/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/210208.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, February 8, 2021, Vol. 25, No. 38 Headlines 203 W 107 STREET: Tenants Group Says Disclosure Statement Ambiguous 5 STAR PROPERTY: Vincent Buying Winter Haven Property for $182K 60G 133 GREENE STREET: Auction for 14% of Big Deal on Feb. 16 900 CESAR CHAVEZ: Lender Objections Added to Disclosure Statement ABSOLUTE CARE: Unsecureds' Recovery Hiked to 100% in Amended Plan ADAPTHEALTH CORP: S&P Raises Senior Unsecured Notes Rating to 'B+' ADETONA LLC: Unsecureds to Get Paid Via Step-Up Monthly Payments ADMI CORP: Moody's Completes Review, Retains B2 CFR ADTALEM GLOBAL: Moody's Rates First Lien Credit Facilities 'B1' ADTALEM'S GLOBAL: S&P Assigns 'BB-' Rating on New Sr. Secured Debt ADVAXIS INC: Inks Consulting Agreement with GoalAssist AG PARENT: Moody's Completes Review, Retains B3 CFR ALDEVRON LLC: Moody's Completes Review, Retains B2 CFR AMERICAN ACHIEVEMENT: Involuntary Chapter 11 Petition Dismissed AMERICAN GREETINGS: S&P Alters Outlook to Stable, Affirms 'B' ICR AMERICAN WOODMARK: S&P Affirms 'BB' ICR on Sustained Demand ANTHONY SCOTT LEVANDOWSKI: Levandowski to Submit Proposed Order APPLOVIN CORP: S&P Alters Outlook to Negative, Affirms 'B+' ICR ASAIG LLC: Files Notice of Approved Bidding Procedures for Assets ASCENA RETAIL: Simon Property Blasts Stores Closures in Plan ASHTON WOODS: Moody's Raises CFR to B2, Outlook Stable ATHLETICO HOLDINGS: Moody's Completes Review, Retains B2 CFR ATI HOLDINGS: Moody's Completes Review, Retains B3 CFR AVINGER INC: Launches $14.4M Bought Deal Offering of Common Stock BAILEY EIDGE: Gets OK to Hire Agri-Management Services as Realtor BELK INC: S&P Lowers ICR to 'D' on Missed Debt Service Payments BIOLASE INC: Regains Compliance with Nasdaq Bid Price Requirement BLACK ELK: Trustee's Punitive Damages Claim Dismissed BLESSINGS INC: Rusing Lopez Represents Mayorquin, 4 Others BOMBARDIER INC: Fitch Affirms 'CCC' LongTerm IDR BRIGHT MOUNTAIN: Appoints Gretchen Tibbits to Board of Directors BROWN JORDAN: S&P Affirms 'CCC+' ICR Following Revolver Extension BSVH LLC: Court Limits Use of Cash Collateral BURNS ASSET MANAGEMENT: To Seek Plan Confirmation on April 1 CALAIS REGIONAL: Seeks to Hire Dentons Bingham as Legal Counsel CATALENT PHARMA: Moody's Completes Review, Retains Ba3 CFR CERTARA HOLDCO: Moody's Completes Review, Retains B2 CFR CHESAPEAKE ENERGY: Moody's Assigns Ba3 CFR on Bankruptcy Emergence CHESAPEAKE ENERGY: S&P Assigns Prelim 'B+' ICR, Outlook Stable CITGO PETROLEUM: Fitch Rates $650MM Secured Notes Due 2026 'BB' CITGO PETROLEUM: Moody's Rates New $650MM Notes Due 2026 'B3' CITGO PETROLEUM: S&P Rates $650MM Senior Secured Notes 'B+' CNX RESOURCES: Moody's Hikes CFR to Ba3 & Alters Outlook to Stable CONFLUENT HEALTH: Moody's Completes Review, Retains B3 CFR CORELOGIC INC: S&P Places 'BB' ICR on CreditWatch Negative CRECHALE PROPERTIES: Seeks to Hire Lentz & Little as Legal Counsel CROWN ASSETS: Granted Cash Collateral Access on Final Basis CROWN REMODELING: Gets Cash Collateral Access Thru April 26 CROWN REMODELING: Seeks to Hire Luxenburg & Bonfin as Accountant DATTO INC: Moody's Hikes CFR to B1 & Rates $200M Secured Notes B1 DATTO INC: S&P Upgrades ICR to 'BB-' Following Parent's IPO DCERT BUYER: Fitch Affirms 'B' LongTerm IDR, Outlook Stable DCERT BUYER: S&P Stays 'B-' Issuer Credit Rating, Outlook Stable DIRECT DIESEL: Case Summary & 12 Unsecured Creditors DIVERSIFIED HEALTHCARE: S&P Rates New Unsec. Notes Due 2031 'BB' DW PRODUCTIONS: Case Summary & 16 Unsecured Creditors E. IMPERIAL: Auction of 100% Interests in Plamex on April 15 EAST CAROLINA COMMERCIAL: Seeks Approval to Hire Special Counsel ECI MACOLA: Moody's Completes Review, Retains B3 CFR ENSEMBLE RCM: S&P Affirms 'B' ICR on Recapitalization EQT CORP: Moody's Raises CFR to Ba2, Outlook Stable EQUESTRIAN EVENTS: Lenders Seek to Prohibit Use of Cash Collateral FDZ HOMES: Seeks Court Approval to Hire Real Estate Agent FF FUND: Unsecured Creditors to Recover 100% in 3 Years FRANCHISE GROUP: S&P Affirms 'B+' ICR, Outlook Stable FREEDOM MORTGAGE: S&P Raises LT ICR to 'B' on Strong Performance FRONTERA HOLDINGS: Lenders to Take 100% Ownership Under Exit Plan FRONTIER COMMUNICATIONS: PURA Approves Chapter 11 Plan FULL HOUSE: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable FURNITURE LAND: Feb. 11 Hearing on Sale of Kissimmee Property GAINWELL ACQUISITION: Moody's Affirms B3 CFR, Outlook Negative GATEWAY RADIOLOGY: Bid to Extend Exclusivity Periods Tossed GBT GROUP: S&P Assigns 'B' Rating on New $200MM Secured Term Loan GIGA-TRONICS INC: Posts $833K Net Income for Quarter Ended Dec. 26 GPD COMPANIES: Moody's Rates New $75MM Add-on Notes 'B3' GRAY TELEVISION: Fitch Places 'BB-' LongTerm IDR on Watch Negative GRAY TELEVISION: Moody's Affirms B1 CFR on Quincy Acquisition GREENTEC-USA INC: Feb. 23 Hearing on Bid Procedures for All Assets GREENTEC-USA INC: Sets Bid Procedures for Substantially All Assets GREER FARMS: Plan Provides for Payment in Full of Allowed Claims GRUBHUB HOLDINGS: Moody's Completes Review, Retains B1 CFR GUIDEHOUSE LLP: Moody's Cuts First Lien Loan Facility Rating to B2 H&S EXPRESS: Hearing on 100% Plan Set for March 18 HARSCO CORP: Fitch Withdraws BB Issuer Default Rating HCA HEALTHCARE: Leverage Target No Impact on Moody's Ba1 CFR HEARTLAND DENTAL: Moody's Completes Review, Retains Caa1 CFR HENRY VALENCIA: Fuentes Say Disclosures Fail to Address Key Issues HIGH LINER: S&P Alters Outlook to Stable, Affirms 'B' ICR HIGHLAND CAPITAL: To Use Chapter 11 Plan to Fend Off Ex-CEO HORIZON THERAPEUTICS: Moody's Affirms Ba2 CFR on Viela Transaction IDAVM MULTI GROUP: Unsec. Creditors Will Recover 10% in 60 Months IDERA INC: Moody's Assigns B3 CFR Following Partners Acquisition IMPERVA INC: Moody's Completes Review, Retains B3 CFR INFORMATICA LLC: Moody's Completes Review, Retains B2 Rating INNOPHOS HOLDINGS: S&P Affirm 'B' ICR, Outlook Stable INTERNATIONAL SEAWAYS: S&P Withdraws 'B-' Issuer Credit Rating INVESTVIEW INC: Unit to Report $2.8M Bitcoin Revenue for January IRIDIUM SATELLITE: Moody's Upgrades CFR to Ba3, Outlook Stable IRIS HOLDINGS: Moody's Rates New $175MM HoldCo PIK Notes 'Caa1' JAZZ PHARMACEUTICALS: S&P Places 'BB' ICR on CreditWatch Negative JFG HOLDINGS: Unsecured Creditors Will Get 100% from Operations JPMCC COMMERCIAL 2019-COR4: Fitch Affirms B- Rating on H-RR Certs JSAA REALTY: Lee Trust Says Plan Disclosures Inadequate KD BELLE TERRE: Unsecureds to Recover 100% in $6.23M Sale Plan KNB HOLDINGS: Moody's Completes Review, Retains Caa3 CFR L BRANDS: Plans to Spin Off or Sell Victoria's Secret by August LAX IN-FLITE: Case Summary & 20 Largest Unsecured Creditors LE TOTE: Committee Now Backs Plan, HBC Settlement LEVI STRAUSS: Moody's Rates New $500MM Unsecured Notes 'Ba2' LEVI STRAUSS: S&P Rates New $500MM Senior Unsecured Notes 'BB+' LOGMEIN INC: Fitch Affirms 'B' LongTerm IDR, Outlook Stable LUCKIN COFFEE: JPLs File Chapter 15 Bankruptcy Petition MAGELLAN HEALTH: Moody's Completes Review, Retains Ba1 CFR MARAVAI INTERMEDIATE: Moody's Completes Review, Retains B2 CFR MARK DAVID TIBBENS: $163K Sale of Cedar Grove Property Approved MATCHBOX FOOD: Court Approves Disclosure Statement MATTHEWS INTERNATIONAL: S&P Affirms 'BB' ICR, Outlook Negative MCAFEE LLC: Moody's Completes Review, Retains B1 CFR MESCO INC: Secured Claimants Say Amended Plan Remains Not Feasible MILLS FORESTRY: Solicitation Exclusivity Extended Thru March 9 MR. COOPER: S&P Alters Outlook to Positive, Affirms 'B' ICR MUNCHERY INC: Court Gives Settlement Agreement Final OK MURRAY ENERGY: CONSOL Appeal Denied MY FL MANAGEMENT: Royal Beach Palace Owners File for Chapter 11 NATIONAL VISION: Moody's Raises CFR to Ba3 on Strong Sales NEELKANTH HOTELS: Wins April 28 Plan Exclusivity Extension NORTHERN OIL: Fitch Assigns First-Time 'B' LongTerm IDR NORTHWEST FIBER: Moody's Rates New $500MM First Lien Loan 'Ba3' NORTHWEST FIBER: S&P Rates New $500MM First-Lien Term Loan B 'B+' NORTONLIFELOCK INC: Moody's Completes Review, Retains Ba2 CFR OPEN TEXT: Moody's Completes Review, Retains Ba1 CFR OPTION CARE: Moody's Completes Review, Retains B2 CFR OPTIV INC: Moody's Completes Review, Retains Caa1 CFR OUTLOOK THERAPEUTICS: Launches $10M Bought Deal Stock Offering PADDOCK ENTERPRISES: Seeks May 3 Plan Exclusivity Extension PANDA STONEWALL: S&P Lowers Senior Secured Debt Rating to 'CCC+' PEABODY ENERGY: S&P Downgrades ICR to 'SD' on Distressed Exchange PENNYMAC FINANCIAL: S&P Upgrades ICR to 'BB-', Outlook Stable PHILADELPHIA SCHOOL: Seeks June 10 Plan Exclusivity Extension PHILIRON INC: PC Mortgage's Plan Pushes Sale to Pay Off Claims PING IDENTITY: Moody's Completes Review, Retains B1 CFR PROFESSIONAL DIVERSITY: Signs $1M Securities Purchase Agreement PROFESSIONAL INVESTORS 31: Involuntary Chapter 11 Case Summary PROFESSIONAL INVESTORS 49: Involuntary Chapter 11 Case Summary PROJECT LEOPARD: Moody's Completes Review, Retains B2 CFR PROJECT RUBY: Moody's Completes Review, Retains B3 CFR PURDUE PHARMA: McKinsey Pays $573M to Settle States' Opioid Claims QUANTUM CORP: Prices $90 Million Public Offering of Common Stock QUANTUM HEALTH: Moody's Completes Review, Retains B3 CFR QUARTZ HOLDING: Moody's Completes Review, Retains B3 CFR QUOTIENT LIMITED: Incurs $29.8MM Net Loss for Quarter Ended Dec. 31 RACKSPACE TECHNOLOGY: Moody's Rates New $650MM Secured Notes 'B1' RACKSPACE TECHNOLOGY: S&P Rates New $550MM Sr. Secured Notes 'B+' RACQUETBALL INVESTMENT: Gets Cash Collateral Access Thru April 6 REALOGY GROUP: Moody's Hikes 2nd Lien Notes Due 2025 to B2 REALOGY GROUP: S&P Raises Rating on 2nd-Lien Secured Note to 'B+' REDSTONE BUYER: Moody's Completes Review, Retains B2 CFR REGALIA UNITS: Court Extends Plan Exclusivity Until March 22 RENT-A-CENTER INC: S&P Rates New $450MM Senior Unsecured Notes 'B' ROUMELCO PROPERTIES: Lender Seeks to Prohibit Cash Collateral Use RTI HOLDING: Asks for May 5 Chapter 11 Plan Filing Extension S2P ACQUISITION: Moody's Completes Review, Retains B3 Rating SAVAGE ENTERPRISES: Moody's Alters Outlook on B1 CFR to Stable SEAHAWK HOLDINGS: Moody's Completes Review, Retains B3 CFR SILGAN HOLDINGS: S&P Alters Outlook to Stable, Affirms 'BB+' ICR SK INVICTUS: S&P Upgrades ICR to 'B' on Improved Performance SKLARCO LLC: US Trustee Opposes to Disclosure Statement SPIRIT REALTY: Moody's Affirms Ba1 Rating on Preferred Stock SUMMIT VIEW: Plan Exclusivity Period Extended to March 22 SUN PACIFIC: Unit Amends Indenture of Trust with UMB Bank SYNCSORT INC: Moody's Completes Review, Retains B3 Rating TEA OLIVE: Wins Cash Collateral Access Thru Feb. 12 TEGRA118 WEALTH: Motive Contribution No Impact on Moody's B2 CFR TEGRA118 WEALTH: S&P Affirms 'B' ICR Following Merger Announcement THRYV HOLDINGS: S&P Assigns 'B' ICR, Outlook Stable THRYV INC: Moody's Gives 'B3' CFR, Rates New $700MM Term Loan 'B3' TNP SPRING: Creditors to Be Paid From Property Sale or Refinance TRAIL MANAGEMENT: District Court Dismisses Michael Kim Suit TUMBLEWEED TINY HOUSE: Gets Cash Collateral Access Thru March 31 UBS COMMERCIAL 2017-C1: Fitch Lowers Class F-RR Certs to 'CCC' UKG INC: Moody's Completes Review, Retains B2 Rating UNITI GROUP: Completes $1.11 Billion Senior Notes Offering UNIVERSITY PLACE: Has Cash Collateral Access Thru February 8 US STEEL: Equity Proceeds No Impact on Moody's Caa1 Rating VALKYR PURCHASER: Moody's Completes Review, Retains B2 Rating VALKYR PURCHASER: Moody's Completes Review, Retains B2 Rating VERSCEND HOLDING: Moody's Hikes Rating on First Lien Debt to B2 VERTEX ENERGY: Regains Full Compliance With Nasdaq Requirement VESTAVIA HILLS: Court Extends Plan Exclusivity Thru July 3 VIDEOMINING CORP: Asks Ct. to Extend Plan Exclusivity Until May 29 VIRTUOLOTRY LLC: Seeks to Hire Spencer Fane as New Legal Counsel VISTAGEN THERAPEUTICS: Names Mark Ginski as SVP, Head of CMC VITALITY RE XII 2021: S&P Assigns 'BB+ (sf)' Rating on Cl. B Notes VS BUYER: Moody's Completes Review, Retains B2 CFR WC 4811 SOUTH: 4811 SoCo Says Disclosures Lack Information WC HIRSHFELD: Court Approves Disclosure Statement WC TEAKWOOD: 8209 Burnet Says Plan Disclosures Insufficient WHEEL PROS: Moody's Affirms B3 CFR & Cuts First Lien Debt to B3 WHEEL PROS: S&P Affirms 'B-' Rating on Term Loan on $200MM Add-On WHITE STALLION: Court Okays 1.5M Ton Coal Shipment WHITE STALLION: Granted Cash Collateral Use on Final Basis WILLCO X DEVELOPMENT: Has Until Feb. 26 to File Plan Disclosures YOUNGEVITY INTERNATIONAL: Delisted from Nasdaq YRC WORLDWIDE: Changes Name to Yellow Corp; Reports 2020 Results Z & J LLC: March 2 Plan Confirmation Hearing Set ZEP INC: S&P Upgrades ICR to 'B-' on Strong Operating Performance [*] Akin Gump's Beckerman Named Manhattan Bankruptcy Judge [*] U.S. Attorney David Jones Moves to Manhattan Bankruptcy Bench [^] BOND PRICING: For the Week from February 1 to 5, 2021 ********* 203 W 107 STREET: Tenants Group Says Disclosure Statement Ambiguous ------------------------------------------------------------------- The Ad Hoc Group of West 107th Street Tenants submitted an objection to the Disclosure Statement of 203 W 107 Street LLC et al. The Tenants point out that it is not reasonable for the Debtors' failure to disclose the amounts of the security deposits, which appear in the leases. Indeed, the one-page form for renewal of a rent-stabilized lease includes the amount of the security deposit in the form. The Tenants further point out that the Disclosure Statement is silent about the provisions of New York General Obligations Law Secs. 7-103 et seq. that govern security deposits of residential tenants. According to the Tenants, despite inquiries from the onset of the bankruptcy filings, the Debtors have not yet explained what happened to the tenants' security deposits. The Tenants assert that the Disclosure Statement is ambiguous in explaining to tenants participating in the rent strike how the Plan would address these issues. The Tenants point out that there is an even greater number of tenants who have claims for breach of the warranty of habitability who have paid their rent. The Disclosure Statement does not warn in plain English that these claims will be extinguished if tenants in that category fail to file a proof of claim timely or, if tenants do file timely proofs of claim, what funds will be available to satisfy such pre-petition claims and how those claims would be resolved. Attorneys for Ad Hoc Group of West 107th Street Tenants: Douglas A. Kellner, Esq. KELLNER HERLIHY GETTY & FRIEDMAN, LLP 470 Park Avenue South, 7th Floor New York, New York 10016-6819 Tel. No. (212) 889-2121 dak@khgflaw.com About 203 W 107 Street LLC 203 W 107 Street LLC, and 10 other entities affiliated with Emerald Equity Group sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-12960) on Dec. 28, 2020. The Debtors are Single Asset Real Estate entities that each owns a residential-building property in Manhattan. They own multi-family residential buildings on 107th Street and 117th Streets in Manhattan. 203 W 107 Street LLC, 210 W 107 Street LLC, 220 W 107 Street LLC and 230 W 107 Street LLC -- collectively, the "107th Street Debtors" -- own the properties at 107th Street, New York. 124-136 East 117 LLC, 215 East 117 LLC, 231 East 117 LLC, 235 East 117 LLC, 244 East 117 LLC, East 117 Realty LLC and 1661 PA Realty LLC -- collectively, the "117 Street Debtors" -- own the properties at 117th Street. Currently, there are several hundred tenants residing in the Properties. 203 W 107 Street disclosed total assets of $7,044,031 against $102,929,476 in liabilities. 210 W 107 Street disclosed total assets of $13,607,479 against liabilities of $103,053,340. 220 W 107th Street disclosed total assets of $15,413,641 against debt of $103,046,384. The petitions were signed by CRO Ephraim Diamond. Emerald retained Arbel Capital Advisors LLC and Ephraim Diamond, its managing member, to assist Emerald and the Debtors in complying with their obligations under the Restructuring Support Agreement with LoanCore. Backenroth Frankel & Krinsky, LLP, led by Mark Frankel, Esq., is serving as counsel to the Debtors. 5 STAR PROPERTY: Vincent Buying Winter Haven Property for $182K --------------------------------------------------------------- 5 Star Property Group, Inc., asks the U.S. Bankruptcy Court for the Middle District of Florida to authorize the sale of the real property located at 2625 Avenue S NW, in Winter Haven, Florida, more particularly described as Inwood Unit 3 PB 9 PG 7A 7B 7C S13/ 24 T28 R25 Lots 544 & 545, to Zachary Vincent for $182,000. The Property is not the Debtor's homestead. On Jan. 19, 2021, the Debtor executed an "As Is" Commercial Contract for Sale and Purchase through which it intends to sell the Real Property to the Purchaser for the sum of $182,000. The sale of the Property is presently set to close on Feb. 26, 2021. Upon information and belief, the only parties who may claim a lien against the Real Property is DSRS, LLC, ("First Mortgager") in the approximate amount of $28,000, Raymond Rairigh, Sr. ("Second Mortgager") in the approximate amount of $118,360 (Claim #13), and the Polk County Tax Collector in the amount of $661. All claims secured by the Real Property will be paid the full amount of their allowed claims at the closing of the sale. Through the instant motion, the Debtor is asking an order authorizing it to sell the Real Property free and clear of all liens, with valid and enforceable liens attaching to the proceeds of the sale. Taxes and ordinary closing costs, including broker's fees, will be paid at closing. The net sale proceeds, after payment of the secured claims and closing costs, will be held in trust by the Debtor's counsel until further order of the Court regarding the distribution of the net sale proceeds. The Debtor asks that the 14-day stay required under Bankruptcy Rule Section 6004(h) be waived, and that any order granting the motion is effective immediately upon entry. It asks for expedited hearing on the Motion. A copy of the Contract is available at https://tinyurl.com/1ca5dgw5 from PacerMonitor.com free of charge. About 5 Star Property Group, Inc. 5 Star Property Group, Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-07801) on Oct. 20, 2020, listing under $1 million in both assets and liabilities. Buddy D. Ford, Esq. at BUDDY D. FORD, P.A. represents the Debtor as counsel. 60G 133 GREENE STREET: Auction for 14% of Big Deal on Feb. 16 ------------------------------------------------------------- In accordance with the applicable provision of the Uniform Commercial Code as enacted in New York, Citizens Bank N.A., successor by merger to Citizens Bank of Pennsylvania, as administrative agent and lender, will offer for sale, at public auction, all of 60G 133 Greene Street Owner LLC's (a) 14.29% of the shares of Big Deal on Green Street Inc., and (b) certain related rights and property relating thereto. Secured party's understanding is that the principal assets of the pledged entity are the certain proprietary leases by and between Bid Deal Realty on Green Street Inc. and the Debtor, for the property commonly known as "Apartment 1 aka Ground Floor Apartment" and "Apartment Basement" located at 133 Green Street, New York, New York 10012, together with all improvements located thereon and all appurtenant property rights relating thereto, and that the pledged entity is the tenant under the proprietary leases. The public auction will be held on Feb. 16, 2021, at 3:00 p.m. (New York Time) by remote auction via the Cisco WebEx Platform or web-based video conferencing or telephonic conferencing program selected by the secured party. The sale will be conducted by: Mannion Auctions LLC Attn: Matthew D. Mannion Auctioneer 305 Broadway, Suite 200 New York, New York Interested parties who intend to bid on the collateral must contact: Eastdil Secured Attn: Will Silverman Managing Director Tel: (212) 315-7200 Email: wsilver-man@eastdilsecured.com Terms of the public sale and bidding instructions can be accessed at http://www.133Greeneuccforeclosure.com. 900 CESAR CHAVEZ: Lender Objections Added to Disclosure Statement ----------------------------------------------------------------- 900 Cesar Chavez, LLC, 905 Cesar Chavez, LLC, 5th and Red River, LLC, and 7400 South Congress, LLC, have filed a Fifth Amended Disclosure Statement. The Bankruptcy Court has entered an order fixing March 8, 2021, at 2:45 p.m. (Prevailing Central Time), Bankruptcy Courtroom 1 for the Hon. Tony M. Davis, 903 San Jacinto, Austin, Texas as the date, time, and place for the initial commencement of a hearing on confirmation of the Plan, and fixing March 1, 2021, at 5:00 p.m. (Prevailing Central Time), as the time by which all objections to confirmation of the Plan. The following paragraph has been added at the request of the Lender in order to resolve its objection to the Disclosure Statement. The Debtors disagree with the statements therein: This Disclosure Statement and the Plan (including, without limitation, all factual assertions, opinions of value, and operative provisions) represent the position of the Debtors only. Except where expressly stated to the contrary, neither ATX Lender 5, LLC (the "Successor Lender"), Stonelake Capital Partners ("Stonelake"), nor any affiliate of either has approved this Disclosure Statement, the Plan, or any provisions, assertions, or language appearing in either the Disclosure Statement or the Plan. In addition, the following paragraph has been added at the section on the Debtors' Background and Financial Picture at the request of the Lender: Stonelake and the Successor Lender disagree with, among other things, the Debtors' assertions in this Section 2.1.1 regarding the value of the Properties. These values represent the position of the Debtors only. Furthermore, Stonelake and the Successor Lender disagree that the Debtors actually paid $1.35 million to the Original Lender to hold in an Interest Reserve Account. On the contrary, Stonelake and the Successor Lender state that the so-called Interest Reserve Account represented only additional lending availability under the Note that the Debtors could borrow in order to pay interest payments (as long as no event of default had occurred, or was then occurring, under the loan documents). Each additional borrowing to pay interest was added to the principal amount due on the Note. Under the Plan, the Lender, which asserts a claim of $22,484,155, will be paid in full in cash on the Effective Date in an amount as determined by the Court. Allowed unsecured claims totaling $189,910 in Class 2 will recover 100% of their claims. Each holder of an Allowed Unsecured Claim shall receive payment in full of the allowed amount of each holder's claim, to be paid 30 days following payment of the Class 1 claim in full. Equity holder will retain their equity interests. All cash necessary for the Reorganized Debtors to make payments pursuant to the Plan shall be obtained from a transaction pursuant to which each of the Debtors will convey their properties to the buyers. As set forth in the documents contained in the Plan Supplement, the buyers for the property are BN Chavez #1, LLC, BN Chavez #2, LLC, BN Red River, LLC, and BN South Congress, LLC. A copy of the Plan Supplement filed Dec. 18, 2020, is available at https://bit.ly/3cNrGFi A full-text copy of the Fifth Amended Disclosure Statement dated Feb. 1, 2021, is available at https://bit.ly/39KGuT7 from PacerMonitor.com at no charge. Attorneys for the Debtors: Morris D. Weiss Mark C. Taylor William R. "Trip" Nix, III Evan J. Atkinson WALLER LANSDEN DORTCH & DAVIS, LLP 100 Congress Ave., Suite 1800 Austin, Texas 78701 Telephone: (512) 685-6400 Facsimile: (512) 685-6417 E-mail: morris.weiss@wallerlaw.com mark.taylor@wallerlaw.com trip.nix@wallerlaw.com evan.atkinson@wallerlaw.com About 900 Cesar Chavez 900 Cesar Chavez, LLC, is engaged in renting and leasing real estate properties. 900 Cesar and its affiliates are single asset real estate entities (as defined in 11 U.S.C. Section 101(51B)). 