants in
North America and primarily focuses on the North American market.
The primary raw material used is polyethylene resin (approximately
5% of sales are from paper products). Warburg Pincus has been the
primary equity owner of the company since August 2019.
The principal methodology used in this rating was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
PRO-PHARMA ADVISORY: Hires Slatkin & Reynolds as Attorney
---------------------------------------------------------
Pro-Pharma Advisory Group, LLC, seeks authority from the U.S.
Bankruptcy Court for the Southern District of Florida to employ
Slatkin & Reynolds, P.A., as attorney to the Debtor.
Pro-Pharma Advisory requires Slatkin & Reynolds to:
a. give advice to the Debtor with respect to its powers and
duties in the continued management of its financial
affairs;
b. advise the Debtor with respect to its responsibilities to
comply with the United States Trustee's Operating
Guidelines and Reporting Requirements and with the rules of
the court;
c. prepare pleadings and other legal documents necessary in
the administration of the case;
d. protect the interests of the Debtor in all matters pending
before the court;
e. represent the Debtor in negotiations with its creditors in
the preparation of a plan; and
f. perform all other necessary functions as attorney for the
Debtor for the proper administration of the bankruptcy
estate.
Slatkin & Reynolds agrees to be compensated at the rate of $375 an
hour for attorneys and $125 an hour for paralegals. The Firm will
be paid a retainer of $3,000.
Robert F. Reynolds, Esq., a partner at Slatkin & Reynolds, attests
that the firm is disinterested as required by Section 327(a) of the
Bankruptcy Code.
The firm can be reached at:
Robert F. Reynolds, Esq.
SLATKIN & REYNOLDS, P.A.
One East Broward Boulevard, Suite 609
Fort Lauderdale, FL 33301
Tel: (954) 745-5880
Fax: (954) 745-5890
E-mail: rreynolds@slatkinreynolds.com
About Pro-Pharma Advisory
Pro-pharma Advisory Group, LLC, based in Coral Springs, FL, filed a
Chapter 11 petition (Bankr. S.D. Fla. Case No. 20-22824) on Nov.
24, 2020. The petition was signed by Jason Fine, sole managing
member. In its petition, the Debtor disclosed $900,000 in assets
and $1,431,724 in liabilities. The Hon. Peter D. Russin presides
over the case. SLATKIN & REYNOLDS, P.A., serves as bankruptcy
counsel.
PROFESSIONAL FINANCIAL: Hires Kimball Tirey as Special Counsel
--------------------------------------------------------------
Professional Financial Investors, Inc., and its debtor-affiliates
seek authority from the U.S. Bankruptcy Court for the Northern
District of California to employ Kimball Tirey & St. John, LLP, as
residential real estate counsel and residential real estate
litigation counsel to the Debtors.
Professional Financial requires Kimball Tirey to:
a. advise and assist the Debtors with regards to real estate
issues that concern the residential properties that the
Debtors either owns or manages;
b. represent the Debtors in disputes with residential tenants
who rent properties that the Debtors either owns or
manages;
c. represent the Debtors in proceedings or hearings before
this Court that concern disputes over residential real
estate owned or managed by the Debtors, including adversary
proceedings involving residential tenants; and
d. take such other action and performing such other services
as the Debtors may require of the Firm in connection with
the portfolio of residential real estate properties that
the Debtor either owns or manages.
Kimball Tirey will be paid at the hourly rate of $295
Kimball Tirey will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Dana R. Wares, partner of Kimball Tirey & St. John, LLP, assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
Kimball Tirey can be reached at:
Dana R. Wares, Esq.
KIMBALL TIREY & ST. JOHN, LLP
9401 E Stockton Blvd., Suite 140
Elk Grove, CA 95624
Tel: (800) 525-1690
About Professional Financial Investors
Professional Financial Investors, Inc., and Professional Investors
Security Fund, Inc. are both engaged in activities related to real
estate.
On July 16, 2020, a group of creditors filed an involuntary Chapter
11 petition (Bankr. N.D. Cal. Case No. 20-30579) against
Professional Investors. On July 26, 2020, Professional Financial
sought Chapter 11 protection (Bankr. N.D. Cal. Case No. 20-30604).
The cases are jointly administered under Case No. 20-30604.
At the time of the filing, Professional Financial disclosed assets
of between $100 million and $500 million and liabilities of the
same range.
Judge Dennis Montali oversees the cases.
Ori Katz, Esq., at Sheppard, Mullin, Richter & Hampton, LLP, is the
Debtors' legal counsel. Debtors have also tapped Trodella & Lapping
LLP as their conflicts counsel and Ragghianti Freitas LLP,
Weinstein & Numbers LLP, Wilson Elser Moskowitz Edelman & Dicker
LLP, and Nardell Chitsaz & Associates as their special counsel.
Michael Hogan of Armanino LLP was appointed as Debtors' chief
restructuring officer. FTI Consulting, Inc., is the financial
advisor.
On Aug. 19, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. The committee is represented by
Pachulski Stang Ziehl & Jones, LLP.
PTC INC: S&P Upgrades ICR to 'BB+' on Strong Business Execution
---------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
provider of industrial design and manufacturing software and
services PTC Inc. to 'BB+' from 'BB'. The outlook is stable. S&P
also raised its issue-level rating on the company's senior
unsecured notes to 'BB' from 'BB-' based on a recovery rating of
'5'.
PTC Inc. demonstrated the resilience of its subscription fee model
in fiscal 2020 (ended Sept. 30, 2020), with annual recurring
revenue (ARR) growing by 14% despite lower bookings due to the
COVID-19 pandemic, EBITDA margins improving by nearly 10 percentage
points to 30.5%, and stable free operating cash flows (FOCF).
PTC's subscription model has made the company's operating
performance and FOCF generation more resilient to macroeconomic
cycles. The rating action reflects S&P's view that PTC's business
profile has improved significantly in recent years following the
completion of its subscription model transition in the first half
of fiscal 2019. The robustness of the model was tested in fiscal
2020 during the COVID-19 pandemic, with the company still being
able to generate 14% ARR growth supported by its backlog of
previous bookings and contracted ramps and only a modest increase
in churn. FOCF was also generally stable at about $225 million
despite higher restructuring and interest cash payments. S&P
believes the greater visibility of the company's ARR growth and
FOCF generation through macroeconomic cycles contributes to an
improved credit profile overall.
S&P said, "We expect the company's improved EBITDA margins to
persist as a result of growing subscription revenues and decreasing
restructuring costs.PTC's EBITDA margins also improved to just
above 30% in fiscal 2020 driven by the company's operating
leverage, as well as lower restructuring expenses. This brings the
company's profitability to a more comparable level with its direct
peers like Autodesk Inc. (about 32% EBITDA margin in the 12 months
ended July 31, 2020) and Dassault Systemes SE (33% in 2019). We
expect PTC's EBITDA margins to remain in the 30% area in fiscal
2021, even as expenses like travel, hiring, and variable
compensation normalize, as a result of further operating leverage
benefits and lower restructuring expenses. At the same time, we
note that EBITDA margins can also be affected by decisions made
around the term length and timing of new and renewal bookings of
PTC's on-premise subscription contracts due to ASC 606 accounting.
"While PTC's financial policy could cause temporary leverage
increases, we expect ARR and FOCF growth will support stable credit
metrics over time.We expect ARR growth in at least the
high-single-digit area in fiscal 2021, supported by PTC's existing
backlog, upselling, and cross-selling activities and continued
market penetration of the internet of things (IoT), augmented
reality (AR), and OnShape software-as-a-service computer-aided
design (SaaS CAD) product areas. The latter trend seems to have
accelerated somewhat to support remote working and learning
environments. We also expect continued traction from PTC's
partnerships with Rockwell Automation, Microsoft, and ANSYS to
support near-term bookings." ARR growth in PTC's core CAD and
product lifecycle management (PLM) product segment should be
further boosted by continued innovation, including, in the longer
term, the migration of these products onto the full SaaS platform
used by OnShape.
As ARR grows, given PTC's low capital intensity, FOCF conversion
rates should also benefit from operating leverage--especially
regarding ARR growth from up-selling and ramp conversions with
existing customers. S&P said, "In fiscal 2021, we expect FOCF to
increase to $330 million-$350 million, further helped by lower
interest, restructuring, and acquisition-related cash payments
items. Assuming a return to share repurchases of about 50% of
reported FOCF and modest tuck-in acquisitions, we would expect
leverage to be in the 2x area at the end of fiscal 2021. While we
note the risk of larger acquisitions that could increase PTC's
near-term leverage profile, given its relatively acquisitive
nature, we believe the company would likely reduce leverage rapidly
back to within the 2x-3x range, in line with its financial
policy."
S&P said, "Our adjusted debt, EBITDA, and operating cash flow
figures include our standard adjustments for operating leases and
share-based compensation. We consider PTC's accessible cash and
liquid investments, for the purpose of our net adjusted debt
amount, to exclude withholding tax amounts on cash held by foreign
entities if repatriated.
"The stable outlook reflects our expectation that PTC will improve
FOCF to $320 million-$350 million in fiscal 2021, helped by lower
restructuring and acquisition-related cash costs, lower interest
payments, and ARR growth in at least the high-single-digit area. We
also expect stable EBITDA margins to result in leverage being
maintained at about 2x."
S&P could lower its rating if:
-- PTC were to undertake large debt-funded acquisitions or sizable
shareholder distributions such that we expected leverage to remain
above 3x on a sustained basis or FOCF to debt to fall below 15%;
or
-- PTC were no longer able to maintain ARR growth due to
competitive pressures, loss of partnerships, or prolonged sales
execution issues and operational missteps while EBITDA margins
approached 20%. S&P does not consider this to be a likely scenario
over the next 12 months due to PTC's backlog and visible recurring
revenue base.
S&P could raise its rating if:
-- PTC were to adopt a clearly articulated financial policy that
were in line with leverage staying below 2x on a sustained basis
and FOCF to debt of above 25% even after accounting for shareholder
returns and strategic acquisitions, and
-- PTC continued to maintain at least high-single digit-ARR growth
supported by new bookings while maintaining EBITDA margins of above
30% and diversifying its revenue mix further away from CAD and PLM
products.
PUERTO RICO HOSPITAL: Unsecureds Will Recover 5% in Plan
--------------------------------------------------------
Puerto Rico Hospital Supply, Inc. and Customed, Inc., submitted a
First Amended Joint Disclosure Statement.
Class 9 Holders of Allowed General Unsecured Claims -- with an
estimated amount of allowed claim $15,773,250 -- are impaired. The
class is projected to recover 5 percent of their claims.
Holders of Allowed General Unsecured Claims in excess of $40,000,
excluding claims from Debtors' Shareholder, Debtors' Affiliates,
the Secured Lenders' Deficiency Claim and the Allowed Unsecured
Deficiency Claim of SFS, will be paid in full satisfaction of their
claims 5 percent thereof through 60 equal consecutive monthly
installments commencing on the Effective Date of the Plan and
continuing on the 30th day of the subsequent 59 months.
Holders of Allowed General Unsecured Claims of $40,000 or less or
those claims in excess of $40,000 which are voluntarily reduced to
$40,000, will receive in full satisfaction of their claims 5%
thereof, on the Effective Date.
The Debtors will obtain financing from Acrecent, or its designee,
for a net amount of $13,000,000, to be used, together with the
proceeds of the sale of the Carolina Property, for payment of the
Secured Lenders under the Settlement Agreement.
A full-text copy of the Disclosure Statement dated November 2,
2020, is available at https://tinyurl.com/y4w387dl from
PacerMonitor.com at no charge.
Attorney for the Debtors:
CHARLES A. CUPRILL P.S.C. LAW OFFICES
356 Fortaleza Street
Second Floor
San Juan, PR 00901
Tel.: 787-977-0515
Fax: 787-977-0518
E-mail: ccuprill@cuprill.com
About Puerto Rico Hospital Supply
Puerto Rico Hospital Supply, Inc., distributes medical supplies in
Puerto Rico. Customed Inc., founded in 1991, manufactures surgical
appliances and supplies.
Puerto Rico Hospital Supply, Inc. and Customed, Inc., filed
voluntary Chapter 11 petitions (Bankr. D.P.R. Case Nos. 19-01022
and 19-01023) on Feb. 26, 2019. The petitions were signed by Felix
B. Santos, president. The cases are assigned to Judge Enrique S.
Lamoutte Inclan.
At the time of the filing, Puerto Rico Hospital estimated $50
million to $100 million in assets and $10 million to $100 million
in liabilities while Customed, Inc. estimated $10 million to $50
million in both assets and liabilities. Alexis Fuentes Hernandez,
Esq., at Fuentes Law Offices, represents the Debtors.
QUIKRETE HOLDINGS: S&P Alters Outlook to Pos., Affirms 'BB-' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S.-based building
materials supplier Quikrete Holdings Inc. to positive from stable
and affirmed its 'BB-' issuer credit rating.
At the same time, S&P is revising its recovery rating on Quikrete's
$2.6 billion term loan due in 2027 to '3' from '4' and affirming
the 'BB-' issue-level rating.
The positive outlook reflects the potential for a higher rating
over the next 12 months if S&P expects leverage to be sustained
below 4x even when demand conditions normalize.
Continued strong demand in Quikrete's main end markets lead to
better than expected earnings growth. They have benefited from
strong demand especially since the second quarter of 2020. S&P
said, "As a result, we expect revenues to increase about 10% and
EBITDA to increase about 30%. A demand boost in its repair and
remodeling segment, which represents 50%-55% of revenues, is from
consumer spending on home improvements. In addition, we expect home
construction (about 15% of revenues) activity to continue to
increase over the next 12 months, driven by favorable mortgage
rates and higher demand for suburban homes."
S&P said, "We expect leverage to remain below 4x, compared to prior
expectations of close to 5x. Adjusted leverage of 3x-3.5x in
fiscal 2020 and 2021 would compare to 4.5x in fiscal 2019 and our
prior expectations of close to 5x. About 60% of cost of goods sold
is attributable to materials costs which have remained relatively
consistent however EBITDA margins have benefited from product mix
changes and improved efficiencies. Although we expect some margin
erosion in 2021 due to uncertainty around the pace and length of
current market conditions as well as the potential for input costs
to rise, we expect EBITDA margins remain in the average range for
building materials companies. This is due to Quikrete's focus on
efficiency improvements through automation and other initiatives,
the absence of hazard pay, and removal of expensive third-party
transportation services to keep up with demand.
"We expect Quikrete to generate positive free cash flows and pursue
acquisitions within cash flows. Free cash flows will be $280
million-$300 million in 2020 and $300 million-$350 million in 2021
due to good working capital management and stable capital spending.
In the first nine months of 2020, Quikrete completed about $60
million in acquisitions, and we expect the company to remain
acquisitive. However, we expect Quikrete will limit the funding
sources of future acquisitions to internally generated cash unlike
large debt-financed acquisitions completed between 2016 and 2018."
Quikrete's leading market positions and well-known brands provide a
competitive advantage. These brands include its Quikrete cement
and concrete; Pavestone and Keystone paver and block products; and
Rinker concrete pipe and storm-water products. Many of the
company's products have No. 1 or 2 market shares and account for
about 65% of sales. Its geographic diversity further supports these
positions. This makes them attractive to large retailers such as
Home Depot and Lowe's, while its nationwide distribution footprint
provides barriers to entry.
The positive outlook reflects the potential for a higher rating
over the next 12 months if we expect credit metrics to be sustained
even when demand conditions normalize with debt to EBITDA remaining
below 4x.
S&P could raise its rating on Quikrete over the next 12 months if:
-- S&P believes it can maintain current credit measures when
demand turns more normalized and incorporating acquisitions;
-- S&P expects debt to EBITDA to remain below 4x; and
-- Discretionary cash flow (DCF, operating cash flow less capital
spending and dividends) to debt above 5%.
S&P could revise the outlook back to stable over the next 12 months
if:
-- Demand falls further than we anticipate; or
-- Less likely, Quikrete adopts a more aggressive financial policy
than S&P expects.
QUORUM HEALTH: Moody's Assigns Caa1 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service assigned ratings to Quorum Health
Corporation, including a Caa1 Corporate Family Rating (CFR) and a
Caa1-PD Probability of Default Rating (PDR). Moody's also assigned
a Caa1 rating to Quorum's senior secured term loan. The outlook is
stable.
The Caa1 CFR reflects the improvement in Quorum's capital structure
since emerging from Chapter 11 bankruptcy as well as its moderate
scale, concentration risk, and management track record. The Caa1
rating on the senior secured term loan reflects its
disproportionately high percentage of the overall capital structure
despite the presence of an ABL facility (unrated).
Ratings assigned:
Quorum Health Corporation (NEW)
Corporate Family Rating at Caa1
Probability of Default Rating at Caa1-PD
Senior secured term loan due 2025 at Caa1 (LGD4)
The outlook is assigned stable.
RATINGS RATIONALE
Quorum's Caa1 CFR reflects Moody's expectation that the company
will operate with high financial leverage and negative free cash
flow over the next 12-18 months. Specifically, Moody's projects
that Quorum's adjusted debt to EBITDA will be in the low-to-mid 5
times range. Further, Moody's expects free cash flow of the new
entity to be moderately negative until at least 2022, given
Quorum's high interest costs and capex requirements. The rating is
also constrained by Quorum's concentration of profits in a few of
its markets and cash flow volatility created by exposure to state
supplemental Medicaid programs. Further, the rating is constrained
by the company's liquidity, which Moody's expects will be adequate
over the next 12-18 months.
The Caa1 CFR is supported by the company's moderate scale and its
position as the sole hospital provider in many of its markets,
which limits competition. Moody's expects Quorum's earnings to
benefit over the next three years from the transition to a new
revenue cycle management provider. It is further supported by
Moody's view that hospital volumes have recovered to roughly
85%-90% of pre-COVID-19 pandemic levels, and that the remainder
will return, albeit in an uneven manner, by late-2021/early-2022.
The rating also reflects Moody's expectation that Quorum's
rightsized capital structure will enable management to be highly
selective when considering potential acquisitions or divestitures
and facilitate a greater focus on growing organically.
The stable outlook reflects Moody's view that Quorum will operate
with weak cash flow, high financial leverage, and moderate scale
while continuing to effectuate operating improvements within its
hospital portfolio.
With respect to governance, Quorum has had a number of management
and strategy changes within the last few years, which have to date
not shown evidence of being successful. Further, the company has
been unable to demonstrate a consistent track record for meeting
its own financial guidance leading up to its Chapter 11 bankruptcy
filing in April 2020. Moody's expects the company to exhibit
aggressive financial policies over time that in the near-term may
be limited by its acceptance of Coronavirus Aid, Recovery, and
Economic Security (CARES) Act grants.
As a for-profit hospital operator, Quorum also faces high social
risk. The affordability of hospitals and the practice of balance
billing has garnered substantial social and political attention.
Hospitals are now required to publicly provide the list price of
all of their services, although compliance and practice is
inconsistent across the industry. Additionally, hospitals rely on
Medicare and Medicaid for a substantial portion of reimbursement.
Any changes to reimbursement to Medicare or Medicaid directly
impacts hospital revenue and profitability. Further, as Quorum is
focused on non-urban communities, slow population growth tempers
the company's capacity to grow admissions. Implementing strategy
changes in a rural hospital is often met with community backlash,
which can make it difficult to sell, close or otherwise reduce
services in order to improve profitability.
An incremental facility can be incurred in an amount that results
in Quorum's pro forma secured net leverage of up to 4.5 times plus
the greater of 25% of LTM EBITDA or $30 million. Collateral leakage
through transfers of assets to unrestricted subsidiaries is not
permitted by the credit agreement. Only non-JV subsidiaries must
provide guarantees, raising the risk of potential guarantee
release; partial dividends of ownership interests could jeopardize
guarantees, subject to protective provisions require permitted
joint ventures to be bona fide joint ventures with non-affiliates.
Quorum's obligation to prepay obligations with net proceeds of
asset sales does not step down subject to leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if operating performance weakens or
liquidity erodes. A downgrade could also occur if the company
engages in debt-funded shareholder initiatives. Finally, a
downgrade could also occur if Moody's expects an increased
probability of default.
The ratings could be upgraded if Quorum is able to generate a
consistent track record of organic growth. Further, an upgrade
would likely be predicated on the company's ability to sustain
debt/EBITDA below the low-to-mid 5 times range while regularly
producing positive free cash flow.
Quorum Health Corporation is an operator and manager of hospitals
and outpatient services in non-urban areas of the US. The company
operates 22 hospitals in 13 states. The company also manages
non-affiliated hospitals, through its Quorum Health Resources
subsidiary. Quorum's annual revenue approximates $1.4 billion. The
company is majority-owned by Davidson Kempner and GoldenTree Asset
Management.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
RACEDAY CYCLE: Seeks to Hire Reynolds Law Corp. as Legal Counsel
----------------------------------------------------------------
Raceday Cycle, Inc. seeks authority from the U.S. Bankruptcy Court
for the Eastern District of California to hire Reynolds Law
Corporation as its legal counsel.
The firm will render these professional services to the Debtor:
(a) prepare and file complete schedules and statements in
support of relief under Chapter 11 of the Bankruptcy Code;
(b) advise and represent the Debtor within the present Chapter
11 case;
(c) obtain employment of professionals as necessary for the
proper administration of the estate and case;
(d) communicate with and negotiate as necessary with the
creditors and other parties-of-interest in this case;
(e) obtain court authority for any and all actions necessary
to the administration of the estate;
(f) propose and obtain confirmation of a Plan of
Reorganization;
(g) provide all other actions necessary for the proper
administration of the estate; and
(h) obtain court authority for the dale of certain property of
the estate.
The firm's services will be provided mainly by Stephen Reynolds,
Esq., who will be paid at the rate of $375 per hour.
Reynolds Law Corporation received a pre-bankruptcy retainer of
$17,500, of which $5,188 was used for pre-bankruptcy legal fees and
costs including the $1,738 court filing fee.
Stephen Reynolds, Esq., disclosed in court filings that the firm
neither holds nor represents any interest adverse to Debtor's
estate.
The attorney can be reached at:
Stephen M. Reynolds, Esq.
Reynolds Law Corporation
424 2nd St., Ste. A
Davis, CA 95616
Telephone: (530) 771-6049
Email: sreynolds@lr-law.net
About Raceday Cycle, Inc.
Raceday Cycle, Inc. sought protection for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Cal. Case No. 20-25396) on Dec.
1, 2020, listing under $1 million in both assets and liabilities.
Stephen M. Reynolds, Esq. at Reynolds Law Corporation represents
the Debtor as counsel.
RACQUETBALL INVESTMENT: Hires Parker & Lipton as Counsel
--------------------------------------------------------
Racquetball Investment Association No. II Limited Partnership seeks
authority from the U.S. Bankruptcy Court for the District of
Massachusetts to employ Parker & Associates LLC d/b/a Parker &
Lipton, as counsel to the Debtor.
Racquetball Investment requires Parker & Lipton to:
(a) advise the Debtor with respect to its rights and duties as
debtor-in-possession;
(b) prepare and file all of requisite schedules and
statements;
(c) advise the Debtors with respect to a plan and any other
matters relevant to the formulation and negotiation of a
plan of in these cases;
(d) represent the Debtor at all hearings in this matter;
(e) prepare all necessary and appropriate applications,
motions, answers, orders, reports, pleadings and other
documents, and review all financial and other reports to
be filed in the Chapter 11 proceeding;
(f) review and analyze the nature and validity of any liens
asserted against the Debtors' property;
(g) review and analyze claims against the Debtors, the
treatment of such claims and the preparation, filing or
prosecution of any objections to claims; and
(h) perform all other legal services as may be necessary or
appropriate during the course of the Debtors' bankruptcy
proceeding.
Parker & Associates will be paid based upon its normal and usual
hourly billing rates.
On September 22, 2020, the Debtor paid Parker & Associates a
retainer in the amount of $10,000.
Parker & Associates will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Nina M. Parker, partner of Parker & Associates, LLC, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Parker & Associates can be reached at:
Nina M. Parker, Esq.
PARKER & ASSOCIATES, LLC
10 Converse Place, Suite 201
Winchester, MA 01890
Tel: (781) 729-0005
About Racquetball Investment Association
No. II Limited Partnership
Racquetball Investment Assoc. II filed a Chapter 11 petition
(Bankr. D. Mass. Case No. 20-12304) on Nov. 25, 2020. The Debtor
hired Parker & Associates, LLC, as counsel.
RADIO DESIGN: Unsecureds to Recover 100% in 6 Years Under Plan
--------------------------------------------------------------
Radio Design Group, Inc. filed with the U.S. Bankruptcy Court for
the District of Oregon a Plan of Reorganization and a Disclosure
Statement on December 4, 2020.
The claims of the Class 8 creditors are general unsecured claims.
The Debtor estimates claims in this class total approximately
$2,698,927. The Debtor will pay the Class 8 creditors in full over
six years, through their pro-rata distributions of monthly
installments to the Class 8 creditors of $37,485 commencing within
30 days of the Effective Date. Class 8 is impaired and shall be
entitled to vote on the Plan.
The Class 9 creditor is the shareholder James Hendershot. The Class
9 creditor will not receive any distributions under the Plan but
will retain his shares in the Reorganized Debtor. Class 9 is
unimpaired.
Payments and distributions under the Plan will be funded by cash
flow from the continued operation of the business. Debtor believes
that the carefully constructed budget is realistic and shows the
Debtor will have the cash over the life of the Plan to implement
the terms of the Plan. The Plan proposes to pay the unsecured
creditors in full over the life of the plan. Debtor believes that
the only way it will ever be able to pay its creditors in full will
be for the company to continue operations.
A full-text copy of the Disclosure Statement dated December 4,
2020, is available at https://tinyurl.com/y2bmd4em from
PacerMonitor at no charge.
Attorneys for the Debtor:
Loren S. Scott
SCOTT LAW GROUP LLP
PO Box 70422
Springfield, OR 97475
Telephone: 541-868-8005
Facsimile: 541-868-8004
E-mail: lscott@scott-law-group.com
About Radio Design Group
Radio Design Group, Inc., is a design and engineering firm based in
Grants Pass, Oregon. Since its incorporation in 1992, Radio Design
has grown from a small RF consulting company specializing in small
commercial markets to a vital contributor to unique and innovative
products that have advanced the state of technology in both the
commercial and defense-related markets.
Radio Design sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Ore. Case No. 19-63617) on Dec. 2, 2019. In the
petition signed by James Hendershot, president, the Debtor was
estimated to have $1 million to $10 million in assets and
liabilities of the same range. Judge Thomas M. Renn is assigned to
the case. The Debtor is represented by Loren S. Scott, Esq., at
The Scott Law Group.
Radio Design previously sought bankruptcy protection on July 24,
2014 (Bankr. D. Ore. Case No. 14-62732).
RADIOLOGY PARTNERS: Moody's Alters Outlook on Caa1 CFR to Positive
------------------------------------------------------------------
Moody's Investors Service affirmed Radiology Partners, Inc's Caa1
Corporate Family Rating (CFR), Caa1-PD Probability of Default
Rating (PDR), B3 first lien senior secured rating and Caa3 rating
on the company's senior unsecured notes. The outlook was changed to
positive from stable.
Concurrently, Moody's assigned a B3 rating to the company's
proposed $650 million senior secured notes. The proceeds of this
notes offering, along with $150 million in new cash equity and $129
million of cash will be used to finance the acquisition of MEDNAX
Radiology Solutions and pay transaction fees/expenses.
The rating affirmation reflects the company's very high leverage
and significant execution risk in integrating MEDNAX Radiology
Solutions, which will increase the company's revenues by up to 40%.
Moody's estimates that the company's adjusted debt/EBITDA was
around 9.0 times for the last twelve months ended September 30,
2020, including an add-back for lost earnings due to the pandemic.
Moody's expects that leverage will improve, but remain high, with
pro forma debt/EBITDA, including MEDNAX Radiology Solution, in the
7.5-8.0 times range in 2021. Achieving this level of deleveraging,
however, remains uncertain given the execution and governance risks
associated with the integration of MEDNAX Radiology Solutions and
ongoing social risks associated with the coronavirus pandemic.
The change of outlook to positive reflects a significant recovery
in patient volumes in recent months following very steep declines
in the second quarter of 2020 triggered by the coronavirus
pandemic. The positive outlook also reflects the company's
materially expanded scale and geographic diversity after completing
the acquisition of the radiology business from MEDNAX, Inc.
A summary of all affected ratings is as follows:
Ratings affirmed:
Radiology Partners, Inc.
Corporate Family Rating at Caa1
Probability of Default Rating at Caa1-PD
$300 million senior secured first lien revolving credit facility
expiring 2024 at B3 (LGD3)
$1.4 billion senior secured first lien term loan due 2025 at B3
(LGD3)
$710 million unsecured notes due 2028 at Caa3 (LGD5)
Ratings Assigned:
Radiology Partners, Inc.
Proposed $650 million secured notes due 2025 at B3 (LGD3)
Outlook Actions:
The outlook was changed to positive from stable
RATINGS RATIONALE
The Caa1 Corporate Family Rating reflects Radiology Partners' very
high financial leverage and significant execution risk in
integrating MEDNAX Radiology Solutions. The company has increased
its revenue by around 10-fold over the last five years through
acquisitions. The company will further increase its revenue by up
to ~40% when the MEDNAX Radiology Solutions acquisition is
completed. This extremely rapid pace of growth carries significant
risk, including systems integration, financial reporting, and
people alignment.
Radiology Partner's liquidity is good, supported by $102 million in
cash and a $300 million revolving credit facility which will be
undrawn following the proposed transaction. Absent acquisitions and
related integration and transaction costs, Moody's believes that
Radiology Partners has the potential to generate over $100 million
of free cash flow. However, Moody's expects the company to remain
acquisitive and significant transaction and business integration
costs associated with the MEDNAX transaction will further constrain
free cash flow over the next 12-18 months.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
the corporate assets from the current weak U.S. economic activity
and a gradual recovery for the coming months. Although economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around Moody's forecasts is unusually high. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety.
Radiology is a sector of healthcare that has social risk given that
radiology services can give rise to surprise medical bills, which
are currently an area of intensive political focus. That said,
Moody's believes that the company's direct exposure to potential
surprise medical bill legislation is limited given Radiology
Partners has a limited number of medical claims that are both
out-of-network and balance billed to patients. However, the company
remains exposed to pricing pressure as an indirect result of some
surprise medical bill proposals that would use median in-network
rates as a benchmark.
In terms of governance, the company is ~61% owned by three private
equity investors. The company's financial policies are expected to
remain aggressive reflecting its majority control by a private
equity investor. However, since physicians also own a significant
proportion of the company, they will also have a material influence
in deciding the company's policies. Over time, Radiology Partners
may need to provide liquidity to doctors as they retire which
raises the risk of cash outflows.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if the company's liquidity and/or
operating performance deteriorates, it fails to effectively
integrate acquired practices including the MEDNAX Radiology
Solutions acquisition, or if its financial policies become more
aggressive.
Ratings could be upgraded if Radiology Partners smoothly integrates
MEDNAX Radiology Solutions and other acquired practices.
Additionally, Moody's would consider an upgrade if the company's
adjusted debt/EBITDA is sustained below 7.5 times and the company
demonstrates the ability to sustainably generate positive free cash
flow.
Headquartered in El Segundo, CA, Radiology Partners is one of the
largest physician-led and physician-owned radiology practices in
the U.S. Services provided include diagnostic and interventional
radiology. The company is 20.1% owned by New Enterprise Associates,
10.3% by Future Fund, 32.4% by Starr and the rest by physicians,
management and other investors. Pro forma revenues including the
recent MEDNAX Radiology Solutions acquisition are approximately
$1.9 billion.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
REALOGY GROUP: Moody's Affirms B2 CFR; Alters Outlook to Stable
---------------------------------------------------------------
Moody's Investors Service affirmed Realogy Group LLC's corporate
family rating at B2, probability of default rating at B2-PD, senior
secured bank credit facility at Ba3, senior secured 2nd lien notes
at B3 and senior unsecured notes at Caa1. The Speculative Grade
Liquidity rating was raised to SGL-2 from SGL-3. The outlook was
revised to stable from negative.
RATINGS RATIONALE
"The rebound in existing home sales volume and mortgage refinance
activity that buoyed Realogy's operating and financial results in
late 2020 enables free cash flow and debt repayment in 2021,
driving the revision of the outlook to stable from negative," said
Edmond DeForest, Moody's Vice President and Senior Credit Officer.
DeForest continued: "The upward revision of the liquidity rating to
SGL-2 from SGL-3 is driven by the growth in free cash flow
following the company's strong third quarter results."
The B2 CFR reflects Moody's expectations for a low single digit
revenue growth rate, at least $200 million free cash flow and debt
to EBITDA of 6.3 times as of September 30, 2020 to decline and
remain below 6 times in 2021. Moody's anticipates strong recovery
in the existing home sales market nationally, including the New
York City suburbs, although not the city itself, fueled in part by
historically low interest rates and renewed interest in existing
homes from consumers since the coronavirus began to wane this
summer is expected to continue in 2021. The substantial rebound in
Realogy's operating and financial results depends in part on
adverse coronavirus-related impacts continuing to wane in 2021.
Moody's notes that strong tailwinds supporting Realogy's business
in late 2020 could reverse quickly if coronavirus-related
disruption forces real estate brokerages to cease operations again.
Profitability rates may not recover from historically low EBITA
margins around 7.5% in the 12 months ended September 30, 2020 in
2021 due to the return of around $120 million of expenses (largely
compensation and investment) temporarily eliminated during the
pandemic in 2020. Over the longer term, expected revenue growth,
operating leverage in its owned brokerage unit and permanent cost
reduction initiatives should help EBITA rates rebound toward their
historical range between 10% and 13%.
All financial metrics cited reflect Moody's standard adjustments.
Additional support is provided by a strong portfolio of brands and
leading existing homes sale brokerage market position. Realogy's
owned brokerage operations are concentrated in the largest US
markets, including most large suburban markets experiencing an
existing home sale market boom, but also in New York City, where
Realogy has a large, multi-brand owned brokerage presence and
existing home sales conditions are not as robust as elsewhere in
the country. Moody's considers the residential real estate
brokerage market volatile, cyclical and seasonal. Although
commission costs are variable, Realogy's owned brokerages have a
high degree of fixed operating costs. A high proportion of its
profits reflect home sale market activity as opposed to
less-transactional franchise fees. Realogy's leading position in
the residential real estate brokerage market positions the company
well to improve financial metrics steadily if existing home sale
volume and price growth is sustained.
Moody's expects that the residential real estate brokerage industry
will remain subject to severe financial and operating consequences
if coronavirus impacts rise further. Realogy is also under
competitive pressure from other traditional brokers that have
sought to recruit Realogy's best-performing salespeople.
Competition from non-traditional technology-enabled competitors
including RedFin and Zillow, own-to-rent buyers and home flippers
has grown. Additionally, Realogy's high operating and financial
leverage could limit its flexibility if the negative impacts of the
pandemic on the existing home sale market linger for an extended
period. Moody's regards the coronavirus outbreak as a social risk
under its ESG framework, given the substantial implications for
public health and safety.
As a public company, Realogy provides transparency into its
governance and financial results and goals. The 10-person board of
directors is controlled by independent directors. Moody's expects
Realogy to maintain conservative financial strategies including
building liquidity and eschewing large debt-funded M&A or any share
repurchase activity until its financial leverage is reduced.
Additionally, Realogy does not exhibit material environmental
risks.
The Ba3 rating on the senior secured obligations reflects their
priority position in the capital structure and a Loss Given Default
("LGD") assessment of LGD2. The debt is secured by a pledge of
substantially all of the company's domestic assets (other than
excluded entities and excluding accounts receivable pledged for the
securitization facility) and 65% of the stock of foreign
subsidiaries. The Ba3 rating, two notches above the CFR, benefits
from loss absorption provided by the junior ranking debt and
non-debt obligations.
The B3 rating assigned to the senior secured second lien notes
reflects their subordination to the existing 1st lien senior
secured bank facilities, seniority to the senior unsecured notes,
and a LGD assessment of LGD5. The second lien note will is secured
by a second lien on substantially all of the company's domestic
assets (other than excluded entities and excluding accounts
receivable pledged for the securitization facility) and 65% of the
stock of foreign subsidiaries.
The Caa1 rating on the senior unsecured notes reflects the B2-PD
PDR and an LGD assessment of LGD5. The LGD assessment reflects
effective subordination to all the secured debt. The senior notes
are guaranteed by substantially all of the domestic subsidiaries of
the company (excluding the securitization subsidiaries).
The SGL-2 liquidity rating reflects Realogy's good liquidity
profile. As of September 30, 2020, Realogy had a cash balance of
$380 million. Moody's anticipates at least $200 million of free
cash in 2021. Over $1.2 billion of loans were available under the
$1.425 billion revolver as of September 30, 2020; Moody's
anticipates full revolver availability in 2021. Realogy's cash flow
is seasonal, with negative cash flow typically in the 1st fiscal
quarter. Moody's expects good headroom under the maximum senior
secured net debt to EBITDA (as defined in the facility agreement)
financial maintenance covenant applicable to the secured first lien
debt over the next year. Realogy has $62 million of required debt
principal payments in 2021. The revolver and $982 million of loans
and notes are due in 2023.
The stable outlook reflects Moody's expectations for debt to EBITDA
below 6 times, good liquidity and creditor-friendly financial
strategies emphasizing repayment of debt. The stable outlook also
anticipates Realogy will repay or refinance its 2023 debt
maturities well in advance of their due dates.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Moody's expects Realogy will
sustain: 1) debt to EBITDA below 5.5 times, 2) free cash flow to
debt of at least 5%, 3) good liquidity and 4) balanced financial
strategies, including an emphasis upon repaying debt and extending
its debt maturity profile.
The ratings could be downgraded if Moody's anticipates: 1) debt to
EBITDA will remain above 6.5 times, 2) diminished liquidity or 3)
aggressive financial strategies featuring large, debt-financed
acquisitions or shareholder returns.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Issuer: Realogy Group LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured Bank Credit Facilities, Affirmed Ba3 (LGD2)
Senior Secured 2nd lien Regular Bond/Debenture, Affirmed B3 (to
LGD5 from LGD4)
Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5)
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Outlook, Changed To Stable From Negative
Realogy is a global provider of real estate and relocation
services. The company operates in four segments: franchise,
brokerage, title and leads. The franchise brand portfolio includes
Century 21, Coldwell Banker, Coldwell Banker Commercial, ERA,
Sotheby's International Realty and Better Homes and Gardens Real
Estate.
On August 8, 2020, Realogy entered into a confidential settlement
agreement with SIRVA, Inc., SIRVA Worldwide, Inc. and affiliates of
Madison Dearborn Partners, LLC to mutually dismiss and release all
claims related to the termination of the Purchase and Sale
Agreement dated Nov. 6, 2019 with North American Van Lines, Inc.
(as assignee of SIRVA Worldwide) for the sale of Realogy's employee
relocation services business, Cartus Corporation, for approximately
$400 million-plus assumed debt. Cartus Corporation remains
classified as a discontinued operation that Moody's expects Realogy
will sell to SIRVA Worldwide or another buyer.
Moody's expects 2021 revenues of over $6 billion.
RED PLUM LG: Seeks to Hire Power Law as Counsel
-----------------------------------------------
Red Plum LG, LLC, seeks authority from the U.S. Bankruptcy Court
for the Northern District of California to employ Power Law, P.C.,
as counsel to the Debtor.
Red Plum LG requires Power Law to:
a) assist and advise the Debtor relative to the administration
of the bankruptcy proceeding;
b) advise the Debtor with respect to its powers and duties as
debtor-in-possession in the continued management and
operation of its business and property;
c) represent the Debtor before the Bankruptcy Court and advise
the Debtor on pending litigation, hearings, motions, and
decisions of the Bankruptcy Court;
d) review and advise the Debtor regarding applications,
orders, and motions filed with the Bankruptcy
Court by third parties in this proceeding;
e) attend meetings conducted pursuant to section of the
Bankruptcy Code and represent Debtor at all examinations;
f) communicate with creditors and other parties in interest;
g) assist the Debtor in preparing all motions, applications,
answers, orders, reports, and papers necessary to the
administration of the estate;
h) confer with other professionals retained by the Debtor and
other parties in interest;
i) negotiate and prepare the Debtor's chapter 11 plan, related
disclosure statement, and all related agreements and
documents and take any necessary actions on Debtor's behalf
to obtain confirmation of the plan; and
j) perform all other necessary legal services and provide all
other necessary legal advice to the Debtor in connection
with this chapter 11 case.
Power Law will be paid at these hourly rates:
Attorneys $375
Paralegals $85
Power Law will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Stacie L. Power, a partner of Power Law, P.C., assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Power Law can be reached at:
Stacie L. Power, Esq.
POWER LAW, P.C.
1058 Mangrove Avenue Suite C
Chico, CA 95926
Tel: (530) 576-5740
E-mail: stacie@powerlawpc.com
About Red Plum LG
Red Plum LG, LLC, based in Belmont, CA, filed a Chapter 11 petition
(Bankr. N.D. Cal. Case No. 20-30710) on Sept. 10, 2020. The
petition was signed by Mitesh Patel, managing member. In its
petition, the Debtor estimated $1 million to $10 million in both
assets and liabilities. Power Law, P.C., serves as bankruptcy
counsel to the Debtor.
RED ROSE: Stalking Horse APA with ACF on All Assets Sale Terminated
-------------------------------------------------------------------
Red Rose, Inc. and its affiliates filed with the U.S. Bankruptcy
Court for the District of Nevada a notice that ACF Finco I LP
timely terminated the Asset Purchase and Sale Agreement in
connection with the Debtors' proposed bidding procedures relating
to the sale of substantially all assets, free and clear of
interests, subject to overbid.
Said Agreement provided for (a) a credit bid in the amount of $10
million, plus (b) the assumption of (i) the DIP Factoring (of up to
$15 million)) on terms acceptable to the DIP Factor, the Secured
Obligations which include the Roll-Up Amount and DIP Liens, and
(ii) 50% of the allowed legal fees and expenses of the Debtors'
counsel, Fox Rothschild LLP, subject to the agreed upon total cap
for such legal fees and expenses of $1.4 million, of which the
Purchaser, subject to the closing of the Sale, will assume
$700,000, to be paid within one year of Closing. Additionally, the
Purchaser will be responsible for the payment for the proposed cure
amounts for Assigned Contracts.
A hearing on the Bidding Procedures Motion is set for Dec. 22, 2020
at 9:30 a.m.
About Red Rose
Red Rose, Inc., its affiliates and its parent company Petersen-Dean
Inc., a full-service, privately-held roofing and solar company,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Nev. Lead Case No. 20-12814) on June 11, 2020. At the time of
the filing, Red Rose and Petersen-Dean each disclosed assets of
between $10 million and $50 million and liabilities of the same
range.
Judge Mike K. Nakagawa oversees the cases.
The Debtors have tapped Fox Rothschild, LLP to serve as their
bankruptcy counsel and JHS CPAs, LLP to provide tax-related
services.
The U.S. Trustee for Region 17 appointed a committee of unsecured
creditors on June 27, 2020. Brown Rudnick LLP and Schwartz Law,
PLLC serve as the committee's bankruptcy counsel and local
counsel,
respectively.
REDFISH COMMONS: Jan. 13, 2021 Disclosure Statement Hearing Set
---------------------------------------------------------------
On Dec. 3, 2020 Redfish Commons, L.L.C. filed with the U.S.
Bankruptcy Court for the Middle District of Louisiana a Disclosure
Statement in support of its Chapter 11 Plan.
On Dec. 4, 2020, Judge Douglas D. Dodd ordered that:
* January 13, 2021, at 2:00 p.m. at the United States Bankruptcy
Court, 707 Florida Street, Room 222, Baton Rouge, Louisiana, by
Zoom video conference is the hearing to consider the adequacy of
the information contained in the disclosure statement; fix a
deadline for the holders of claims and interests to accept or
reject the plan; and fix a date for the hearing on confirmation of
the plan.
* Objections to the disclosure statement be filed and delivered
to the plan proponent no later than eight (8) days before the
hearing. Objections not timely filed and delivered may be deemed
waived.
A full-text copy of the order dated December 4, 2020, is available
at https://tinyurl.com/yy6m7vot from PacerMonitor at no charge.
A full-text copy of the Disclosure Statement dated December 3,
2020, is available at https://tinyurl.com/y63etjgy from
PacerMonitor at no charge.
Attorneys for Redfish Commons:
STERNBERG, NACCARI & WHITE, LLC
Ryan J. Richmond (La. Bar No. 30688)
17732 Highland Road, Suite G-228
Baton Rouge, LA 70810
Tel: (225) 412-3667
Fax: (225) 286-3046
E-mail: ryan@snw.law
About Redfish Commons
Redfish Commons, L.L.C., based in Baton Rouge, LA, filed a Chapter
11 petition (Bankr. M.D. La. Case No. 20-10553) on Aug. 5, 2020. In
the petition signed by Michael D. Kimble, manager, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. STERNBERG, NACCARI & WHITE, LLC, serves as bankruptcy
counsel to the Debtor.
REDFISH COMMONS: Unsecured Creditors to Recover 100% in 2 Years
---------------------------------------------------------------
Redfish Commons, L.L.C. filed with the U.S. Bankruptcy Court for
the Middle District of Louisiana a Chapter 11 Plan and a Disclosure
Statement on December 3, 2020.
The Debtor formulated a plan of reorganization. Under the Plan,
the Debtor intends to distribute the proceeds from the sale or
refinancing of its 2.682-acre shopping center in Gonzales, LA
("Redfish Commons") to holders of Allowed Claims and Interests.
The Plan provides for the treatment of Claims and Interests as
follows:
* Allowed Priority Claims will be paid in full within two years
of the Effective Date;
* Allowed General Unsecured Claims that are not Intercompany
Claims will be paid in full within two years of the Effective
Date;
* The Secured Claim of First Bank & Trust will be paid in full
within two years of the Effective Date; and
* Allowed Interests, i.e., its members, will retain their
membership interests in Redfish Commons.