900 Cesar Chavez, LLC (Bankr. W.D. Tex. Case No. 19-11527), the Lead Case, and its affiliates, 905 Cesar Chavez, LLC (Bankr. W.D. Tex. Case No. 19-11528), 5th and Red River, LLC (Bankr. W.D. Tex. Case No. 19-11529), and 7400 South Congress, LLC (Bankr. W.D. Tex. Case No. 19-11530), sought Chapter 11 protection on Nov. 4, 2019. The cases are assigned to Judge Tony M. Davis. In the petition signed by Brian Elliott, corporate counsel, 900 Cesar Chavez, LLC, was estimated to have assets in the range of $1 million to $10 million, and $10 million to $50 million in debt. The Debtors tapped Evan J. Atkinson, Esq., and Morris D. Weiss, Esq., at Waller Lansden Dortch & Davis LLP, as counsel. ABSOLUTE CARE: Unsecureds' Recovery Hiked to 100% in Amended Plan ----------------------------------------------------------------- Absolute Care Assisted Living & Memory Care, LLC, filed a First Amended Disclosure Statement describing Chapter First Amended 11 Plan of Reorganization dated January 28, 2021. Class 3(a) consists of the Secured Claim of 1st Deed of Trust. This class shall receive a monthly payment of $33,655 with 4% interest for 24 months with a total payout of $807,731.00. Class 3(b) consists of the Secured Claim of Taco Mexico, Inc. This class shall receive a monthly payment of $6,514 with 4% interest for 24 months with a total payout of $156,330.00. Class 3(c) consists of the Secured Claim of Chung An Chyu Tu. This class shall receive a monthly payment of $2,171 with 4% interest rate for 24 months with a total payout of $52,110. Class 3(d) consists of the Secured Claim of County of San Bernardino will receive a monthly payment for six months with 1.5% interest per month with a total payout of $59,847. Class 5 consists of General Unsecured Claims. This Class will receive a monthly payment of $14,203 with a total payout of $340,870. After the project is completed and income-generating, over 24 months. First payment is estimated to commence 18 months after effective date. Class 5 Allowed Unsecured Creditors will receive 100% of the claim. All class 6 interest holders are wiped out and the Plan Proponent ends up with a 100% equity interest in the Reorganized Debtor. To the extent said creditors filed a Proof of Claim, this treatment will not affect their rights as a Class 5 claimant. The Plan will be funded by Post petition funding from a third party lender/ investor Inland Senior Development, LLC, who shall be the 100% owner of the reorganized Debtor upon consummation of the Plan. Inland has sufficient immediate source of funds to fund the plan immediately and through the span of the plan. Inland is a wholly-owned entity by Mohammad Monshizadeh, Debtor's managing members' brother. Inland Senior Development, LLC, has provided a loan commitment letter of $1,500,000 and has provided an immediate availability of $300,000 to Debtor. Said lender will take a 100% ownership interest in the LLC on the Effective Date. Plan Proponent's most recent bank statement shows a balance of $1,300,000. Plan Proponent indicated that it expects a further $700,000 within 30 days from the filing of this Plan. Furthermore, in the event that additional capital is required, Debtor seeks to obtain further postpetition investment from alternative sources. A full-text copy of the First Amended Disclosure Statement dated Jan. 28, 2021, is available at https://bit.ly/2MSjdWy from PacerMonitor.com at no charge. Attorney for the Debtor: Robert S. Altagen, Esq. LAW OFFICE OF ROBERT S. ALTAGEN A Professional Corporation 1111 Corporate Center Drive, Suite 201 Monterey Park, California 91754 Tel: (323) 268-9588 Fax: (323) 268-8742 About Absolute Care Assisted Living & Memory Care Absolute Care Assisted Living & Memory Care, LLC, owns in fee simple a property located in Fontana, California, having a current value of $1.50 million, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-12274) on March 19, 2020. The petition was signed by Ali Monshizadeh, its manager. At the time of the filing, the Debtor disclosed total assets of $1 million to $10 million and total liabilities of the same range. The Hon. Mark S. Wallace oversees the case. The Debtor tapped Robert Altagen, Esq., at Law Offices of Robert S. Altagen, Inc., as its counsel. ADAPTHEALTH CORP: S&P Raises Senior Unsecured Notes Rating to 'B+' ------------------------------------------------------------------ S&P Global Ratings raised its rating on AdaptHealth Corp.'s senior unsecured notes to 'B+' from 'B' and revised its recovery rating on this debt to '4' from '5', indicating expectations that lenders would receive average (30%-50%; rounded estimate: 45%) recovery in the event of a payment default. These actions follow notice of structural changes that reduced the amount of secured debt ahead of the unsecured notes. S&P's 'B+' issuer credit rating and stable outlook on AdaptHealth is unchanged and reflects its expectation of organic revenue growth in the mid-single-digit percent area in 2021 and 2022, adjusted EBITDA margins of about 20% in 2021, and adjusted leverage in the 4x-4.5x area. S&P said, "Subsequent to our previous rating action on Dec. 14, 2020, the company has raised additional common equity of about $235 million and has made some changes to the final capital structure including upsizing the revolver to $250 million from $200 million and reducing the secured debt to $700 million from the proposed $850 million (both not rated). In addition, the amortization on the secured debt is higher than we previously anticipated given the term loan A structure. "Given the final capital structure, we have revised our assumptions in our recovery analysis. The higher expected debt amortization indicates higher fixed charges in the default year and also less priority debt ahead of the unsecured notes, resulting in better recovery prospects for the senior unsecured notes in a hypothetical default scenario." ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- The company's capital structure includes a $250 million revolver facility (not rated), a $350 million senior unsecured notes due 2028, a $500 million senior unsecured notes due 2029, and a $700 million senior secured term loan A (not rated). In addition, it will continue to include a subordinated debt in amount of $144 million. -- S&P assumes the revolving credit facility will be 85% drawn, LIBOR of 250 basis points at default, and some increase in margin following a breach in financial covenants. -- Given the company's substantial market position and the continued demand for its services, S&P believes AdaptHealth would remain a viable business and reorganize rather than liquidate following a hypothetical payment default. -- S&P valued the company on a going-concern basis using a 5.5x multiple applied to its projected EBITDA at default, consistent with the multiple used for similar companies. Simulated default assumptions -- Simulated year of default: 2025 -- Implied enterprise value multiple: 5.5x -- EBITDA at emergence: $242.9 million -- Jurisdiction: U.S. Simplified waterfall -- Net enterprise value at default (after 5% administrative costs): $1.269 billion -- Valuation split (obligors/nonobligors): 100%/0% -- Priority claims: $22 million -- Total secured claims: $837.8 million -- Total collateral value available to unsecured creditors: $409 million -- Unsecured debt: $872 million —Recovery expectations: 30%-50%; rounded estimate: 45% Note: All debt amounts include six months of prepetition interest. ADETONA LLC: Unsecureds to Get Paid Via Step-Up Monthly Payments ---------------------------------------------------------------- Adetona, LLC, filed with the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, a Disclosure Statement, and Plan of Reorganization dated Jan. 28, 2021. After the filing of the voluntary petition, the Debtor has continued to operate its business. The Debtor has continued to pay all obligations on postpetition debts while under protection of the Bankruptcy Code and has paid all normal operating business expenses. The Debtor has continued to remain current on its postpetition tax liability and make agreed-upon cash collateral payments. The Debtor is currently leasing the real property to Practical Approach Pediatric Dentistry, LLC, Practical Approach Pediatric Urgent Care, PLLC, and Practical Approach Pediatrics, PLLC. These leases will be assumed in the Plan. Each one of those entities is currently paying the Debtor $5,000 per month each for a total of $15,000 in rental income for the Debtor. Additionally, each one of those entities collectively owes the Debtor the sum of $135,000 for rent that was not paid prepetition. That amount totals $135,000 collectively. Those three entities collectively shall pay the sum of $2,250 each month for 60 months commencing thirty days from the effective date of the Plan. The Debtor will be revested with the property of the estate after the Plan is confirmed and the revested Debtor will continue to operate the business of Debtor. The revested Debtor will not be entitled to any distributions, other than ordinary salaries and wages to employees and business expenses, under the Plan until such time as the allowed claims of the creditors in Classes 1 through 4 have been paid. The Debtor anticipates that the business will be operated profitably and that it will be able to pay the allowed claims of the creditors in Classes as scheduled. Class 8 consists of the unsecured claim of Wells Fargo Bank in the amount of $189,139. To the extent that its claim is allowed, Class 8 will receive a monthly payment of $500 to begin 30 days from the effective date of the Plan and continued until such claim is fully paid. The monthly payment to unsecured creditors will increase by amounts equal to the monthly Class 7 and Class 8 payments once they are paid to the extent needed. Equity holder Adetona, LLC, is unimpaired and will retain its interests. The distributions and payments provided for in the Plan will be funded by the revested Debtor's future business operations and sale of assets, if necessary. A full-text copy of the Disclosure Statement dated Jan. 28, 2021, is available at https://bit.ly/3pRpsbM from PacerMonitor.com at no charge. The Debtor is represented by: James S. Wilkins, Esq. James S. Wilkins, P.C. 1100 NW Loop 410, Suite 700 San Antonio, TX 78205-1711 Telephone: (210) 271-9212 Facsimile: (210) 271-9389 E-mail: jwilkins@stic.net About Adetona LLC Adetona, LLC, filed as a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). Based in San Antonio, Texas, Adetona filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-51825) on Oct. 30, 2020. Olutola Adetona, managing member, signed the petition. At the time of filing, the Debtor estimated $1 million to $10 million in both assets and liabilities. Judge Craig A. Gargotta oversees the case. James S. Wilkins, P.C., serves as the Debtor's legal counsel. ADMI CORP: Moody's Completes Review, Retains B2 CFR --------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of ADMI Corp. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations ADMI Corp's (dba Aspen Dental) B2 CFR reflects its high pro forma financial leverage and integration risk following the acquisition of CC Dental Implants Holding, LLC ("ClearChoice"). The rating is further constrained by the company's aggressive growth strategy and a high proportion of self-pay revenues and third party financing in supported clinical practices. The B2 rating is supported by its strong market position as one of the largest dental service organizations in the US, good geographic diversity, and favorable industry dynamics with a growing market of edentulous patients. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. ADTALEM GLOBAL: Moody's Rates First Lien Credit Facilities 'B1' --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Adtalem Global Education Inc.'s new first lien credit facilities, which comprises of a $1 billion term loan facility and a $400 million revolving credit facility. The company's Ba3 Corporate Family Rating, B1-PD probability of default rating, and existing Ba3 senior secured ratings remain on review for downgrade. Moody's also expects Adtalem to issue an additional $650 million of secured debt in the near term. Net proceeds from the combined debt issuances along with cash balances will be used to fund the acquisition of Walden University (Walden) from Laureate Education (Laureate) previously announced on September 11, 2020 and pay down the existing term loan facility. The rating of the new credit facility reflects Moody's expectation that a downgrade of Adtalem's CFR is likely and limited to one notch. The assigned rating is subject to review of final documentation and no material change in the size, terms and conditions of the transaction as advised to Moody's. Moody's expects to conclude the review at or near the timing of the acquisition close, which the company expects to occur in the July-September 2021 quarter (Adtalem's first quarter of fiscal 2022), subject to approvals from the Department of Education (DOE), regulatory authorities and other closing conditions. Assignments: Issuer: Adtalem Global Education Inc. Senior Secured 1st Lien Revolving Credit Facility Assigned B1 (LGD3) Senior Secured 1st Lien Term Loan B, Assigned B1 (LGD3) RATINGS RATIONALE Based upon the current proposed transaction structure, the B1 rating of the new first lien credit facilities reflects Moody's expectation that a downgrade of Adtalem's CFR is likely and limited to one notch when the Walden transaction closes. The new first lien credit facilities will have a first lien priority on substantially all assets of the combined company. The review initiated on September 14, 2020 was triggered by Adtalem's agreement to purchase Baltimore, MD-based Walden University, a leading online healthcare education provider offering bachelor's, master's and doctoral degrees to more than 56,000 students across all 50 states and over 120 countries. Walden is a leading nursing school in the US and specializes in graduate degree programs. Though healthcare and behavioral sciences account for the bulk of its approximate $600 million in annual revenue, Walden also offers programs in management, technology and education. Adtalem's ratings that remain under review consider the increased uncertainty if, and when, the acquisition closes with the pending U.S. Department of Justice's (DOJ) investigation. On September 16, 2020, Laureate advised Adtalem that Walden received a letter from the DOJ indicating that the DOJ and several other government agencies are conducting an investigation into allegations that Walden's online nursing program was misleading students about the program's cost, its content, and the availability of clinical placements that students would need to graduate. If the Walden acquisition is not consummated, Moody's would withdraw the ratings of the new financing and likely confirm Adtalem's existing ratings. Moody's review focuses on the: (i) pro forma financial leverage and future cash flow generating capacity of the combined company, as well as the financial and capital allocation policies and medium-term financial targets; (ii) complementary nature of the Walden asset with Adtalem's medical and healthcare education business and how Walden will position Adtalem to capture the expected growth in nursing education and online learning markets; (iii) business profile of the combined company in terms of operational diversity, degree mix, program mix and geographic reach; (iv) integration and execution risks associated with the acquisition; (v) regulatory risks, including the increased dependence on Title IV funding and expected deterioration of Adtalem's financial responsibility score as a result of the acquisition; (vi) timing for realization of potential cost synergies arising from the Walden integration as well as revenue synergies between the two companies and plans to improve operating margins in the financial services segment; and (vii) combined entity's liquidity with respect to free cash flow generation given the higher interest expense burden from the increased debt load and potential uses of free cash flow for the resumption of share repurchases. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Given Adtalem's exposure to the US and overseas economies as well as consumer spending, the company remains vulnerable to restrictions imposed on its operations and shifts in market demand and consumer sentiment in these unprecedented operating conditions. Somewhat offsetting these social risks are the social benefits associated with Walden's education services primarily being offered online, enabling new and current students to continue their education despite the coronavirus outbreak. Also, the coronavirus outbreak has cast a spotlight on nursing, driving increased interest in an industry that has an ongoing supply-demand imbalance for nursing professionals. Adtalem is subject to governance risk given its more shareholder friendly financial strategy and increased leverage levels associated with the proposed Walden acquisition. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the review for downgrade, an upgrade is highly unlikely over the near term. Prior to the review for downgrade, the factors that could lead to a downgrade included: (i) higher financial leverage sustained above 2.75x (Moody's adjusted); (ii) substantial challenges of any potential acquired asset integration; (iii) sustained enrollment declines or operating profit deterioration in the medical and healthcare segment (Adtalem's largest segment); or (iv) unanticipated regulatory challenges that could result in sizeable litigation expenses, ineligibility for Title IV funding or removal of accreditation. Ratings could also be downgraded if there is meaningful deterioration in liquidity. Headquartered in Chicago, Illinois, Adtalem Global Education Inc. is a global provider of educational services with a focus on Medical and Healthcare and Financial Services. The company operates seven educational institutions across the US and Caribbean. Revenue totaled over $1 billion for the last twelve months ended December 31, 2020. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. ADTALEM'S GLOBAL: S&P Assigns 'BB-' Rating on New Sr. Secured Debt ------------------------------------------------------------------ S&P Global Ratings assigned its 'BB-' issue-level rating and '3' recovery rating to U.S.-based for-profit education provider Adtalem's Global Education Inc.'s proposed $1.4 billion senior secured debt. The facilities consist of a $400 million revolving credit facility due 2026 and $1 billion term loan due 2028. The '3' recovery rating indicates its expectation for meaningful (50%-70%; rounded estimate: 50%) recovery of principal in the event of a payment default. S&P said, "We expect to lower our issuer credit rating on Adtalem's by one notch to 'BB-' when the transaction closes. Pro forma for the acquisition, S&P Global Ratings-adjusted leverage will increase to about 4.0x from approximately 2.1x as of Dec. 30, 2020. We will withdraw the ratings on the existing debt facilities once the refinancing is complete and the debt is repaid." Adtalem plans to use the net proceeds, along with $650 million of other secured debt and cash on hand, to fund the acquisition of Walden University, refinance the existing debt, and pay transaction-related fees. The company's new revolving credit facility will be undrawn. The company announced in September 2020 that it planned to acquire Walden University for $1.48 billion. The acquisition is subject to regulatory approval and is expected to close in the second half of 2021. Issue Ratings - Recovery Analysis Key analytical factors -- S&P's simulated default scenario contemplates a default in 2025 stemming from a decline in enrollment due to increased competition, operating challenges, and reduced availability of Title IV funding. -- S&P expects the company would reorganize in the event of a default or insolvency proceeding given the brand value of its individual educational institutions and universities. However, it believes it is likely that some of its schools could lose significant value in a default scenario, similar to what the company experienced with DeVry University. -- While the company has a material presence outside the U.S., in a default scenario we envision that lenders would aim to maximize recoveries and pursue a default in the U.S. due to the company's significant concentration there, including the location of its headquarters and its debt and equity financing. -- The proposed senior secured credit facilities are guaranteed by each existing and future material domestic subsidiary of the company and benefit from a first priority perfected lien on all assets of the guarantors, excluding certain assets such as owned real estate. -- S&P has valued the company as a going concern, with a 5.5x multiple of emergence EBITDA. -- S&P assumes the company's proposed $400 million revolving credit facility is approximately 85% drawn at default, excluding any outstanding letters of credit. Simulated default assumptions -- Simulated year of default: 2025 -- EBITDA at emergence: about $200 million -- EBITDA multiple: 5.5x -- Obligor/non-obligor valuation split: 100/0 Simplified waterfall -- Net enterprise value (after 5% administrative costs): about $1.05 billion -- Estimated senior secured debt claims: $2 billion -- Value available for senior secured debt claims: $1.05 billion million --Recovery expectations: 50%-70% (rounded estimate: 50%) Note: All debt amounts include six months of prepetition interest. ADVAXIS INC: Inks Consulting Agreement with GoalAssist ------------------------------------------------------ Advaxis, Inc. entered into a consulting agreement with GoalAssist Corporation. The sole person responsible for Consultant's performance under the Agreement is Jerald Hammann. Pursuant to the Agreement, Consultant will serve as an independent contractor and will perform reasonable consulting services regarding the Company's business strategy, plans, goals and objectives, as requested by the Company's Board of Directors, for a term beginning on Feb. 1, 2021 and ending on the close of business on Jan. 31, 2022. Additionally, as requested by the Company during the Term, the Consultant may assist in facilitating the recruitment of research sites for the Company, accelerating enrollment of study participants in the Company's clinical trials and identifying opportunities for cost savings. For consulting services rendered under the Agreement, Consultant will be entitled to receive a retainer amount of $150,000, payable in four equal installments over the Term. Consultant will be entitled to receive additional fees upon the successful initiation of a new clinical trial site, acceleration of certain clinical trial activities or the identification and implementation of cost savings, in each case, which are the direct result of the Consultant's efforts. Under the terms of the Agreement, the Consultant has agreed to customary confidentiality provisions, as well as restrictions on his activities with respect to the Company, including restrictions on his ability to submit any director nominations or stockholder proposals to the Company, or otherwise attempt in any way to influence the Company, through Dec. 31, 2021. About Advaxis Inc. Advaxis, Inc. -- http://www.advaxis.com-- is a clinical-stage biotechnology company focused on the development and commercialization of proprietary Lm-based antigen delivery products. These immunotherapies are based on a platform technology that utilizes live attenuated Listeria monocytogenes (Lm) bioengineered to secrete antigen/adjuvant fusion proteins. TheseLm-based strains are believed to be a significant advancement in immunotherapy as they integrate multiple functions into a single immunotherapy and are designed to access and direct antigen presenting cells to stimulate anti-tumor T cell immunity, activate the immune system with the equivalent of multiple adjuvants, and simultaneously reduce tumor protection in the tumor microenvironment to enable T cells to eliminate tumors. Advaxis reported a net loss of $26.47 million for the year ended Oct. 31, 2020, compared to a net loss of $16.61 million for the year ended Oct. 31, 2019. As of Oct. 31, 2020, the Company had $38.53 million in total assets, $8.35 million in total liabilities, and $30.18 million in total stockholders' equity. AG PARENT: Moody's Completes Review, Retains B3 CFR --------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of AG Parent Holdings, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations ArisGlobal's B3 corporate family rating reflects the company's very small scale, customer concentration risk and high leverage following the company's LBO by Nordic Capital in mid 2019. The company's private equity ownership also introduces risk that leverage will remain elevated due to debt financed dividend and acquisitions. ArisGlobal benefits from its strong competitive position in the pharmacovigilance market, expectations for continued growth in the global pharmaceutical industry and complexity of evolving regulatory standards regarding the compliance of pharmaceutical information. Additionally, the credit profile benefits from the company's subscription based business model which allow for high EBITDA margins and strong free cash flow generation. The principal methodology used for this review was Software Industry published in August 2018. ALDEVRON LLC: Moody's Completes Review, Retains B2 CFR ------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Aldevron, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Aldevron's B2 CFR reflects its high financial leverage, modest scale and narrow business focus in the niche plasmid DNA market. Further, the rating is constrained by our expectation for modest free cash flow after expansion capex and distributions to fund tax payments. The rating is supported by strong growth prospects, good revenue visibility over the next 12-18 months and high profitability reflecting technological expertise and high barriers to entry. The principal methodology used for this review was Manufacturing Methodology published in March 2020. AMERICAN ACHIEVEMENT: Involuntary Chapter 11 Petition Dismissed --------------------------------------------------------------- American Achievement Corporation, the digital retailer and premier provider of school recognition products, announced Feb. 4, 2021, that the involuntary Chapter 11 petition filed by four of the Company's junior lenders against the Company and certain of its subsidiaries, on January 14, 2021, will be dismissed. "We look forward to getting back to the business of running our business and helping our schools celebrate the most meaningful moments in their students' lives, this year more than ever," said Bob Myers, American Achievement Corporation's Chief Executive Officer. "While COVID has adversely affected the commencement, graduation, and yearbook business, AAC continued to be profitable and has successfully pivoted and adjusted to operating in the pandemic. We appreciate the parties working together to find a solution that is beneficial to the business and all of its constituents." AAC will continue to operate in the normal course of business just as before. The Company is thrilled that the lenders were able to resolve their differences. About American Achievement Corp. American Achievement Corporation is the world's largest Collegiate and High School commencement services company leading the industry in digital product innovation by helping students and their families celebrate life's most important achievements with a suite of digital commencement services & innovations. The School's personalized, customized products and services are available through digital technology, personal in-school deliveries and customized school assortments on Balfour.com, the destination for Graduation products. Junior bondholders filed involuntary Chapter 11 petitions for American Achievement Corporation and 14 affiliates (Bankr. N.D. Tex. Lead Case No. 21-30058) on Jan. 14, 2021. Alleged creditors who signed the involuntary petitions are Prudential Capital Partners IV, L.P., Prudential Capital Partners Management Fund IV, L.P., Prudential Capital Partners (Parallel Fund) IV, L.P., and Falcon Strategic Partners IV, LP., who assert at least $120 million in claims on account of 8.00% Senior Subordinated Notes issued by the Debtors. GRAY REED & MCGRAW LLP, led by Jason S. Brookner, is representing the Junior Bondholders. AMERICAN GREETINGS: S&P Alters Outlook to Stable, Affirms 'B' ICR ----------------------------------------------------------------- S&P Global Ratings revised its outlook on U.S. greeting cards maker American Greetings Corp. (AG) to stable from negative and affirmed the 'B' issuer credit rating on the company. At the same time, S&P affirmed the 'B+' issue-level rating on the company's $250 million senior secured revolving credit facility due April 2023 and $470 million senior secured term loan due April 2024. The '2' recovery rating is unchanged and indicated its expectation for substantial (70%-90%; rounded recovery: 80%) recovery. S&P said, "We are also affirming the 'CCC+' issue-level rating on the company's $282.5 million 8.75% senior unsecured notes due April 2025. The '6' recovery rating reflects our expectation for negligible (0%-10%; rounded estimate: 5%) recovery in the event of payment default. "The stable outlook reflects our expectation for growth in EBITDA from its cost-reduction initiative over the next 12 months, which should result in leverage improving to near 5x. "The stable outlook reflects the upward revision of our base case forecast after the company performed better than we previously expected during the pandemic. AG has demonstrated improving revenue and profit trends during the third quarter of fiscal 2021 (ended November 2020), which we expect will continue over the next year, amid the ongoing COVID-19 pandemic. Leverage declined to 5.3x for the 12 months ended Nov. 30, down from about 5.9x at the end of the second quarter. Sales declined by about 4% during the third quarter, excluding the impact from previously lost customers and retail bankruptcies, as volumes suffered from continued lower traffic at retail stores due to the COVID-19 pandemic. This was partially offset by strong growth in the company's digital segment, AG Interactive, supported by continued increases in customer subscriptions and higher volumes of downloads by existing customers. Moreover, the company's efforts to pivot toward a more holistic merchandising approach by expanding its product offerings while maintaining a focus on streamlining of operations and cost-reduction initiatives allowed it to expand profitability significantly. AG's profitability in the first nine months of fiscal 2021 has also benefited from temporary COVID-19 financial support from various governmental agencies in the form of wage subsidies. "We revised our base case forecast to reflect modest mid-single-digit sales declines offset by profitability improvements in the fourth quarter of fiscal 2021 (which is the highest contributing quarter and generates about 35% of EBITDA historically). We forecast mid-single-digit percentage EBITDA growth in 2021 mainly driven by a rebound in volumes at retail stores and continued benefits from the company's ongoing cost-efficiency programs. As a result, we expect leverage to further improve to about 5x over the next 12 months. We previously believed that lower demand due to pandemic restrictions would pressure profitability and could lead to leverage approaching our 7x downgrade threshold. S&P adjusted leverage is about 1x higher due to our inclusion of about $200 million of preferred stock, which we view as a debt-like obligation. "We believe the benefits from AG's initiatives aimed at revenue enhancement, efficiency improvements, and cost cutting will enable EBITDA margins to be sustained close to 20%. AG has broadened its product assortment to include curated product solutions such as gift packaging, party goods, giftware, and boxed cards across key everyday occasions like birthdays and weddings. The new product assortment creates a comprehensive gift-giving offering that increases sales per customer transaction. The company has also simplified its go-to-market strategy and streamlined its manufacturing network, thereby achieving better operating efficiency. In addition, the company has realized a significant reduction in its cost of raw materials by using alternative materials for its cards and in-store display fixtures while maintaining the quality of its products. We believe the actions taken by the AG management team have enhanced the company's profitability profile and that the majority of the costs taken out are permanent in nature, thereby supporting our view that AG can sustain stronger EBITDA margins over the next 12-24 months. "We expect financial policy to result in long-run leverage maintained above 5x. We forecast adjusted leverage to be near 5x over the next 12 months as the company continues to achieve its cost-savings targets and increase EBITDA. The company has made debt payments of about $30 million over the past 12 months above the mandatory amortization of $5 million. While our forecast leverage measures include only mandatory debt amortization, we believe the company could continue to deploy its cash toward further debt repayment, which is supported by our expectation of $50 million of annual discretionary cash flow generation. "We forecast adjusted leverage to decline below 5x as the company continues to achieve its targeted cost savings over the next 12-24 months. While our forecast leverage measures include only mandatory debt amortization of about $5 million, should the company continue to pay down additional debt of about $30 million annually, given projected discretionary cash flow after shareholder remuneration and mandatory debt amortization, we expect leverage will improve by about 0.1x-0.2x over the next 12 months. However, we believe AG will maintain adjusted leverage of 5x-6x longer term due to the company's majority ownership by financial sponsor Clayton, Dubilier & Rice (CD&R). Our measure of leverage includes approximately $204 million of preferred stock, which we view as a debt-like obligation due to its fixed dividend. "While we continue to expect modest sales volume declines driven by changing customer preferences, unforeseen customer losses could pressure the company's credit quality. Our view that the greeting card industry is mature and well-penetrated is unchanged. We believe that the industry will continue to face a secular decline due to a shift toward social media and other digital forms of expression. As a result, AG's ability to sustainably increase profitability and generate steady FOCF, fueled by the company's new initiatives and investments in its digital capabilities will be key factors in offsetting any unforeseen headwinds and greater-than-anticipated secular pressures in the underlying industry." A slower-than-anticipated deployment of the vaccine could reduce the pace of economic recovery in the company's key markets such as the U.S. or the U.K. Therefore, a prolonged economic downturn could lead to a potential bankruptcy of one or more of its retail customers. Although S&P believes the event risk associated with customer losses such as those suffered in 2019 is low, the company could face higher-than-expected sales volumes declines if one or more of its key customers did not renew their contracts with AG. The stable outlook reflects S&P's belief that the company will continue increasing EBITDA by reducing costs such that adjusted leverage improves to about 5x while generating positive discretionary cash flow of about $50 million annually. S&P could lower the ratings if leverage were sustained above 7x. S&P believes this could occur if: -- The company adopted a more aggressive financial policy by funding large, debt-financed acquisitions or dividends; -- A slower-than-anticipated recovery continued to pressure the company's retail customers, resulting in significant volume declines in the brick and mortar channel of the company's portfolio, and the company's cost-management efforts were not sufficient to avoid a substantial erosion of EBITDA; or -- Discretionary cash flow generation declined significantly due to higher-than-anticipated capital expenditures (capex) or the above factors. Although unlikely given CD&R's financial-sponsor ownership, we could raise our ratings if: -- There were a commitment and track record from the sponsor to maintain leverage below 5x, and S&P continued to believe that the company would deleverage and sustain leverage below 5x as a result of organic growth and utilization of cash flows for debt repayment. AMERICAN WOODMARK: S&P Affirms 'BB' ICR on Sustained Demand ----------------------------------------------------------- S&P Global Ratings revised its outlook on U.S.-based kitchen and bath cabinetmaker American Woodmark Corp. (AMWD)to stable from negative, indicating its belief that steady demand will allow the company to sustain these improved credit measures. At the same time, S&P affirmed the 'BB' issuer credit rating and its 'BB' rating on the company's $350 million senior unsecured notes. S&P said, "Steady end-market demand is improving the company's revenues, and we expect modest growth for the next few quarters. We expect 1%-2% revenue growth in fiscals 2021 and 2022. The residential repair and remodel (R&R) market is largely supporting these results, as it has remained solid since its quick rebound in June 2020. Specifically, the company's in-stock sales via home centers benefited from increased do it yourself (DIY) R&R activities during the initial months of the stay-at-home orders. "We believe some of this elevated R&R demand may be a pull forward from future years. However, looking into 2021 we believe expected high value renovation projects may have been deferred or delayed at the onset of the pandemic and are now being undertaken as consumer confidence improves. The company's special-order business recovered only through late 2020. We expect value-based R&R projects to moderate but be somewhat offset by increased demand for the premium-priced products. "Furthermore, demand in AMWD's homebuilders' channel remains steady, as homebuilders continue to complete in-progress projects launched in the first few months of 2020. We expect the order backlog to remain strong due to solid new residential construction demand, as we project that residential construction will grow by 5.5% in 2021 versus 3.9% in 2020. We also believe the company's organic revenue growth is supported by low mortgage rates, rising demand for suburban homes, higher home equity values, and the diversion of consumer spending toward home improvements. "While we expect margins to deteriorate by 50 basis points (bps)-100 bps over the next 12 months, earnings should remain strong. The company is experiencing some margin compression through the first half of this fiscal year, driven by supply-chain disruptions, including the shutdown of its facilities in Mexico. Adjusted EBITDA margins through the 12 months ended October 2020 were 15% compared to just over 16% in the prior year. Further, rising input costs--particularly for lumber, particle board, and steel--are pressuring margins, and we believe these increases will persist over the next few quarters. Like other players in the sector, the company also continues to face higher labor and freight costs. We believe the company's ability to pass-through these rising costs will be key to its performance over the next 12-24 months. Nonetheless, for fiscal 2021, we expect the company to generate adjusted EBITDA of $230 million-$250 million and adjusted EBITDA margins of 14%-15%. "We expect adjusted leverage of 2x-3x, bolstered by strong free cash flow and a credit-supportive financial policy. The company's free cash flow generation and balance sheet are strong. When combined with voluntary debt repayments, this is resulting in lower net debt and improved debt to EBITDA of 2.4x for the 12 months ended October 2020 compared with 2.7x in the prior year. We expect the company to continue generating healthy free cash flow of about $130 million-$150 million while maintaining its supportive financial policy. Therefore, we expect the improvement in credit measures to be sustained over the next 12-24 months. "The stable outlook reflects our view that AMWD's steady earnings and cash flows on the back on sustained end-market demand will result in adjusted leverage of 2x-3x and FFO to debt of 30%-45% over the next 12-24 months." S&P could lower the ratings over the next 12 months if: -- A severe downturn resulted in a decline in discretionary spending that drastically reduced demand for the company's products or rapidly rising costs depleted margins more than expected. Either of these scenarios could result in debt leverage of above 4x and FFO to debt under 30% on a sustained basis. -- The company adopts an aggressive financial policy, such as pursuing debt-financed acquisitions, resulting in debt to EBITDA above 4x on a sustained basis. S&P said, "We view an upgrade as unlikely in the next 12 months. However, we could raise the rating if the company's EBITDA growth outperforms our base-case expectations such that debt to EBITDA remains notably under 2x and can be sustained at this level in most market conditions." ANTHONY SCOTT LEVANDOWSKI: Levandowski to Submit Proposed Order --------------------------------------------------------------- Judge Dennis Montali of the United States Bankruptcy Court for the Northern District of California directed counsel for Anthony Scott Levandowski to prepare a form of written order memorializing the Court's January 21, 2021 oral ruling, as well as the Court's Memorandum Decision. Mr. Levandowski's counsel was also directed to submit the proposed order to counsel for Uber Technologies, Inc. for approval as to form, and to upload it when approved. Judge Montali said that if Uber's counsel is unwilling or unable to agree to the form of order, she should upload an alternative form, marked in redline against Mr. Levandowski's proposed form, without argument. The Memorandum Decision contained, among others, the following court rulings: 1) Uber should produce the documents it committed to produce during the January 21, 2021, hearing no later than January 29, 2021, unless Mr. Levandowski agrees to a later date. 2) Uber should ensure that documents in Morrison & Foerster's possession, and referred to during the January 21 hearing, are produced no later than February 5, 2021, unless Mr. Levandowski agrees to a later date. 3) The court will take no position on the so-called "Topic 8" debate because it appears to be much more complicated than can be summarized in two short letter briefs and does not appear to have been separately identified to in the prior letter briefing. Uber's proposal to produce two witnesses who have testified about those topics appears reasonable and, given the state of the record and this court's limited familiarity with the case, does not justify any further relief to Mr. Levandowski on this subject at present. 4) The court will defer Mr. Levandowski's request to recall witnesses and instead will rely on Uber's counsel's representation that she will meet and confer with Mr. Levandowski's counsel if there is a good faith basis for further questioning of Mr. Poetzscher. The case is In re ANTHONY SCOTT LEVANDOWSKI, Chapter 11, Debtor. ANTHONY SCOTT LEVANDOWSKI, Plaintiff, v. UBER TECHNOLOGIES, INC., Defendant, No. 20-30242-HLB, Adversary Case No. 20-03050-HLB (Bankr. N.D. Cal.). A full-text copy of the Memorandum Decision, dated January 28, 2021, is available at https://tinyurl.com/42yyop9l from Leagle.com. About Anthony Scott Levandowski Anthony Scott Levandowski filed for bankruptcy under Chapter 11 on March 4, 2020 (Bankr. N.D. Cal. Case No. 20-30242). Mr. Levandowski is represented by Tobias Keller, Esq. APPLOVIN CORP: S&P Alters Outlook to Negative, Affirms 'B+' ICR --------------------------------------------------------------- S&P Global Ratings revised its rating outlook on AppLovin Corp., a developer of mobile games and provider of performance-based targeted marketing for mobile app developers, to negative from stable and affirmed its 'B+' issuer credit rating on the company. S&P is also affirming its 'B+' issue-level rating on the upsized first-lien credit facility. The recovery rating is '3'. S&P said, "The negative outlook reflects our view that leverage reduction will be predicated on substantial revenue growth over the next year and the company's aggressive acquisition policies. We expect AppLovin to achieve full growth and EBITDA expansion in 2021 that should support deleveraging, though the outlook also reflects the risk for further leveraging debt-financed transactions." AppLovin's leverage is high compared to similarly rated peers, and further debt-funded acquisitions could delay debt reduction plans. Given that AppLovin's acquisition spending exceeds its annual free cash flow generation, S&P believes the company could continue relying on the debt markets to fund its larger acquisitions, thus limiting long-term improvement of credit metrics. While the company has grown considerably since its initial debt raise in 2018, add-on debt deals have resulted in little reduction of its debt to EBITDA ratio. AppLovin has prioritized cash generation toward increased user acquisition investments and acquisitions rather than debt reduction. S&P Global Ratings-adjusted leverage has remained at the upper end of the range that S&P expects for the 'B+' rating, consistently in the high-4x to low-5x area. The transaction will raise leverage to 6x (inclusive of our treatment of earnouts as debt). Many acquisition targets come with negative to little EBITDA generation but with high revenue multiple valuations, which could translate to even more debt-financed transactions for AppLovin in the future. Acquisition spend increased 64% year over year in 2020, to $665 million (third quarter year to date acquisitions per financials plus value of acquisitions made in the fourth quarter), and the company is on pace to increase spend this year as well. If growth rates do not accelerate in 2021 from good levels in 2020, leverage could remain elevated. AppLovin needs to grow faster than the market to support significant deleveraging in 2021. The market is already growing faster than many other subsegments within technology. Sensor Tower, an app analytics firm, estimated that consumer spending on mobile games increased 26% in 2020, to $78 billion globally. It also estimated that mobile game downloads increased 33% in 2020, to 56 billion downloads. S&P estimates that AppLovin will need to grow revenue at least 50% in 2021 to reduce leverage to under 5x. This could happen if the company speeds its new mobile game introductions, more titles hit the top charts, and more clients sign up for AppLovin's new Max ad recommendation engine. AppLovin benefits by being both a gaming content owner and a marketing platform. It leverages its first-party content into its proprietary recommendation engines (such as Max) to achieve wide distribution of its apps among smartphone users--many of whom will then be served relevant ads that AppLovin can monetize. AppLovin's business risk remains elevated as rules and regulations evolve in the industry. Because the mobile gaming app industry is fragmented and many small players do not have large budgets to advertise on traditional media channels, developers rely on different ad exchanges to effectively market their games. Some of these apps and exchanges rely on personally identifiable information to select which ads they should show to specific users. In spring 2021, Apple is expected to change its policy related to identifier for advertisers (IDFA) to increase user privacy for all apps downloaded from the Apple App Store. While this policy update allows users to opt-in or opt-out of in-app tracking, S&P expects tracking user behaviors and collecting personalized data across apps will be difficult and could render some performance-based advertising less effective. By launching new mobile games and adapting its machine learning platform, AppLovin's management believes it can grow the company meaningfully despite user data privacy changes. Because it already has a large reach among mobile phones through existing apps, AppLovin can use its already installed software development kits to get required data to facilitate effective ads within its own portfolio of games. However, the ripple effects from the IDFA change are uncertain, and the pace of new gaming app introductions could slow as developers find it harder to effectively market their games, and this could result in a diminished demand for mobile games. S&P said, "The negative outlook reflects our view that leverage of about 6x pro forma for deal close is elevated for the 'B+' rating. If AppLovin does not achieve growth well above market rates in 2021 or incurs more debt-funded acquisitions, leverage may remain elevated. We expect at least steady profitability trends and free operating cash flow (FOCF) of $250 million-$350 million in 2021. "We could revise our outlook to stable if leverage improves or is on the path to declining below 5x. This would likely result from continued very high revenue growth rates and stable to rising profitability. "We could lower our rating on AppLovin over the next 12 months if leverage remains above 5x or if further debt-financed acquisitions slow the pace of debt reduction. In addition, new regulation by governments or big-tech firms that threaten AppLovin's business model--resulting in underperformance--could also result in a downgrade." ASAIG LLC: Files Notice of Approved Bidding Procedures for Assets ----------------------------------------------------------------- ASAIG, LLC and affiliates filed with the U.S. Bankruptcy Court for the Southern District of Texas a notice of their approved bidding procedures, Sale Notice, and Cure Notice in connection with the auction sale of substantially all assets. On Jan. 26, 2021, the Court entered its Bidding Procedures Order, which approved the Sale Notice and Cure Notice, and the Bidding Procedures. The Bidding Procedures Order specifically provides that: "prior to service, the Debtors may make final, non-substantive edits to the Bidding Procedures, Sale Notice, and Cure Notice consisting solely of correcting typographical and grammatical errors, making stylistic and formatting improvements, adding relevant dates and deadlines, and adding revisions announce on the record at the Bidding Procedures Hearing, each of which will be deemed approved by the Bidding Procedures Order without further notice or hearing." The Debtors have made final, non-substantive edits to the Bidding Procedures, Sale Notice, and Cure Notice, which will be served on parties in interest in accordance with the Bidding Procedures Order. The Debtors filed the following: 1. The approved Bidding Procedures, complete with all relevant dates and deadlines, and all changes incorporated at the Bidding Procedures Hearing (Exhibit A); 2. The approved Sale Notice, complete with all relevant dates and deadlines (Exhibit B); and 3. The approved Cure Notice, complete with all relevant dates and deadlines (Exhibit C). A copy of the Exhibits A to C is available at https://tinyurl.com/etpv3eum from PacerMonitor.com free of charge. About ASAIG LLC ASAIG, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 20-35600) on Nov. 17, 2020. The petition was signed by A. Kelly Williams, manager. At the time of the filing, the Debtor had estimated assets of between $1 million and $10 million and liabilities of between $10 million and $50 million. Judge Marvin Isgur oversees the case. Matthew Okin, Esq., at Okin Adams LLP, represents the Debtor as counsel. ASCENA RETAIL: Simon Property Blasts Stores Closures in Plan ------------------------------------------------------------ Daniel Gill of Bloomberg Law reports that Simon Property Group Inc., one of the largest U.S. mall operators, is opposing Ascena Retail Group Inc.'s Chapter 11 reorganization plan, arguing that a buyer of Ann Taylor and other Ascena brands hasn't fully assured the landlord that it will pay rent. Bankruptcy law entitles shopping center operators to demand a heightened showing from a buyer of bankrupt businesses that it will continue to pay real estate leases assumed in the transaction, Simon said in a court filing with the U.S Bankruptcy Court for the Eastern District of Virginia Wednesday, February 3, 2021. On Dec. 30, 2020, the Debtors filed the Plan. The Plan, as amended, includes modifications to reflect the consummation of the Sale, provided that the Sale closes on or before the Effective Date. Article V.B. of the Plan provides that if the Sale is consummated before the Effective Date, all executory contracts and unexpired leases not previously assumed, assumed and assigned, or rejected are deemed rejected unless they are the subject of a pending assumption motion. The hearing regarding confirmation of the Plan is scheduled for Feb. 25, 2021, at 1:00 p.m. (New York time). On Jan. 25, 2021, the Debtors filed a Notice of Filing of Additional Store Closing List, which was subsequently amended (the "Store Closing Notice"), pursuant to the Store Closing Order, which provided for the closure of 160 of the stores subject to the Leases with the Simon Landlords (the "Noticed Leases"). On Feb. 3, 2021, the Debtors filed a Notice of Rejection of Certain Executory Contracts and/or Unexpired Leases (the "Rejection Notice"), which proposed the rejection of 10 of the Noticed Leases. The Store Closing Notice was a significant departure from the Master Agreement negotiated less than three months prior, which promised to retain all of the 226 stores, and close none. Although the Store Closing Notice is silent as to the ultimate treatment of the remaining 66 store Leases (the "Remaining Leases"), nearly half of them have either already expired (and are thus not capable of assumption or assumption and assignment) or will expire within the next twelve months. With no assurance they