Class 6 Allowed General Unsecured Claims are estimated to aggregate
no more than $57,000. Holders of Allowed General Unsecured Claims
shall receive a pro rata share of 24 monthly payments of $1,000
beginning April 15, 2021. Reorganized shall make a balloon payment
equal to the unpaid balance of each Allowed General Unsecured Claim
on April 15, 2023. The unpaid principal balance of each Allowed
General Unsecured Claim shall accrue interest at the rate of 4.00%
per annum until paid in full. Class 6 is Impaired. Holders of
Allowed General Unsecured Claims in Class 6 shall be entitled to
vote to accept or reject the Plan.
Class 8 consists of the membership interests in the Debtor. Michael
D. Kimble (25.00%), Mitchell W. Kimble (25.00%), and GRC Real
Estate, L.L.C. (50.00%) are the members of the Debtor. Their
Interests are Allowed under the Plan. Each holder of an Allowed
Interest shall retain their Interest in the Debtor. If Reorganized
Debtor sells Redfish Commons, then holders of Allowed Interests in
the Debtor shall receive a pro rata share of the balance of the
proceeds from the sale of Redfish Commons after payment of all
Allowed Administrative, Priority, Class 1, Class 6 and Class 7
Claims.
The Debtor intends to either sell or refinance Redfish Commons. To
make Redfish Commons more attractive to a purchaser or a new
lender, the Debtor intends to aggressively market Redfish Commons
to prospective tenants. The Debtor has received two letters of
intent for new leases. Along with a lease expansion, the Debtor
expects rental income to increase rental income by some
$110,000/year.
A full-text copy of the disclosure statement dated December 3,
2020, is available at https://tinyurl.com/y63etjgy from
PacerMonitor at no charge.
Attorneys for Redfish Commons:
STERNBERG, NACCARI & WHITE, LLC
Ryan J. Richmond
17732 Highland Road, Suite G-228
Baton Rouge, LA 70810
Tel: (225) 412-3667
Fax: (225) 286-3046
E-mail: ryan@snw.law
About Redfish Commons
Redfish Commons, L.L.C., based in Baton Rouge, LA, filed a Chapter
11 petition (Bankr. M.D. La. Case No. 20-10553) on Aug. 5, 2020. In
the petition signed by Michael D. Kimble, manager, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. STERNBERG, NACCARI & WHITE, LLC, serves as bankruptcy
counsel to the Debtor.
REDRHINO: Seeks to Hire Michael Jay Berger as Legal Counsel
-----------------------------------------------------------
Redrhino: The Epoxy Flooring Company, Inc. seeks authority from the
U.S. Bankruptcy Court for the Central District of California to
hire the Law Offices of Michael Jay Berger as its general
bankruptcy counsel.
The Debtor requires the firm to:
a. communicate with creditors of the Debtor;
b. review the Debtor's Chapter 11 bankruptcy petition and all
supporting schedules;
c. advise the Debtor of its legal rights and obligations in a
bankruptcy proceeding;
d. work to bring the Debtor into full compliance with
reporting requirements of the Office of the U.S. Trustee;
e. prepare status reports as required by the bankruptcy court;
and
f. respond to motions filed in the Debtor's bankruptcy
proceedings.
The firm will be paid at these hourly rates:
Michael Jay Berger $595
Sofya Davtyan $495
Carolyn Afari $435
Samuel Boyamian $350
Senior Paralegals/Law Clerks $225
Bankruptcy Paralegals $200
The firm received a retainer fee of $20,000.
Michael Jay Berger, Esq., disclosed in court filings that he has no
prior connections to Debtor, its creditors and other parties.
The firm can be reached through:
Michael Jay Berger, Esq.
Law Offices of Michael Jay Berger
9454 Wilshire Boulevard, 6th Floor
Beverly Hills, CA 90212
Tel: (310) 271-6223
Email: michael.berger@bankruptcypower.com
About Redrhino
Redrhino is an independent contractor offering epoxy coating for
concrete floors.
Redrhino: The Epoxy Flooring Company, Inc. filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
C.D. Case No. 20-20257) on Nov. 16, 2020. The petition was signed
by Michael D. Kenealy, president. At the time of filing, the Debtor
estimated $38,800 in assets and $1,563,449 in liabilities. Michael
J. Berger, Esq. at the LAW OFFICES OF MICHAEL JAY BERGER represents
the Debtor as counsel.
RESIDENCE GROUP: Seeks to Hire Michael Jay Berger as Counsel
------------------------------------------------------------
Residence Group, Inc. seeks authority from the U.S. Bankruptcy
Court for the Central District of California to hire the Law
Offices of Michael Jay Berger as its general bankruptcy counsel.
The Debtor requires the firm to:
a. communicate with creditors of the Debtor;
b. review the Debtor's Chapter 11 bankruptcy petition and all
supporting schedules;
c. advise the Debtor of its legal rights and obligations in a
bankruptcy proceeding;
d. work to bring the Debtor into full compliance with
reporting requirements of the Office of the U.S. Trustee;
e. prepare status reports as required by the bankruptcy court;
and
f. respond to motions filed in the Debtor's bankruptcy
proceedings.
The firm will be paid at these hourly rates:
Michael Jay Berger $595
Sofya Davtyan $495
Carolyn Afari $435
Samuel Boyamian $350
Senior Paralegals/Law Clerks $225
Bankruptcy Paralegals $200
The firm received a retainer fee of $15,000.
Michael Jay Berger, Esq., disclosed in court filings that he has no
prior connections to Debtor, its creditors and other parties.
The firm can be reached through:
Michael Jay Berger, Esq.
Law Offices of Michael Jay Berger
9454 Wilshire Boulevard, 6th Floor
Beverly Hills, CA 90212
Tel: (310) 271-6223
Email: michael.berger@bankruptcypower.com
About Residence Group, Inc.
Residence Group, Inc. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
20-20261) on Nov. 16, 2020. The petition was signed by Ernesto
Arellano, president. At the time of filing, the Debtor estimated $1
million to $10 million in both assets and liabilities. Michael Jay
Berger, Esq. at the LAW OFFICES OF MICHAEL JAY BERGER serves as the
Debtor's counsel.
ROSEGOLD HOTELS: Court Confirms Revised Exit Plan
-------------------------------------------------
A hearing was held Nov. 30 to consider confirmation of Rosegold
Hotels LLC's amended Chapter 11 exit plan. Following the hearing,
the U.S. Bankruptcy Court for the Eastern District of Texas said it
would confirm the Plan.
Two days later, the Debtor delivered to the Court a third amended
plan.
As of press time, the Hon. Brenda T. Rhoades, who oversees the
case, has yet to issue a written confirmation order.
Judge Rhoades previously extended the period within which the
Debtor has the exclusive right to confirm a plan of reorganization
to Nov. 30. The Debtor filed a Second Amended Plan of
Reorganization Dated September 8, 2020. The hearing to confirm the
Debtor's Second Amended Plan was originally set for Nov. 9. On Nov.
27, the Debtor filed a Third Modification to the Second Amended
Plan, which was taken up at the Nov. 30 hearing.
As reported by the Troubled Company Reporter, the Third Amended
Plan says the Debtor will continue its business after the
Confirmation Date. The Debtor owns and operates a Holiday Inn
Express located in Eunice, Louisiana. The Hotel is in good
condition, but revenues have been negatively impacted by the
effects of COVID-19 since early March 2020. The Debtor also had
seen a drop in income prior to the early part of 2020 due to the
loss of jobs in Louisiana in the oil and gas industry. This hotel
served primarily workers in the area rather than travelers. The
Hotel is completely renovated and like new. All PIP requirements
have been met.
The Plan will be funded by the Debtor through the profits it will
earn through the continuation of the Debtor's hotel business.
As to Class 1: Allowed Secured Claims of West Town Bank & Trust,
the Debtor and West Town have agreed that the value of the
Collateral is $4,000,000. This places the Allowed Secured Claim
of
West Town at $4,000,000. To the extent West Town's Claim is
partially unsecured, the Claim shall be bifurcated into a Class 1
Secured Claim allowed in the amount of the value of its Collateral
(as agreed by the parties) and a Class 6 Unsecured Claim for the
remainder, pursuant to 11 U.S.C. Sec. 506(d). The Allowed
Unsecured
Claim is estimated to be $2,772,085.03. West Town has received
adequate protection payments during the pendency of this case and
such amounts shall reduce the Allowed Claims of West Town. The
Bank
will retain all liens against the Property described as Holiday
Inn
Express Eunice, 1698 U.S. Highway 190, Eunice, St. Landry Parish,
Louisiana 70535 to secure repayment of the Allowed Secured Claims
in the combined amount of $4,000,000. All other amounts owed to
the Bank are treated in the Debtor's Plan as Allowed Unsecured
Claims.
Class 6 Allowed Unsecured Claims will receive $2,500 per month, to
be distributed pro rata among the Class 6 Claimants, payable in
equal monthly installments without interest for 60 months,
beginning on the first day of the first month following the
Effective Date and continuing on the first day of each month
thereafter.
Class 7 Allowed Equity Interests will be retained.
A full-text copy of the Third Amended Plan of Reorganization dated
Dec. 2, 2020, is available at https://tinyurl.com/y5uy3cfm from
PacerMonitor.com at no charge.
About Rosegold Hotels LLC
Rosegold Hotels LLC, d/b/a Holiday Inn Express Eunice, owns and
operates a Holiday Inn Express located in Eunice, Louisiana. It
filed a Chapter 11 bankruptcy petition (Bankr. E.D. Tex. Case No.
20-40502) on Feb. 19, 2020. In the petition signed by Rukshanda
Hasham, managing member, the Debtor was estimated to have between
$1 million and $10 million in both assets and liabilities. Lawyers
at Joyce W. Lindauer Attorney, PLLC, represents the Debtor.
RS IVY: Fitch Assigns BB LT IDR, Outlook Stable
-----------------------------------------------
Fitch Ratings has assigned RS Ivy Holdco, Inc. a Long-Term Issuer
Default Rating (IDR) of 'BB' and a senior secured rating of
'BB'/'RR4' to RS Ivy's proposed offering of a $450 million senior
secured term loan. The Rating Outlook is Stable.
The ratings reflect the structural subordination of RS Ivy's
proposed term loan to total outstanding debt of $1.1 billion total
at ITT Holdings, LLC (ITT; BBB-/RWN). Concerns include cash flow
concentration derived solely from ITT and no other assets. ITT is a
provider of bulk storage terminals across North America with a
competitive advantage from strategically located facilities. ITT
has agreed to be acquired by affiliates of Riverstone Holdings LLC
and upon closing of the transaction, Fitch expects to downgrade
ITT's rating one notch to 'BB+'/'RR4'.
The Stable Outlook at RS Ivy reflects Fitch's view that ITT's
operations should provide steady cash flows over the forecast
period, and pay dividends that are adequate to service RS Ivy's
proposed term loan and maintain the minimum debt-service coverage
ratio of 1.1x. ITT's cash flows are supported by a diverse mix of
counterparties with 81% of revenues coming from firm commitments in
2019. Fitch expects utilization rates to remain in the 90s, over
the forecast period, and several fully contracted growth projects
are set to be completed by year-end 2021.
Fitch has reviewed the preliminary documentation for the senior
secured term loan offering; the assigned rating assumes there will
be no material variation from the draft previously provided.
KEY RATING DRIVERS
Structural Subordination: RS Ivy's ratings reflect that the new
senior secured term loan is structurally subordinated to the
outstanding debt at ITT and is solely reliant on the dividend
distributions from ITT for debt service repayment. Cash flow
generated at its operating subsidiary ITT is prioritized to service
debt and interest payments for ITT's debt obligations. The term
loan is secured by pledged equity interest in ITT and is junior to
the subsidiaries in recovery claims should a credit event default
occur at ITT. Under Fitch's parent-subsidiary linkage analysis, RS
Ivy also exhibits a weaker credit profile relative to the
subsidiary Opco given the cash flow structure and provisions around
ITT's distribution.
Cash Flow Concentration: Cash flow to service RS Ivy's term loan is
solely dependent on dividends received from ITT. Any outsized event
of financial distress at ITT that would result in the inability to
pay out a dividend would impair cash flow to RS Ivy. However, ITT
has a history of generating cash flows from a diverse customer base
with approximately 80% of revenues coming from firm commitments.
Under ITT's tariff structure, customers typically pay in advance
for storage regardless of whether or not product is stored, and
contract rates generally increase along with inflation indices.
Steady Cash Flow at ITT: RS Ivy's Opco (ITT) is strategically
located with terminals across North America with two key locations,
Lower Mississippi River (LMR) and New York Harbor (NYH). Storage
assets in NYH are focused on gasoline and distillates while storage
in the LMR is more focused on heavy and residual oil and
petrochemicals. ITT has a good history of cash flow generation.
When utilization rates fell in the 80's% in 2018 and 2019, the
company repositioned its assets and average utilization rates have
improved to 95.8% during 3Q20.
Leverage and Distributions: RS Ivy plans to have a $450 million
secured term loan with mandatory amortization and an excess cash
flow sweep provision. Fitch forecasts consolidated leverage for RS
Ivy and ITT to be approximately 6.2x for 2020 and remain over 6.0x
by the end of 2021. Fitch does not forecast the excess cash flow
sweep provision to kick in during its forecast period through 2023.
However, should that provision be triggered, leverage would be
better than Fitch forecasts toward the end of the forecast period.
Fitch also projects that distributions up to RS Ivy will service
the term loan and that ITT will use cash on its balance sheet for
capex projects rather than move up to RS Ivy and be subject to the
excess cash flow provision.
Parent Subsidiary Linkage: Upon the closing of the transaction,
Fitch will evaluate the holding company and operating company on a
consolidated basis given the holding company's full reliance on the
operating company to service its debt. There will be a link between
ITT and RS Ivy with a strong subsidiary and a weak parent. Legal
ties would be considered to be weak as ITT will not provide
upstream guarantees, and there are provisions that restrict
payments as well as intercompany loans. Operational ties would also
be considered to be weak since ITT has its own management team, a
decentralized treasury and its own operations. Given the much
stronger credit profile at ITT, Fitch expects to have its rating
notched up one from the consolidated credit profile of 'BB' while
the rating for RS Ivy is equalized with the consolidated rating.
Refinancing Risk: Refinancing is a longer-term significant concern
for RS Ivy. While the term loan has some mandatory amortization and
an excess cash flow sweep provision, it will not result in full
amortization by the maturity of the term loan. With no other
subsidiaries or assets, the term loan will need to be refinanced to
repay the maturing debt. RS Ivy could face unfavorable refinancing
markets at maturity, or an inability to monetize its equity
interests in ITT should there be operating issues, or the dividend
stream come under pressure and negatively impact RS Ivy's ability
to service its debt.
DERIVATION SUMMARY
On a consolidated basis, Fitch views ITT/RS Ivy as a 'BB' category
entity with a competitive advantage from strategic locations in the
New York Harbor and Lower Mississippi River. The rating also
reflects steady cash flow generation and leverage that is expected
to be approximately 6.0x at the end of YE21. The Holdco, RS Ivy, is
rated 'BB' and upon closing of the transaction, the Opco, ITT, is
expected to be notched up one level to 'BB+'. The rating reflects
ITT's history of generating fairly steady cash flow, and leverage
on a standalone basis is expected to be approximately 4.5x at the
end of 2021 and fall to approximately 4.0x by the end of 2022.
Buckeye Partners LP is also rated 'BB' and is much larger and has
greater asset base diversity than ITT/RS Ivy. EBITDA is also
significantly larger at close to $1 billion. Buckeye operates in
the crude oil, refined products pipelines and storage terminal
segments. Its leverage is expected to be near 6.0x at YE20 and
improving to 5.0x at YE21. However, both entities are rated the
same given ITT's history of cash flow generation and strategically
located assets.
TransMontaigne Partners LP (TLP) is a 'BB' rated midstream
terminaling company operating in 20 U.S. states with slightly less
capacity than IT/RS Ivy. Both companies operate diversified
petroleum liquids storage assets strategically located across the
U.S. Both also have assets that make up critical portions of their
respective regional petroleum value chains, although ITT has a much
stronger presence in its two markets. ITT is roughly 13% larger
than TLP by storage capacity. Leverage at TLP is expected to
decline to 4.0x at yearend 2020 while ITT/RS Ivy is expected to
have leverage around 6.0x at the end of 2021. While RS Ivy's
leverage is higher, it also generates double the EBITDA of TLP,
which is an important factor for the rating.
NuStar is rated 'BB-' and is larger and more diverse than ITT/RS
Ivy with approximately 36% of EBITDA from storage, 62% from
pipelines and 2% for fuels marketing. Leverage is expected to be
5.6x-6.1x by YE21, which is in line with or better than forecast
consolidated leverage at ITT/RS Ivy. However, NuStar's FFO interest
coverage is much weaker versus other 'BB' issuers such as ITT/ RS
Ivy and Buckeye.
ITT/RS Ivy's leverage profile and cash flow generation is
significantly better than the consolidated profile for Tallgrass
Energy Partners, LP (Opco)/Prairie ECI Acquiror LP (Opco). Fitch
forecasts Tallgrass to have yearend 2021 leverage of 7.5x (which is
proportionally consolidated for Rockies Express Pipeline LLC). Its
consolidated credit profile is deemed to be 'B+', its Holdco's IDR
is 'B+' and the Opco, Tallgrass is 'BB-'.
KEY ASSUMPTIONS
-- Utilization percentage rates remain in the 90's;
-- Revenues grow in 2022 as a result of large projects coming
online;
-- EBITDA margins are forecast to be approximately 52% in line
with historical rates;
-- On a consolidated basis, leverage will be approximately 6.0x
at yearend 2021 under the proposed structure;
-- RS Ivy closes on the term loan offering in benchmark size.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Consolidated leverage (consolidated debt with equity credit to
consolidated operating EBITDA) that is expected to be below 5.5x on
a sustained basis;
-- A geographic expansion and/or asset diversification, by a
series of acquisitions or incremental growth projects, that
significantly increased ITT/RS Ivy's cash flow generation;
-- Increased dividend diversification at RS Ivy without an
increase to current leverage profile.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Consolidated leverage (consolidated debt with equity credit to
consolidated operating EBITDA) is expected to be above 7.0x on a
sustained basis;
-- Low storage utilization at ITT below 90% that results in
EBITDA deterioration on a sustained basis;
-- Unforeseen changes in the cash flows up to RS Ivy which
results in credit deterioration.
LIQUIDITY AND DEBT STRUCTURE
Liquidity Needs Limited: RS Ivy is a holding company with little
liquidity needs. Fitch expects dividends to RS Ivy from ITT to be
sufficient to support interest payments and its mandatory
amortization and minimum debt-service coverage ratio of 1.1x for
the forecast period. At the close of the transaction, Fitch expects
there to be $10 million in a cash account and $18 million in the
Debt Service Reserve Account (DSRA). RS Ivy must maintain six
months of interest and amortization for the term loan in the DSRA
until consolidated total net leverage ratio is less than 4.5x.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch removed a $39 million termination payment from ITT Holdings
LLC's 2019 revenues and adjusted EBITDA. A standard multiple of
8.0x is applied to operating lease expense to derive
lease-equivalent debt.
SOURCES OF INFORMATION
ESG CONSIDERATIONS
This corporate family (both RS Ivy and ITT) has a relevance Score
of '4' for Group Structure and Financial Transparency as it
possesses a complex group structure, with ownership concentration.
As a private company backed by a private equity firm, disclosures
are limited when compared to public companies. This has a negative
impact on the credit profile and is relevant to the rating in
conjunction with other factors.
RTI HOLDING: Seeks to Hire Epiq as Administrative Advisor
---------------------------------------------------------
RTI Holding Company, LLC, and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the District of Delaware to
employ Epiq Corporate Restructuring, LLC, as administrative agent
to the Debtor.
RTI Holding requires Epiq to:
a. assist with, among other things, solicitation, balloting,
and tabulation of votes, and prepare any related reports,
as required in support of confirmation of a chapter 11
plan, and in connection with such services, process
requests for documents from parties in interest, including
brokerage firms, bank back-offices, and institutional
holders;
b. prepare an official ballot certification and, if necessary,
testify in support of the ballot tabulation results;
c. assist with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs,
and gather data in conjunction therewith;
d. provide a confidential data room, if requested; and
e. provide such other processing, solicitation, balloting, and
other administrative services described in the Engagement
Agreement, as may be requested from time to time by the
Debtors, the Court, or the Office of the Clerk of the
Bankruptcy Court (the "Clerk").
Epiq will be paid at these hourly rates:
Executives No Charge
Executive Vice President, Solicitation $215
Solicitation Consultant $195
Consultants/Directors/Vice Presidents $165-$195
Case Managers $85-$165
IT/Programming $65-$85
Clerical/Administrative Support $35-$55
Epiq will be paid a retainer in the amount of $25,000.
Epiq will also be reimbursed for reasonable out-of-pocket expenses
incurred.
Kathryn Tran, a partner at Epiq Corporate Restructuring, assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
Epiq can be reached at:
Kathryn Tran
EPIQ CORPORATE RESTRUCTURING, LLC
777 Third Avenue, 12th Floor
New York, NY 10017
Tel: (212) 225-9200
About RTI Holding Company
RTI Holding Company, LLC and its affiliates develop, operate and
franchise casual dining restaurants in the United States, Guam, and
five foreign countries under the Ruby Tuesday brand. The
company-owned and operated restaurants (i.e. non-franchise) are
concentrated primarily in the Southeast, Northeast, Mid-Atlantic
and Midwest regions of the United States.
On Oct. 7, 2020, RTI Holding Company and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-12456). At the time of the filing, the Debtors
disclosed assets of between $100 million and $500 million and
liabilities of the same range.
Judge John T. Dorsey oversees the cases.
Pachulski Stang Ziehl & Jones LLP and CR3 Partners LLC serve as the
Debtors' legal counsel and financial advisor respectively. Epiq
Corporate Restructuring LLC is the claims, noticing and
solicitation agent and administrative advisor.
On October 26, 2020, the U.S. Trustee for the District of Delaware
appointed an official committee of unsecured creditors in these
chapter 11 cases. The committee tapped Kramer Levin Naftalis &
Frankel LLP and Cole Schotz P.C. as counsel and FTI Consulting,
Inc. as financial advisor.
RXB HOLDINGS: Moody's Assigns B3 CFR, Outlook Stable
----------------------------------------------------
Moody's Investors Service assigned ratings to RXB Holdings, Inc.,
including a B3 Corporate Family Rating, B3-PD Probability of
Default Rating, and a B2 rating to the senior secured first lien
credit facilities. The outlook is stable.
Proceeds from the $300 million first lien term loan along with a
$120 million second lien term loan (unrated) will be used, along
with equity (both rollover and new), to finance the
recapitalization of RxBenefits by Advent International Corporation
and Great Hill Partners. The remaining stake will be owned by the
company's management and other shareholders.
Ratings assigned:
Issuer: RXB Holdings, Inc.
Corporate Family Rating, assigned B3
Probability of Default Rating, assigned B3-PD
Senior secured first lien term loan, assigned B2 (LGD3)
Senior secured first lien revolving credit facility, assigned B2
(LGD3)
Outlook action:
Assigned, stable outlook
RATINGS RATIONALE
RxBenefits' B3 CFR is constrained by its small size with less than
$150 million in revenue and its very high financial leverage.
Moody's estimates debt/EBITDA, pro forma for the transaction of
approximately 8.8x for the twelve months ended September 30, 2020,
improving to about 7.5x by the end of 2021. The ratings are
constrained by RxBenefits' reliance on the three largest pharmacy
benefit managers (PBMs), for a majority of its revenue. RxBenefits
is unique in that it has a competitive advantage with back-office
connectivity with its PBM partners, but the market for managing
pharmacy benefits is highly competitive. The ratings are supported
by high EBITDA margins and a strong earnings outlook, driven by
mid-teens growth in new lives under contract that utilize
RxBenefits' services.
Moody's expects that RxBenefits' liquidity will be good, supported
by positive free cash flow and an undrawn $40 million revolver that
expires in 2025. RxBenefits benefits from favorable timing between
receipt and distribution of rebates and claims payments that
results in a strong balance sheet cash position. Moody's does not
view this balance as a benefit to creditors but it is a source of
operating liquidity to manage quarterly working capital
fluctuations. RxBenefits' capex spend will be elevated for the next
two years at more than $10 million per year, to fund IT
investments. Mandatory debt amortization is modest at 1% per year,
or $3.0 million. Further, RxBenefits' term loan has no financial
maintenance covenants and the revolver has a maximum first lien net
leverage covenant that only springs when more than 35% is drawn.
Moody's does not anticipate that the revolver will be used.
ESG considerations are material to RxBenefits' rating. While
RxBenefits is generally helping to reduce the rate of increase in
pharmacy drug spend for its employer customers, it relies on the
largest PBMs for a majority of its revenue, a social risk. These
PBM customers are under significant scrutiny because the industry
profits from drug price inflation. Legislative and regulatory
proposals aimed at drug pricing, could constrain profits at these
customers. Governance risks include RxBenefits' private equity
ownership and high financial leverage. RxBenefits' owners have
engaged debt-funded dividends in 2018 and 2019.
The stable outlook reflects Moody's view that scale and earnings
will grow, driven by new lives under management, but that
debt/EBITDA will remain very high at over 7x over the next 18
months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a downgrade include if RxBenefits'
liquidity weakens, if the net number of newly implemented lives are
weak on a sustained basis, or if claims volumes materially
decline.
Factors that could lead to an upgrade include if RxBenefits
sustains strong earnings growth leading to a meaningful increase in
scale. Another factor includes if Moody's expects RxBenefits'
debt/EBITDA to be sustained below 6.0x.
Headquartered in Birmingham, Alabama, RXB Holdings, Inc. is a
benefits consultant and administrator of pharmacy benefits for
self-insured small and mid-sized employers. Reported revenue for
the twelve months ended September 30, 2020 exceeded $140 million.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SANTA BARBARA LAND: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Santa Barbara Land Corporation
P.O. Box 22200
Lexington, KY 40522
Chapter 11 Petition Date: December 7, 2020
Court: United States Bankruptcy Court
Eastern District of Kentucky
Case No.: 20-51648
Judge: Hon. Tracey N. Wise
Debtor's Counsel: Taft A. McKinstry, Esq.
FOWLER BELL PLLC
300 W. Vine Street
Suite 600
Lexington, KY 40507-1660
Tel: 859-252-6700
Fax: 859-255-3735
Email: Bankruptcy@FowlerLaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Robert C. Sims, president.
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/GDVV2FQ/Santa_Barbara_Land_Corporation__kyebke-20-51648__0001.0.pdf?mcid=tGE4TAMA
SEADRILL PARTNERS: Milbank LLP Represent TLB Group
--------------------------------------------------
In the Chapter 11 cases of Seadrill Partners LLC, et al., the law
firm of Milbank LLP submitted a verified statement filed under Rule
2019 of the Federal Rules of Bankruptcy Procedure, to disclose that
it is representing the TLB Ad Hoc Committee.
In May 2019, the TLB Ad Hoc Committee retained Milbank as counsel
in connection with the Term Loan B. From time to time thereafter,
certain lenders under the Term Loan B have joined or resigned from
the TLB Ad Hoc Committee.
Milbank represents the TLB Ad Hoc Committee and does not represent
or purport to represent any entities other than the TLB Ad Hoc
Committee in connection with the Debtors' chapter 11 cases. In
addition, neither the TLB Ad Hoc Committee nor any member of the
TLB Ad Hoc Committee represents or purports to represent any other
entities in connection with the Debtors' chapter 11 cases.
As of Dec. 1, 2020, members of the TLB Ad Hoc Committee and their
disclosable economic interests are:
Avenue Capital Group
11 West 42nd St. 9th Floor
New York, NY 10036
* Term Loans: $82,538,221.85
* Revolving Loans: $4,472,451.11
Canyon Capital Advisors LLC and
Canyon CLO Advisors LLC
2000 Avenue of the Stars 11th Floor
Los Angeles, CA 90067
* Term Loans: $538,751,250.75
* Revolving Loans: $29,252,937.75
Elliott Management Corporation
40 West 57th St.
4th Floor
New York, NY 10019
* Term Loans: $310,524,841.55
* Revolving Loans: $11,644,752.25
GoldenTree Asset Management LP
300 Park Avenue 21st Floor
New York, NY 10022
* Term Loans: $374,179,954.54
* Revolving Loans: $18,646,873.88
Invesco Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
* Term Loans: $241,753,715.44
* Revolving Loans: $13,749,488.24
Sculptor Capital LP
9 West 57th St. 39th Floor
New York, NY 10019
* Term Loans: $446,297,062.86
* Revolving Loans: $23,981,629.08
Nothing contained in this Verified Statement should be construed as
a limitation upon, or waiver of, any rights of any member of the
TLB Ad Hoc Committee to assert, file, and/or amend any claim or
proof of claim filed in accordance with applicable law and any
orders entered in these cases.
The information contained herein is provided only for the purpose
of complying with Bankruptcy Rule 2019 and is not intended for any
other use or purpose.
Counsel reserves the right to amend this Verified Statement as
necessary in accordance with the requirements set forth in
Bankruptcy Rule 2019.
Counsel to the TLB Ad Hoc Committee can be reached at:
COLE SCHOTZ P.C.
Michael D. Warner, Esq.
Benjamin L. Wallen, Esq.
301 Commerce Street, Suite 1700
Fort Worth, TX 76102
Telephone: (817) 810-5250
Facsimile: (817) 977-1611
E-mail: mwarner@coleschotz.com
bwallen@coleschotz.com
- and -
MILBANK LLP
Dennis F. Dunne, Esq.
Gerard Uzzi, Esq.
Abhilash Raval, Esq.
Andrew M. Leblanc, Esq.
55 Hudson Yards
New York, NY 10001-2163
Telephone: (212) 530-5000
Email: ddunne@milbank.com
guzzi@milbank.com
araval@milbank.com
aleblanc@milbank.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2K5mAYY
About Seadrill Partners
Seadrill Partners LLC, an offshore drilling contractor, provides
offshore drilling services to the oil and gas industry. Its primary
business is the ownership and operation of drillships,
semi-submersible rigs and tender rigs for operations in shallow to
ultra-deepwater areas in both benign and harsh environments. The
company was founded in 2012 and is headquartered in London, the
United Kingdom.
Seadrill Partners, set up as an asset-holding unit, owns four
drillships, four semi-submersible rigs and three so-called tender
rigs which are all operated by Seadrill Ltd.
SEADRILL PARTNERS: Receives 'First Day' Motions Court Approval
--------------------------------------------------------------
Seadrill Partners LLC announced that on Dec. 4, 2020, the Southern
District of Texas Bankruptcy Court overseeing Seadrill Partners'
chapter 11 restructuring proceedings granted the relief requested
in the Company's first-day motions related to ordinary course
business activities. The approved motions give the Company the
authority to, among other things, continue to pay employee wages
and benefits without interruption, continue to utilize its cash
management system and continue to pay critical third-party
suppliers and vendors.
The Company intends to meet its obligations in the ordinary course
and expects its operations to continue uninterrupted throughout the
reorganization process.
Court filings and other information related to the restructuring
proceedings are available at a website administered by the
Company's claims agent, Prime Clerk, at
https://cases.primeclerk.com/seadrillpartners or via the
information call center at
US Toll Free: +1 (877) 329-1894
Local/International: +1 (347) 919-5756
Email: seadrillpartnersinfo@primeclerk.com
About Seadrill Partners
Seadrill Partners LLC (NYSE: SDLP) is a limited liability company
formed bydeepwater drilling contractor Seadrill Ltd.
(OTCMKTS:SDRLF), to own, operate and acquire offshore drilling
rigs. Seadrill Partners was founded in 2012 and is headquartered
in London, the United Kingdom. Seadrill Partners, set up as an
asset-holding unit, owns four drillships, four semi-submersible
rigs and three so-called tender rigs which are all operated by
Seadrill Ltd.
Seadrill Partners LLC and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 20-35740) on Dec. 1,
2020.
Seadrill Partners disclosed $4,579,300,000 in assets and
$3,122,300,000 in total debts of June. 30, 2020.
JACKSON WALKER L.L.P., led by Matthew D. Cavenaugh, is the Debtors'
counsel.
About Seadrill Partners
Seadrill Partners LLC, an offshore drilling contractor, provides
offshore drilling services to the oil and gas industry. Its primary
business is the ownership and operation of drillships,
semi-submersible rigs and tender rigs for operations in shallow to
ultra-deepwater areas in both benign and harsh environments. The
company was founded in 2012 and is headquartered in London, the
United Kingdom.
Seadrill Partners, set up as an asset-holding unit, owns four
drillships, four semi-submersible rigs and three so-called tender
rigs which are all operated by Seadrill Ltd.
About Seadrill Ltd.
Seadrill Limited (OSE:SDRL, OTCQX:SDRLF) --
http://www.seapdrill.com/-- is a deepwater drilling contractor
providing drilling services to the oil and gas industry. As of
March 31, 2018, it had a fleet of over 35 offshore drilling units
that include 12 semi-submersible rigs, 7 drillships, and 16 jack-up
rigs.
On Sept. 12, 2017, Seadrill Limited sought Chapter 11 protection
after reaching terms of a reorganization plan that would
restructure $8 billion of funded debt. It emerged from bankruptcy
in July 2018.
Demand for exploration and drilling has fallen further during the
COVID-19 pandemic as oil firms seek to preserve cash, idling more
rigs and leading to additional overcapacity among companies serving
the industry.
In June 2020, Seadrill wrote down the value of its rigs by $1.2
billion and said it planned to scrap 10 rigs.
Seadrill is presently in talks with lenders on a restructuring of
its $5.7 billion bank debt.
SEAGATE HDD: Moody's Downgrades Senior Unsecured Rating to Ba1
--------------------------------------------------------------
Moody's Investors Service downgraded Seagate HDD Cayman's senior
unsecured ratings to Ba1 from Baa3. Moody's concurrently assigned a
Ba1 Corporate Family Rating (CFR), a Ba1-PD Probability of Default
Rating, and an SGL-1 Speculative Grade Liquidity rating. The
outlook remains stable. The ratings action was prompted by
Seagate's plans to issue $1 billion of senior notes, the proceeds
of which Moody's expects will primarily be used to fund share
repurchases.
Moody's analyst Raj Joshi said, "The downgrade reflects Seagate's
increasingly aggressive shareholder-friendly financial policy and
our view that the company will operate at a higher financial
leverage and its cash balances will likely decline relative to debt
over the next 12 to 24 months."
Assignments:
Issuer: Seagate HDD Cayman
Probability of Default Rating, Assigned Ba1-PD
Speculative Grade Liquidity Rating, Assigned SGL-1
Corporate Family Rating, Assigned Ba1
Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD4)
Downgrades:
Issuer: Seagate HDD Cayman
Senior Unsecured Regular Bond/Debenture to Ba1 (LGD4) from Baa3
Outlook Actions:
Issuer: Seagate HDD Cayman
Outlook, Remains Stable
RATINGS RATIONALE
Pro forma for the $1 billion increase in debt, Seagate's total debt
to EBITDA (Moody's adjusted) will increase from 2.4x at the end of
fiscal 1Q 2021 to 3x. In October 2020, Seagate increased its share
repurchase program by $3 billion to $4.2 billion. The company's
dividend payout ratio is high (about 60% of pre-dividend free cash
flow) and since the increase in share repurchase authorization in
October 2018, share buybacks have significantly exceeded free cash
flow while operating profits have remained meaningfully below their
peak in FY '18. Given management's track record of capital returns
and Moody's expectations for free cash flow of approximately $500
million over the next 12 to 24 months, there is a risk of further
erosion in cash position and incremental borrowings to fund share
repurchases. Moody's expects Seagate's EBITDA to decline modestly
in FY '21, and grow in the high single digit in FY '22, if
Seagate's HAMR drives are successful and shipments grow in scale.
The downgrade reflects Moody's revised expectation that
notwithstanding the improvements in profitability, Seagate will
operate with leverage of about 3x and its cash balances will likely
decline relative to debt over the next 12 to 24 months.
The Ba1 CFR is supported by Seagate's good operating scale with
over $10 billion in revenues, market position as one of the two
leading suppliers of Hard Disk Drive-based storage solutions, and
very good long-term demand for data storage capacity. Increasing
operating efficiencies have supported profitability but Seagate has
high business risks from the high revenue concentration in the HDD
product category, sustained pricing pressure in the HDD industry,
substitution risks from flash memory in a meaningful portion of its
business, and high demand volatility. Product cycles are short and
execution risk in managing technology transitions with increasingly
complex storage technologies is high. The Ba1 rating reflects
Moody's expectations that Seagate will maintain very good liquidity
and moderate leverage and generate free cash flow of 8% to 10% of
adjusted debt over the next 12 to 24 months. The strong growth
prospects for high capacity drives should offset sustained pricing
pressure and limit downside risks to Seagate's profitability. At
the same time, the growing revenue concentration in the hyperscale
cloud market will amplify business volatility.
The stable ratings outlook reflects Moody's expectations that
Seagate will maintain very good liquidity, generate free cash flow
of about 8% to 10% of total adjusted debt over the next 12 to 24
months, and maintain leverage below the low 3x (Moody's adjusted).
The SGL-1 liquidity rating reflects Seagate's very good liquidity
profile supported by its $1.7 billion of cash balances, an undrawn
$1.5 billion revolving credit facility, and Moody's expectations
for about $500 million in free cash flow over the next 12 months.
Furthermore, an unsecured capital structure provides Seagate
additional flexibility to raise liquidity.
Seagate's senior unsecured notes are rated Ba1, the same as CFR, as
the entire debt capital structure consists of unsecured debt. The
ratings for senior unsecured notes will be susceptible to downward
ratings pressure if meaningful amounts of senior secured debt are
added in the capital structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Seagate's shareholder-oriented financial policy and high business
risks make it unlikely that the ratings will be upgraded over the
next 12 to 24 months. Over time, the ratings could be upgraded if
the company establishes a track record of highly conservative
financial policies and generates sustained growth in profits.
Conversely, the ratings could be downgraded if execution
challenges, competitive challenges, weak operating performance, or
elevated shareholder returns result in total debt to EBITDA above
3.25x and free cash flow below the high single-digit percentages of
total adjusted debt on a sustained basis.
Seagate HDD Cayman is a subsidiary of Seagate Technology plc and is
leading provider of data storage solutions.
The principal methodology used in these ratings was Diversified
Technology published in August 2018.
SEAGATE TECHNOLOGY: Fitch Cuts IDR to BB+; Alters Outlook to Neg.
-----------------------------------------------------------------
Fitch Ratings has downgraded the ratings, including the long-term
Issuer Default Ratings, for Seagate Technology Plc and its wholly
owned subsidiary, Seagate HDD Cayman, to 'BB+' from 'BBB-' and
assigned recovery ratings of 'RR4' to the existing senior unsecured
debt. Fitch has also assigned 'BB+'/'RR4' ratings to Seagate HDD
Cayman's proposed senior unsecured notes offering. Finally, Fitch
has revised the Rating Outlook to Negative from Stable. Fitch's
actions affect $5.7 billion of total debt including the undrawn
$1.5 billion revolving credit facility.
The rating reflects Fitch's expectation for structurally higher
debt levels to support more aggressive capital returns, resulting
in total debt to operating EBITDA exceeding Fitch's 2.5x negative
rating sensitivity over at least the near term. Fitch expects
Seagate will use net proceeds from the proposed notes offering to
accelerate share repurchases under its outstanding authorization,
which the Board of Directors recently upsized by $3.0 billion to
$4.2 billion in aggregate. The Outlook incorporates the potential
for higher leverage, given macroeconomic uncertainty and Seagate's
flattish top line guidance.
Fitch believes exponential data creation and the disk drive
industry's ongoing sales mix shift to higher-priced mass storage
from lower density markets provides a pathway for modest long-term
growth. With its technology roadmap believed to be on-track,
Seagate is positioned to offset average selling price pressure with
ever higher areal density product introductions through the
forecast period. Moderating investment intensity may also drive
modest profit margin expansion after two consecutive years of
margin compression and annual FCF below $500 million.
KEY RATING DRIVERS
More Aggressive Financial Policies: Fitch expects Seagate's
financial structure to weaken within the context of more aggressive
financial policies, as the company ramps up share repurchases
funded with incremental debt and cash flow. As a result, Fitch
forecasts total debt to operating EBITDA closer to 3.0x versus
management's previous guidance of 2.0x to 2.5x. Historically,
Seagate limited share buybacks to roughly two-thirds of
pre-dividend FCF but the Board of Directors recently increased its
share repurchase authorization by $3.0 billion to increase
available amounts under the program to $4.2 billion.
Coronavirus Impact: Fitch expects revenue will begin recovering in
the current quarter, driven by healthy cloud demand and strong edge
infrastructure investment. Cloud spending has been strong through
the coronavirus pandemic to support work-from-home (WFH), which
should result in some customer digestion over the near-term. Fitch
expects enterprise spending will remain challenged, despite modest
improvement anticipated in the current quarter. Fitch believes the
pace of overall recovery will be gradual, constrained by still
significant uncertainty around stimulus and global trade.
FCF Tracking Below Model: Fitch forecasts cash flow for the current
fiscal year will again fall short of long-term expectations for
$500 million to $1 billion of annual FCF, despite the potential for
modest margin expansion from lower investment intensity. Fitch does
not anticipate annual FCF above $500 million until fiscal 2022-2023
absent a stronger than expected recovery in revenue and profit
margins. Annual FCF has been below $500 million in each of the past
two years due in part to higher technology development and capex to
support expectations for mass capacity demand growth.
Data Proliferation Supports Demand: Fitch believes robust demand
for storage across media types provides a path for modest positive
organic long-term revenue growth. Artificial intelligence (AI)- and
5G-enabled applications across compute environments will be a
significant driver of demand. Fitch expects the significant
majority of data creation will be cool/cold storage on lower cost
HDD-based capacity drives in the public cloud, driving the bulk of
Seagate's revenue growth through the forecast period, with
surveillance penetration and gaming markets leading the remainder
of top line growth.
Constructive Supply Conditions: Fitch believes Seagate's market
position, as one of two HDD providers of roughly equal size and
with nearly 100% share of the capacity drive market, supports
constructive supply conditions that should enable profitable growth
and solid FCF margins for rating through the mid-2020s. As a
result, Seagate can support average selling prices (ASP) by
reducing excess HDD capacity and focusing on technology
development, including the production of stable drives on
energy-assisted technologies and eliminating stranded drive
capacity from bandwidth constraints.
Significant Technology Risk: Fitch believes storage technology and
product risks remains meaningful with regular aerial density
increases required to offset significant ASP pressure to sustain
HDDs' total cost of ownership (TCO) advantage over SSDs and keep
pace with chief competitor, Western Digital (WD). More recently
proven 'energy assist'-based drives promise to provide a roughly
decade-long roadmap to drives of more than 50TB (versus 16TB drives
shipping), reducing Seagate's technology risk. At the same time,
the break-down of Moore's Law will ultimately constrain
SSDs-makers' ability to close the TCO gap.
DERIVATION SUMMARY
Fitch believes Seagate and its chief competitor, WD, are both
appropriately positioned at the weaker end of the 'BBB-' rating
spectrum from a business model perspective, given industry revenue
growth characteristics for disk drives. This results in a 2.5x
total debt to operating EBITDA cut-off between investment grade and
high yield, versus 3.0x for technology companies with stronger
business models. Fitch believes WD's vertically integrated SSD
business yields higher and more diversified revenue growth but also
adds meaningfully higher operating cyclicality and investment
intensity compared with Seagate. While total debt to operating
EBITDA is above 2.5x for both issuers, WD's publicly articulated
focus on the use of FCF for debt reduction after its leveraging
acquisition of Sandisk Corp. positions WD favorably to Seagate's
focus on shareholder returns from a financial structure
perspective.
KEY ASSUMPTIONS
-- Flattish revenue growth for fiscal 2021 followed by the
resumption of normalized low-single-digit revenue growth in fiscal
2022;
-- A richer sales mix from faster growing high capacity
shipments, product roadmap execution and lower technology
development spending drive operating EBITDA margin expansion toward
20%;
-- Capital intensity at the lower end of the long-term 6%-8% of
revenue target range to support mass capacity drive demand;
-- Modest annual dividend growth;
-- Seagate refinances all upcoming maturities and issues
incremental debt to accelerate capital returns;
-- The company continues to return all cash flow to shareholders
via dividends and stock buybacks.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Public commitment to manage debt levels for total leverage
sustained below 2.5x;
-- Expectations for annual FCF margins consistently in the mid-
to high-single digits while growing revenue, maintaining market
share and expanding the SSD business, which would demonstrate the
strength of Seagate's technology roadmap.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Expectations for annual FCF sustained below $250 million or
FCF margins in the low-single digits from persistently weaker than
expected revenue trends or profit margins, indicating poor
execution on the technology or product roadmap;
-- Expectations for total leverage sustained above 3.0x, from
debt issuance to support capital returns persistently in excess of
FCF.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fitch expects Seagate's liquidity will remain
adequate and, as of Oct. 2, 2020, consisted of the following: i)
$1.7 billion of cash and cash equivalents and ii) $1.5 billion
undrawn senior unsecured RCF expiring Feb. 20, 2024. Fitch's
expectation for more than $500 million of annual FCF also supports
liquidity.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch made no material adjustments to the published financial
statements of Seagate Technology Plc.
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.
SELECTIVE INSURANCE: Moody's Rates $200MM Preferred Stock Ba1(hyb)
------------------------------------------------------------------
Moody's Investors Service has assigned a Ba1(hyb) rating to a $200
million perpetual preferred stock offering being issued by
Selective Insurance Group, Inc. (Selective; NASDAQ: SIGI, Baa2
senior). The company intends to use net proceeds of the offering
for general corporate purposes, potentially including share
repurchases. Selective is issuing the preferred stock off its
multi-purpose shelf registration. The outlook for Selective's
ratings is stable.
RATINGS RATIONALE
According to Moody's, Selective's debt ratings and A2 insurance
financial strength ratings on its property casualty operating
subsidiaries reflect the group's strong regional franchise focused
on low-to-medium hazard, small to middle market commercial lines
(80% of consolidated net premiums written) with support from
established independent agencies. Other strengths include solid
risk-adjusted capitalization, a conservative investment portfolio,
and good underwriting profitability. These strengths are tempered
by significant gross catastrophe exposure, particularly in the
Northeast (about 40% of direct written premiums are generated from
NY, NJ, and PA), a sizable commercial lines concentration in small
to midsize contractors (about one third of premiums), and limited
scale in personal lines.