will be renewed, additional store closures are likely. "[T]he Purchaser has laid bare its intention to significantly reduce the business' physical store presence in the near term. The result will be a significantly less creditworthy lessee than the entity with which the Simon Landlords originally contracted. The Purchaser's significantly reduced store footprint and mix of remaining stores not only will diminish the profitability of its brick-and-mortar business, but also will hurt its e-commerce business, as a strong physical presence drives e-commerce sales and profitability as well. The Simon Landlords' concern is supported by a depth of experience as the largest shopping center operator in the United States, as well as its own experience owning and operating retailers across the United States, including iconic retailers like J.C. Penney, Brooks Brothers, Lucky Brand, Forever 21, and Aeropostale," Simon Property Group said in court filings. About Ascena Retail Group 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 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. ASHTON WOODS: Moody's Raises CFR to B2, Outlook Stable ------------------------------------------------------ Moody's Investors Service upgraded the senior unsecured notes of Ashton Woods USA, LLC to B2 from Caa1, the Corporate Family Rating to B2 from B3 and the Probability of Default Rating to B2-PD from B3-PD. The outlook remains stable. The upgrade of the senior unsecured notes follows the refinancing of Ashton Woods' $350 million secured line of credit with a new $250 million unsecured revolver (unrated). In doing so, the company has shifted to a largely unsecured debt strategy and reduced the expected losses on the unsecured notes in a default scenario. The upgrade of the CFR considers Moody's expectation that leverage will decline to 53.3% by fiscal 2022 (ending May 31, 2022) from 60.1% at the end of Q2 2020 (ended November 30, 2020), and that interest coverage will increase to 3.5x from 2.8x over the same time period. Ashton Woods has a meaningful backlog of sold homes of almost 3,000 units and Moody's forecasts total annual sales of over 6,500 units for fiscal 2022, which will result in deleveraging through earnings growth. Upgrades: Issuer: Ashton Woods USA, LLC Corporate Family Rating, Upgraded to B2 from B3 Probability of Default Rating, Upgraded to B2-PD from B3-PD Senior Unsecured Notes, Upgraded to B2 (LGD4) from Caa1 (LGD4) Outlook Actions: Issuer: Ashton Woods USA, LLC Outlook, Remains Stable RATINGS RATIONALE The B2 CFR reflects the company's conservative land strategy, which consists of a high optioned component that reduces land impairment risk, as well as a highly developed inventory position. The rating is further supported by Ashton Woods' diversified product portfolio and growing mix of entry-level homes, a category currently experiencing some of the highest demand. These factors are offset by high, albeit declining, debt leverage and geographic concentration in the state of Texas, which made up 39% of fiscal 2020 revenue. In addition, tangible net worth, an important measure for homebuilders due to the high level of working capital needed to operate, is small for Ashton Woods relative to peers. Finally, the rating reflects industry cost pressures, including land, labor and materials that could negatively impact gross margin, as well as the cyclical nature of the homebuilding industry that could lead to protracted revenue declines. The stable outlook reflects Moody's expectations that positive fundamentals in the housing sector, including strong demand, low inventory and stable interest rates will support Ashton Woods' growth initiatives and drive deleveraging. The stable outlook also reflects maintenance of good liquidity. Moody's expects Ashton Woods to generate approximately $73 million of free cash flow in fiscal 2022. Moody's forecasts the company will maintain a high unrestricted cash balance of over $200 million, full availability on its revolver and ample cushion on its maintenance covenants through the end of fiscal 2022. Moody's views Ashton Woods' governance risk as moderate given the company's still high leverage and absence of board independence, with only one independent member out of five. The company is majority owned by a collection of five families and provides regular tax liability distributions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Ashton Woods maintains tangible net worth above $1 billion, debt to total capitalization approaches 50%, EBIT interest coverage is maintained above 3.0x and gross margin approaches 20%, all on a sustained basis. A ratings upgrade would also reflect maintenance of good liquidity and sustained positive free cash flow to fund growth. The ratings could be downgraded if debt to total capitalization approaches 60%, EBIT interest coverage drops below 2.0x or if the company's liquidity weakens. Also, a downgrade could result from weakening industry conditions causing meaningful revenue and gross margin declines. The principal methodology used in these ratings was Homebuilding And Property Development Industry published in January 2018. Headquartered in Atlanta, Georgia and established in 1989, Ashton Woods USA, LLC constructs single-family detached and attached homes in Texas, Arizona, North Carolina, South Carolina, Georgia, and Florida. Formerly, primarily a move-up builder, the company has successfully built up its starter home brand, Starlight Homes. For the 12 months ended November 30, 2020, Ashton Woods generated approximately $1.9 billion in revenues and $116 million in both pretax and net income (as an LLC, the company does not recognize a provision for income taxes). The company is majority-owned by an affiliate of the Great Gulf Group Limited of Canada. ATHLETICO HOLDINGS: Moody's Completes Review, Retains B2 CFR ------------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Athletico Holdings, LLC. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Athletico Holdings LLC's B2 Corporate Family Rating reflects the company's elevated financial leverage and relatively low barriers to entry in the highly-fragmented physical therapy industry. The rating is further challenged by geographic concentration in the mid-west region of the US as well as an aggressive expansion strategy through new office openings and acquisitions. The company benefits from solid free cash flow and favorable long-term industry dynamics for physical therapy. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. ATI HOLDINGS: Moody's Completes Review, Retains B3 CFR ------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of ATI Holdings Acquisition, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. ATI Holdings Acquisition, Inc.'s B3 Corporate Family Rating is reflective of high financial leverage and geographic concentration in the mid-western and east coast regions of the US. The rating is also constrained by ATI's aggressive growth strategy, mainly through the establishment of new clinics. The rating is supported by the company's position as the second largest physical therapy service provider in the US, low capital expenditure requirements, and good long-term industry fundamentals for physical therapy services. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. AVINGER INC: Launches $14.4M Bought Deal Offering of Common Stock ----------------------------------------------------------------- Avinger, Inc. has entered into an underwriting agreement with Aegis Capital Corp. under which the underwriter has agreed to purchase, on a firm commitment basis, 10,000,000 shares of common stock of the Company, at a price to the public of $1.44 per share, representing an approximate 10% discount to the Company's Jan. 28, 2021 closing share price. Aegis Capital Corp. is acting as the sole book-running manager for the offering. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes, which may include research and development of the Company's Lumivascular platform products, preclinical and clinical trials and studies, regulatory submissions, expansion of sales and marketing organizations and efforts, intellectual property protection and enforcement and capital expenditures. The Company has not yet determined the amount of net proceeds to be used specifically for any particular purpose or the timing of these expenditures. The Company may use a portion of the net proceeds to acquire complementary products, technologies or businesses or to repay principal on its debt; however, the Company currently has no binding agreements or commitments to complete any such transactions or to make any such principal repayments from the proceeds of this offering, although the Company does look for such acquisition opportunities. About Avinger Headquartered in Redwood City, California, Avinger -- http://www.avinger.com-- is a commercial-stage medical device company that designs and develops image-guided, catheter-based system for the diagnosis and treatment of patients with Peripheral Artery Disease (PAD). Avinger reported a net loss applicable to common stockholders of $23.03 million for the year ended Dec. 31, 2019, compared to a net loss applicable to common stockholders of $35.69 million for the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $36.95 million in total assets, $22.49 million in total liabilities, and $14.45 million in total stockholders' equity. Moss Adams LLP, in San Francisco, California, the Company's auditor since 2017, issued a "going concern" qualification in its report dated March 5, 2020, citing that the Company's recurring losses from operations and its need for additional capital raise substantial doubt about its ability to continue as a going concern. BAILEY EIDGE: Gets OK to Hire Agri-Management Services as Realtor ----------------------------------------------------------------- Bailey Ridge Partners LLC received approval from the U.S. Bankruptcy Court for the Northern District of Iowa to employ a realtor. Agri-Management Services, as realtor, will assist the Debtor in selling nine swine facility sites in Iowa. The realtor will receive a 3.5 percent commission on the gross sale price. Agri-Management Services can be reached through: Richard Isaacson Agri-Management Services 5475 Dyer Ave. #141 Marion, IA 52302 Phone: +1 319-377-1143 About Bailey Ridge Partners Kingsley, Iowa-based Bailey Ridge Partners LLC filed a Chapter 11 petition (Bankr. N.D. Iowa Case No. 17-00033) on Jan. 11, 2017. In the petition signed by Floyd Davis, managing member, the Debtor was estimated to have assets of less than $50,000 and liabilities of $10 million to $50 million. Donald H. Molstad, Esq., at Molstad Law Firm, is the Debtor's legal counsel. On March 2, 2017, the Office of the U.S. Trustee appointed an official committee of unsecured creditors. The committee retained Goldstein & McClintock LLLP as lead counsel, Dickinson Mackaman Tyler & Hagen, P.C. as Iowa counsel, and Houlihan & Associates, P.C. as accountant. The court confirmed the Debtor's Chapter 11 plan on June 11, 2018. Jeffrey R. Mohrauser was appointed as plan administrator. BELK INC: S&P Lowers ICR to 'D' on Missed Debt Service Payments --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Charlotte, N.C.-based department store operator Belk Inc. and its issue-level rating on its first-lien term loan to 'D' from 'CC'. The downgrade reflects Belk's missed interest and amortization payments and anticipated Chapter 11 restructuring. S&P said, "We expect Belk's debt service obligations to continue accruing prior to the completion of its proposed Chapter 11 restructuring, which we believe it will complete around the end of February 2021. We anticipate the company will reduce its funded debt by approximately $450 million and halve its annual cash interest burden to about $75 million through the restructuring." Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety Belk is a regional department store operator primarily located in the Southeastern U.S. As of Aug. 1, 2020, it operated 292 stores as well as an online shop. Its store offerings include fashion apparel, shoes, accessories, cosmetics, home furnishings, housewares, and fine jewelry. Sycamore Partners, a New York-based private-equity firm, owns Belk. BIOLASE INC: Regains Compliance with Nasdaq Bid Price Requirement ----------------------------------------------------------------- BIOLASE, Inc. received official notification from the Listing Qualifications Department of the Nasdaq Stock Market Inc. that it has regained compliance with the minimum bid price requirement set forth in Rule 5550(a)(2) of the Nasdaq Listing Rules. BIOLASE had previously received written notice from NASDAQ in December 2019 indicating that because the closing bid price per share had been below $1.00 for a period of 30 consecutive trading days, the Company did not meet the Minimum Price Bid Requirement. According to the recent notification letter, the staff of NASDAQ has determined that for the last ten consecutive business days, from Jan. 21, 2021 to Feb. 3, 2021, the closing bid price of the Company's common stock has been at $1.00 per share or greater, and the Company has regained compliance with the Minimum Bid Price Requirement, and the matter is now closed. The Company has canceled its Special Meeting of Stockholders scheduled for Feb. 16, 2021. As a result of regaining compliance with the Minimum Bid Price Requirement, the Company is no longer seeking stockholder approval to implement a reverse split of the Company's outstanding shares of Common Stock at this time. About BIOLASE BIOLASE -- http://www.biolase.com-- is a medical device company that develops, manufactures, markets, and sells laser systems for the dentistry, and medicine industries. BIOLASE's proprietary laser products incorporate approximately 271 patented and 40 patent-pending technologies designed to provide biologically and clinically superior performance with less pain and faster recovery times. Biolase reported a net loss of $17.85 million for the year ended Dec. 31, 2019, compared to a net loss of $21.52 million for the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $41.99 million in total assets, $28.14 million in total liabilities, and $13.85 million in total stockholders' equity. BDO USA, LLP, in Costa Mesa, California, the Company's auditor since 2005, issued a "going concern" qualification in its report dated March 27, 2020 citing that the Company has suffered recurring losses from operations, has negative cash flows from operations and has uncertainties regarding the Company's ability to meet its debt covenants and service its debt. These factors, among others, raise substantial doubt about its ability to continue as a going concern. BLACK ELK: Trustee's Punitive Damages Claim Dismissed ----------------------------------------------------- Judge Marvin Isgur of the United States Bankruptcy Court for the Southern District of Texas, Houston Division, dismissed claims for punitive damages brought by Richard Schmidt, Trustee of the Black Elk Litigation Trust. Judge Isgur also granted in part, and denied in part, the motions to dismiss that were filed by Defendants Leon Myers, Bernard Edelstein, and Meadows Capital, LLC, which were joined by Defendants Ditmas Park Capital, LP and Rockwell Fulton Capital, LP. Black Elk was an oil and gas company headquartered in Houston, Texas, that purchased and reworked abandoned oil and gas properties in the Gulf of Mexico. Black Elk issued $150,000,000.00 in Senior Secured Notes to fund its operations. The Senior Noteholders were granted a first priority lien covering the majority of Black Elk's assets. The Trustee filed an adversary complaint seeking to avoid and recover certain fraudulent pre-petition transfers. The Defendants each invested in Platinum Partners Black Elk Opportunities Fund LLC ("PPBEO") and Platinum Partners Black Elk Opportunities Fund International LLC ("PPBEOI") (collectively, "the PPBE Funds"). The Trustee alleged that the Defendants received over $17,000,000.00 in proceeds from a fraudulent scheme to repurchase and distribute Black Elk's Series E preferred equity. Platinum Partners Value Arbitrage Fund LP, Platinum Partners Credit Opportunities Master Fund LP, Platinum Partners Liquid Opportunity Master Fund LP, PPVA Black Elk (Equity) LLC, and PPBE (collectively, "Platinum") became Black Elk's controlling investors in 2009. On November 16, 2012, an explosion occurred on one of Black Elk's offshore drilling platforms in the Gulf of Mexico, where three workers lost their lives. Black Elk's business suferred because of the disaster, and also because of unfavorable market conditions. In response, Platinum, along with certain Black Elk executives, created the two PPBE Funds. The PPBE Funds then purchased Black Elk's Series E preferred equity, which was subordinate to Black Elk's Senior Notes. Despite that cash infusion, both Black Elk and Platinum became insolvent in 2014. At that time, Platinum was Black Elk's largest investor. Platinum controlled Black Elk's credit facility, held a majority of the Senior Notes, and the Series E preferred equity. Platinum also controlled a majority of the Board of Managers, and appointed Black Elk's chief financial officer. The Trustee alleged that as Black Elk's financial outlook became more dire, Platinum devised a plan to enrich itself and its investors at the expense of Black Elk's other debtholders. Black Elk first sold many of its prime assets to Renaissance Offshore, LLC. The Senior Noteholders' lien should have attached to the sale proceeds. However, instead of using the sale proceeds to pay down its debt, Black Elk improperly redeemed the Series E preferred equity. As a result, Platinum and its investors received the sale proceeds, while retaining their Secured Notes in anticipation of a bankruptcy filing. Althought the Senior Noteholders were entitled to first call of the sale proceeds. Platinum executed a scheme to fraudulently claim that a majority of unaffiliated and disinterested holders of Secured Notes "voted to allow Platinum the ability to transfer proceeds of the Renaissance Sale to Platinum and for Platinum's benefit by redeeming the Series E preferred equity ahead of the Notes." Amendment of the Secured Notes required a majority vote of the disinterested Noteholders. The Trustee contended that Platinum was not disinterested because it held substantial equity in Black Elk. The Trustee further contended that truly disinterested noteholders would have never supported the amendment because the amendment released the noteholders' liens on Black Elk's most valuable assets for no consideration. Platinum allegedly manufactured a group of consenting noteholders led by certain Beechwood entities, in order to overcome the voting issue. In 2014, Beechwood purchased $37,000,000.00 in Senior Notes. Platinum and its insiders controlled Beechwood, but failed to disclose that control. This allowed Beechwood to pose as a disinterested Noteholder and vote in favor of the amendment. The amendment passed as a result and Black Elk was able to divert nearly $100,000,000.00 of Renaissance Sale proceeds to Platinum and then the PPBE Funds. The initial transfers went to various Platinum entities between August 18, 2014 and August 21, 2014. Those entities then transferred the proceeds to the PPBE Funds. The PPBE Funds then paid the Defendants. The Trustee said that the Defendants in the present adversary proceeding received $17,261,590.57 of the Renaissance Sale proceeds. On August 11, 2015, an involuntary chapter 7 bankruptcy proceeding was initiated by three creditors against Black Elk. Black Elk consented to the Order for Relief and the Court converted the case to one under chapter 11. The Court confirmed Black Elk's Third Amended Plan of Liquidation on June 20, 2016, which established the Black Elk Litigation Trust in order to recover preferential and fraudulent transfers. On October 26, 2016, the Trustee brought a case against PPVAF, PPCO, PPLO, and PPVA Equity (all Platinum entities) relating to the fraudulent transfers. On August 31, 2017, the Trustee brought another adversary proceeding against the PPBE Funds relating to the fraudulent transfers. Both PPBE Funds defaulted, and the Court entered a judgment against them on June 29, 2018 in the amount of $32,802,572.16 (PPBEO) and $39,022,229.15 (PPBEOI). The Trustee alleged that the Defendants received subsequent transfers from the PPBE Funds. The Trustee an adversary proceeding on May 8, 2019, with the following counts: Count I - alleged that the Defendants received fraudulent transfers pursuant to 11 U.S.C. Section 548(a)(1)(A). Count II - alleged fraudulent transfers under 11 U.S.C. Section 548(a)(1)(B). Count III - alleged preferences under 11 U.S.C. Section 547. Count IV - alleged violations of the Texas Uniform Fraudulent Transfer Act ("TUFTA"). Count V - sought to recover the avoided transfers under 11 U.S.C. Section 550. The Trustee later clarified that he only sought recovery based on the Defendants' status as subsequent transferees under Section 550 and TUFTA. "The elements of a TUFTA claim are satisfied here. The complaint identifies Black Elk as the debtor and the Senior Noteholders (as well as trade vendors) as creditors. The complaint states that the initial transfers were made shortly after the redemption of Series E preferred equity, at the expense of the Senior Noteholders. As explained, the complaint contains ample detail explaining Black Elk and Platinum's alleged scheme to hinder, delay, or defraud creditors," Judge Isgur said. "The Trustee claims that Black Elk and Platinum sold Black Elk's most valuable assets and then diverted the proceeds to junior interest-holders. Further, the transactions occurred while Black Elk was insolvent. Those allegations, taken as true, suggest that the Series E preferred equity was not worth the redemption price. Thus, the transfers were not made for reasonably equivalent value. The Trustee adequately alleges that the initial transfers were constructively fraudulent under Section 548(a)(1)(B) and TUFTA," he added. Judge Isgur explained that "the Trustee avoided the initial transfers, and the complaint also sets out in detail why the initial transfers were avoidable. The complaint also alleges that the Defendants received Renaissance Sale proceeds from Platinum. Those allegations show that the Defendants were immediate or mediate transferees of avoidable transfers. That is all that the Trustee must plead to assert a cause of action under Section 550(a)(2)." He further explained that "even if the Court looks past the Trustee's allegations regarding the Platinum scheme, the complaint alleges that Black Elk's business was significantly and publicly harmed by a deadly rig accident and unfavorable market conditions. Under those conditions, a junior interest-holder receiving a full stock redemption, ahead of $150,000,000.00 of outstanding Senior Notes, might suspect impropriety. To prove that the Defendants have a § 550(b)(1) defense, the factual allegations in the complaint must show that the Defendants lacked knowledge of the transfers' voidability. The allegations in the complaint, taken as true, suggest the opposite." In dismissing the Trustee's claim for punitive damages, Judge Isgur said "the allegations in the complaint, taken as true, cannot entitle the Trustee to an award of punitive damages. There are no allegations that any Defendant acted with malice towards Black Elk. Likewise, no allegations suggest that a Defendant owed a duty to Black Elk, or that a Defendant acted with gross negligence. This leaves fraud as the only possible avenue for the Trustee to recover punitive damages. However, the complaint does not allege that any of these Defendants actively participated in the Platinum scheme. At best, the complaint indicates that these Defendants knew or should have known about the scheme. Taking no action to prevent fraud 'is not enough to state a plausible claim of entitlement to punitive damages.'" The case is IN RE: BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC, Chapter 11, et al, Debtors. RICHARD SCHMIDT, Plaintiff, v. BERNARD FUCHS, et al, Defendants, Adversary No. 19-3459, Case No. 15-34287 (Bankr. S.D. Tex.). Full-text copies of the Memorandum Opinion and Order, both dated February 1, 2021, are available at https://tinyurl.com/140mr7uk and https://tinyurl.com/15utpish from Leagle.com. About Black Elk Black Elk Energy Offshore Operations, LLC, is a Houston, Texas-based privately held limited liability company engaged in the acquisition, exploitation, development and production of oil and natural gas properties primarily in the shallow waters of the Gulf of Mexico near the coast of Louisiana and Texas. Black Elk had total assets of $339.7 million and total debt of $432.3 million as of Sept. 30, 2014. Judge Letitia Z. Paul of the U.S. Bankruptcy Court in the Southern District of Texas placed Black Elk under Chapter 11 bankruptcy protection on Sept. 1, 2015, converting an involuntary Chapter 7 bankruptcy petition by its creditors. Thereafter, the Company filed with the Court a voluntary Chapter 11 petition (Bankr. S.D. Tex. Case No. 15-34287) on Sept. 10, 2015. Judge Paul later recused herself from the case and the matter was given to Judge Marvin Isgur, according to information posted on the case docket on Sept. 14. The Debtor was represented by Elizabeth E. Green, Esq., of Baker & Hostetler. Blackhill Partners' Jeff Jones served as the Debtor's Chief Restructuring Officer. The Debtors hired Ryan LLC as tax research consultant and Williamson, Sears & Rusnak, LLP as special counsel. Judy A. Robbins, U.S. Trustee for Region 7, appointed five creditors to serve in the Official Committee of Unsecured Creditors in the Chapter 11 case of Black Elk Energy Offshore Operations, LLC. Okin & Adams LLP is counsel to the Committee. * * * Black Elk Energy Offshore Operations' Third Amended Plan of Liquidation became effective, and the Company emerged from Chapter 11 protection, according to a report by The Troubled Company Reporter on July 28, 2016. The Court confirmed the Plan