The group has historically maintained moderate adjusted financial
leverage in the low-to-mid 20s, with good earnings and cash flow
coverage of interest. Selective's financial leverage as of
September 30, 2020 was about 24%. Giving effect to the debt
issuance, the company's pro forma financial leverage would increase
modestly, consistent with Moody's expectations.
For the first nine months of 2020, Selective reported net income of
$119 million, down from $190 million in the prior year period,
primarily due to second and third quarter catastrophe losses that
were well above historical averages as well as lower net investment
income. The company generated an underwriting profit for the first
nine months of 2020 with a combined ratio of 97.4% demonstrating
good price adequacy in commercial lines, past re-underwriting
initiatives and improvements in claims processes. The company is
addressing higher combined ratios in its commercial property,
personal lines, and excess and surplus lines business through rates
increases, enhanced terms and conditions, and data analytics.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade of Selective's ratings
include: (i) strong and consistent earnings through the cycle
(return on capital above 8%), (ii) maintenance of pretax interest
coverage above 6x, (iii) gross underwriting leverage less than 3x,
and (iv) adjusted financial leverage in the low 20% range.
Factors that could lead to a downgrade of Selective's ratings
include: (i) weak earnings profile with return on capital below 4%,
(ii) adjusted financial leverage consistently above 30% and/or
interest coverage below 4x, (iii) gross underwriting leverage
consistently above 4.5x, and (iv) decline in shareholders' equity
by more than 10%.
Moody's has assigned the following rating:
Selective Insurance Group, Inc. – perpetual preferred stock at
Ba1(hyb).
The rating outlook for Selective is stable.
The principal methodology used in this rating was Property and
Casualty Insurers Methodology published in November 2019.
Selective is a property and casualty insurance holding company
based in New Jersey. For 2019, the company's business mix consisted
of commercial lines representing about 80% of net written premiums,
personal lines at 11%, and excess and surplus lines at 9%. For the
first three quarters of 2020, Selective reported net premiums
written of $2.0 billion and net income of $119 million.
Shareholders' equity was $2.4 billion as of September 30, 2020.
SOURCEONE HOLDINGS: Hires C. Taylor Crockett as Legal Counsel
-------------------------------------------------------------
SourceOne Holdings, LLC seeks authority from the U.S. Bankruptcy
Court for the Northern District of Alabama to hire C. Taylor
Crockett, P.C. as its legal counsel.
SourceOne Holdings requires C. Taylor Crockett to:
a. provide the Debtor legal advice with respect to its powers
and duties as Debtor-in-Possession in the continued management of
its financial affairs and property;
b. prepare on behalf of the Debtor necessary schedules, lists,
applications, motions, answers, orders, and reorganization papers
as may become necessary;
c. review all leases and other corporate papers and prepare
any necessary motions to assume unexpired leases or executor
contracts and assist in preparation of corporate authorizations and
resolutions regarding Chapter 11 case; and
d. perform any and all other legal services for the Debtor as
Debtor-in-possession as may be necessary to achieve confirmation of
Chapter 11 Plan of Reorganization.
Taylor Crockett will be paid $400 per hour, and a retainer in the
amount of $2,000, plus $1,738 filing fee.
Taylor Crockett will also be reimbursed for reasonable
out-of-pocket expenses incurred.
C Taylor Crockett, Esq. assured the court that his firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code and does not represent any interest adverse to
the Debtor and its estates.
C. Taylor Crockett can be reached at:
C. Taylor Crockett, Esq.
C. TAYLOR CROCKETT, P.C.
2067 Columbiana Road
Birmingham, AL 35216
Tel: (205) 978-3550
Email: taylor@taylorcrockett.com
About SourceOne Holdings, LLC
SourceOne Holdings, LLC sought protection for relief under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Ala. Case No. 20-03554) on
Dec. 1, 2020, listing under $1 million in both assets and
liabilities.
C Taylor Crockett, Esq. represents the Debtor as counsel.
SPEEDCAST INT'L: Centerbridge Accused of Buying Votes
-----------------------------------------------------
Steven Church of Bloomberg News reports that Centerbridge is
accused of a vote-buying plot in SpeedCast's bankruptcy case. A
rival hedge fund says Centerbridge Partners is improperly trying to
buy creditor votes as part of a scheme to take over bankrupt
satellite services provider SpeedCast International. SpeedCast
President Joe Spytek sent a text message to company Chief Executive
Peter Shaper in August 2020 saying Centerbridge had a "plan to buy
the votes" of key creditors, according to a copy of the message
displayed during a bankruptcy court hearing held on Monday, Dec. 7,
2020. A lawyer for Centerbridge said the message was being
misconstrued and simply referred to the normal give and take of
negotiations.
About SpeedCast International
Headquartered in New South Wales, Australia, SpeedCast
International Limited and its affiliates provide remote and
offshore satellite communications and information technology
services. SpeedCast's fully-managed service is delivered to more
than 2,000 customers in 140 countries via a global, multi-access
technology, multi-band, and multi-orbit network of more than 80
satellites and an interconnecting global terrestrial network,
bolstered by on-the-ground local upport from more than 40
countries. Speedcast services customers in sectors such as
commercial maritime, cruise, energy, mining, government, NGOs,
enterprise, and media.
SpeedCast International and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-32243) on April 23, 2020. At the time of the filing, the
Debtors each had estimated assets of between $500 million and $1
billion and liabilities of the same range.
Judge David R. Jones oversees the cases.
Speedcast is advised by Weil, Gotshal & Manges LLP as global legal
counsel and Herbert Smith Freehills as co-counsel. Michael Healy of
FTI Consulting, Inc. is Speedcast's Chief Restructuring Officer,
and FTI Consulting, Inc. is Speedcast's financial and operational
advisor. Moelis Australia Advisory Pty Ltd and Moelis & Company
LLC are Speedcast's investment bankers. KCC is Speedcast's claims
and noticing agent.
The Office of the U.S. Trustee appointed a committee to represent
unsecured creditors in Debtors' bankruptcy cases. The committee is
represented by Hogan Lovells US, LLP.
On August 13, 2020, the Debtor received a $395 million equity
commitment from Centerbridge Partners, L.P. and its affiliates, one
of its largest lenders.
SUPERIOR AMERIHOST: To Seek Plan Confirmation Jan. 13, 2021
-----------------------------------------------------------
Judge John T. Gregg has entered an order that the Disclosure
Statement of Superior Amerihost Hotel, LLC is conditionally
approved.
The consolidated evidentiary hearing regarding final approval of
the disclosure statement and confirmation of the plan will be held
on January 13, 2021 at 11:00 a.m. (Eastern) in Courtroom C at the
United States Bankruptcy Court for the Western District of
Michigan, One Division Ave., N., Grand Rapids, Michigan 49503.
The deadline by which objections to the Plan and Disclosure
Statement will be January 4, 2021 at 12:00 p.m. (Eastern).
The deadline by which Ballots must be filed so as to be received by
this court will be January 4, 2021.
About Superior Amerihost
Superior Amerihost Hotel, LLC is a Michigan limited liability
company which owns the real estate upon which the Baymont by
Wyndham Dowagiac, in Dowagiac, Michigan operates.
Superior Amerihost filed a Chapter 11 petition (Bankr. W.D. Mich.
Case No. 20-02762) on Aug. 26, 2020. At the time of filing, the
Debtor has $500,000 to $1 million estimated assets and $1 million
to $10 million estimated liabilities. The Hon. John T. Gregg
oversees the Case. Stuart Sandweiss, Esq. of METRO DETROIT
BANKRUPTCY LAW GROUP is the Debtor's counsel.
SUPERIOR AMERIHOST: Unsec. Creditors to Recover 20% in 10 Years
---------------------------------------------------------------
Superior Amerihost Hotel, LLC filed with the U.S. Bankruptcy Court
for the Western District of Michigan a Combined Chapter 11 Plan of
Reorganization and Disclosure Statement on November 24, 2020.
Class 1 consists of General Unsecured Claims. This class shall be
paid at 20% over 120 months with no interest. Debtor has used
values that it believes to be accurate as to the amounts owed to
the various creditors. As with all claims, Debtor reserves the
ability to object to these claims. Payments shall be $1,045.18 per
month, commencing on the Effective Date. This class is impaired.
Debtor's sole member is Edom Lyatuu, who is the only Interest
Holder in Class 3. The claims and interests of Mr. Lyatuu shall be
treated in one of two alternative methods, to the extent
applicable:
* If all impaired classes of Creditors vote to accept the Plan,
then the rights of the Interest Holders shall remain the same. This
Class shall not be Impaired.
* If any class of Creditors vote to reject the Plan or if the
Bankruptcy Court requires, for any reason, that New Value be
provided to the Debtor, the Interests of the Debtor shall be
canceled, and new Interests shall be reissued to the Interest
Holders upon the investment by the Interest Holders of New Value,
or those purchasing the Debtor's equity in the auction contemplated
by this Plan. This Class shall be Impaired.
Debtor reasonably believes that its future operations will generate
sufficient funds to satisfy its obligations under the Plan. To the
extent that additional funds are necessary, third parties may
provide such funds to the Reorganized Debtor. Other sources of cash
may be explored and utilized by the Reorganized Debtor to the
extent that such cash infusions are necessary to meet the
obligations of the Plan.
Debtor may also sell all of its assets or a portion of its assets
to fund its obligations under the plan. To the extent additional
monies are needed, it is contemplated that funds will come from
Debtor's principal, which shall be treated as a new value
contribution to the extent new value is required, and as a loan at
4% interest amortized over 10 years to the extent new value is not
required.
A full-text copy of the Disclosure Statement dated Nov/ 24, 2020,
is available at
https://www.pacermonitor.com/view/VBGPJEI/Superior_Amerihost_Hotel_LLC__miwbke-20-02762__0028.0.pdf?mcid=tGE4TAMA
Attorneys for Debtor:
METRO DETROITBANKRUPTCY LAW GROUP
STUART SANDWEISS
18481 West Ten Mile Road, Suite 100
Southfield, Michigan 48075-2621
Tel: (248) 559-2400
Fax: (248) 971-1500
E-mail: stuart@metrodetroitbankruptcylaw.com
About Superior Amerihost
Superior Amerihost Hotel, LLC is a Michigan limited liability
company which owns the real estate upon which the Baymont by
Wyndham Dowagiac, in Dowagiac, Michigan operates.
Superior Amerihost filed a Chapter 11 petition (Bankr. W.D. Mich.
Case No. 20-02762) on Aug. 26, 2020. At the time of filing, the
Debtor has $500,000 to $1 million estimated assets and $1 million
to $10 million estimated liabilities. The Hon. John T. Gregg
oversees the Case. Stuart Sandweiss, Esq. of METRO DETROIT
BANKRUPTCY LAW GROUP is the Debtor's counsel.
SUPERIOR ENERGY: Files for Chapter 11 With $1.3B Debt-Swap Plan
---------------------------------------------------------------
Superior Energy Services (OTCQX: SPNX) announced Dec. 7, 2020, that
it has advanced its financial restructuring by commencing
voluntary cases under chapter 11 of the U.S. Bankruptcy Code before
the U.S. Bankruptcy Court for the Southern District of Texas to
implement a proposed "pre-packaged" Plan of Reorganization.
Superior entered the Chapter 11 Cases with the support of holders
of approximately 85% of Superior's $1.3 billion of senior unsecured
notes. Subject to the Bankruptcy Court's approval, under the Plan,
the noteholders would receive 100% of the equity to be issued and
outstanding by the reorganized Company in exchange for discharging
$1.3 billion of unsecured claims arising under the senior notes.
As a result, the Plan would eliminate all of the Company's funded
debt and related interest costs and establish a capital structure
that the Company believes will improve its operational flexibility
and long-term financial health even in a low-commodity-price
environment.
"Since the initial announcement of our planned recapitalization
initiative in September, we have been encouraged by the growing
consensus of the noteholders that have agreed to support the Plan,
as well as the ongoing strong backing and support provided by our
customers and lenders," said David Dunlap, President and CEO of
Superior. "We also thank all of our employees for their ongoing
hard work and commitment to our Company and our customers and are
grateful to our vendors and other valuable business partners for
their continued support. The Company looks forward to quickly
emerging from the Chapter 11 Cases in early 2021."
The Company intends to operate its businesses and facilities
without disruption to its customers, vendors, and employees, and is
filing motions with the Bankruptcy Court to ensure that all
undisputed trade claims against the Company (whether arising prior
to or after the commencement of the Chapter 11 Cases) will be paid
in full in the ordinary course of business.
Subject to the Bankruptcy Court's approval, Superior intends to
obtain a $120 million debtor-in-possession letter of credit
facility (the "DIP Facility") for its subsidiary SESI, L.L.C.
("SESI"), as borrower, with certain of the lenders under SESI's
existing credit facility (the "Existing Facility"). Upon
Bankruptcy Court approval, approximately $47.4 million of
outstanding undrawn letters of credit under the Existing Facility
will be deemed outstanding under the DIP Facility. The DIP Facility
is expected to provide sufficient letter of credit capacity to
support the Company's continuing business operations and minimize
disruption during the Chapter 11 Cases.
About Superior Energy Services
Headquartered in Houston, Texas, Superior Energy Services (SPN) --
htttp://www.superiorenergy.com/ -- serves the drilling, completion
and production-related needs of oil and gas companies worldwide
through a diversified portfolio of specialized oilfield services
and equipment that are used throughout the economic life cycle of
oil and gas wells.
Superior Energy incurred net losses of $255.7 million in 2019,
$858.1 million in 2018, and $205.92 million in 2017.
As of June 30, 2020, the Company had $1.73 billion in total assets,
$222.9
million in total current liabilities, $1.28 billion in long-term
debt, $135.7 million in decommissioning liabilities, $54.09 million
in operating lease liabilities, $2.53 million in deferred income
taxes, $125.74 million in other long-term liabilities, and a total
stockholders' deficit of $95.13 million.
The New York Stock Exchange notified the Securities and Exchange
Commission of its intention to remove the entire class of common
stock of Superior Energy Services, Inc. from listing and
registration on the Exchange on Oct. 13, 2020, pursuant to the
provisions of Rule 12d2-2(b) because, in the opinion of the
Exchange, the Common Stock is no longer suitable for continued
listing and trading on the NYSE.
On Dec. 7, 2020, Superior Energy and its affiliates sought Chapter
11 protection (Bankr. S.D. Tex. Lead Case No. 20-35812) to seek
approval of a prepackaged Chapter 11 plan of reorganization.
Ducera Partners LLC and Johnson Rice & Company L.L.C. are acting as
financial advisors for the Company, Latham & Watkins LLP and Hunton
Andrews Kurth LLP are acting as legal counsel, and Alvarez & Marsal
is serving as restructuring advisor. Kurtzman Carson Consultants
LLC is the claims agent.
Evercore L.L.C. is acting as financial advisor for an ad hoc group
of noteholders with Davis Polk & Wardwell LLP and Porter Hedges LLP
serving as legal counsel. FTI Consulting, Inc. is acting as
financial advisor for the agent for the Company's secured
asset-based revolving credit facility with Simpson Thacher &
Bartlett LLP acting as legal counsel.
TAMARAC 10200: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Tamarac 10200, LLC 20-23346
10200 N.W. 67th Street
Tamarac, FL 33321
Unipharma, LLC 20-23348
10200 N.W. 67th Street
Tamarac, FL 33321
Business Description: Unipharma -- https://www.unipharmausa.com/
-- is a healthcare packaging company serving
the pharmaceutical and nutraceutical sectors
in the development, manufacturing, and
packaging of liquid, disposable, and single-
dose units. Tamarac owns a state-of-the-
art, 165,000 square foot, FDA-registered,
blow-fill-seal and conventional seal
manufacturing facility built in 2018 located
in Tamarac, Florida, that among other
things, packages prescription, over the
counter, and nutraceutical and oral
ophthalmic solutions.
Chapter 11 Petition Date: December 7, 2020
Court: United States Bankruptcy Court
Southern District of Florida
Judge: Hon. Peter D. Russin
Debtors' Counsel: Paul Steven Singerman, Esq.
BERGER SINGERMAN LLP
1450 Brickell Avenue
Suite 1900
Miami, FL 33131
Tel: 305-755-9500
Email: singerman@bergersingerman.com
- and -
Christopher Andrew Jarvinen, Esq.
BERGER SINGERMAN LLP
1450 Brickell Avenue
Suite 1900
Miami, FL 33131
Tel: (305) 755-9500
Fax: (305) 714-4340
Email: cjarvinen@bergersingerman.com
Debtors'
Restructuring
Advisor: SOLIC CAPITAL ADVISORS, LLC
- AND -
SOLIC CAPITAL, LLC
Debtors'
Notice &
Claims
Agent: KURTZMAN CARSON CONSULTANTS LLC
https://www.kccllc.net/unipharma/document/list/5465
Tamarac 10200's
Estimated Assets: $10 million to $50 million
Tamarac 10200's
Estimated Liabilities: $50 million to $50 million
Unipharma, LLC's
Estimated Assets: $50 million to $100 million
Unipharma, LLC's
Estimated Liabilities: $100 million to $500 million
The petitions were signed by Neil F. Luria, chief restructuring
officer.
Copies of the petitions are available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/ESQTGJQ/Tamarac_10200_LLC__flsbke-20-23346__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/4NDDDHY/Unipharma_LLC__flsbke-20-23348__0001.0.pdf?mcid=tGE4TAMA
Tamarac 10200 stated it has no unsecured creditors.
List of Unipharma, LLC's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. INK Trade Debt $370,734
806 S Douglas Road
Suite 300
Coral Gables, FL 33134
2. AMRP Handels AG Trade Debt $277,163
Vogessenstrasse 132
Postfach CH 4009
Basel, Switerland
3. Rommelag Mayenner Straise Trade Dbet $261,576
18-20
Waiblingen
01332-0000
Germany
4. FPL Utility $49,700
General Mail Facility
Miami, FL 33188-0001
5. Quinn Emanuel Trade Debt $45,260
Urquhart & Sullivan, LLP
865 South Figueroa Street
Los Angeles, CA 90017-2543
6. Aerotek, Inc. Trade Debt $40,208
3689 Collection CTR. DR.
Chicago, IL 60693
7. Clear Channel Outdoor Trade Debt $39,003
PO Box 402379
Atlanta, GA 30384-2379
8. The Creative Hub LLC Trade Debt $38,928
3811 NW 2nd Ave
Miami, FL 33127
9. Resources Global Trade Debt $37,002
Professionals
PO Box 740909
Los Angeles, CA 90074-0909
10. KHOU-TV Trade Debt $22,418
P.O. Box 637386
Cincinnati, OH45263-738
11. AGC Electric Inc. Trade Debt $22,324
2660 West 79th Street
Hialeah, FL 33016
12. Waters Technologies Trade Debt $21,559
Corporation
Dept. CH 14373
Palatine, IL 60055-4373
13. Pedro Gallinar & Trade Debt $18,400
Associates PA
6701 Sunset Drive
Miami, FL 33143
14. BR Supply Trade Debt $18,077
Bay View Funding
P.O. Box 204703
Dallas, TX 75320-4703
15. VWR International Trade Debt $16,932
P.O. Box 640169
Pittsburgh, PA 15264
16. IHeartMedia Trade Debt $15,000
PO Box 847572
Dallas, TX 75284-7572
17. ANF Group Trade Debt $15,000
2700 Davie Road
Davie, FL 33314
18. Marko Magolnick Trade Debt $14,799
Attorneys at Law
3001 SW 3rd Ave
Miami, FL 33129
19. Lope Alejandro Tapia Trade Debt $14,700
9862 NW 52nd TER
Doral, FL 33178
20. Harmony Environmental, Inc. Utility $14,600
3362 Cat Brier Trail
Harmony, FL 34773
TASEKO MINES: Fitch Assigns B- LT IDR, Outlook Stable
-----------------------------------------------------
Fitch Ratings has assigned a first-time Long-Term Issuer Default
Rating (IDR) of 'B-' to Taseko Mines Ltd. Fitch has also assigned a
'B-'/'RR4' rating to the company's senior secured notes. The Rating
Outlook is Stable.
The ratings reflect Taseko's small size, concentration on one
operation and cost position in the fourth quartile of the global
copper cost curve. The Gibraltar mine benefits from a stable
production profile, a favorable mining jurisdiction and an 18-year
mine life.
The Stable Outlook reflects Fitch's view that the USD250 million
notes will be refinanced in 1H21; spending on development projects
from Gibraltar cash flows or credit capacity will be limited; any
capital to develop the Florence copper project will be sourced from
third-parties; and that Florence project financing debt will be
limited to USD125 million. Fitch views the successful development
of the Florence project would provide positive rating momentum for
the IDR, recovery rating and the issue rating on the USD250 million
notes. Should the notes be refinanced with notes in a greater
amount or without a guarantee from Florence Copper Inc., the issue
ratings could have negative rating momentum.
KEY RATING DRIVERS
Weak Business Profile: Taseko is relatively small and undiversified
by operation and metal. The company owns 75% of one large-scale
operating copper mine in a favorable mining jurisdiction (Gibraltar
in BC, Canada) but with costs in the fourth quartile of CRU Group's
cost curve. Taseko also has a near-term development copper project
(Florence in AZ, USA). Fitch estimates that development of Florence
would reduce the company's overall cost position by about 15% and
increase production by about two-thirds.
Florence Execution Risk: Taseko expects to obtain the remaining two
permits in early 2021 and is working to obtain development capital
estimated at about USD230 million from third parties. Without
permits and financing the project cannot move forward. Details on a
final financing structure will be necessary to assess the potential
economic impact on Taseko. The project is designed to use in-situ
copper recovery rather than conventional mining and to take about
18 months to construct and 18 months to ramp-up. Execution risk has
been reduced by the 2018 construction and subsequent operation of a
production test facility that recently commenced the rinsing phase
of testing.
Other Development Longer-Term: Taseko is evaluating the Yellowhead
copper project in BC, Canada. Other early-stage projects include
Aley (niobium) and New Prosperity (gold and copper), which are both
in BC, Canada and currently deemed not material. Taseko also owns
the dormant exploration stage Harmony gold project. Fitch does not
expect material spending on other development until after Florence
has ramped-up.
Copper Sensitivity: Taseko reports that a USD0.25/lb. increase in
copper prices increases annual cash flow by CAD33 million. Fitch
notes that cash flow from operations after interest paid was CAD11
million in 2019. Fitch assumes that the 2020 average copper price
will be about USD2.69/lb. increasing to about USD2.72/lb. in 2021
and USD2.81/lb in 2022. This compares with USD2.09/lb. -
USD3.10/lb. in the first nine months of 2020, an average of
USD2.65/lb. in the first nine months of 2020 and Taseko's realized
copper price of CAD2.72 in 2019. Current copper prices are above
USD3.00/lb.
Taseko enters into copper put option contracts to reduce short-term
copper price volatility. As of Oct. 26, 2020, the company had put
options covering 12 million pounds of copper at a USD2.60/lb.
strike price maturing in November and December of 2020 executed at
an original cost of CAD0.7 million and put options covering 15
million pounds of copper at a USD2.80/lb. strike price maturing in
1Q21 executed at an original cost of CAD0.9 million. These volumes
compare to Taseko's share of LTM Sept. 30, 2020 copper sales of 99
million pounds.
High Leverage: Taseko's current capital structure includes
Gibraltar equipment loans (75% at CAD22 million) and USD250 million
senior secured notes due 2022 (converts to CAD333 million at Sept.
30, 2020. Consolidated total debt of CAD356 million was 3.6x for
the LTM ending Sept. 30, 2020 with operating EBITDA of CAD99
million. Total debt/operating EBITDA, assuming a 25% interest in
Florence is sold and a 75% pre-completion guarantee on USD125
million Florence project finance is provided, would peak over 5x
Fitch's rating case including the development of the Florence
copper project. If the Florence project is delayed, Fitch expects
leverage to be below 4x.
Refinancing Risk: Taseko's USD250 million 8.75% senior secured
notes mature in June 2022 and will need to be refinanced. The
company has no revolving credit or ABL facilities.
DERIVATION SUMMARY
Taseko Mines Ltd. is smaller, less diversified, and less profitable
than HudBay Minerals Inc. (B+/Stable) and Eldorado Gold Inc.
(B/Stable). Taseko is more highly leveraged than HudBay and
Eldorado Gold but similarly leveraged compared with much larger and
diversified First Quantum Minerals Ltd. (B-/Stable). Development of
the low-cost Florence project would result in higher pre-completion
leverage but would bring size, expected profitability and leverage
comparable to Eldorado Gold. Should the Florence project be
delayed, Fitch would expect total debt/EBITDA to be about 4.0x
through 2021 and trend lower thereafter but for the company to
remain less diversified than peers.
KEY ASSUMPTIONS
-- Taseko's 75% of Gibraltar production at lower end of
guidance;
-- Copper prices of USD5,927/tonne in 2020, USD6,000/tonne in
2021, USD6,200/tonne in 2022 and USD6,400/tonne in 2023;
-- Gibraltar operating expenses at USD2.10/lb.;
-- Gibraltar Capex at CAD55 million in 2020 and CAD50 million in
each of 2021 and 2022;
-- The USD250 million senior secured notes due June 15, 2022 are
refinanced on similar terms;
-- The Florence copper project goes forward roughly in line with
the technical report dated Feb. 28, 2017 with development capital
provided by third-parties and project debt limited to USD125
million;
-- No other financing activities.
Key Recovery Rating Assumptions
The recovery analysis assumes that Taseko Mines Ltd. would be
reorganized as a going-concern in bankruptcy rather than
liquidated. Florence Copper Inc. provides an unsecured guarantee of
the notes but is expected to be financed on a secured basis, take
18 months to construct and a further 18 months to fully ramp-up.
Fitch has assumed a 10% administrative claim.
Going-Concern (GC) Approach
Taseko's GC EBITDA assumption comprises it's 75% interest in
Gibraltar calculated at a copper price of USD2.50/lb which compares
with the average for the first three quarters of 2020 of
USD2.65/lb. and the current prices above USD3.00/lb. The GC EBITDA
assumption for Gibraltar is CAD55 million. Fitch calculates the GC
EBITDA assumption for Florence at the same copper price. The GC
EBITDA assumption for Florence is CAD100 million.
The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which Fitch bases the
enterprise valuation.
An EV multiple of 4.0x EBITDA is applied to the Gibraltar GC EBITDA
to calculate a post-reorganization enterprise value compared with
5.0x for Florence to reflect Gibraltar's higher cost position and
both entities solid reserve life and low country risk offset by low
diversification. The choice of this multiple considered the
following factors:
Similar public companies trade at EBITDA multiples in the 4x-6x
range.
The company has no revolver, but Gibraltar has secured equipment
loans that are deemed to have priority over the USD250 million
senior secured Taseko notes and guaranteed on a secured basis by
Gibraltar equity interests. Florence's project financing is assumed
to be USD125 million indicating a residual EV of CAD275 million
once the project is completed.
The allocation of value in the liability waterfall results in
recovery corresponding to 'RR1' recovery for the equipment loans
(100% at CAD30 million) and a recovery corresponding to 'RR4' for
the senior secured notes (CAD333 million). Once Florence has been
completed and ramped-up, the residual EV would result in the notes
recovering 100%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The Florence copper project is well advanced, project capital
expenditures are in the USD250 million range, project debt is in
the USD125 million range and expected to be non-recourse, annual
production is expected to be in the 80-million-pound range and cash
costs are in the first quartile of the global cost curve;
-- Financial policies in place resulting in consolidated Total
debt/EBITDA after minority distributions anticipated to be
sustained below 3.5x;
-- Financial policies in place resulting in consolidated FFO
leverage anticipated to be sustained below 4x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Weakening liquidity profile, including failure to refinance
the USD250 million notes due 2022;
-- Increased costs or material disruption at Gibraltar;
-- Consolidated Total Debt/EBITDA after minority distributions
anticipated to be sustained above 4.5x;
-- Consolidated FFO leverage anticipated to be sustained above
5x.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Taseko does not have a revolving credit or an
ABL facility and provides cash collateral for LOCs or surety bonds
for reclamation. Taseko raised USD28.5 million gross proceeds from
the sale of equity in November 2020. The company has recently
arranged an uncommitted CAD9 million credit facility to provide
LOCs to Gibraltar suppliers to support trade finance. Restricted
cash and reclamation deposits were CAD4.3 million and available
cash on hand was
CAD72.7 million at Sept. 30, 2020. Fitch expects fairly neutral FCF
from Gibraltar over the ratings horizon under its rating case
excluding Florence. The development of the Florence copper project
depends upon the company's efforts to raise capital from a sale of
a minority interest in the project and project finance. Fitch
assumes that Gibraltar cash flows will not be used to develop the
Florence copper project beyond 2020.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch has made no material adjustments that are not disclosed
within the company's public financial statements.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
Environmental, Social and Governance (ESG) credit relevance is a
score of '3'. ESG issues are credit neutral or have only a minimal
credit impact on the entity, either due to their nature or the way
in which they are being managed by the entity.
TEMPLE UNIVERSITY: Moody's Affirms Ba1 Rating on Outstanding Debt
-----------------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 assigned to Temple
University Health System, PA's outstanding debt. The outlook has
been revised to stable from negative. The action affects $448
million of debt outstanding.
RATINGS RATIONALE
Affirmation of the Ba1 and revision of the outlook to stable
acknowledges Temple University Health System's (TUHS) successful
onboarding of new leadership and more clearly articulated strategic
direction in unison with Temple University (TU), governance
considerations under Moody's ESG classifications. Strengthened
governance along with the solid recovery from pandemic related
disruptions are expected to translate into the durability of
adequate financial performance and maintenance of balance sheet
resources. That said, TUHS' credit profile will continue to reflect
its position as an essential safety net provider for the City of
Philadelphia with still modest margins, which will remain above
pre-pandemic levels but likely soften from FY 2020, and adequate
balance sheet and debt service coverage metrics. TUHS will continue
to receive substantial special funding support from the
Commonwealth that will be integral to maintaining adequate
cashflow. Additionally, the Commonwealth funding and well above
average exposure to Medicaid remain at risk to cutbacks. A
manageable pension obligation and an all fixed rate debt structure
will lower the risk of unexpected demands on liquidity; however,
considerable capital needs will require a greater level of annual
spend to address a high and rising age of plant and will weigh on
balance sheet measures. Although TUHS' recovery from the suspension
of elective services is ongoing and volumes have substantially
returned to pre-COVID levels, there remains uncertainty regarding
sustainability especially in light of a resurgence and acceleration
in site of care shifts.
RATING OUTLOOK
The revision of the outlook to stable from negative reflects
expectations that TUHS will demonstrate adequate margins in FY
2021, yet more modest than margins in FY 2020, as strengthened
governance remains focused on controlling costs and increasing
patient revenue while effectively managing the pandemic. The
outlook also assumes that TU will continue to demonstrate decisive
action and strong stewardship as TUHS pursues various strategic
initiatives including the potential divestiture of its ownership
interest in Health Partners Plans, Inc.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Operating margins which are demonstrably stronger than
pre-pandemic levels and show durability
- Substantial growth of balance sheet cushion relative to debt,
operations and liquidity covenant
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Sustained weakening of operating cashflow margin or notable
cuts to supplemental funding that are not readily absorbed
- Marked decline in absolute cash and investments or relative
measures of liquidity
- Narrowing of headroom to covenants
- Increase in financial leverage
- Adverse change in relationship with TU
LEGAL SECURITY
The obligated group consists of Temple University Hospital, Inc.
(TUH), TUHS, the Fox Chase Entities, Temple Health System Transport
Team, Inc. and Temple Physicians, Inc. Each member of the obligated
group is jointly and severally liable for all obligations issued
under or secured by the Loan and Trust Agreement. The Bonds are
secured on parity basis with the obligations currently outstanding
issued under the Loan and Trust Agreement. As security for the
obligated group's obligations under the Loan and Trust Agreement,
each member of the obligated group has pledged its respective gross
receipts. The Bonds are also secured by mortgages on certain real
property of certain members of the obligated group.
PROFILE
TUHS is a $2.0 billion academic health system anchored in northern
Philadelphia. Temple University owns TUHS. The Health System
consists of TUH-Main Campus; TUH-Episcopal Campus; TUH-Northeastern
Campus; Fox Chase Cancer Center, an NCI designated comprehensive
cancer center; and TUH-Jeanes campus, a community-based hospital
offering medical, surgical and emergency services. TUHS also has a
network of specialty and primary-care physician practices. TUHS is
the academic medical center for the Lewis Katz School of Medicine
at TU.
METHODOLOGY
The principal methodology used in these ratings was Not-For-Profit
Healthcare published in December 2018.
TESTER DRILLING: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Tester Drilling Services, Inc.
2221 Cinnabar Loop
Anchorage, AK 99507-3139
Business Description: Tester Drilling Services, Inc. provides
construction services such as the erection
of structural steel and of similar products
of prestressed or precast concrete.
Chapter 11 Petition Date: December 5, 2020
Court: United States Bankruptcy Court
District of Alaska
Case No.: 20-00282
Judge: Hon. Gary Spraker
Debtor's Counsel: David H. Bundy, Esq.
DAVID H. BUNDY, P.C.
721 Depot Drive
Anchorage, AK 99501
Tel: 907-248-8431
Fax: 907-248-8434
Email: dhb@alaska.net
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Peter B. Tester, authorized
representative.
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/TBKS6HI/Tester_Drilling_Services_Inc__akbke-20-00282__0001.0.pdf?mcid=tGE4TAMA
TRAVEL CONCEPTS: Seeks to Hire Baerga & Quintana as Special Counsel
-------------------------------------------------------------------
Travel Concepts, LLC, seeks authority from the U.S. Bankruptcy
Court for the District of Puerto Rico to employ Baerga & Quintana
Law Offices, LLC as its counsel to assist in the stated labor and
employment matters.
Baerga & Quintana's hourly rates are:
Partners and Junior Partners $185
Associates $150
Paralegals and Law Clerks $50
Baerga & Quintana Law Offices is a disinterested entity as defined
in 11 U.S.C. Sec. 101(14), according to court filings.
Baerga & Quintana can be reached through:
Reynaldo A. Quintana LaTorre, Esq.
Baerga & Quintana Law Offices
Union Plaza Building
416 Ponce De Leon Avenue, Suite 810
San Juan, PR 00918-3426
Telephone: (787) 753-7455
Facsimile: (787) 756-5796
About Travel Concepts
Travel Concepts LLC -- https://www.tws.travel -- is a travel agency
headquartered in San Juan, Puerto Rico, offering travel arrangement
and reservation services. It conducts business under the name
Travel With Sears.
Travel Concepts LLC filed its voluntary petition under Chapter 11
of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-03281) on August
21, 2020. In the petition signed by Rigo Emilio Mediavilla Varela,
president, the Debtor disclosed $3,442,184 in assets and $4,399,286
in liabilities. Charles A. Cuprill, Esq. at CHARLES A. CUPRILL, PSC
LAW OFFICES represented the Debtors.
UNIPHARMA LLC: Sets Bidding Procedures for Substantially All Assets
-------------------------------------------------------------------
Tamarac 10200, LLC, and Unipharma, LLC, ask the U.S. Bankruptcy
Court for the Southern District of Florida to authorize the bidding
procedures in connection with the sale of substantially all assets
to NHTV (AIV) ULM BIDCO, LLC, on the terms of the Asset Purchase
Agreement, dated Dec. 7, 2020, subject to overbid.
In exchange, NHTV offers the following: (i) $20 million, which
amount will be credited against obligations outstanding under the
Loan Documents; plus (ii) the assumption by the Buyer of (A) the
remaining outstanding debt due under the prepetition senior secured
lending arrangement and (B) if so elected by the buyer in
accordance with the Stalking Horse Bid Agreement, all or any
portion of the outstanding obligations under the DIP Facility; plus
(iii) the assumption by the Stalking Horse Bidder of the other
assumed liabilities.
The Debtors, in the exercise of their reasonable business judgment,
have determined that the most effective way to maximize the value
of the Debtors’ estates for the benefit of their constituents is
to seek bankruptcy protection and to sell their businesses and all
or substantially all of their assets through the Sale pursuant to
section 363 of the Bankruptcy Code. In order to satisfy the
requirements of the DIP Facility and maintain the support of the
DIP Lender, customers and vendors, and maintain the Debtors'
employee base, it is in the best interests of the Debtors and their
estates to move expeditiously with a sale process.
On Nov. 10, 2020, the Debtors retained SOLIC Capital Advisors, LLC
and SOLIC Capital, LLC to provide the Debtors with, among other
things, Neil F. Luria as their Chief Restructuring Officer and
marketing and transactional services to market their assets for the
Sale. Consistent with terms of the retention of SOLIC, the Debtors
began a formal marketing process during early November for a sale
of the Purchased Assets. Although the Debtors have not yet
received, as of the date of the filing of the Motion, any
non-binding purchase proposals, SOLIC will continue to market the
Debtors' assets during the postpetition period with the goal of
obtaining competing bids by the mid-January Bid Deadline.
As set forth in the Stalking Horse Bid Agreement, the proposed Sale
includes all of the Purchased Assets which represent all or
substantially all of the Debtors' assets. The Debtors have filed
contemporaneously with the BIdding Procedures Motion their Sale
Motion.
Pursuant to the terms of the Stalking Horse Bid Agreement, the
Stalking Horse Bidder has agreed to purchase the Purchased Assets
in exchange for the sum of the following consideration: (i) $20
million, which amount will be credited against obligations
outstanding under the Loan Documents; plus (ii) the assumption by
the Buyer of (A) the remaining outstanding debt due under the
prepetition senior secured lending arrangement and (B) if so
elected by the buyer in accordance with the Stalking Horse Bid
Agreement, all or any portion of the outstanding obligations under
the DIP Facility; plus (iii) the assumption by the Stalking Horse
Bidder of the other assumed liabilities.
The Debtors propose to conduct a fair and transparent sale process
pursuant to which the winning bidder will enter into an agreement,
substantially in the form of the Stalking Horse Bid Agreement, for
the purchase of all or substantially all of their assets, free and
clear of certain liens, claims, encumbrances, and interests with
such liens, claims, encumbrances, and interests attaching to the
sale proceeds.
The Debtors respectfully submit that the sale of the Purchased
Assets pursuant to the Bidding Procedures and on the timeline
proposed represents the best opportunity to maximize the value of
the Purchased Assets for all interested parties.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: Jan. (TBD), 2021 at 5:00 p.m. (ET)
b. Initial Bid: Must include (i) cash consideration of not
less than the sum of the Purchase Price (including the amount of
the Assumed Debt as of the Closing Date) plus (a) all amounts
outstanding under the DIP Documents, (b) the Expense Reimbursement
and (c) an initial cash overbid of $500,000 and (ii) assumption of
the Assumed Liabilities (other than the Assumed Debt)
c. Deposit: 10% of the proposed bid
d. Auction: The Debtors ask to have the Auction commence not
later than Jan. 20, 2021 at 10:00 a.m. (ET), a date that falls 44
days from the Petition Date, subject to the right of the Debtors,
in the exercise of their reasonable business judgment, to adjourn
the Auction to a later date in consultation with the Stalking Horse
Bidder. It will take place at the offices of Berger Singerrnan
LLP, located at 1450 Brickell Avenue, Suite 1900, Miami, Florida
33131, or such other place and time, or by electronic means (e.g.,
Zoom), as the Debtors will notify all Competing Qualified Bidders,
including the Stalking Horse Bidder, the counsel for the Stalking
Horse Bidder and other invitees in accordance with the Bidding
Procedures.
e. Bid Increments: $500,000
f. Sale Hearing: Jan. (TBD), 2021
g. Sale Objection Deadline: Jan. 14, 2021 at 4:00 p.m. (ET)
h. Closing: Feb. 5, 2021
i. Credit Bid: Credit bids will be accepted. The Stalking
Horse Bid Agreement is, in part, a Credit Bid.
j. The criteria for payment of the Expense Reimbursement (if
any) to the Stalking Horse Bidder.
The Stalking Horse Bidder has requested the Expense Reimbursement
for actual reasonable and documented out-of-pocket costs and
expenses in connection with the Sale payable to the Stalking Horse
Bidder upon the terms and conditions set forth in Sections 7.1 and
9.2 of the Stalking Horse Bid Agreement to partially defray the
substantial out-of-pocket costs the Stalking Horse Bidder has and
is expected to incur in the process. The payment of the Expense
Reimbursement will be subject to the terms of the Stalking Horse
Bid Agreement.
Within three business days following the entry of the Bidding
Procedures Order, the Debtors will serve copies of: (i) the Bidding
Procedures Order and (ii) the Sale Notice upon the Sale Notice
Parties.
Given the number of executory contracts and unexpired leases to
which the Debtors are party, the Debtors propose to establish the
Assumption and Assignment Procedures. Attached as Schedule 2.5(a)
to the Stalking Horse Bid Agreement is a list of executory
contracts and unexpired leases of non-residential real property to
which either Debtors is a party. The Available Contracts schedule
may be updated from time to time prior to Jan. 7, 2021 (i.e., up to
30 days past the date of the Stalking Horse Bid Agreement). The
Stalking Horse Bidder will determine which of the Available
Contracts it wishes to have the Debtors assume and assign to it as
a part of the Sale and the remainder will be considered to be
"Excluded Assets."
Three Business Days after the entry of the Bidding Procedures
Order, the Debtors will file the Assumption Notice. The Contract
Objection Deadline is 4:00 p.m. (ET) on Jan. 14, 2021.
Concurrently with the filing of the Motion, the Debtors filed the
DIP Financing Motion, asking authority for them to receive senior
secured DIP Financing in an aggregate principal amount of up to
$15.6 million of commitments to make term loans all on the terms
and conditions set forth in the proposed interim and final orders
and documents related to the DIP Financing.
The Debtors ask, pursuant to Bankruptcy Rule 2002 and 9006(c), to
have the Motion heard on shortened notice.
Finally, they ask the Court that the Bidding Procedures Order be
effective immediately by providing that the 14-day stays under
Bankruptcy Rules 6004(h) and 6006(d) are waived.
Proposed Counsel for Debtors:
Christopher Andrew Jarvinen, Esq.
Paul Steven Singerman, Esq.
BERGER SINGERMAN LLP
1450 Brickell Avenue, Ste. 1900
Miami, FL 33131
Telephone: (305) 755-9500
Facsimile: (305) 714-4340
E-mail: singerman@bergersingerman.com
ciarvinen@bergersingermancom
About Unipharma LLC
Unipharma LLC is a healthcare packaging company serving the
pharmaceutical and nutraceutical sectors in the development,
manufacturing and packaging of liquid, disposable, and single-dose
units. Tamarac owns the state of the art 165,000 square foot,
FDA-registered, blow-fill-seal ("BFS") and ocnventional seal
manufacturing facility build in 2018 located in Tamarac, Florida
that, among other things, packages prescription, over the counter
and nutraceutical oral and ophtalmic solutions.
Unipharma was a Venezuela-based multinational pharmaceutical
company. In 2013, it announced that it will invest $50 million to
relocate to Tamarac, Florida.
In April 2020, the senior secured lender provided notice of various
defaults under the Debtors' loans.
Tamarac 10200, LLC and Unipharma, LLC each sought Chapter 11
protection (Bankr. S.D. Fla. Case No. 20-23346 and 20-23348) on
Dec. 7, 2020. Tamarac was estimated to have at least $10 million
ina ssets and less than $100 million in liabilities as of the
bankruptcy filing.
Berger Singerman LLP is serving as the Debtors' bankruptcy
counsel. SOLIC Capital Advisors, LLC and SOLIC Capital, LLC
provides the services of the CRO and other interim officers.
Kurtzman Carson Consultants LLC is the claims agent.
According to documents attached to the petition, the Debtors have
arranged a senior secured debtor-in-possession financing credit
facility in an aggregate amount up to $15,600,000.
UNIVERSAL TOWERS: Dec. 16 Disclosure Statement Hearing Set
----------------------------------------------------------
Judge Karen S. Jennemann has ordered that December 16, 2020 at 3:00
p.m. in Courtroom A, Sixth Floor, of the United States Bankruptcy
Court, 400 West Washington Street, Orlando, Florida is the hearing
by video via ZOOM to consider the disclosure statement filed by
Debtor Universal Towers Construction, Inc.
In addition, objections to the proposed disclosure statement may be
filed with the Court at any time before or at the hearing and shall
be served on the debtor, debtor's counsel and the United States
Trustee.
A full-text copy of the order dated November 10, 2020, is available
at https://tinyurl.com/y5yw6dkb from PacerMonitor at no charge.
About Universal Towers Construction
Universal Towers Construction, Inc., owns the 400-room Crowne Plaza
Hotel located on Universal Boulevard in Orlando, Florida.
Universal Towers Construction, Inc., filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 20-03799) on July 3, 2020. The petition was signed by Lis
R. Oliveira-Sommerville, president.
At the time of filing, the Debtor was estimated to have $10 million
to $50 million in both assets and liabilities.
Eric S. Golden, Esq. at BURR & FORMAN LLP represents the Debtor.
UNIVERSAL TOWERS: Expects Sale Plan to Pay 100% to Unsecureds
-------------------------------------------------------------
Universal Towers Construction, Inc. filed with the U.S. Bankruptcy
Court for the Middle District of Florida, Orlando Division, a
Disclosure Statement for Plan of Liquidation on October 30, 2020.
The overall purpose of the Plan is to provide for the orderly sale
and liquidation of the Debtor's assets, including the Debtor's
primary asset, the 400-room Crowne Plaza Hotel located on Universal
Boulevard in Orlando, Florida, in a manner designed to maximize
recoveries to all stakeholders. The Debtor believes the Plan
provides the best means currently available for the orderly
liquidation of the Debtor's assets and the best recoveries possible
for Holders of Claims and Interests against the Debtor, and thus
strongly recommends that you vote to accept the Plan.
Class 3 consists of all Allowed General Unsecured Claims. Holders
of Class 3 Claims shall receive payment in full, with interest, of
the Allowed Amount of each respective Holder's Claim. Holders of
Class 3 Claims shall receive Pro Rata Distributions from the
Liquidation Trust Assets until each Holder has received the Allowed
amount of such Holder's Class 3 Claim, with all accrued interest
from the Petition Date through the date such Claims are paid in
full. Interest shall accrue on each Class 3 Claim at the prevailing
federal judgment rate of interest pursuant as of the Petition Date.
Class 3 is Impaired and the Holders of Class 3 Claims are entitled
to vote on the Plan.
Class 4 consists of all Allowed Interests issued and outstanding of
the Debtor as of the Petition Date, and the Subordinated 510(b)
Claim(s) of Constrazza. The Holders of the Class 4 Interests shall
receive distributions from the Liquidation Trust in accordance with
their respective percentage Interests after payment in full of all
Allowed Administrative Claims, Allowed Priority Tax Claims, and all
Classes of Claims. Class 4 is Impaired and entitled to vote on the
Plan.
The Debtor has determined in its business judgment that a Sale of
the Hotel and the liquidation of its other assets is in the best
interest of all stakeholders. The anticipated sale price of the
Hotel, and the anticipated recoveries from the payment of the Notes
and distributions on account of the UTB Interests upon the
occurrence of the UTB Sale, will generate Cash sufficient to pay
all Allowed Claims in full, with significant funds remaining for
distributions to the Holders of Class 4 Interests after payment of
all senior Classes of Claims. The Debtor estimates that all Allowed
Administrative Expenses, Allowed Priority Tax Claims, Allowed
Secured Claims, and Allowed Unsecured Claims will not exceed $18
million.
A full-text copy of the Disclosure Statement dated October 30,
2020, is available at https://tinyurl.com/y5hba5w8 from
PacerMonitor at no charge.
Counsel for the Debtor:
Eric S. Golden, Esq.
Christopher R. Thompson, Esq.
Burr & Forman, LLP
200 S. Orange Ave., Suite 800
Orlando, Florida 32801
E-mail: egolden@burr.com
crthompson@burr.com
ccrumrine@burr.com
jmorgan@burr.com
About Universal Towers Construction
Universal Towers Construction, Inc., owns the 400-room Crowne Plaza
Hotel located on Universal Boulevard in Orlando, Florida.
Universal Towers Construction, Inc., filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 20-03799) on July 3, 2020. The petition was signed by Lis
R. Oliveira-Sommerville, president.
At the time of filing, the Debtor was estimated to have $10 million
to $50 million in both assets and liabilities.
Eric S. Golden, Esq. at BURR & FORMAN LLP represents the Debtor.
UNIVERSAL TOWERS: Hires Fisher Auction as Auctioneer
----------------------------------------------------
Universal Towers Construction, Inc., seeks authority from the U.S.
Bankruptcy Court for the Middle District of Florida to employ
Fisher Auction Company, as auctioneer and co-broker to the Debtor.
Universal Towers requires Fisher Auction to auction and sell the
Debtor's interest in the hotel real and personal property located
at 7800 Universal Blvd., Orlando, FL 32819.
Fisher Auction has agreed to be compensated by a sale commission of
3% buyer's premium. In the event the Debtor chooses not to proceed
with the live auction of the Hotel, Fisher Auction shall be
entitled to a $75,000 "no sale fee."
Lamar Fisher, partner of Fisher Auction Company, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Fisher Auction can be reached at:
Lamar Fisher
FISHER AUCTION COMPANY
2112 East Atlantic Boulevard
Pompano Beach, FL 33062-5208
Tel: (954) 942-0917
Fax: (954) 782-8143
About Universal Towers Construction
Universal Towers Construction, Inc., is a privately held company in
the traveler accommodation industry.
Universal Towers Construction filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-03799) on July 3, 2020. The petition was signed by Lis R.
Oliveira-Sommerville, president. At the time of filing, the Debtor
was estimated to have $10 million to $50 million in both assets and
liabilities. Eric S. Golden, Esq., at BURR & FORMAN LLP, is the
Debtor's counsel.
UNIVERSAL TOWERS: Holiday Says Crowne License Sale Needs Consent
----------------------------------------------------------------
Holiday Hospitality Franchising, LLC, filed a limited objection to
the Disclosure Statement for the Plan of Liquidation of Universal
Towers Construction, Inc.
Section V.C.1 (Plan Summary) of the Disclosure Statement provides
that the Debtor will be selling the Hotel by public auction
pursuant to Sec. 363 of the Bankruptcy Code ("Sale"), and that the
License Agreement "shall be deemed assumed as of the Effective Date
if the Sale does not occur prior to the Effective Date." On Nov.
25, the Debtor filed a motion for approval of sale and bid
procedures. Article I.A.22 of the Plan references the possibility
of the Debtor assigning an executory contract "that is to be
assumed by the Debtors (and/or assigned by the Debtors pursuant to
the Sale Order or the Confirmation Order) pursuant to sections 365
or 1123 of the Bankruptcy Code."
HHF asserts that the Disclosure Statement and Plan should be
amended so that it is clear that (i) the License Agreement is not
assignable absent HHF's consent, (ii) HHF will only consent to the
Debtor -- and only the Debtor -- assuming the License Agreement if
HHF is paid in full on all cure costs, and (iii) HHF will not
consent to any assignment, and that any proposed purchaser will
need to apply for and obtain a new license agreement from HHF if it
wishes to continue operating as a Crowne Plaza® Hotel after the
closing.
The Debtor should disclose that, presuming the Hotel is sold, the
License Agreement will be rejected and terminated, HHF will assert
rejection damages and, if a prospective buyer does not obtain a new
license from HHF, the Hotel will need to be deidentified.
Counsel for Holiday Hospitality Franchising, LLC:
W. Gregory Golson, Esquire
MECHANIK NUCCIO HEARNE &
WESTER, P.A.
305 South Boulevard
Tampa, Florida 33606
Telephone: (813) 276-1920
Facsimile: (813) 276-1560
Email: wgg@floridalandlaw.com
- and -
Leib M. Lerner
ALSTON & BIRD LLP
333 S. Hope Street, 16th Fl.
Los Angeles, CA 90071
About Universal Towers
Universal Towers Construction, Inc., owns the 400-room Crowne Plaza
Hotel located on Universal Boulevard in Orlando, Florida.
Universal Towers Construction, Inc., filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 20-03799) on July 3, 2020. The petition was signed by Lis
R. Oliveira-Sommerville, president.
At the time of filing, the Debtor was estimated to have $10 million
to $50 million in both assets and liabilities.
Eric S. Golden, Esq. at BURR & FORMAN LLP represents the Debtor as
counsel.
UNIVERSAL TOWERS: Ignores Constrazza's Judgment Creditor Status
---------------------------------------------------------------
Creditor/Shareholder Constrazza International Construction, Inc.
("Constrazza") objects to the Disclosure Statement for Plan of
Liquidation of Debtor Universal Towers Construction, Inc.
Constrazza points out that the Debtor, in its plan and proposed
liquidation, fails to identify that UTI is currently in default,
and offers no off set for the defaulted UTI funds.
Constrazza claims that the Debtor's failure to disclose the
preferential transfer, lending to an already defaulting borrower
and guarantor, and the Debtor's inability to pursue this claim,
while at the same time pursuing an alleged preference against
Constrazza, demonstrates inconsistent conduct emanating from the
Debtor's management and their conflict of interests.
Constrazza asserts that the Debtor's disclosure statement makes no
reference to the fact that it providing legal fees for Bomfim and
Summerville, let alone disclosing its conflict of interest.
Constrazza further asserts that Opus Consulting and John Gonzalez
was paid in excess of $100,000.00 for services based upon review of
Debtor's financials, yet no justification for those payments is
provided, nor is any effort made at recovering those payments as a
preference provided.
Constrazza objects to the Debtor's Disclosure statement because it
fails to advise the Court of its conflict of interest in scheduling
these debts and how it will object to these debts, given the state
court adjudication of their validity.
Constrazza states that the Debtor is consistently inconsistent as
the Debtor denies Constrazza shareholder status, including its
rights under all of the shareholder agreements, while at the same
time ignores that its status has changed to a judgment creditor.
A full-text copy of Constrazza's objection to disclosure statement
dated November 20, 2020, is available at
https://tinyurl.com/y4wzx8h9 from PacerMonitor at no charge.
Attorneys for Constrazza International:
KATZ BARRON
KEITH T. GRUMER
100 N.E. Third Avenue, #280
Fort Lauderdale, FL 33301
Tel: (954) 522-3636; Fax: (954) 331-2505
Primary E-mail: ktg@katzbarron.com
Secondary E-mail: sml@katzbarron.com
About Universal Towers Construction
Universal Towers Construction, Inc., owns the 400-room Crowne Plaza
Hotel located on Universal Boulevard in Orlando, Florida.
Universal Towers Construction, Inc., filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 20-03799) on July 3, 2020. The petition was signed by Lis
R. Oliveira-Sommerville, president.
At the time of filing, the Debtor was estimated to have $10 million
to $50 million in both assets and liabilities.
Eric S. Golden, Esq. at BURR & FORMAN LLP represents the Debtor.
URSA PICEANCE: Sale or Equitization Plan to Give 1% to Unsecureds
-----------------------------------------------------------------
Ursa Piceance Holdings LLC, et al. submitted a Joint Chapter 11
Plan of Reorganization and a Disclosure Statement on Nov. 30,
2020.
Through these chapter 11 cases, the Debtors seek to maximize the
value of their estates through a sale transaction, confirm and make
distributions through a plan of distribution, and wind down any
remaining affairs. On Nov. 19, 2020, the Court held a hearing and
approved the sale of the Debtors' to Terra Energy Partners LLC.
The Asset Sale is expected to close on Dec. 22, 2020 or soon
thereafter. In the alternative, if the Asset Sale does not close
and the Debtors are not otherwise able to achieve an acceptable
sale transaction through a 363 sale process, the Debtors intend to
pursue a debt equitization transaction with its RBL Lenders. As a
result, the Plan includes a toggle feature dependent upon whether a
third-party sale or equitization is ultimately determined as the
best path for these estates. While the RBL Lenders prefer a
successful sale to a third party, they intend to equitize their
debt and provide Exit Financing if a successful sale is not
achieved.
Class 5 General Unsecured Claims in the amount of $14,303,000 to
20,000,000 are impaired. Creditors will recover 1% of their claims.
On the Effective Date, each Holder of an Allowed General Unsecured
Claim that is not an RBL Deficiency Claims shall receive, in full
and final satisfaction of such Claim, its Pro Rata share of: (i) if
the Equitization Restructuring occurs, the Unsecured Stakeholder
Recovery; or (ii) if the Asset Sale Distribution is elected, the
greater of: (1) the Sale Proceeds after satisfaction of the
Administrative Claims, the Priority Tax Claims, the Other Priority
Claims, the Other Secured Claims, the DIP Claims, the RBL Claims,
and the Term Loan Claims, up to the Allowed amount of such General
Unsecured Claim; or (2) the Unsecured Stakeholder Recovery.
A full-text copy of the Disclosure Statement dated November 30,
2020, is available at
https://www.pacermonitor.com/view/L2GLJVA/Ursa_Piceance_Holdings_LLC__debke-20-12065__0282.0.pdf?mcid=tGE4TAMA
Attorneys for the Debtors:
Duston K. McFaul
Maegan Quejada
Hannah Rozow Owolabi
SIDLEY AUSTIN LLP
1000 Louisiana St., Suite 5900
Houston, TX 77002
Telephone: (713) 495-4500
Facsimile: (713) 495-7799
Emails: dmcfaul@sidley.com
mquejada@sidley.com
hrozow@sidley.com
David Kronenberg
1501 K Street, N.W.
Washington, DC 20005
Telephone: (202) 736-8000
Facsimile: (202) 736-8711
Email: dkronenberg@sidley.com
Robert S. Brady
Edmon L. Morton
Kenneth J. Enos
Joseph M. Mulvihill
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, Delaware 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
Emails: rbrady@ycst.com
emorton@ycst.com
kenos@ycst.com
jmulvihill@ycst.com
About Ursa Piceance Holdings
Ursa Piceance Holdings LLC -- http://www.ursaresources.com/-- is
engaged in the development and production of oil and gas in the
Piceance Basin, principally in rural areas of Western Colorado. Its
operations are focused on natural gas and natural gas liquids.
Ursa Piceance Holdings LLC and its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 20-12065) on Sept. 2, 2020. The petitions were signed by Jamie
Chronister, chief restructuring officer. The Hon. Karen B. Owens
oversees the cases.
The Debtor was estimated to have assets and liabilities of $100
million to $500 million as of the bankruptcy filing.
Sidley Austin LLP has been tapped as general bankruptcy counsel to
the Debtors while Young Conaway Stargatt & Taylor LLP has been
tapped as Delaware counsel. Conway MacKenzie Management Services
LLC serves as interim management services provider to the Debtors.
Lazard Freres & Co. LLC is the Debtors' investment banker, and
Prime Clerk LLC is the Debtors' claims and noticing agent.
US VIRGIN ISLANDS WPA: Fitch Maintains CCC Rating on Revenue Bonds
------------------------------------------------------------------
Fitch Ratings maintains the following ratings for the U.S. Virgin
Islands (USVI) Water and Power Authority (WAPA) on Rating Watch
Negative:
-- $91.49 million electric system revenue bonds, 'CCC';
-- $86.40 million electric system subordinate revenue bonds,
'CCC';
--Issuer Default Rating (IDR), 'CCC'.
ANALYTICAL CONCLUSION
Maintenance of the Rating Watch reflects continuing developments
related to WAPA that could increase the authority's vulnerability
to default. Although the authority recently addressed previously
identified challenges related to its debt structure, WAPA's ongoing
operating performance may be adversely impacted by the prospects
for additional governmental oversight. A recently proposed bill in
the legislature of the Virgin Islands (Bill No. 33-0346) would
create an additional oversight committee (the Virgin Islands Water
and Power Authority Management Oversight Review Committee [the
Review Committee]) that would become responsible for the operations
of the authority. Fitch's concerns are heightened by the scope of
the Review Committee's duties, which include the development and
structuring a debt consolidation and management plan, and the
possibility that such a plan could increase the likelihood of a
distressed debt exchange.
The 'CCC' rating continues to reflect heightened default risk as a
consequence of WAPA's exceptionally weak cash flow and liquidity.
Based on unaudited information provided by the WAPA, the authority
maintains modest amounts of cash on hand and borrowing capacity
that is insufficient to service the full amount of scheduled
maturities over the long term. Despite a recent agreement to extend
the maturity date of bond anticipation notes to July 1, 2022 from
July 1, 2020, meeting these obligations will still require external
financing, which may not be available. Additionally, while
operating cash flow appeared to stabilize in fiscal year 2020, the
outbreak of the coronavirus, and challenges the virus presents for
the travel and tourism sector and the demand for electricity
throughout the USVI, clouds WAPA's performance even further.
Fitch currently makes no distinction between the ratings on WAPA's
senior-lien obligations, subordinate-lien obligations and its IDR
as the relatively high probability of enterprise default does not
support distinction among the ratings. However, given the disparate
liens supporting WAPA's rated and unrated debt obligations,
distinctions could be made in the event of selective payment
default on specific classes of debt.
SECURITY
Electric system revenue bonds are secured by a pledge of net
electric revenues and certain other funds established under the
bond resolution. The electric system subordinated revenue bonds are
secured by a pledge of net revenues that are subordinate to the
pledge securing the electric system revenue bonds. Outstanding
senior and subordinate lien bonds are also secured by fully debt
service reserve funds.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'; Weak Service Area and Regulation
Limit Revenue Defensibility
The authority's revenue defensibility is constrained by the
territory's weak demographics and demand characteristics, as well
as limited rate flexibility. WAPA's rates for electric service are
extremely high contributing to low affordability. The authority's
rates are further regulated by the PSC.
Operating Risk: 'bb'; High Operating Cost Burden
Operating risk is very high due to an extremely high operating cost
burden. Costs are driven largely by the challenges of serving a
territory comprised of multiple islands including higher than
normal costs for fuel, labor and excess capacity necessary to
ensure reliability.
Financial Profile: 'bb'; Significant Liquidity Concerns
Weak liquidity and very high leverage contribute to WAPA's weak
financial profile. At Aug. 31, 2020, the authority reported
(unaudited) $8 million or 13 days of unrestricted cash on hand, no
borrowing capacity under its working capital line of credit and $14
million of short-term overdraft balances.
Asymmetric Additional Risk Considerations
Asymmetric risks related to WAPA's management and governance, debt
profile and the absence of audited information for fiscal year 2019
have been factored in the current rating.
ESG - Governance: WAPA has an ESG Relevance Score of '5' for
Governance Structure due to the proposed legislation that would
create and additional oversight committee that would become
responsible for the operations of the authority. Increased
political influence could pressure WAPA toward a debt restructuring
that could increase a distressed debt exchange.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Reduced risks related to additional governmental oversight and
the potential for the restructuring of outstanding debt;
-- Evidence of sustainable earnings and cash flow stability, as
well as an ability to meet ongoing financial obligations;
-- Improved liquidity in the form of both cash on hand and future
borrowing capacity.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- The inability to refinance, or negotiate a long-term
resolution to address, WAPA's scheduled debt maturities;
-- Any evidence that a restructuring of outstanding debt is
probable, including the passage of enabling legislation.
CREDIT PROFILE
WAPA is an instrumentality created by the government of United
States Virgin Islands (USVI) and is the sole provider of electric
and water service to the territory, which includes the separate
islands of St. Thomas, St. Croix and St. John. The electric system
generates, transmits and sells electric power and energy to
currently more than 50,000 residential, commercial and large power
customers, including the USVI government.
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
WAPA has ESG Relevance Scores of 5 for governance structure due to
the increasing threat that political influence could pressure WAPA
toward a debt consolidation and management plan, and the
possibility that such a plan could increase the likelihood of a
distressed debt exchange. This factor has a negative impact on the
credit profile, and is highly relevant to the rating and driving
the Rating Watch.
WAPA has ESG Relevance Scores of 4 for exposure to environmental
impacts, and financial transparency due to the authority's exposure
to extreme weather events and its inability to issue timely audited
financial statements, which have a negative impact on the credit
profile, and are relevant to the ratings in conjunction with other
factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. 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.
VANDEVCO LIMITED: Case Summary & 3 Unsecured Creditors
------------------------------------------------------
Debtor: Vandevco Limited
700 Washington Street
Vancouver, WA 98660
Chapter 11 Petition Date: December 6, 2020
Court: United States Bankruptcy Court
Western District of Washington
Case No.: 20-42710
Judge: Hon. Mary Jo Heston
Debtor's Counsel: Joseph A. Field, Esq.
FIELD JERGER LLP
621 SW Morrison, Suite 510
Portland, OR 97205
Tel: 503-228-2665
Fax: 503 225-0276
Email: joe@fieldjerger.com
Total Assets: $31,601,920
Total Liabilities: $74,827,369
The petition was signed by Ziad A. Elhindi, president.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/CLEOGDA/Vandevco_Limited__wawbke-20-42710__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Three Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Cerner Middle East Foreign Arbitration $62,000,000
Limited Award Against
2800 Rock Creek Parkway Principal of
Kansas City, MO 64117 upstream owner of
debtor
2. Foster Garvey, P.C. Legal Fees $366,343
121 SW Morrison St.
11th Floor
Portland, OR 97204
3. Horenstein Law Group PLLC Legal Fees $87,053
500 Broadway Suite 370
WA 98866
VANTAGE POINT: U.S. Trustee Says Disclosures Inadequate
-------------------------------------------------------
The U.S. Trustee conveyed objections to Vantage Point Apparel
Software, Inc.'s Disclosure Statement describing its Subchapter V
Chapter 11 Plan of Reorganization.
The U.S. Trustee asserts that the Debtor's disclosure statement
does not contain "adequate information" as required by 11 U.S.C.
Sec. 1125(a):
* The Disclosure Statement states that the Effective Date of the
Plan is the earlier of (1) twelve months from the entry of the
confirmation order, or (2) the first month where the Debtor has
revenue of at least $60,000. But during the course of this case
the Debtor's monthly operating reports reflect that it has never
had revenue in excess of $45,000 and that in the months of
September and October of 2020 the Debtor's revenue was only about
$40,000 per month.
* The DS provides that if the Plan is confirmed under section
1191(a) (consensual plan), those creditors in Class 4 (general
unsecured claims) that vote in favor of the plan will receive more
favorable treatment than those who do not. The DS, however, fails
to adequately explain how this treatment complies with the
mandatory plan provision of Section 1123(a)(4) of the Code, which
states that the plan shall "provide the same treatment for each
claim or interest of a particular class, unless the holder of a
particular claim or interest agrees to a less favorable treatment
of such particular claim or interest."
* The DS states that the Debtor will receive a discharge to the
extent specified under section 1141 of the Code. That is true if
the Plan is a consensual Plan confirmed under Section 1191(a). If
that is the case, the Debtor will receive its discharge upon
confirmation of the Plan. However, if the Plan is confirmed under
Section 1191(b) (i.e., cramdown) then the discharge will not be
granted until completion of all plan payments by the debtor. The
DS should be revised to reflect this distinction.
About Vantage Point Apparel Software
Vantage Point Apparel Software, Inc., filed a Chapter 11 bankruptcy
petition (Bankr. C.D. Cal. Case No. 20-10936) on March 16, 2020.
The Debtor tapped M. Jones and Associates, PC, as counsel.
VANTAGE POINT: Unsecureds to Get 2% or 4% in Plan Treatments
------------------------------------------------------------
Vantage Point Apparel Software, Inc., submitted a Chapter 11 Small
Business Plan and a corresponding Disclosure Statement.
The Debtor has proposed a reorganization plan. In other words, the
Debtor seeks to accomplish payments under the Plan by restructuring
their financial affairs and paying the creditors with post-petition
earnings derived from revenue earned by the Debtor.
The Effective Date of the plan is the first day of the first full
month following the first month where the Debtor has revenue of at
least $60,000 after the entry of the confirmation order, or 12
months following the entry of the confirmation order confirming
this Chapter 11 Plan, whichever is first.
Class 4: General Unsecured Claims -- estimated to total $938,557 --
are impaired. The Debtor proposes to pay Class 4 members on one of
two of the following terms, with each class member selecting which
plan treatment it desires when casting its ballot; only one of the
two terms will apply. If no vote is cast by a Class 4 member, or
no election for treatment is made by a Class 4 member, Class 4
Treatment A will be the default treatment for Class 4 members.
The Plan lets unsecured creditors select one of two treatments:
* Class 4 Treatment A: This treatment allows Class 4 members to
be paid a dividend of 2.0% of their allowed claims, with quarterly
payments for the first 36 months following the Effective Date. Each
class member will be paid on a pro rata basis together with all
other members selecting Class 4 Treatment A.
* Class 4 Treatment B: This treatment allows Class 4 members to
be paid a dividend of 4.0% of their allowed claims, with 4
quarterly payments paid during months 49-60 following the Effective
Date. In other words, the Class 4 members electing this treatment
will be paid more on their claim, but they must wait until year 5
of the plan to be paid anything on their claims. Each class member
will be paid on a pro rata basis together with all other members
selecting Class 4 Treatment B.
The funding of the Plan will be accomplished through "available
cash" on the Effective Date of the Plan and "future disposable
income" obtained through the Debtor's business activities.
A full-text copy of the Disclosure Statement dated October 14,
2020, is available at
https://www.pacermonitor.com/view/2OEJMSI/Vantage_Point_Apparel_Software__cacbke-20-10936__0045.0.pdf?mcid=tGE4TAMA
Attorneys for the Debtor:
Michael Jones, CA
M. Jones & Associates, PC
505 North Tustin Ave, Suite 105
Santa Ana, CA 92705
Telephone: (714) 795-2346
Facsimile: (888) 341-5213
Email: mike@MJonesOC.com
About Vantage Point Apparel Software
Vantage Point Apparel Software, Inc., filed a Chapter 11 bankruptcy
petition (Bankr. C.D. Cal. Case No. 20-10936) on March 16, 2020.
The Debtor tapped M. Jones and Associates, PC, as counsel.
VILLA TAPIA: Unsecureds to Recover 100% in Step-Up Plan
-------------------------------------------------------
Villa Tapia Citi Fresh Supermarket Corp submitted an Amended
Chapter 11 Plan that proposes to pay 100% to creditors.
Despite the fact that its inability to meet its rent and debt
obligations continued to some extent after its petition was filed,
the Debtors long-term prospects of survival appear promising
because, even though it lost its W.I.C. license, it maintained its
liquor license, and the Department of Sanitation purchased a large
vacant lot next door to the Debtor on which it contracted to build
a garage for sanitation vehicles. This construction virtually
guarantees the Debtor a sizeable amount of foot traffic for the
foreseeable future, first from construction workers working on the
garage, and then from sanitation workers once the garageis
finished
The Debtor's prospects were also helped when, on June 17, 2020, it
received a $150,000 loan from the Small Business Administration
(the "SBA Loan") as part of the government's coronavirus pandemic
relief efforts. To date, the Debtor has used $53,177.46 of the SBA
Loan to pay off its rental arrears to its landlord, Nostrand Avenue
Equities, thus enabling the Debtor to assume its lease, and has
paid $13,300 to Con Edison in accordance with an agreed-upon
payment plan which will lower the Debtor's post-petition Con Edison
arrears to the point where the remainder of those arrears can be
paid through the Plan. Furthermore, on the Effective Date of the
Plan, as discussed in greater detail below, the SBA Loan will
enable the Debtor to pay down and pay off other debts so that it
will be in a much better position to manage the remainder of its
debt through its monthly plan payments.
Class 1 is an impaired class consisting of the secured claims of
Eastern Funding in the amount of $132,349.00, Resnick Corp in the
amount of $14,877.31 and General Trading Co. in the amount of
$13,517.00. Class 2is an unimpaired class consisting of a secured
claim consisting of the United States Small Business Administration
in the amount of $150,000. Class 3 is an impaired class consisting
of nonpriority unsecured claims held by Con Edison ($14,258.90),
National Grid ($1,013.52), the New York State Department of
Taxation and Finance ($980.16) and the Internal Revenue Service
($1,717.45).
The Plan provides for payment to its creditors in amounts that
increase over time. This "step-up" method of payment is designed to
coordinate the Debtor's payments with what is anticipated to be the
gradual increase in revenue from the construction site and,
eventually, from the sanitation garage next door.
First, on the Effective Date of the Plan, the Debtor will apply the
SBA Loan proceeds to pay in full the following administrative fees:
1) the approved professional fees of its accountant, Marcum LLP in
the amount of $25,824.50, 2) the post-petition administrative fees
of Resnick Corp in the amount of $1,209.50, and 3) the
post-petition administrative fees of National Grid in the amount of
$3,696.16,
Second, also on the Effective Date of the Plan, the Debtor will
apply the SBA Loan proceeds to make a payment of $36,822.54 to
Eastern Funding which will reduce the outstanding debt owed to
Eastern Funding from $132,349.00 to $95,526.46 (the "Eastern Fund
Balance").
Third, also on the Effective Date of the Plan, the Debtor 1) will
make the first of 60 monthly Plan payments to Eastern Funding to
pay in full the Eastern Fund Balance, with such payments beginning
at $750.00 a month and accelerating thereafter as further described
in the Payment Schedule, and 2) will make the first of 40 monthly
Plan payments to PM Esq to pay in full his allowed administrative
expenses in the amount of $9,374.52, with such payments beginning
at $100.00 a month and accelerating thereafter as further described
in the Payment Schedule, 3) will make the first of 12 monthly
payments to Con Edison in the amount of $1,130.09 each, with the
final payment being made on January 1, 2022, and with the sum of
such payments paying in full Con Edison's remaining post-petition
administrative fees in the amount of $13,561.20, and 4) will make
the first of three monthly payments in the amount of $337.84 each
to National Grid to pay in full its $1,013.52 unsecured debt.
Fourth, beginning in the sixth month of the Plan, the Debtor will
begin making monthly payments on the SBA Loan. The Debtor will make
payments on the SBA Loan in accordance with the SBA Loan's original
terms, which call for monthly payments of $731.00 beginning on June
21, 2021 and ending on June 21, 2050.
Fifth, on the 13th month of the Plan, the Debtor will make the
first of 48 monthly payments to 1) Resnick Corp to pay in full its
secured debt in the amount of $14,877.41, with the first 47 monthly
plan payments in the amount of $309.24, and the 48th monthly
payment in the amount of $310.23, and 2) General Trading to pay in
full its secured debt in the amount of $13,517, with all 48
payments in the amount of $281.60, and 3) the Internal Revenue
Service to pay its combined debt of $7,715.32, with 47 payments in
the amount of $160.74 and the 48th payment in the amount of
$160.54, and 4) the New York City Department of Finance to pay its
combined debt of $1,685.26, with 47 payments in the amount of
$35.11 and the 48th payment in the amount of $35.09, and 5) the New
York State Department of Taxation and Finance to pay its combined
debt of $12,092.64, with 48 payments all in the amount of $251.93.
A full-text copy of the Amended Disclosure Statement dated November
30, 2020, is available at
https://www.pacermonitor.com/view/A6S4I7Q/Villa_Tapia_Citi_Fresh_Supermarket__nyebke-20-40357__0142.0.pdf?mcid=tGE4TAMA
About Villa Tapia Citi Fresh
Supermarket Corp.
Based in Brooklyn, N.Y., Villa Tapia Citi Fresh Supermarket Corp.
is a delicatessen located at 40 Nostrand Avenue, Brooklyn,
NY11205.
It fell behind on its debt obligations in mid-2019 after it lost
its W.I.C. license, which enabled it to sell certain nutritional
children's productsto holders of W.I.C. (Women, Infants and
Children) food subsidy cards.
The Company subsequentlyfell behind on its rent payments to
landlord Nostrand Avenue Equities, and on its loan payments to
Eastern Funding LLC, which held a secured first lien on all the
Debtor’s property, and to Resnick Supermarket Equipment
Corporation and General Trading Company, both of whom held junior
liens.
Based in Brooklyn, N.Y., Villa Tapia Citi Fresh Supermarket Corp.
filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 20-40357) on Jan. 20,
2020, listing under $1 million in both assets and liabilities.
Judge Elizabeth S. Stong oversees the case.
Phillip Mahony, Esq., is Debtor's bankruptcy counsel. Debtor
tapped Sgouras Law Firm, PLLC as its legal counsel for
non-bankruptcy matters.
VISKASE COMPANIES: Moody's Withdraws Caa2 CFR on Debt Repayment
---------------------------------------------------------------
Moody's Investors Service withdrawn Viskase Companies, Inc.
ratings, including the Caa2 Corporate Family Rating (CFR), the
Caa2-PD Probability of Default Rating (PDR), SGL-4 Speculative
Grade Liquidity Rating, and the Caa3 rating on the company's senior
secured first lien term loan due January 2021.
The rating action follows the full repayment and cancelation of its
credit facilities.
The following ratings/assessments are affected by today's action:
Withdrawals:
Issuer: Viskase Companies, Inc.
Probability of Default Rating, Withdrawn, previously rated Caa2-PD
Speculative Grade Liquidity Rating, Withdrawn, previously rated
SGL-4
Corporate Family Rating, Withdrawn, previously rated Caa2
Senior Secured Bank Credit Facility, Withdrawn, previously rated
Caa3 (LGD4)
Outlook Actions:
Issuer: Viskase Companies, Inc.
Outlook, Changed to Ratings Withdrawn from Negative
RATINGS RATIONALE
Moody's has decided to withdraw the ratings because Viskase's debt
previously rated by Moody's has been fully repaid following
Viskase's debt refinancing.
Viskase, headquartered in Lombard, Illinois, is a global producer
of cellulose, fibrous and plastic casings for hot dogs and sausages
and other processed meat products. Viskase has sizable
international operations with approximately 50% of sales generated
from customers located outside North America. Revenue for the
twelve months ended June 30, 2020 was approximately $385 million.
Viskase is publicly traded over the counter and Icahn Enterprises
LP owns approximately 78.6% of the company.
VISUAL COMFORT: S&P Alters Outlook to Stable, Affirms 'B' ICR
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issue-level rating on
U.S.-based Visual Comfort & Co.'s senior secured debt. The '3'
recovery rating is unchanged and indicated its expectation for a
meaningful recovery (50%-70%; rounded recovery: 60%) in the event
of a payment default.
Visual Comfort has returned to pre-COVID-19 EBITDA despite a
macroeconomic downturn on effective cost-saving measures and
heightened demand from remodeling projects.
The outlook revision reflects a stronger than expected recovery in
operating performance. Unlike past recessions, in this
pandemic-driven downturn consumers are reallocating greater
discretionary dollars into home and remodeling projects away from
travel and leisure. Profitability improved in the third quarter
(ended Sept. 30, 2020) because of precautionary cost reductions,
showroom and store reopenings, and heightened residential
remodeling demand. Revenues increased 6.1% during the third quarter
compared with last year and declined 10% in the second compared to
the same period. However, overall unit volumes declined, in part
attributable to the commercial market decline.
Leverage declined to about 4x for the 12 months ended Sept. 30,
down from about 4.5x during the second quarter when adjusted EBITDA
fell about 6% year over year and Visual Comfort had an asset-based
lending (ABL) facility balance of $10 million, which has since been
repaid. The reduction in leverage was because of year-over-year
adjusted EBITDA growth of about 10%, repayment of the revolver, and
about $30 million repayment on the term loan in the third quarter.
S&P expects demand trends to continue, resulting in leverage of
about 4x for fiscal 2020 and 2021, as some discretionary costs cut
in 2020 return as the business environment stabilizes.
S&P said, "Although residential demand may moderate in 2021, we
expect continued top-line growth due to Circa showroom expansion,
more new housing starts, and commercial market recovery. We expect
residential remodeling demand to continue driving top-line
expansion in the near term as consumers spend more time at home due
to the pandemic. However, as a vaccine becomes widely administered,
we expect residential remodeling sales could moderate and
commercial sales to recover. We expect an easier comparison in the
second quarter of fiscal 2021, after sales suffered in the second
quarter of 2020 from store and showroom closures and consumer
hesitance to shop. Additionally, S&P economists forecast 1.4
million housing starts in 2021 compared to 1.3 million in 2020,
providing another driver for growth. Visual Comfort resumed
investing in its Circa showrooms after a brief pause during the
height of the COVID-19 pandemic. They have consistently generated
double-digit percent sales growth through e-commerce platform. For
fiscal 2020, we expect flat to low-single–digit percent sales
growth and low- to mid-single-digit growth in fiscal 2021.
"We forecast steady EBITDA margins despite the resumption of
certain costs. Visual Comfort maintained adjusted EBITDA margins of
20%-21% through fiscal 2018-2019. It is operating at a similar
margin profile despite weakness in its commercial portfolio due to
cost-cutting efforts that included personnel, travel, trade show,
and marketing expenses. Additionally, its outsourced manufacturing
model helped protect against margin degradation, particularly in
the second quarter when year-over-year sales declined 10% but
adjusted EBITDA margins remained about 20%. We expect some of these
costs to resume in fiscal 2021 if a COVID-19 vaccine is available
and travel and trade shows resume. However, we forecast the company
will remain disciplined with costs and will leverage its operating
cost structure as sales recover to sustain 20%-21% adjusted EBITDA
margins.
"We expect financial policy to result in long-run leverage
maintained over 5x. While Visual Comfort ended the third quarter
with adjusted trailing-12-months leverage of about 4x, and we
forecast adjusted leverage to remain there near term, Visual
Comfort will maintain adjusted leverage of 5x-6x longer term due to
its financial sponsor ownership. We believe the sponsor could make
debt-funded acquisitions to further expand its scale, round out its
portfolio, and accelerate growth, as it did with the Visual Comfort
acquisition in 2017. We also expect the sponsor could releverage
the balance sheet to fund a dividend.
"The stable outlook reflects our expectation that the company will
continue increasing sales and maintain leverage of about 4x over
the next 12 months."
S&P could lower the ratings if leverage approaches 7x. S&P believes
this could occur if:
-- The U.S. housing market weakens and consumer demand for its
products fall substantially, leading to sustained double-digit
percent declines in revenues and EBITDA margin contraction to the
mid to low teens;
-- Free cash flow generation declines significantly; or
-- If the company adopts a more aggressive financial policy by
funding large, debt-financed acquisitions or dividends.
While unlikely during the next year, S&P could raise the ratings
if:
-- There is a commitment and track record from the sponsor to
maintain leverage below 5x.
VRAI TABERNACLE: Hires Continental Properties as Realtor
--------------------------------------------------------
Vrai Tabernacle De Jesus, Inc., has filed an amended application
with the U.S. Bankruptcy Court for the Southern District of Florida
seeking approval to hire Continental Properties, Inc. as realtor.
Vrai Tabernacle requires Continental Properties to assist in the
sale of the Debtor's real property located at 1656 S. Congress
Ave., West Palm Beach, Fla.
The contract provides for a 6% commission for the sale of the
property. The Firm will be paid 3% of the sale price of the
property and will be paid at closing. Any contributing broker will
also receive 3% of the sale price.
Continental Properties is disinterested as defined in the
Bankruptcy Code and does not hold an interest adverse to the Debtor
or its estate, according to court filings.
The realtor can be reached through:
Julie Clapp
Continental Properties, Inc.
2240 Palm Beach Lakes Blvd.
West Palm Beach, FL 33409
Phone: (561) 369-4193
About Vrai Tabernacle de Jesus
Vrai Tabernacle de Jesus, Inc., a non-profit religious
organization, filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 20-21421) on
Oct. 19, 2020. Vrai Tabernacle President Lenese Naval-Estiverne
signed the petition. At the time of filing, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. Judge Mindy A. Mora oversees the case. Brian K.
McMahon, P.A. serves as the Debtor's legal counsel.
WELD NORTH: S&P Affirms 'B-' ICR on Debt Issuance, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed all its ratings on Education software
provider Weld North Education LLC, including its 'B-' issuer credit
rating and 'B-' issue-level rating on its first-lien debt.
The outlook is stable, reflecting S&P's expectation that Weld North
will sustain revenue growth and maintain EBITDA margins and
sufficient cash flow generation, in spite of the incremental
financial leverage.
Recent strong revenue growth and margin expansion have allowed the
company to delever, but incremental debt issuance will keep
leverage high over the next 24 months. The ratings affirmation
reflects expectation that Weld North will continue to grow revenue
and cash generation amidst growing demand for education software,
in spite of the incremental debt burden represented by this
transaction. Over the past 12 months the company has sustained
strong revenue growth and margin improvement, resulting in
deleveraging to around 5.7x at the end of Sept. 30, 2020. Pro forma
for the transaction, leverage is near 10x and S&P expects it to
remain elevated in the future as the company continues to pursue
acquisitions in support of organic growth.
The COVID-19 pandemic and stay-at-home orders have helped
accelerate Weld North's recent growth, increasing demand for its
digital education products to support remote learning. Weld
North's revenues increased by around 40% in third-quarter fiscal
2020. While there was strength across all segments, growth was
driven primarily by the Edgenuity segment, which now includes the
Glynlyon products and together represent Weld North's courseware
and credit recovery products. As the COVID-19 pandemic and
resulting stay-at-home orders caused schools to shut down
nationwide, demand for digital solutions in the education space
grew and Weld North has benefited from this accelerated digital
transformation. Through its acquisitions, Weld North has developed
a robust portfolio, with products catering to different areas of
education, including online courseware, supplemental intervention
solutions, and virtual instructional services, all of which have
become tools that help teachers and parents navigate through the
recent disruption in the education space.
S&P believes that the core instructional market, traditionally
dominated by textbooks, will continue to grow as an opportunity for
Weld North as educators adopt a digital-first curriculum. The
company continues to invest in this area, as shown through the
current acquisition and the LearnZillion acquisition completed in
December of 2019. After a strong year of nearly 30% revenue growth
in 2020, with around a 90% retention rate, S&P expects around 25%
growth in 2021, while margins improve modestly to around 27% as the
company grows its scale and realize cost synergies from
acquisitions. Weld North's recent performance is in line with the
growing and acyclical nature of the education software market.
In spite of recent strong performance, the market remains highly
fragmented with uncertainty around timing of broader digital
adoption across schools. S&P said, "While we expect Weld North to
maintain a good market position in credit recovery, the company
still operates at a limited scale versus its rated software peers
with margins below those of many software companies. We believe the
demand for Weld North's products is sustainable even after the
pandemic, albeit at a slower growth rate, as digitization of
education had already been underway with increasing device
penetration. However, the use of technology supplements and digital
curriculum in schools remains an emerging trend and the timing
around wide adoption of digital tools remains uncertain. As the
utilization of digital solutions in classrooms increase, we expect
the competition from larger education software providers to
intensify as well. As the company maintains its acquisitive
strategy to bolster its portfolio, we view integration efforts as
an ongoing risk. Furthermore, we view the company's reliance on
school budgets as an additional risk with uncertainty around
potential municipal budget shortfalls as well as the sustainability
of spending when students eventually return to school."
While acquisitions remain central to Weld North's strategy and
debt-funded transactions will likely keep leverage elevated, it
should generate positive free operating cash flow and maintain
sufficient liquidity despite increased cash interest. S&P said,
"While the increased debt balance will raise Weld North's annual
cash interest burden by around $30 million to $70 million and
reduce free operating cash flow (FOCF) generation, we still expect
positive FOCF of about $50 million in fiscal 2021. The company has
minimal capital expenditure (capex) requirements and coupled with
about $190 million of total cash and full revolving credit facility
availability, pro forma for the transaction, we expect Weld North
to maintain sufficient liquidity over the next 12 months."
S&P said, "The stable outlook on Weld North reflects our
expectation that it will sustain revenue growth and generate
sufficient cash flow in 2021 and beyond, which should allow it
maintain sufficient liquidity despite high leverage. While Weld
North's margins may face headwinds from product integration
initiatives or reinvestments in its products, we believe the
company will be able to reduce its leverage modestly in the next 12
months."
S&P could lower its rating on Weld North if:
-- A deterioration in its operating performance leads to
break-even FOCF;
-- Its leverage increases to the point that S&P no longer
considers its capital structure to be sustainable. This would
likely occur because of significantly greater attrition among its
clients.
An upgrade is unlikely over the next 12 months because of Weld
North's high initial leverage at close of transaction. S&P could
raise its rating over the longer term if:
-- The company sustains consistent organic revenue growth and
margin expansion (from scale efficiencies and integration success);
and
-- It sustains debt to EBITDA at or below the mid-6x area, with
FOCF to debt in the mid-single-digit percent area.
ZAYAT STABLES: Lenders Sue Owner for $24 Million
------------------------------------------------
Daniel Gill of Bloomberg Law reports that according to lenders, the
owner of Triple-Crown winner American Pharoah should remain on the
hook for a $24 million repayment despite his Chapter 7 bankruptcy
filing.
Ahmed Zayat, the owner of Zayat Stables LLC, fraudulently
dissipated millions of dollars of "equine collateral" -- including
horses and breeding rights -- that secured a loan by MGG Specialty
Finance Fund LP and MGG SF Evergreen Fund LP, the two said in a
lawsuit filed in the U.S. Bankruptcy Court for the District of New
Jersey.
Zayat's knowing and intentional fraud should prevent MGG's claims
from being wiped out in Zayat's bankruptcy case, MGG said.
About Zayat Stables
Headquartered in Hackensack, New Jersey, Zayat Stables owns of 203
thoroughbred horses. The horses, which are collateral for the bank
loan, are worth $37 million, according an appraisal mentioned in a
court paper. Ahmed Zayat said in a court filing that he personally
invested $40 million in the business.
The Company filed for Chapter 11 bankruptcy protection on February
3, 2010 (Bankr. D.N.J. Case No. 10-13130). The Company listed $10
million to $50 million in assets and liabilities.
[*] Commercial Chapter 11 Filings Rise 45% in November Y/Y
----------------------------------------------------------
ABL Advisor reports that commercial Chapter 11 filings increased 46
percent in November 2020 over November 2019, according to data
provided by Epiq. Increasing from November 2019's commercial
Chapter 11 filing total of 449, nearly half of the 654 commercial
Chapter 11 filings registered in November 2020 were “related”
filings. Commercial bankruptcy filings totaled 2,335 in November
2020, a 23 percent decrease from the 3,022 commercial filings in
November 2019, according to the American Bankruptcy Institute.
All other filing categories registered decreases from last year.
The 34,478 total U.S. bankruptcies in November 2020 were down 39
percent from the 56,085 filings in November 2019. Consumer
bankruptcies also decreased 39 percent in November 2020, as the
32,143 filings dropped from the 53,063 consumer filings registered
in November 2019.
The 494,756 total bankruptcies through the first 11 months of 2020
are on pace to result in the lowest annual filing total since the
617,660 filings recorded in calendar year 2006, the year after the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
went into effect and placed new requirements on filers.
"Government relief programs, moratoriums and lender deferments have
helped families and businesses weather surging COVID-19 cases,
elevated unemployment rates and growing debt loads to this point of
the pandemic," said ABI Executive Director Amy Quackenboss. "Unless
renewed by Congress, the expiration of the stabilization programs
will leave struggling consumers and businesses in a challenging and
uncertain position. Bankruptcy provides a proven shield to
companies and consumers facing mounting financial distress."
Commercial Chapter 11 filings in November 2020 represented a 19
percent increase from the 550 filings recorded in October 2020.
November’s commercial filing total represented an 8 percent
decrease from the October 2020 commercial filing total of 2,539.
Total filings for November decreased 14 percent compared to the
40,218 total filings in October 2020. Total noncommercial filings
for November decreased 15 percent from the October 2020
noncommercial filing total of 37,679.
The average nationwide per capita bankruptcy filing rate (total
filings per 1,000 population) was 1.74 for the first 11 calendar
months of 2020 (Jan. 1-Nov. 30), a slight decrease from the 1.78
rate registered during the first 10 months of the year. The average
daily filing total in November 2020 was 1,815, a 39 percent
decrease from the 2,952 total daily filings registered in November
2019. States with the highest per capita filing rates (total
filings per 1,000 population) through the first 11 months of 2020
were:
Alabama (3.91)
Delaware (3.74)
Tennessee (3.46)
Nevada (2.95)
Mississippi (2.93)
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
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public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
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liabilities delivered to nation's bankruptcy courts. The list
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then-ending.
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