on July 13, 2016. BLESSINGS INC: Rusing Lopez Represents Mayorquin, 4 Others ---------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, the law firm of Rusing Lopez & Lizardi, P.L.L.C. submitted a verified statement to disclose that it is representing Abraham Mayorquin; Viviana Lopez; ADAB Ocean Harvest LLC; ADAB Ocean Harvest, S. De R.L. De CV; and Pacific Ocean Harvest S. De R.L. De CV in the Chapter 11 cases of Blessings, Inc. RL&L represents the Clients in their capacity as it relates to all aspects of Blessings' bankruptcy proceeding, but not necessarily as to adversary proceedings that may be brought. RL&L does not represent any other entities in connection with the Blessings Chapter 11 case. RL&L does not represent the Clients as a "committee" and does not undertake to represent the interests of, and is not fiduciary for, any creditor, party in interest or other entity that has not agreed to representation by RL&L. The Clients do not represent or purport to represent any other entities in connection with the Blessings Chapter 11 case, to the best of the undersigned's knowledge. Each Client does not represent the interests of, nor act as a fiduciary for, any person or other entity other than itself in connection with the Blessings Chapter 11 case, or as a disclosed officer or director, to the best of the undersigned's knowledge. Upon information and belief formed after due inquiry, RL&L does not hold any disclosable economic interests in relation to Blessings. As of Feb. 4, 2021, the Clients and their disclosable economic interests are: Abraham Mayorquin Viviana Lopez 7989 West Ironwood Reserve Court Tucson, AZ 85743 ADAB Ocean Harvest LLC 7989 West Ironwood Reserve Court Tucson, AZ 85743 ADAB Ocean Harvest, S. De R.L. De CV 7989 West Ironwood Reserve Court Tucson, AZ 85743 Pacific Ocean Harvest S. De R.L. De CV 7989 West Ironwood Reserve Court Tucson, AZ 85743 Counsel for Abraham Mayorquin can be reached at: RUSING LOPEZ & LIZARDI, P.L.L.C. Jonathan M. Saffer, Esq. 6363 North Swan Road, Suite 151 Tucson, AZ 85718 Telephone: (520) 792-4800 Facsimile: (520)529-4262 E-mail: jsaffer@rllaz.com A copy of the Rule 2019 filing, downloaded from PacerMonitor.com, is available at https://bit.ly/2N7D3xi and https://bit.ly/2LuQfM8 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 Sept. 24, 2020. The petition was signed by David Mayorquin, president and chief executive officer. At the time of filing, the Debtor disclosed $3,889,514 in assets and $6,770,256 in liabilities. Judge Scott H. Gan oversees the case. Smith & Smith PLLC and Lang & Klain, P.C., serve as the Debtor's bankruptcy counsel and special counsel, respectively. BOMBARDIER INC: Fitch Affirms 'CCC' LongTerm IDR ------------------------------------------------ Fitch Ratings has affirmed Bombardier Inc.'s (BBD) Long-Term Issuer Default Rating (IDR) at 'CCC'. In addition, Fitch has affirmed BBD's senior unsecured notes at 'CCC'/'RR4' and preferred shares at 'CC'/'RR6'. BBD completed the sale of Bombardier Transportation (BT) on Jan. 29, 2021, which generated approximately $3.6 billion of net cash proceeds, including approximately $600 million of Alstom shares monetizable beginning in April 2021, which BBD plans to allocate toward debt reduction. DEBT RATING RECOVERY PRIOR ---- ------ -------- ----- Bombardier Inc. LT IDR CCC Affirmed CCC senior unsecured LT CCC Affirmed RR4 CCC preferred LT CC Affirmed RR6 CC KEY RATING DRIVERS BBD's ratings incorporate the company's high leverage, negative FCF, and substantially smaller scale after completing divestitures over the past year, including the aerostructures, regional jet and BT businesses and the remainder of its interest in the A220 commercial aircraft. The company's planned use of proceeds from the sale of BT to reduce debt, will mitigate the loss of earnings from divested businesses. However, Fitch expects leverage will remain elevated, including debt/EBITDA well above 10x as calculated by Fitch until revenue and margins at the company's business jet operations improve. Negative FCF: The impact of the coronavirus pandemic exacerbated BBD's negative FCF in the first nine months of 2020, which was approximately negative $3.4 billion. FCF was expected to be positive in the fourth quarter, partly reflecting seasonally higher deliveries. Capex requirements will be relatively low in the near term following recent updates to several aircraft programs. However, a return to higher capex will eventually be needed to support BBD's competitive position, and Fitch believes high leverage could potentially constrain BBD's flexibility to invest over the long term. Fitch estimates FCF for the full year in 2020 will be approximately negative $2.7 billion, and that FCF will improve significantly but remain negative in 2021 and possibly beyond. A return to positive FCF will depend on BBD's ability to reduce its cost structure to align with its smaller scale, achieve profitability on the Global 7500, and manage working capital effectively. Liquidity Concerns: Proceeds from asset dispositions will support debt reduction in 2021 and into 2022; however, Fitch believes BBD could face challenges meeting funding needs by late 2022 or in 2023 if FCF does not become solidly positive. Other cash requirements include pension contributions and funding for certain retained liabilities related to the sale of the regional jet program. Fitch's base case assumes BBD maintains year-end cash of at least $1.5 billion beginning at the end of 2021 which would fund seasonal cash requirements that typically are highest in the first part of the year. Weak Business Jet Market: BBD is well positioned to compete in the business jet market, but will have a concentrated exposure to market demand due to its exit from other businesses. The business jet market experienced significant disruption in 2020 due to the coronavirus pandemic, although a recovery is underway. Higher deliveries of Global 7500 aircraft have partly offset lower volumes for other business jets while services revenue was down 22% in the first nine months of the year. There has been some improvement in market demand since the second quarter but the timing of a full recovery remains uncertain, and BBD is prepared to operate at lower levels if necessary. BBD's business aircraft backlog was $12.2 billion at Sept. 30, 2020 compared to $14.4 billion at the end of 2019. Margins Expected to Recover: BBD's EBIT was negative $46 million in the first nine months of 2020 excluding one-time gains and other special items. Fitch's base case assumes margins will become solidly positive in 2021, including an EBITDA margin in the mid-single digits, and improve further as the company reduces its cost structure and realizes higher profitability on the Global 7500. There is upside to Fitch's margin assumption if BBD executes effectively on its realignment. DERIVATION SUMMARY BBD is among the largest providers of business jets, particularly for larger aircraft. However, its credit profile is weaker than peers, and several competitors are larger, better capitalized or generate higher margins, putting BBD at a disadvantage with respect to funding future new aircraft programs. This concern is mitigated in the near term by BBD's updated product line. BBD is less diversified than in the past, and has a concentrated exposure to the cyclical business jet market. The company generates lower revenue and margins than Gulfstream, a subsidiary of General Dynamics Corporation, although margins should increase as BBD focuses on business jets and aftermarket revenue and as the Global 7500 achieves full production. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- FCF in 2020 will be approximately negative $2.7 billion and improves significantly in 2021 but remains negative; -- Liquidity is adequate to fund scheduled debt maturities into 2022; -- Aviation revenue improves in 2021 following a significant decline in 2020 due to the impact of the coronavirus pandemic; -- EBITDA margins increase in 2021 from low levels in 2020 due to higher sales, an increased focus on aftermarket revenue, and cost efficiencies associated with the ramp up of the Global 7500. Recovery Analysis -- The analysis for BBD reflects Fitch's expectation that the company's enterprise value, and recovery rates for creditors, would be maximized as a going concern rather than through liquidation. Fitch has assumed a 10% administrative claim. The recovery analysis assumes that a combination of lower end market demand, negative FCF partly offset by proceeds from the sale of Aviation assets in 2020, and an inability to refinance debt creates a distress scenario in the next one-to-two years. -- Going-concern EBITDA for BBD's business jet operations of $334 million assumes a recovery in demand is not sustained. In this scenario, BBD experiences margin pressure associated with a competitive pricing environment and slow progress reducing the company's cost structure in line with its smaller scale. -- An EBITDA multiple of 6.0x is used to calculate a post reorganization valuation, below the 6.7x median for the industrial and manufacturing sector and the 6.4x average for the small subset of A&D companies. The multiple incorporates a competitive environment and cyclicality and event risk in the aerospace sector. -- Fitch assumes $375 million of the secured term loan is outstanding after the sale of BT to Alstom is concluded. Under this scenario, the recovery model produces a Recovery Rating of 'RR4' for unsecured debt, reflecting average recovery prospects (31%-50%) in a distress scenario. The 'RR6' for preferred stock reflects poor recovery prospects due to a low priority position relative to BBD's debt RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The business jet market recovers steadily after the coronavirus pandemic is resolved; -- Annual FCF becomes positive; -- Leverage declines, including debt/EBITDA below 6.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO interest coverage is below 1x; -- Cash balances are consistently less than $1 billion. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE BBD's liquidity at Sept. 30, 2020 included cash of $1.1 billion, excluding BT, which is reported as a discontinued operation. BBD reported cash at Dec. 31, 2020 of $1.8 billion excluding BT. BBD does not have a bank credit facility. Reported long-term debt totaled $10 billion at Sept. 30, 2020, including the current portion. Scheduled maturities include approximately $1.5 billion due in 2021 (EUR414 million in May; USD1.018 billion in December) and $1.7 billion due in 2022. BBD's debt, excluding BT, as calculated by Fitch, totaled approximately $10.4 billion. In addition to long-term debt, this amount includes amounts sold under extended payment terms. Fitch also includes half of BBD's preferred shares. BBD's net pension obligation at Dec. 31, 2019 was nearly $2 billion (79% funded) including unfunded plans. Funded plans were 86% funded. BBD is retaining slightly more than half of pension and other post-retirement liabilities after the sale of BT. 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. BRIGHT MOUNTAIN: Appoints Gretchen Tibbits to Board of Directors ---------------------------------------------------------------- Gretchen M. Tibbits, renowned corporate strategy executive and industry thought leader, has been appointed to Bright Mountain Media, Inc.'s Board of Directors effective immediately. Ms. Tibbits brings with her over 25 years of experience in management, strategy and mergers & acquisitions. She currently serves as managing director at Progress Partners, a Boston & New York-based M&A advisory firm focused on the media, marketing and advertising sectors. Concurrently, she serves on Arts related boards advising them on branding, digital media strategy, and fundraising initiatives. Previously, Ms. Tibbits served in executive roles at LittleThings, Maxim Magazine, ESPN, Hearst Business Media, and American Media (now A360 Media). Ms. Tibbits holds an M.B.A. in Finance and Management from New York University, and a B.A. from the University of Virginia, for which she serves on a number of volunteer boards. "I am pleased to appoint Gretchen to our Board of Directors, as she brings decades of executive experience to further strengthen our core competencies in corporate strategy and M&A," said Kip Speyer, chairman & chief executive officer of Bright Mountain Media. "Her unique entrepreneurial insights will help us continue to expand the breadth and depth of our reach as a Company, positioning us to continue to create value for our shareholders." "Bright Mountain Media is building an incredible digital media platform company and is extremely well positioned to grow its reach and revenues in 2021 and beyond. I look forward to working with Kip Speyer and the Bright Mountain Media Board of Directors," added Gretchen M. Tibbits. About Bright Mountain Based in Boca Raton, Fla., Bright Mountain Media, Inc., is an end-to-end digital media and advertising services platform, efficiently connecting brands with targeted consumer demographics. Through the removal of middlemen in the advertising services process, Bright Mountain Media efficiently connects brands with targeted consumer demographics while maximizing revenue to publishers. Bright Mountain Media's assets include Bright Mountain, LLC, MediaHouse (f/k/a NDN), Oceanside (f/k/a S&W Media), and Wild Sky Media including 24 owned and/or managed websites and 15 CTV apps. Bright Mountain reported a net loss of $3.40 million for the year ended Dec. 31, 2019, compared to a net loss of $5.22 million for the year ended Dec. 31, 2018. EisnerAmper LLP, in Iselin, New Jersey, the Company's auditor since 2018, issued a "going concern" qualification in its report dated May 14, 2020, citing that the Company has experienced recurring net losses, cash outflows from operating activities, and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. BROWN JORDAN: S&P Affirms 'CCC+' ICR Following Revolver Extension ----------------------------------------------------------------- S&P Global Ratings affirmed its 'CCC+' issuer credit rating on U.S.-based Brown Jordan Inc. and the outlook remains negative because of the continued decline in the hospitality segment, which could pose further liquidity risks. At the same time, S&P affirmed its 'CCC+' issue-level rating on the company's term loan. The '3' recovery rating is unchanged, indicating its expectation for a meaningful recovery (70%-90%; rounded recovery: 65%). Brown Jordan extended the maturity on its $35 million asset-based lending (ABL) revolver to Oct. 30, 2022, from Jan. 31, 2022, averting an immediate deterioration in its assessment of the company's liquidity. The rating affirmation reflects the company's revolver maturity extension. The company extended its ABL revolver maturity to Oct. 30, 2022, from Jan. 31, 2022. Further extension of the revolver maturity depends on the company's ability to extend the maturity of the term loan to April 24, 2023 and beyond (its current maturity is Jan. 31, 2023). The fixed charge covenant remains unchanged. The maturity extension staves off the revolver from becoming current January 2021, which would have deteriorated liquidity cushion. S&P said, "While we still assess the liquidity position as less than adequate given volatile operating conditions in the hospitality industry, we now expect the company to have sufficient liquidity sources over uses at least through October 2021, prior to the revolver becoming current." A slower-than-expected recovery poses significant liquidity and refinancing risk. Despite the liquidity benefit from the revolver maturity extension, the company's revenues were down 21.9% through the nine months ended Sept. 30, 2020, compared with the same period in 2019. This was primarily the result of hotels pulling back remodeling spend due to the COVID-19 pandemic travel restrictions, resulting in hospitality segment revenues declining approximately 36% through the second and third fiscal 2020 quarters. S&P said, "We do not expect a recovery in the hospitality segment to begin until a vaccine has been widely administered in the back half of fiscal 2021. A slower-than-expected recovery could hurt cash flow generation and reduce liquidity sources. Furthermore, the company could face difficulty refinancing its revolver, which becomes current October 2021 and term loan which becomes current January 2022. If these maturities become current or we are no longer confident the company would be able to extend the maturities ahead of them becoming current, we would treat any outstanding revolver and term loan balance as a liquidity use. If this were to happen, we would lower our liquidity assessment of the company and the ratings." S&P could lower the rating if it believes a default is imminent in the next 12 months as a result of: -- A prolonged recession or continued depressed hospitality and discretionary spending; or -- If S&P expects it won't be able to refinance its debt maturities before they become current. S&P could revise the outlook to stable if: -- The company is able to refinance its upcoming maturities before they become current; -- The hospitality business rebounds quicker than anticipated; and -- Macroeconomic conditions improve. BSVH LLC: Court Limits Use of Cash Collateral --------------------------------------------- The U.S. Bankruptcy Court for the Western District of Kansas, Hot Springs Division, entered an agreed order with respect to the request of Wilmington Savings Fund Society, FSB, D/B/A Christiana Trust, to prohibit BSVH, LLC from using the income generated by the real property located at 109 RoadRunner Point, Hot Springs, AR 71913. Wilmington Savings and the Debtor agree that the rental income received from the real property constitute Wilmington Savings' cash collateral pursuant to 11 U.S.C. section 363(a). Wilmington Savings is acting as Owner Trustee of Residential Credit Opportunities Trust II. The Agreed Order provides that BSVH is prohibited from using any cash collateral from the real property, other than which is necessary and required in order to maintain its current contracts and booking fees for rental of the real property. The Debtor is directed to provide a full monthly accounting and breakdown of all income produced by the real property and identify all expenses paid from said income. A copy of the Order is available at https://bit.ly/3rpe1Z4 from PacerMonitor.com. About BSVH, LLC BSVH, LLC is a Hot Springs National, Ark.-based privately held company primarily engaged in the operation of dwellings other than apartment buildings. BSVH filed a Chapter 11 petition (Bankr. W.D. Ark. Case No. 20-70365) on Feb. 7, 2020. The petition was signed by BSVH President Matthew Valentine. At the time of filing, the Debtor had estimated assets of up to $10 million and liabilities of less than $50,000. Judge Ben T. Barry oversees the case. Jennifer M. Lancaster, Esq., at The Lancaster Law Firm, is the Debtor's legal counsel. Wilmington Savings is represented by: Heather Martin-Herron, Esq. Kathryn Lachowsky-Khan, Esq. Adam Perdue, Esq. Joel W. Giddens, Esq. WILSON & ASSOCIATES, P.L.L.C. 400 West Capitol Avenue, Suite 1400 Little Rock, AR 72201 Tel: (501) 219-9388 BURNS ASSET MANAGEMENT: To Seek Plan Confirmation on April 1 ------------------------------------------------------------ Judge Stephani W. Humrickhouse conditionally approved the disclosure statement of Burns Asset Management, Inc., and set a hearing on confirmation of the Plan will be on Thursday, April 1, 2021, at 10:30 a.m. in Room 208, 300 Fayetteville Street, Raleigh, NC 27601. Written objections to confirmation of the Plan and final approval of the Disclosure Statement are due March 24, 2021. Ballots are also due March 24. The Debtor filed a Chapter 11 case in an attempt to reamortize the lien claims against each of its rental properties and bring each lien claim payment cure not, paying each allowed secured claim in full over a 30-year amortization. The Debtor proposes to make the payments on the reamortized lien claims from the net rental receipts for each rental property. The Debtor says there are no general unsecured claims. A copy of the Disclosure Statement dated Jan. 29, 2021, is available at https://bit.ly/3rqm8om About Burns Asset Management Burns Asset Management, which owns certain properties, filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 20-03888) on Dec. 14, 2020. Burns Asset President James Jerald Burns signed the petition. At the time of the filing, the Debtor disclosed assets of between $500,001 and $1 million and liabilities of the same range. Judge Stephani W. Humrickhouse oversees the case. Danny Bradford of Bradford Law Offices serves as the Debtor's legal counsel. CALAIS REGIONAL: Seeks to Hire Dentons Bingham as Legal Counsel --------------------------------------------------------------- Calais Regional Hospital seeks approval from the U.S. Bankruptcy Court for the District of Maine to hire Dentons Bingham Greenebaum, LLP as its legal counsel. The firm's services will include: (a) advising the Debtor with regard to the requirements of the court, bankruptcy laws, local rules and the Office of the United States Trustee, as they pertain to the Debtor; (b) advising with regard to certain rights and remedies of the bankruptcy estate and rights, claims, and interests of creditors and bringing such claims as the Debtor, in its business judgment, pursues; (c) representing the Debtor in any proceeding or hearing in the bankruptcy court unless the Debtor is represented by special counsel; (d) conducting examinations of witnesses, claimants or adverse parties, and representing the Debtor in any adversary proceeding; (e) reviewing and analyzing various claims of the Debtor's creditors and treatment of such claims, and preparing, filing or prosecuting any objections thereto or initiating appropriate proceedings regarding leases or contracts to be rejected or assumed; (f) preparing reports, pleadings and other legal documents; (g) assisting in the negotiation, formulation, preparation and approval of a Chapter 11 plan of reorganization and disclosure statement, or the sale of the Debtor's assets; and (h) other legal services necessary to administer the Debtor's Chapter 11 case. Dentons Bingham will be paid at these rates: Andrew Helman Partner $350 per hour James Irving Partner $510 per hour April Wimberg Partner $375 per hour Christopher Madden Senior Managing Associate $345 per hour Gina Young Managing Associate $280 per hour The firm will also be reimbursed for out-of-pocket expenses incurred. Andrew Helman, Esq., a partner at Dentons Bingham, disclosed in court filings that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Dentons Bingham can be reached at: Andrew C. Helman, Esq. Dentons Bingham Greenebaum, LLP 254 Commercial Street, Suite 245 Merrill's Wharf Portland, ME 04101 Phone: (207) 619-0919 Email: andrew.helman@dentons.com About Calais Regional Hospital Based in Calais, Maine, Calais Regional Hospital operates as a non-profit organization offering cardiac rehabilitation, emergency, food and nutrition, home health, inpatient care unit, laboratory, nursing, radiology, respiratory care and stress testing, surgery, and social services. Visit https://www.calaishospital.org for more information. Calais Regional Hospital filed a Chapter 11 petition (Bankr. D. Maine Case No. 19-10486) on Sept. 17, 2019. At the time of the filing, the Debtor disclosed assets of between $10 million and $50 million and liabilities of the same range. Judge Michael A. Fagone oversees the case. Debtor tapped Murray Plumb & Murray as its bankruptcy counsel, Spinglass Management LLC as financial advisor, and Kelly, Remmel & Zimmerman and Norman Hanson Detroy LLC as special counsel. CATALENT PHARMA: Moody's Completes Review, Retains Ba3 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Catalent Pharma Solutions, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Catalent Pharma Solutions Inc.'s Ba3 Corporate Family Rating is supported by its track record of delivering strong revenue and earnings growth, even despite the coronavirus pandemic. It also reflects its good size and scale, breadth of services and strong reputation as one of the largest contract development and manufacturing organizations (CDMOs) globally. The company also maintains a diversified customer base and commands a large library of patents, know-how, and other intellectual property that raise barriers to entry and enhance margins. The rating is constrained by Catalent's appetite for acquisitions which could lead to a temporary increase in leverage. The rating also reflects the risks inherent in the contract manufacturing industry, which is highly competitive, and has a high reliance on the pharmaceutical industry. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. CERTARA HOLDCO: Moody's Completes Review, Retains B2 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Certara Holdco, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Certara Holdco, Inc.'s B2 corporate family rating reflects the company's small scale and concentrated end market, with exposure to potential shifts in end market demand. Certara's defensible market position in biosimulation software and services, as well as competitive advantage through its proprietary modeling data allow it to experience positive secular trends in drug development and related services. The company's initial public offering (IPO) in December 2020 reduced adjusted debt to EBITDA by about one turn to about 4.3x. The positive outlook reflects Moody's expectation that increasing revenues and EBITDA over the next year will reduce adjusted debt to EBITDA toward 3.5x. Given Certara's pool of public shareholders following the IPO, Moody's expect the company to maintain a more conservative financial policy. The principal methodology used for this review was Software Industry published in August 2018. CHESAPEAKE ENERGY: Moody's Assigns Ba3 CFR on Bankruptcy Emergence ------------------------------------------------------------------ Moody's Investors Service assigned ratings to Chesapeake Energy Corporation, including a Ba3 Corporate Family Rating and a Ba3-PD Probability of Default Rating. Moody's also assigned a SGL-2 Speculative Grade Liquidity rating. The rating outlook is stable. These are first time ratings for Chesapeake, following its emergence from bankruptcy. At the same time, Moody's assigned a B1 rating to the proposed $1 billion senior unsecured notes due 2026 and 2029 being issued by Chesapeake Escrow Issuer LLC (an entity that will ultimately be merged with and into Chesapeake who will become the surviving issuer of the notes). Chesapeake Escrow Issuer LLC is a wholly-owned subsidiary of Chesapeake. "Chesapeake will benefit from a restructured balance sheet and a much lighter debt burden along with an improved cost structure stemming from renegotiating certain of its gathering and transportation contracts," commented John Thieroff, Moody's Senior Credit Officer. Assignments: Issuer: Chesapeake Energy Corporation Corporate Family Rating, Assigned Ba3 Probability of Default Rating, Assigned Ba3-PD Speculative Grade Liquidity Rating, Assigned SGL-2 Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD5) Outlook Actions: Issuer: Chesapeake Energy Corporation Outlook, Assigned Stable RATINGS RATIONALE Chesapeake's Ba3 Corporate Family Rating (CFR) reflects its large, low-cost natural gas positions in the Marcellus and Haynesville shale plays, low financial leverage following its restructuring and the ability to generate significant free cash flow in a $2.50/mcf natural gas price environment. The company's annual interest burden will fall to about $100 million following its restructuring from more than $650 million in 2019, freeing up a substantial amount of cash. The company's emphasis on natural gas marks a strategic reversal following many years of attempting to transition to a more oil and liquids-heavy production mix, culminating in the Brazos Valley acquisition in February 2019. Chesapeake's South Texas, Brazos Valley and Powder River assets provide attractive oil optionality in an environment in which oil prices are sustainably greater than $50/bbl. However, based on Moody's 2021 and 2022 oil price assumptions it is unlikely the company will drill in those areas in a meaningful way in the near term. Moody's has historically viewed Chesapeake's financial policy as aggressive, though many of the actions it took in recent years were necessitated by its then burdensome debt load. Chesapeake's strategic shift and its historically aggressive financial policy are material factors in its rating as ESG considerations under the "financial strategy and risk management" and "management credibility and track record" categories of Moody's Governance framework. Consistent execution of the company's conservative approach to growth and funding could ameliorate these concerns over time. Post-bankruptcy, Chesapeake's ability to generate free cash flow through its gas-focused approach provides the opportunity to balance low-to-mid single digit production growth and returning capital to shareholders while maintaining low leverage. Financial strategy and risk management; Management credibility and track record Chesapeake's senior notes are rated B1, one notch beneath the company's Ba3 CFR, reflecting the notes' junior priority claim on assets to borrowings under the revolving credit facility and the large size of the secured revolver, relative to the notes. Following its exit from the Midcontinent through divestiture during its bankruptcy proceedings, Chesapeake retains substantial footprints in five major producing areas and good investment optionality between oil and natural gas. Production has fallen significantly in recent years due to divestitures and reduced investment. Given Moody's oil price assumptions through 2022 ($40/bbl WTI in 2021; $50/bbl WTI in 2022), Chesapeake will likely continue to direct investment toward developing its natural gas reserves which would lead to further production declines in the company's oil-weighted basins (Powder River, South Texas, and Brazos Valley). Moody's views Chesapeake's liquidity as good, reflected by its SGL-2 rating. As part of its bankruptcy exit financing, Chesapeake will enter into a new revolving credit facility which will have a borrowing base of $1.75 billion and $1.4 billion of availability. The revolver expires in 2024 and is subject to a maximum total leverage ratio covenant of 3.5x, a maximum first lien secured leverage ratio of 2.75x, and a current ratio covenant requiring coverage of 1.0x. Moody's expects Chesapeake to comfortably comply with both covenants through early 2022. Moody's expects Chesapeake to generate free cash flow sufficient to pay down the revolver balance by year end 2021. Cash flow is supported by the company's considerable commodity hedge position in 2021, with more than 70% of its natural gas production hedged at an average price of $2.69 and almost 80% of its oil production at an average price of $42.62 per barrel. Chesapeake has no debt maturities until 2026. The stable outlook reflects Moody's expectation that Chesapeake will generate free cash flow and will balance growth spending and shareholder returns while maintaining low leverage. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if the company can achieve production growth while maintaining a Leveraged Full-Cycle Ratio above 1.5x. Ratings could be downgraded if Leveraged Full-Cycle Ratio falls below 1x, RCF/debt falls toward 30%, or if the company returns to materially outspending cash flow. Oklahoma City, OK-based Chesapeake Energy Corporation is a large independent exploration and production (E&P) company operating in several onshore US basins. The company's daily production averaged 445 mboe/d in the quarter ended September 30, 2020, of which 70% was natural gas. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. CHESAPEAKE ENERGY: S&P Assigns Prelim 'B+' ICR, Outlook Stable -------------------------------------------------------------- S&P Global Ratings assigned its preliminary 'B+' issuer credit rating to Oklahoma-based oil and gas exploration and production (E&P) company Chesapeake Energy Corp. S&P said, "At the same time, we are assigning our preliminary 'BB-' issue-level rating and '2' recovery rating to the company's proposed $500 million senior unsecured notes due 2026 and $500 million senior unsecured notes due 2029 (the notes will initially be issued by Chesapeake Escrow Issuer LLC, which will subsequently be merged with Chesapeake Energy Corp.). "The stable outlook reflects our expectation that the company will maintain funds from operations (FFO) to debt of more than 60% and generate positive free cash flow over the next two years. "We are assigning our preliminary 'B+' issuer credit rating to Chesapeake Energy Corp. pending its emergence from bankruptcy. Our preliminary rating reflects the company's high volume of production relative to its 'B' category peers (425,000 barrels of oil equivalent per day [boe/d]), good geographic diversity in the onshore U.S. segment, the high concentration of natural gas in its reserves and production base (70%), and the significant improvement in its cost structure since 2019. Our rating also reflects Chesapeake's currently low leverage and our expectation that it will generate positive free cash flow; however, we note its management team has acted to the detriment of its bondholders in the past." The company will be majority-owned by its recent debtholders, including Franklin, Fidelity, Prudential, Blackrock, and Oaktree. Chesapeake's asset base is largely unchanged from 2019. The company's oil and gas properties are focused in five operating areas: the Appalachian basin; the Gulf Coast (Haynesville shale); South Texas and the Brazos Valley (Eagle Ford shale); and the Powder River Basin. About 70% of its proved reserves and production are natural gas, which--at current prices--generate better returns than its oil-producing properties. Therefore, Chesapeake expects to run all five of its rigs in Appalachia and the Gulf Coast this year. Although the company's current production volume of 425,000 boe/d is high relative to that of its 'B' category peers, its reported proved reserves of 988 million boe is lower due primarily to the negative revisions it took in March 2020 when commodity prices troughed and it was facing imminent bankruptcy. To book reserves as proved undeveloped under the U.S. Securities and Exchange Commission's (SEC) rules, companies must demonstrate access to sufficient capital to develop them over the next five years, which Chesapeake was unable to do in March. S&P expects this will change following its emergence from bankruptcy, thus we expect its proved reserves to increase materially in 2021. S&P said, "While Chesapeake's asset base is largely the same as it was prior to its bankruptcy, we expect its operating costs to materially improve. Following the restructuring of its most onerous midstream commitments, the company estimates it has been able to reduce its gathering, processing, and transportation expenses by 25% relative to 2019. Chesapeake only has two minimum volume commitments left in place, which it should be able to manage based on its current capital expenditure (capex) and production levels. In addition, the company estimates it has reduced both its lease operating and cash general and administrative (G&A) expenses by 30% relative to 2019. These cost reductions will lead Chesapeake's profitability, on an unhedged EBIT per boe of production basis, to be essentially in line with that of its peers on a go-forward basis. The company also no longer has any required volumetric production payments (VPPs). Without these commitments, we anticipate Chesapeake will be able to base its drilling plans purely on well economics rather than exogenous factors. "Chesapeake's debt levels at emergence will be low. After wiping out more than $7.0 billion in debt through its bankruptcy, and assuming the completion of the $600 million rights offering, we believe Chesapeake will emerge with about $1.2 billion of debt outstanding. Based on our current assumptions, we estimate the company's leverage will remain very low with FFO to debt of over 100% and debt to EBITDA of below 1.0x. We also expect Chesapeake to generate excess cash flow. The company's new financial policy will be focused on keeping its capital spending close to maintenance levels, which will likely lead to modest production declines but support steady, positive cash flows. In our view, Chesapeake's biggest credit risk is its willingness and ability to continue to live within its cash flows over the next several years. "The stable outlook on Chesapeake reflects our view that it intends to maintain healthy financial measures and adequate liquidity over the next two years while keeping its production declines modest and generating positive free cash flow. We currently estimate the company's FFO to debt to be over 100% and anticipate it will sustain debt to EBITDA of less than 1.0x in 2021 and 2022. Our outlook assumes Chesapeake's management will maintain its newfound conservative financial policy, enable the company to generate excess cash flow by keeping its capex low, and deploy any excess cash in a credit-enhancing manner. "We could lower our ratings on Chesapeake if we expect its FFO to debt to approach 30% or its debt to EBITDA to approach 3x for a sustained period. This would most likely occur if natural gas prices decline and the company fails to rein in its spending levels accordingly or its production falls by more than we currently anticipate given its limited drilling plans. We could also lower our rating if Chesapeake pursued a debt-funded acquisition. "We could raise our ratings on Chesapeake if it successfully executes its plan to improve its profitability and generate positive free cash flow for the next several quarters while maintaining FFO to debt of over 45%. This would most likely occur if the company is able to maintain modest production declines by operating with capex close to maintenance levels while limiting its shareholder distributions and debt-funded acquisitions." CITGO PETROLEUM: Fitch Rates $650MM Secured Notes Due 2026 'BB' --------------------------------------------------------------- Fitch Ratings has assigned a 'BB'/'RR1' to CITGO Petroleum Corporation's (Opco) $650 million senior secured 2026 notes. Proceeds from the notes, along with cash on hand, will be used to repay CITGO Petroleum's 6.25% secured notes due August 2022 and associated fees. The new notes will rank pari passu with other Opco debt and are secured by a first priority lien on CITGO's three refineries (Lake Charles, Lemont, and Corpus Christi), its inventories, accounts receivables (excluding those pledged for specific carve-outs including the company's A/R Securitization facility) and capital stock. Covenants are substantially similar to the company's existing 2025 notes and include a change in control triggering event at 101, an equity clawback, and R/P basket restrictions. CITGO's ratings are supported by its high-quality refining assets, significant feedstock flexibility, modest capex requirements, prospects for a vaccine-led recovery in 2H21; and the industry rationalization of around 1.8 million bpd in excess refining capacity to date, which should help rebalance supply and demand. Rating concerns are material and include market access issues linked to Petroleos de Venezuela's (PDVSA) legacy ownership of CITGO; the deep deterioration in pandemic-linked demand seen in 2020 and the risks of a delayed recovery in 2021; medium term risks around structural changes in transport fuel demand for commuters and business travelers, and liquidity impacts. The Negative Outlook could be revised if conditions normalize and liquidity is not materially compromised. KEY RATING DRIVERS Coronavirus Impacts: Although the industry has partly recovered from the deep trough conditions seen at the onset of the pandemic, the pandemic continues to have a lingering negative impact on utilization rates across the refining industry, which as of mid-January, were still running about 6 full percentage points below levels seen last year. The recovery in refined product demand has also been uneven. While distillate demand is up slightly, gasoline demand is still down around 11% yoy, and jet fuel around 20%-25% yoy, according to recent EIA data. Compression in key crack spreads has also reduced industry profitability. Weak 2020, but Stronger 2H21: CITGO will experience material negative FCF in 2020, driven by pandemic impacts, substantial scheduled down time at both the Lake Charles and Lemont refineries, and unplanned downtime and repair expense at Lake Charles due to hurricane activity. Fitch anticipates a significant recovery in 2H21, but notes the speed of the recovery is subject to any slowdowns in vaccine campaigns, and any unfavorable structural changes in commuter trends (working from home and increased remote business meetings). Covenant Waiver: At the end of 2020, CITGO received a waiver to increase its net debt-to-capitalization financial ratio from a maximum of 60% to 70%, effective until Q1 of 2022. The waiver creates additional headroom in the event the pandemic downturn is prolonged. Fitch notes that the company did not apply for a waiver for covenants which govern distributions up to CITGO Holdco, which still requires a positive dividend basket, maximum net debt to cap of 55% and minimum of $500 million in liquidity before distributions can be made. Holdco has enough liquidity to service its debt without any additional dividends from CITGO Petroleum until at least July 2022, but it could become an issue thereafter absent an additional waiver. Improved Governance: In line with U.S. sanctions, CITGO severed all relationships with its PDVSA-appointed board and a new board was installed by the Guaido-led faction of Venezuela. Operationally, CITGO has ceased all financial and operational interactions with PDVSA. Challenges remain despite these improvements, including ongoing attempts by Venezuela to regain control of CITGO, although Fitch notes recent court rulings have been in favor of the Guaido-appointed board. Access to Capital: The legacy effects of PDVSA ownership remains a key overhang on the issuer in terms of capital market access. In 2019, CITGO had to replace revolver liquidity with a drawn term loan, given bank concerns about Office of Foreign Assets Control sanctions against Venezuelan entities. Fitch believes CITGO has access to a capital pool that is deep but narrow. Lower Change of Control Risks: The financial weakness of parent PDVSA means there are several paths that could trigger a change of control clause in CITGO's debt. CITGO replaced earlier language with a more benign, two trigger tests: less than majority ownership by PDVSA and a related failure by rating agencies to affirm ratings within 90 days. Fitch believes there is a lower probability this test is triggered for several reasons, including: a longer 90-day period to complete a refinancing; and an expected improvement in CITGO's credit profile under nearly any owner besides PDVSA, which limits bondholder incentives to tender. All of CITGO's drawn debt, including the new proposed 2026 notes issuance, contains this double trigger language. Parent-Subsidiary Linkage: Fitch rates the IDR of Holdco two notches below that of its stronger subsidiary, Opco. The notching differential stems from the significant legal and structural separations between the two, primarily the strong covenant protections for Opco's debt, which limits the ability of the direct parent to dilute its credit quality. Key covenants include limitations on guarantees to affiliates, restrictions on dividends, asset sales and restrictions on the incurrence of additional indebtedness. Opco debt has no guarantees or cross-default provisions related to HoldCo debt. HoldCo: Ratings for HoldCo reflect its structural subordination to OpCo and its reliance on OpCo to provide dividends to cover its significant debt service requirements. Dividends from OpCo provide the majority of debt service capacity at HoldCo and are driven by refining economics and the restricted payments basket. HoldCo's pledged security includes approximately $40 million-$60 million in EBITDA from midstream assets available for interest payments. These logistics assets are pledged as collateral under the HoldCo debt package. ESG Influence: CITGO has an Environmental, Social and Corporate Governance (ESG) Relevance Score of '4' under Environmental Factors which reflects its material exposure to extreme weather events (hurricanes), which periodically lead to extended shutdowns. Two out of three of CITGO's refineries are located on the Gulf Coast, including the largest, Lake Charles at 425,000 barrels per day (bpd). CITGO also has a Score of '4' under Governance Factors related to the effects the legacy PDVSA ownership issues still have on the issuer despite the transition CITGO made to being run by a U.S.-approved board. The risk centers around contagion through change of control clauses associated with a PDVSA default and the overhang legacy ownership creates in terms of capital markets access. Both factors have negative impacts on the credit profile and are relevant to the rating in conjunction with other factors. DERIVATION SUMMARY At 769,000 bpd day of crude refining capacity, CITGO is smaller than peer refiners such as Marathon Petroleum Corporation (BBB/Negative) at 3.0 million bpd, Valero Energy Corporation (BBB/Negative) at 2.6 million bpd, and PBF Holding (B+/Negative) at 1.04 million bpd, but is larger than peers HollyFrontier Corporation (BBB-/Negative) at 405,000 bpd and CVR Refining (BB-/Negative) at 206,500 bpd. CITGO lacks the earnings diversification from ancillary businesses seen at a number of peers in areas such as logistics master limited partnerships, chemicals, renewables or retail. However, CITGO's core refining asset profile is strong, given the high complexity of its refineries, which allows it to process a large amount of discounted heavy crudes and shale crudes, both of which have historically boosted profitability but currently offer limited uplift given the pandemic. Legacy PDVSA ownership issues still remain an overhang on the issuer through change of control contagion and market access issues. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- West Texas Intermediate oil prices of $42/bbl in 2021, $47/bbl in 2022 and $50/bbl in 2023 and the long run; -- Gross margins and refinery utilization drop sharply in 2020 and recover over the remainder of the forecast; -- Capex of $257 million in 2021, which rises slowly across the remainder of the forecast in line with recovering fundamentals; -- CITGO experiences continued weakness in operating results in 1H2021 before seeing a vaccine led recovery in refined product fundamentals in the second half of the year, and sees continued gradual improvements thereafter. KEY RECOVERY RATING ASSUMPTIONS -- The recovery analysis assumes that CITGO Corporation would be reorganized as a going-concern in bankruptcy rather than liquidated. -- Fitch has assumed a 10% administrative claim. Going-Concern (GC) Approach The GC EBITDA of $1.16 billion estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation (EV). This value reflects the potential for narrower crude spreads on a mid-cycle basis due to structural changes in the market. An EV multiple of 5.0x was applied to the GC EBITDA to calculate a post-reorganization EV of $5.78 billion. This multiple is below the median 5.7x exit multiple for energy in Fitch's Energy, Power and Commodities Bankruptcy Enterprise Value and Creditor Recoveries (Fitch Case Studies - August 2020), but is also above the multiple for the only refining-related bankruptcy contained in that study, Philadelphia Energy Solutions. Liquidation Approach The liquidation estimate reflects Fitch's view of the value of balance sheet assets that can be realized in sale or liquidation processes conducted during a bankruptcy or insolvency proceeding and distributed to creditors. For liquidation value, Fitch used an 80% advance rate for the company's inventories since crude and refined products are standardized and easily re-sellable in a liquid market to peer refiners, traders or wholesalers. Fitch also assigned relatively light discounts to CITGO's net PP&E, based on historical refining transactions, and A/R. These items summed to a total liquidation value of $4.04 billion. The maximum of these two approaches was the going concern approach of $5.78 billion. A standard waterfall approach was then applied. Subtracting 10% for administrative claims resulted in an adjusted EV of $5.2 billion, which resulted in a three-notch recovery (RR1) for all of CITGO Petroleum's secured instruments (including the new notes), which are pari passu. A residual value of approximately $2.24 billion remained after this exercise. This was applied in a second waterfall at CITGO Holdco, whose debt is subordinated to that of Opco. The $2.24 billion was added to approximately $400 million in going concern value associated with the Midstream assets ($50 million in assumed run-rate midstream using an 8x multiple), as well as $179 million in restricted cash, which was escrowed in a debt service reserve account for the benefit of secured Holdco debt, along with A/R. This resulted in total initial value at Holdco of approximately $2.82 billion. No administrative claims were deducted in the second waterfall. Holdco secured debt also recovered at the 'RR1' level. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: CITGO Petroleum -- Sustained improvement in the refined product market, marked by recovering utilization and crack spreads; -- Improved market access; -- Mid-cycle lease-adjusted FFO-gross leverage below approximately 4.3x; -- Mid-cycle debt/EBITDA below 3.0x. CITGO Holding -- Sustained improvement in the refined product market, marked by recovering utilization and crack spreads; -- Improved market access; -- Mid-cycle lease-adjusted FFO-gross leverage below approximately 6.0x; -- Mid-cycle debt/EBITDA below 4.8x. Factors that could, individually or collectively, lead to negative rating action/downgrade: CITGO Petroleum -- Prolonged dislocation in refined product market, leading to sustained weakness in metrics and impaired liquidity; -- Deterioration in market access; -- Mid-cycle lease-adjusted FFO-gross leverage above approximately 5.5x; -- Mid-cycle debt/EBITDA above 4.1x; -- Weakening or elimination of key covenant protections in the CITGO senior secured debt documents. CITGO Holding -- Deterioration in market access; -- Mid-cycle lease-adjusted FFO-gross leverage approaching 7.5x; -- Mid-cycle debt/EBITDA approaching 6.5x; -- Weakening or elimination of key covenant protections in CITGO Holding senior secured debt documents. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Opco's liquidity, as of YE 2020, comprised $1.01 billion in cash, as well as an untapped two-year $250 million A/R Securitization facility, for total liquidity of $1.26 billion, versus liquidity of $971 million at Sept. 30, 2020. The majority of OpCo's cash is from proceeds of a $1.2 billion term loan, which was issued in 2019 as replacement liquidity for a terminated senior secured revolver and accounts receivable securitization facility. CITGO maintains this liquidity on the balance sheet to handle working capital swings and for other cyclical needs. CITGO also has $290 million in industrial revenue bonds in treasury that could be remarketed, assuming supportive market conditions. Following the repayment of the 2022 6.25% term loan, the next material maturity due at the Opco level is the company's $1.08 billion term loan in 2024. ESG CONSIDERATIONS CITGO has an ESG Relevance Score of '4' for Exposure to Environmental Impacts due to the material exposure that Gulf Coast refiners have to extreme weather events (hurricanes), which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. CITGO also has an ESG Relevance Score of '4' for Complexity, Transparency, and Related-Party Transactions relating to the impact the legacy PDVSA ownership structure has on the issuer, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. CITGO PETROLEUM: Moody's Rates New $650MM Notes Due 2026 'B3' ------------------------------------------------------------- Moody's Investors Service assigned a B3 (LGD3) rating to CITGO Petroleum Corporation proposed $650 million in senior secured notes due 2026. Proceeds from the transaction will be used to refinance its existing 6.250% Senior Secured Notes due 2022 and other general corporate purposes. The outlook on the rating is stable. RATINGS RATIONALE CITGO Petroleum's B3 ratings and stable outlook primarily reflect the company's historic solid credit metrics for its rating category, the location of its assets in the United States (Government of United States of America, Aaa stable), and certain protections to lenders provided by credit agreements; these protections are in place to ring-fence the company from its ultimate owner, Petroleos de Venezuela, S.A. (PDVSA), with clauses for limitations on increase in debt leverage, dividends, minimum cash, new business associations, change of control and proceeds from asset sales. Moody's expects CITGO Petroleum to post negative EBITDA in 2020 as a consequence of lower economic activity in the markets it covers caused by the COVID-19 pandemic; in addition, the company was negatively affected by the eight-week shutdown at the Lake Charles refinery due to hurricanes Laura and Delta in the third quarter of the year. Despite the adverse business environment, in 2020 the company was able to refinance debt and strengthen its liquidity, which protect its credit condition. Moody's expects CITGO Petroleum to post positive EBITDA in 2021 as the pandemic fades, the US economy rebounds and as exports to Mexico and other Latin American countries increase again; however, EBITDA will be well below historic averages of $1.5 billion per year. Moody's expects CITGO Petroleum's debt metrics to improve in 2021 from weak levels in 2020 and the company to remain in compliance with its financial covenants. The company's refineries have high conversion capacity that provides flexibility to adjust crude slate and to optimize operations based on market dynamics; CITGO Petroleum also have significant export capability that supports sales. However, Moody's notes that CITGO Petroleum remains vulnerable to US actions against Venezuela and the political situation in that country, which could affect the company's operating and financial activities. CITGO Petroleum's liquidity is adequate and both the company and its parent company, CITGO Holding, have maintained capital market access to refinance maturing debt and sustain liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING CITGO Petroleum's ratings could be upgraded if the risk arising from PDVSA's ownership, mostly related to legal procedures that could derive in change of control, asset sales or asset declines. CITGO Petroleum's ratings could be downgraded if (1) the company lacks access to capital markets for refinancing debt, (2) its margins decline because of its lack of access to an optimum mix of crudes or operating inefficiencies, or (3) PDVSA exerts negative influence on management's decisions, increasing CITGO Petroleum's credit risk, although it should be noted that the current sanctions have resulted in a severing of financial and operational ties. The principal methodology used in this rating was Refining and Marketing Industry published in November 2016. CITGO Petroleum, headquartered In Houston, Texas, is an independent refining company with a capacity of 769,000 barrels per day (bpd) across three large refineries that have good logistical and market positions in the US Gulf Coast and Upper Midwest markets. The company is a wholesale refiner that sells a large portion of its refined products under the CITGO brand through around 4,500 independently owned and operated service stations. CITGO Petroleum is a wholly owned subsidiary of PDVSA, the state oil company of Venezuela. As of September 30, 2020 CITGO Petroleum reported assets and last-twelve-month adjusted EBITDA of $9.4 billion and $227 million, respectively. CITGO PETROLEUM: S&P Rates $650MM Senior Secured Notes 'B+' ----------------------------------------------------------- S&P Global Ratings assigned its 'B+' rating and '1' recovery rating to CITGO Petroleum Corp.'s $650 million senior secured notes due in 2026. The '1' recovery rating indicates its expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a default. The notes rank pari passu with CITGO Petroleum's existing senior secured notes and term loan with a first-priority claim on the company's assets. CITGO intends to use the net proceeds, together with cash on hand, to repay the $650 million 6.25% bonds due in 2022. CNX RESOURCES: Moody's Hikes CFR to Ba3 & Alters Outlook to Stable ------------------------------------------------------------------ Moody's Investors Service upgraded CNX Resources Corporation's Corporate Family Rating to Ba3 from B1, Probability of Default Rating to Ba3-PD from B1-PD, and existing senior unsecured notes to B1 from B3. The Speculative Grade Liquidity Rating remains unchanged at SGL-2. The rating outlook was changed to stable from positive. Concurrently, Moody's upgraded CNX Midstream Partners LP's, a wholly owned subsidiary of CNX, Corporate Family Rating to Ba3 from B1, Probability of Default Rating to Ba3-PD from B1-PD, and senior unsecured notes rating to B1 from B3. The rating outlook was changed to stable from positive. "The upgrade of CNX's credit ratings recognizes its substantial free cash flow generation capacity, supported by its flexible capital allocation program, high capital efficiency and extensive hedging program," said Elena Nadtotchi, Senior Vice President at Moody's. "CNX aims to use its free cash flow to reduce debt in 2021-22 and should continue to exhibit improving leverage metrics and good liquidity." Upgrades: Issuer: CNX Resources Corporation Probability of Default Rating, Upgraded to Ba3-PD from B1-PD Corporate Family Rating, Upgraded to Ba3 from B1 Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD5) from B3 (LGD5) Issuer: CNX Midstream Partners LP Probability of Default Rating, Upgraded to Ba3-PD from B1-PD Corporate Family Rating, Upgraded to Ba3 from B1 Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD5) from B3 (LGD5) Outlook Actions: Issuer: CNX Resources Corporation Outlook, Changed To Stable From Positive Issuer: CNX Midstream Partners LP Outlook, Changed To Stable From Positive RATINGS RATIONALE The upgrade of CNX's CFR to Ba3 reflects its modest execution and operating risks and Moody's view that financial risks will continue to decline. Moody's expects that the company will generate substantial free cash flow and will have significant financial flexibility to reduce debt, as it aims to achieve 1.5x debt/EBITDA leverage in the medium term. CNX's financial policy and deleveraging target are supported by its consistent and effective management of commodity price risks. The company maintains an extensive hedging program with minimal commodity price risk in 2021-23 and beyond. The Ba3 CFR further reflects CNX's single basin concentration in Appalachia, subjecting its natural gas production to volatile basis differentials, that the company also hedges. CNX does not target growth in production in the near term and focuses on maximizing capital efficiency and cash flow. The company demonstrates leading returns on capital, measured by its Leveraged Full Cycle Ratio (LFCR), supported by its competitive costs, limited gathering and transportation expenses compared to some in-basin peers, and extensive hedging. The stable outlook on CNX's ratings reflects Moody's expectation that the company will maintain a balanced approach in allocating its free cash flow to debt reduction and shareholder distributions. CNX's senior unsecured notes are rated B1, one notch below the Ba3 CFR, given the significant size of the secured credit facility in the capital structure that has a priority claim and security over substantially all of the E&P assets. The senior notes are unsecured and guaranteed by subsidiaries (excluding CNXM) on a senior unsecured basis. CNX maintains good liquidity through 2021, reflected in the SGL-2 rating. The liquidity position is underpinned by sizable positive free cash flow generation, extensive hedging and reduced growth investment. Liquidity is also supported by its committed $1.8 billion secured revolving credit facility that matures in April 2024. As of December 31, 2020, CNX reported about $1.6 billion availability under its secured credit facility (excluding LC's) and full compliance under the covenants. The facility includes two financial covenants (a maximum net leverage ratio of 4.0x and a minimum current ratio of 1x) and Moody's expects CNX to remain in compliance with covenants though 2021. CNX benefits from an extended maturity profile, with the next bond maturity in 2026, when the company will need to manage several maturities, including $400 million notes issued by CNXM and $345 million convertible notes issued by CNX. The upgrade of CNXM's CFR to Ba3, in step with the upgrade of the CNX's ratings, reflects high reliance of its business and governance on CNX, its main customer and owner. The upgrade also recognizes strong free cash flow generation by CNXM, which should create sufficient flexibility to accelerate deleveraging of the subsidiary's balance sheet. The modest size and high degree of geographical concentration of CNXM remain its limiting credit factors on a standalone basis. The stable outlook on CNXM ratings follows the outlook on the ratings of CNX. The B1 rating on CNXM's senior notes is one notch below its CFR, reflecting the high proportion of secured debt in the capital structure. The revolving credit facility is senior secured and has a priority claim to substantially all of CNXM's assets. The senior notes are unsecured and guaranteed by subsidiaries on a senior unsecured basis. CNXM liquidity is good, underpinned by a $600 million senior secured revolving facility. The facility matures in April 2024 and is supported by assets and cash flow of the midstream subsidiary. It has several leverage covenants, including debt/EBITDA not exceeding 5.25x, secured debt/EBITDA not exceeding 3.5x and minimum interest coverage of at least 2.5x. Moody's expect CNXM to maintain good headroom for future compliance with these covenants through 2021. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS CNX's ratings may be upgraded if it demonstrates replacement of reserves amid modest growth in production and a broader recovery in the natural gas sector. The ratings could be upgraded if CNX continues to reduce its debt, with debt/production declining towards $6,000/boe and RCF/debt at above 30%, with sustained good liquidity and solid capital returns, with LFCR maintained above 1.5x. Deteriorating cash margins, capital returns and operating cash flow or a substantial increase in leverage with RCF/debt declining below 20% could result in a downgrade of the ratings. CNXM ratings are likely to be upgraded in step with the ratings of CNX, if the company maintains its solid credit metrics on a standalone basis. CNXM ratings may be downgraded if its liquidity or standalone leverage weaken, or if the ratings of CNX are downgraded. CNX Resources Corporation is a sizable publicly traded independent exploration and production company operating in the Appalachian Basin. It controls substantial resources in Marcellus and Utica Shale. CNX Midstream Partners LP, a wholly owned subsidiary of CNX, owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. The principal methodology used in rating CNX Resources Corporation was Independent Exploration and Production Industry published in May 2017. CONFLUENT HEALTH: Moody's Completes Review, Retains B3 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Confluent Health, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Confluent Health, LLC's B3 Corporate Family Rating reflects its moderately high financial leverage and small, but growing, scale relative to physical therapy peers. The rating is challenged by the relatively low barriers to entry in the physical therapy industry. The B3 rating benefits from low working capital and capital expenditures requirements as well as growing industry demand for physical therapy. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. CORELOGIC INC: S&P Places 'BB' ICR on CreditWatch Negative ---------------------------------------------------------- S&P Global Ratings placed its ratings on property data and analytics provider CoreLogic Inc., including the 'BB' issuer credit rating, on CreditWatch with negative implications. S&P expects to resolve CoreLogic's CreditWatch when details about the acquisition deal become available, most likely at transaction close. CoreLogic has entered into a definitive agreement to be acquired by private equity sponsors Stone Point Capital LLC and Insight Partner. The agreement values CoreLogic's equity at about $6 billion; however, transaction and financing details were not disclosed. S&P said, "The CreditWatch placement reflects our belief that the pending acquisition of CoreLogic by financial sponsors Stone Point Capital and Insight Partner will likely increase debt in the company's capital structure. This could weaken its credit metrics well beyond our downgrade threshold. The transaction is expected to close in the second quarter of 2021. "We will resolve the CreditWatch over the next 90 days or at transaction close once we have details on the acquisition and new capital structure to review the potential impact on CoreLogic's credit metrics, and the growth strategy and financial policy under its new owner. We could lower the rating one or more notches depending on the amount of incremental debt." CRECHALE PROPERTIES: Seeks to Hire Lentz & Little as Legal Counsel ------------------------------------------------------------------ Crechale Properties, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Mississippi to hire Lentz & Little, PA as its legal counsel. The firm's services include: (a) advising the Debtor concerning questions arising in the conduct and administration of its estate and concerning the Debtor's rights and remedies with regard to the estate's assets and claims of creditors and other parties in interest; and (b) assisting in the preparation of pleadings, motions, notice and orders, which are required for the orderly administration of the estate. The firm will be paid at these rates: William J. Little, Jr. $300 per hour W. Jarrett Little $250 per hour Para-professionals $75 per hour As disclosed in court filings, Lentz & Little has no connection or affiliation with the Debtor, its creditors and any party in interest appearing in its Chapter 11 case. The firm may be reached at: W. Jarrett Little, Esq. William J. Little, Jr., Esq. Lentz & Little, PA 2505 14th Street, Suite 500e Gulfport, MS 39501 Tel: (228) 867-6050 Email: jarrett@lentzlittle.com bill@lentzlittle.com About Crechale Properties Crechale Properties, LLC is primarily engaged in the operation of apartment buildings. Crechale Properties filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case No. 21-50079) on Jan. 21, 2021. Elizabeth Crechale, manager, signed the petition. At the time of filing, the Debtor estimated $1 million to $10 million in assets and $10 million to $50 million in liabilities. Judge Katharine M. Samson presides over the case. Lentz & Little, PA serves as the Debtor's legal counsel. CROWN ASSETS: Granted Cash Collateral Access on Final Basis ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia, Gainesville Division, has authorized Crown Assets, LLC to use cash collateral on a final basis. The Debtor is a borrower or guarantor on a loan evidenced by a note with the U.S. Small Business Administration, a note with Gelt Financial, LLC, and a note with Quantum National Bank, which assert security interests in certain of the Debtor's personal property. As of the Petition Date, the amount owed collectively to the Lenders is $1,822,682. The Debtor says the revenue from its business may constitute Cash Collateral. The Debtor believes the Lenders assert an interest in the Cash Collateral. The Debtor is authorized to use Cash Collateral, nunc pro tunc to the Petition Date, consistent within a 20% overall variance of the Budget, except such variance will not apply to the salaries to be paid to Mr. Karan Ahuja and Mr. Charanjeev Singh. As adequate protection, the Lenders are granted valid and properly-perfected liens on all property acquired by the Debtor after the Petition Date that is the same or similar nature, kind, or character as each party's respective pre-petition collateral. The salaries of $6,000 per month collectively between Karan Ahuja and Charanjeev Singh are approved, provided however, that payment of the Salaries will be deferred until the week of April 19, 2021, and will only be paid to the extent the Debtor has sufficient cash at that time to make such payments, after payment of all other approved expenses in the Budget. If the Debtor does not have sufficient cash at that time to pay the Salaries, the Employees will be entitled to payment of any unpaid portion of the Salaries at such time as the Debtor has sufficient cash to make the payments. King Group MGMT, LLC, Maharaja Investments, LLC, Dr. Sahib Arora, and Mr. Vineet Singh filed their Objection to the Debtor's Motion for Authority to Use Cash Collateral, asserting an interest in the Cash Collateral. The Debtor disputes that the Maharaja Parties hold an interest in the Cash Collateral. The Court makes no finding at this time regarding whether or not Maharaja Parties hold an interest in Cash Collateral, and all parties' rights on that issue are reserved. A copy of the Final Order and the Debtor's 13-week budget through April 19 is available at https://bit.ly/3tr6DhH from PacerMonitor.com. About Crown Assets, LLC Crown Assets, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-21451) on Oct. 25, 2020. Karan S. Ahuja, owner, signed the petition. At the time of filing, the Debtor disclosed between $1 million and $10 million in both assets and liabilities. Judge James R. Sacca oversees the case. Rountree Leitman & Klein, LLC serves as the Debtor's legal counsel. CROWN REMODELING: Gets Cash Collateral Access Thru April 26 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland, Baltimore Division, has authorized Crown Remodeling LLC to use cash collateral on an interim basis through April 26, 2021, for ordinary course purposes in accordance with the terms and conditions of a Third Interim Order and the Debtor's budget. The Debtor requires continued immediate use of cash collateral to avoid immediate and irreparable harm to its bankruptcy estate. The Debtor is directed to deposit any and all cash, checks or monies it collects, receives or derives from the operation of its business, including, but not limited to, all cash, checks and monies received or hereafter received by the Debtor from the collection of its business accounts receivable (whether pre- or post-petition) into the Debtor's pre-petition bank accounts, or, if one or more debtor-in-possession bank accounts are opened, into one of those debtor-in-possession accounts, and said funds will also be subject to the provisions for use of cash collateral. The Debtor will continue to provide to the Subchapter V Trustee appointed by the US Trustee a bi-weekly cash report, with copies to the United States Small Business Administration, c/o Assistant United States Attorney Alan C. Lazerow and file monthly operating reports within 20 days after the end of each month for that month, as required under the United States Trustee's Guidelines. As adequate protection, the creditors are granted a replacement lien in and to all post-petition assets of the Debtor, of any kind or nature whatsoever, real or personal, whether now existing or hereafter acquired, and the proceeds of the foregoing, to the same extent and with the same priority as the creditor's interest in the prepetition collateral. The liens and security interests are duly perfected without the necessity for the execution, filing or recording of financing statements, security agreements and other documents which might otherwise be required pursuant to applicable non-bankruptcy law for the creation or perfection of such liens and security interests. A final hearing is scheduled for April 19 at 3 p.m. A copy of the order and the Debtor's 17-week budget through the week of April 19 is available for free at https://bit.ly/2MTX6PE from PacerMonitor.com. About Crown Remodeling LLC Based in Owings Mills, Md., Crown Remodeling, LLC -- https://www.crownremodelingllc.com -- is a general contractor that offers roofing installation, storm damage repair, window services, chimney repair, and lead paint services. Crown Remodeling sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No. 20-20690) on Dec. 10, 2020. Crown Remodeling President Jeff Weissberg signed the petition. At the time of filing, Debtor had total assets of $231,157 and liabilities of $1,219,792. Judge David E. Rice oversees the case. Jeffrey M. Sirody and Associates is the Debtor's legal counsel. Scott Miller is the Subchapter V Trustee appointed by the U.S. Trustee. CROWN REMODELING: Seeks to Hire Luxenburg & Bonfin as Accountant ---------------------------------------------------------------- Crown Remodeling, LLC seeks approval from the U.S. Bankruptcy Court for the District of Maryland to hire Luxenburg & Bonfin, LLC as its accountant. The firm's services include: a. preparing monthly operating reports; b. preparing and filing taxes with the appropriate authorities; and c. taking other necessary actions incident to the proper preservation and administration of the Debtor's Chapter 11 case. The Debtor expects to pay the firm between $2,500 and $12,500 per year for its services. As disclosed in court filings, Luxenburg & Bonfin does not represent any interest adverse to the Debtor and its estate in matters upon which the firm will be engaged. The firm can be reached through: Samuel N. Luxenburg, CPA Luxenburg & Bonfin, LLC 28 Walker Ave. Pikesville, MD 21208 Phone: +1 410-358-7255 About Crown Remodeling LLC Based in Owings Mills, Md., Crown Remodeling, LLC is a general contractor that offers roofing installation, storm damage repair, window services, chimney repair, and lead paint services. Visit https://www.crownremodelingllc.com for more information. Crown Remodeling sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No. 20-20690) on Dec. 10, 2020. Crown Remodeling President Jeff Weissberg signed the petition. At the time of the filing, the Debtor had total assets of $231,157 and liabilities of $1,219,792. Judge David E. Rice oversees the case. The Debtor tapped Jeffrey M. Sirody and Associates as its legal counsel and Luxenburg & Bonfin, LLC as its accountant. DATTO INC: Moody's Hikes CFR to B1 & Rates $200M Secured Notes B1 ----------------------------------------------------------------- Moody's Investors Service upgraded Datto, Inc.'s Corporate Family Rating to B1, from B2, and assigned a B1 rating to the company's $200 million senior secured revolving credit facility. Moody's affirmed Datto's Probability of Default rating of B2-PD and assigned an SGL-1 Speculative Grade Liquidity rating reflecting very good liquidity. The ratings outlook is stable. Datto, Inc. is a wholly-owned subsidiary of Datto Holding Corp. Upgrades: Issuer: Datto, Inc. Corporate Family Rating, Upgraded to B1 from B2 Affirmations: Issuer: Datto, Inc. Probability of Default Rating, Affirmed B2-PD Assignments: Issuer: Datto, Inc. Speculative Grade Liquidity Rating, Assigned SGL-1 Gtd Senior Secured Bank Credit Facility, Assigned B1 (LGD3) Withdrawals: Issuer: Datto, Inc. Gtd Senior Secured Bank Credit Facility, Withdrawn , previously rated B2 (LGD4) Outlook Actions: Issuer: Datto, Inc. Outlook, Changed To Stable From Negative RATINGS RATIONALE The upgrade of the CFR to B1 reflects Datto's increased financial flexibility following the IPO and Moody's expectations that the company will maintain strong revenue growth and a moderate financial risk profile. Pro forma for the IPO and repayment of debt, Datto had no debt outstanding and approximately $144 million of cash balances as of September 30, 2020. Datto's credit profile benefits from a large addressable market for IT outsourcing by small and medium businesses (SMB) globally and secular tailwinds from growing penetration of technology solutions in the SMB segment. Moody's expects revenue growth in the low to mid-teens percentages over the next 12 to 24 months although growth in adjusted EBITDA and operating cash flow will likely be modest as the company will prioritize investments to accelerate growth. Datto has a good track record of generating growth and increasing profitability since its combination with Autotask Holdings in 2017. The company generates over 90% of its revenues under subscription agreements with high retention rates. Datto has a large and rapidly growing network of Managed Service Providers (MSPs) which ultimately drives its revenue growth. Datto's growth in Annual Recurring Revenues (ARR) slowed from the 20% to 25% range prior to the outbreak of coronavirus, to the high teens. Moody's expects ARR growth to accelerate to the 20% to 25% range over the next 12 to 24 months as economic conditions affecting the SMB customer segment improve and the company increases investments to accelerate growth. Moody's expects Datto to generate about $80 million in annual free cash flow over this period. Datto's ratings are constrained by its limited product diversity, modest operating scale, and the highly competitive market for IT outsourcing services for SMBs. Datto's distribution through its MSP partners is highly efficient for its target addressable market. But the company has non-exclusive relationships with MSPs and it relies on the effectiveness of MSPs to drive sales productivity. Governance considerations, specifically the risk that financial policies could become more shareholder friendly as affiliates of Vista Equity still own about a 70% equity interest after the IPO, also constrain Datto's ratings. The company has a short track record of operating as a public company and Moody's expects financial policies to evolve as the business matures. As a provider of solutions that store, protect and transfer data for its ultimate SMB customers, Datto faces risk of reputational harm or adverse impact on business in the event of a cybersecurity breach. The stable outlook reflects Moody's expectations for revenue growth in the low to mid-teens, good liquidity, and approximately $80 million in annual free cash flow over the next 12 to 18 months. The Probability of Default rating of B2-PD, relative to the B1 CFR, reflects Datto's post-IPO capital structure, which currently consists of only a first-lien revolving credit facility, and requires the company to maintain first lien leverage ratio below 4x. The SGL-1 rating reflects Moody's expectations that Datto will maintain very good liquidity comprising growing cash balances, access to funds under its $200 million revolving credit facility, and good free cash flow. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given Datto's modest scale, Moody's expectations for pressure on operating margins due to elevated investments, and Datto's concentrated ownership, a ratings upgrade is not expected over the next 12 to 24 months. Moody's could upgrade Datto's ratings over time if the company establishes a track record of conservative financial policies and maintains strong growth in revenues and operating cash flow. The rating could be downgraded if revenue growth does not accelerate as anticipated. In addition, the rating could be downgraded if operating challenges or aggressive financial policies lead to an erosion in liquidity, Moody's adjusted Debt/EBITDA approaches 4x, or free cash flow relative to total adjusted debt falls below 15%. The principal methodology used in these ratings was Software Industry published in August 2018. Datto, Inc., a wholly-owned subsidiary of Datto Holdings Corp., is a provider of technology solutions that MSPs use to manage their SMB customers and sell to their SMB customers. Affiliates of Vista Equity own an approximately 70% equity interest in Datto Holding Corp. DATTO INC: S&P Upgrades ICR to 'BB-' Following Parent's IPO ----------------------------------------------------------- S&P Global Ratings raised its ratings on Datto Inc. to 'BB-' from 'B' and removed them from CreditWatch, where S&P placed them with positive implications on Oct. 15, 2020. S&P said, "At the same time, we are assigning our 'BB+' issue-level rating and '1' recovery rating (rounded estimate: 95%) to the company's new $200 million first-lien revolving credit facility due in 2025. "We are also withdrawing our 'B' issue-level rating and '3' recovery rating on the company's $50 million revolving credit facility due in 2024 and a $550 million senior secured term loan maturing in 2026 because they were repaid." Datto Inc.'s parent, Datto Holdings Inc., recently completed its initial public offering (IPO), and used the majority of the net proceeds from its IPO to repay all of its funded debt. With this repayment, S&P's estimate that the company's S&P Global Ratings' adjusted leverage has improved to less than 0.5x from approximately 5x as of Sept. 30, 2020. The upgrade reflects that after completing its IPO Datto Inc., now has substantially improved credit metrics. It also incorporates S&P's view that although there continues to be a risk of aggressive policies given that financial sponsor Vista Equity still retains effective control and influence over Datto, a declining share of financial-sponsor ownership should support less aggressive policies in the future. IPO proceeds have significantly improved Datto's credit profile. Datto generated total net proceeds of about $641.6 million in its recently completed IPO. Datto used about $590 million of these net proceeds to repay all of its funded debt, including borrowing under both its $550 million senior term loan and revolving credit facility (RCF). Datto also retained the $51.4 million of remaining proceeds from the IPO on its balance sheet, bringing total cash to $150 million, and also entered into a new $200 million revolving credit facility, which is undrawn. Datto now carries substantially improved credit metrics, including S&P Global Ratings-adjusted leverage of less than 0.5x, compared to 4.9x before the IPO transaction. Moreover, the repayment will also eliminate the company's ongoing cash interest payments, which will enhance cash flow generation prospects to fund working capital and growth initiatives. Datto remains financial-sponsor controlled, which constrains our assessment of its financial risk profile. After the IPO, financial sponsor Vista Equity continues to hold about 70.7% ownership in Datto. S&P said, "Also, through its Director Nomination Agreement, Vista retains the exclusive right to designate all nominees to the board of directors, which, in our view, enables it to control all aspects of financial decision-making. As Vista continues to exert significant control over Datto's financial decision-making, we continue to classify it as financial-sponsor owned, which constrains our assessment of its financial risk profile. Although we don't discount the potential for leveraging acquisitions or shareholder returns in the future, we believe that Vista will reduce its stake in Datto over the next several years, which in our view, should support a more moderate financial policy. We think it is unlikely that leverage would increase above 4x in such a scenario because Datto has a cash balance of about $150 million and the lack of funded debt offers ample capacity to accommodate higher growth levels of investments or mergers and acquisitions (M&A)." Datto has attractive organic growth opportunities, but these investments will likely constrain profitability over the next few years. Datto generates substantially all of its revenue through its managed service provider (MSP) partnership network, who both resell its Unified Continuity and networking products and also use its business management offerings to run their respective business. S&P said, "In our view, this business model provides multiple opportunities for growth, including expanding the number of MSP partners both domestically and internationally and also cross-selling and upselling new or existing solutions to these partners. That said, to facilitate this growth, we believe Datto will need to make investments in marketing, sales force, and research and development." S&P said, "Datto's recent operating performance has been resilient through the COVID-19 pandemic and we expect this trend to continue. COVID-19-related business disruption and deteriorating economic conditions have hurt many small to midsize businesses (SMBs), a customer base that Datto exclusively serves. As expected, this exposure has created some operating headwinds for Datto, including lower sales bookings and slower cash collections from existing MSP partners. Still, considering Datto experienced relatively stable churn rates, about 2%, and also that it continued to increase both its subscription revenue (to 94% from 90% at the end of 2019) and MSP partner count (increased to 17,200 from 16,600 at the end of 2019), we think Datto's recent performance has been relatively resilient. Over the first nine months of 2020, Datto achieved revenue growth of about 14%. This increased operating leverage alongside a reduction in variable expenses and improved its S&P Adj EBITDA margins to 24.8% by about 450 basis points (bps) improvement when compared to its margins of 20.4% at the end of fiscal 2019. Datto also began generating positive free cash flow in its second and third quarters of 2020, the second consecutive quarter of positive free cash flow in the company's recent history. Moreover, the roughly $45 million of free operating cash flow (FOCF) generated through the first nine months of 2020, marked a substantial improvement compared to negative free cash flow of $35 million in fiscal 2019. "The stable outlook reflects our view that Datto's strong growth in its subscription bookings and favorable industry growth environment will allow it to increase revenue faster than the broader enterprise software industry. It also assumes that despite making growth investments, which will modestly weaken EBITDA margins, free cash flow generation will remain strong, which should allow Datto to remain in a net cash position for at least the next 12 months. "We could lower our rating on Datto if we expect adjusted debt leverage to increase and be sustained at more than 4x. This could occur if the company pursues acquisitions or shareholder returns that substantially increase debt and impair credit metrics." Datto's current financial-sponsor ownership limits the potential for an upgrade at this time; however, S&P could consider a higher rating in the future if: -- Vista further reduces it ownership in Datto, and management demonstrates a willingness and ability to sustain adjusted debt leverage at less than 3x. -- S&P believes Datto has strengthened its competitive position relative to peers. This could occur if Datto can sustain its above-average growth trajectory, increase EBITDA margins, and generate higher levels of FOCF. DCERT BUYER: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed DCert Buyer, Inc.'s (operating as DigiCert) Long-Term Issuer Default Rating (IDR) at 'B'. The Rating Outlook is Stable. Fitch has also affirmed DCert Buyer's $125 million first lien secured revolver and upsized $1.975 billion first-lien term loan at 'BB-'/'RR2' and published a 'CCC+'/'RR6' rating for the upsized $605 million second-lien term loan. DigiCert plans to upsize its first lien term loan by $337 million and 2nd lien term loan by $130 million. The proceeds, along with cash on balance sheet, will be used for dividend payment to shareholders. The revolving credit facility remains undrawn. The ratings reflect DigiCert's resilient business model and dominant position within the Public Key Infrastructure (PKI) and Certificate Authority (CA) markets that enable continuing growth of digitalization of information supporting growth in use cases and internet traffic. The company's technology is utilized by 89% of Fortune 500 companies and 87% of e-commerce transactions. DigiCert has experienced limited impact in its business from the coronavirus pandemic given the mission criticality of its products for customers with an internet presence. In spite of DigiCert's strong operating profile, its private equity ownership is likely to optimize return on equity (ROE) by maintaining some level of financial leverage. This is likely to limit positive rating actions. With the planned dividend recapitalization, Fitch forecasts gross leverage to remain at over 7x through 2022 leaving no capacity for incremental debt in the near term. KEY RATING DRIVERS Strong Position in Niche Segment: DigiCert has effectively consolidated the CA industry with a solid leading position and an even stronger position in the core Extended Validation (EV) and Organizational Validation (OV) segments. The industry is expected to grow in the high single digits in the near term, with EV and OV growing at near 10% and Domain Validation (DV) at mid-single-digits. Limited Technology Obsolescent Risks: With increasing information being exchanged over the internet and expanding footprint of devices, the need to ensure data security will continue to rise. Secure Sockets Layer (SSL) and Public Key Infrastructure (PKI) provide important security by authenticating devices and websites and by encrypting data transported over the internet. Fitch believes SSL and PKI technologies will be continuously enhanced, including adaptation for quantum computing, by building on the existing foundations to ensure full backward compatibility rather than being replaced by new disruptive technologies. Such technological evolution tends to favor incumbents such as DigiCert. Benefits from New Access Platforms and Applications: While access to internet data has evolved from browsers to mobile applications, and increasingly to Internet of Things, PKI and SSL technologies provide authentication of access devices and secure data across various access platforms. Fitch expects applications of PKI and SSL technologies to continue to grow along with new access platforms and devices. In addition, the company also anticipates future growth opportunities in emerging technologies to enable greater digital security including code signing certificates, document signing certificates and transport layer security (TLS) management. Browser Lifecycle a High Entry Barrier: CAs need to be embedded into various available access points, which could result in new CAs being incompatible with outdated browsers and devices, as it could take five to 10 years for older access points to be eliminated from the market. Without full compatibility with all existing access points, the value of certificates issued by new CAs diminishes. Fitch believes the inability to be fully compatible is an effective entry barrier. Recurring Revenue and Strong Profitability: Consistent with historical revenue trends, DigiCert revenue is expected to be 100% subscription-based with over 100% net retention rate. Fitch expects the continuing growth in the underlying demand for CAs should provide the foundation for resilient market growth. This results in a highly predictable and profitable operating profile for the company. Given the concentrated industry structure and high entry barriers, Fitch expects DigiCert to sustain strong profitability. Ownership Could Limit Deleveraging: DigiCert is majority owned by private equity firms Clearlake and TA Associates. Fitch believes private equity ownership is likely to result in some level of ongoing leverage to optimize ROE. Fitch expects the company to gradually delever through EBITDA growth with periodic dividend recapitalization that could reset financial leverage at elevated levels. This could constrain upside in ratings. DERIVATION SUMMARY DigiCert Holdings, Inc. is a CA that enables trusted communications between website servers and terminal devices such as browsers and smartphone applications. Increasingly, applications are expanding to include Internet of Things terminal devices. A CA verifies and authenticates the validity of websites and their hosting entities, and facilitates the encryption of data on the internet. CA services are 100% subscription-based and generally recurring in nature. DigiCert is the revenue market share leader in the space after acquiring Symantec's Website Security Services in 2017. The merger combined DigiCert's technology platform with Symantec's large customer base resulting in a robust operating profile. The 'B' IDR reflects Fitch's view that DigiCert's gross leverage is consistent with 'B' rating category peers with solid operating profiles. Despite the strong profitability, Fitch believes the private equity ownership is likely to prioritize ROE optimization over accelerated deleveraging, resulting in gross leverage remaining elevated at approximately 7.0x. Fitch's ratings on DigiCert reflect its view of the resilience and the predictability of DigiCert's revenue and profitability as a result of the continuing demand for trust over the internet. DigiCert has solidified its strong position in the segment as illustrated through the company's operating profile. Within the broader internet security segment, NortonLifeLock Inc. (BB+/Stable) is also a leader in its space. NortonLifeLock has larger revenue scale and lower financial leverage than DigiCert, but NortonLifeLock operates in a more competitive space and does not have the market dominant position DigiCert has in its niche space as reflected in their respective profit margins. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Revenue growth in the mid- to high-single-digits; -- EBITDA margins expanding modestly in 2021 then remaining stable; -- Capex at 1.0%-2.0% of revenue; -- Dividend to the sponsors of $600 million between 2022 and 2023 funded with a combination of incremental debt and cash on balance sheet; -- $50 million aggregate acquisitions per year through 2023 funded with internal cash. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that DCert Buyer would be reorganized as a going-concern in bankruptcy rather than liquidated. In estimating a distressed EV for DigiCert, Fitch assumes a combination of customer churn and margin compression on lower revenue scale in a distressed scenario to result in approximately 10% revenue decline leading to a going concern EBITDA that is approximately 20% lower relative to fiscal 2020 EBITDA. As DigiCert's business model depends on the ability to provide trust supported by its technology infrastructure, customer churn could rise in times of distress. Fitch applies a 7.0x multiple and a 10% administration claim to arrive at an adjusted EV of $1,512 million. The multiple is higher than the median TMT enterprise value multiple due to the company's strong market positioning that is reflected in its profitability. In the 21st edition of Fitch's Bankruptcy Enterprise Values and Creditor Recoveries case studies, Fitch notes nine past reorganizations in the Technology sector with recovery multiples ranging from 2.6x to 10.8x. DigiCert's operating profile is supportive of a recovery multiple in the upper-bound of this range. The company's revolving credit facility and first-lien secured debt are rated 'BB-'/'RR2'. The second-lien secured debt is rated 'CCC+'/'RR6'. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch's expectation of forward total debt with equity credit/operating EBITDA sustaining below 6.0x or FFO leverage sustaining below 6.5x; -- (Cash from Operations-capex)/total debt with equity credit above 6.5%; -- Stable market position as demonstrated by mid-single-digits revenue growth and stable EBITDA and FCF margins. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO fixed-charge coverage below 1.5x; -- Fitch's expectation of forward total debt with equity credit/operating EBITDA sustaining above 7.5x or FFO leverage sustaining above 8.0x; -- (Cash from operations-capex)/total debt with equity credit below 3.5%; -- Weakening market position as demonstrated by sustained negative revenue growth and EBITDA and FCF margin erosion. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: The company had $93 million in readily available cash at end of 3Q 2020. Fitch forecasts DigiCert to generate EBITDA near $300 million in 2020, resulting in over $115 million in readily available cash exiting 2020. Additionally, DigiCert's liquidity is supported by an undrawn $125 million revolving facility and a favorable debt maturity schedule, with the nearest term loan maturing in 2026. Liquidity may potentially be hampered by special dividends to the sponsors. Fitch assumes special dividends of $600 million in 2023; however, liquidity remains solid as DigiCert continues to generate high FCF margins. ESG Considerations 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. DCERT BUYER: S&P Stays 'B-' Issuer Credit Rating, Outlook Stable ---------------------------------------------------------------- S&P Global Rating's 'B-' issuer credit rating on DCert Buyer Inc. and the stable outlook are unchanged. S&P assigned its 'CCC' issue-level and '6' recovery ratings on the company's second-lien debt. S&P is also affirming its 'B-' rating on the company's existing senior secured first-lien and revolving credit facility. The stable outlook reflects S&P Global Ratings' view of DigiCert's leadership position in the SSL certificate market and S&P's expectation the company will grow revenues and free cash flow during fiscal 2021. DigiCert, a certification authority that provides secured socket layers (SSL) certificates and managed public key infrastructure solutions with an emphasis on authentication and encryption, announced a dividend recapitalization. The company plans to issue a $337 million incremental first-lien term loan and a $130 million incremental second-lien term loan. As part of this transaction, the company will make a dividend payout of $570 million. DigiCert's business likely to remain highly recurring with strong customer-retention rates and above-average profitability. S&P said, "We expect DigiCert to maintain its profitability, with EBITDA margins in the mid-50% area and good free cash flow generation. We also expect the company to maintain its position as a leading provider of high assurance SSL certificates. Additional opportunities within 5G, IoT, and DevOps will support mid- to high-single-digit-percent revenue growth." Credit metrics are in line with 'B-' rated peers. DigiCert's business has performed well in 2020 despite the pandemic, with revenues and profitability in line with the company's 2020 budget. With the incremental debt issuance, S&P expects S&P Global Ratings-adjusted leverage to increase to about 9x and free cash flow to debt of about 5%, in line with other 'B-' rated peers. DIRECT DIESEL: Case Summary & 12 Unsecured Creditors ---------------------------------------------------- Debtor: Direct Diesel, Inc. DBA Prosource Diesel Diesel Truck Parts Direct DBA Pro-Direct Diesel 2125 Sunhaven Court Fairfield, CA 94533 Chapter 11 Petition Date: February 5, 2021 Court: United States Bankruptcy Court Eastern District of California Case No.: 21-20431 Judge: Hon. Christopher D. Jaime Debtor's Counsel: Arasto Farsad, Esq. FARSAD LAW OFFICE, P.C. 1625 The Alameda, Suite 525 San Jose, CA 95126 Tel: 408-641-9966 E-mail: farsadecf@gmail.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Andrew P. Kolonay, president. A copy of the petition containing, among other items, a list of the Debtor's 12 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/3AU3A2Y/Direct_Diesel_Inc__caebke-21-20431__0001.0.pdf?mcid=tGE4TAMA DIVERSIFIED HEALTHCARE: S&P Rates New Unsec. Notes Due 2031 'BB' ---------------------------------------------------------------- S&P Global Ratings assigned its 'BB' issue-level rating and '2' recovery rating to Diversified Healthcare Trust's (DHC) proposed unsecured notes due 2031. The company plans to use the proceeds from these notes to repay its $200 million term loan and redeem $300 million of its outstanding 6.75% unsecured notes due 2021 on or after June 15, 2021, when the notes become redeemable without the payment of a premium. The '2' recovery rating indicates its expectation for substantial (70%-90%; rounded estimate: 85%) recovery in the event of a payment default. The 'BB' issue-level rating is one notch above its 'BB-' long-term issuer credit rating on DHC. S&P said, "Our 'BB-' issue-level rating and '4' recovery rating on DHC's unsecured notes that do not have subsidiary guarantees remain unchanged, though we have revised our rounded recovery estimate to 30% from 45%. Therefore, the '4' recovery rating now indicates our expectation for average (30%-50%; rounded estimate: 30%) recovery in the event of a payment default." DW PRODUCTIONS: Case Summary & 16 Unsecured Creditors ----------------------------------------------------- Debtor: DW Productions, LLC DBA DWP Live 885 Elm Hill Pike Nashville, TN 37210 Business Description: DW Productions, LLC -- https://dwplive.com -- specializes in projection mapping, live events, laser scanning, projection systems, equipment rental and sales. Chapter 11 Petition Date: February 4, 2021 Court: United States Bankruptcy Court Middle District of Tennessee Case No.: 21-00368 Judge: Hon. Randal S. Mashburn Debtor's Counsel: Griffin S. Dunham, Esq. DUNHAM HILDEBRAND, PLLC 2416 21st Ave S, Ste 303 Nashville, TN 37212 Tel: 615-933-5850 Fax: 615-777-3765 E-mail: griffin@dhnashville.com Total Assets: $4,683,513 Total Liabilities: $7,364,004 The petition was signed by Danny Woodrow Whetstone, president. A copy of the petition containing, among other items, a list of the Debtor's 15 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/WP2Y7YI/DW_Productions_LLC__tnmbke-21-00368__0001.0.pdf?mcid=tGE4TAMA E. IMPERIAL: Auction of 100% Interests in Plamex on April 15 ------------------------------------------------------------ Jones Lang LaSalle, on behalf of Quarry Head 2017-1 Grantor Trust ("secured party"), will offer for sale at public auction 100% of the limited liability company membership interests in Plamex Investment LLC, together with certain rights and property representing, relating to, or arising from the membership interests. Based upon information provided by 3100 E. Imperial Investment LLC, it is the understanding of the secured party that (i) the membership interests constitute the principal asset of the Debtor, (ii) the membership interests and other collateral secure payment of a mezzanine loan in the original amount of $14 million made by the secured party's predecessor to the Debtor, for which events of default have occurred, are continuing and all indebtedness due thereunder has been accelerated by the secured party, (iii) the pledged entity owns Plaza Mexico, which is a retail shopping center located at SWC Long Beach Boulevard, and Imperial Highway in Lynwood, CA, and (iv) the pledged entity is the borrower under a loan in the original principal amount of $106 million that is secured by a mortgage on the property. The sale is scheduled to take place on April 15, 2021, at 10:00 a.m. (Eastern Time) in compliance with New York Uniform Commercial Code. In recognition of the Covid-19 pandemic and related limitations on public assemblies, the sale will be conducted virtually via online video conference. The URL address and password will be provided to all registered participants. An online data site for the sale is available at http://www.plazamexicouccforeclosure.com. For further information on the sale, contact: Brett Rosenberg Managing Director Jones Lang LaSalle 330 Madison Ave 4th floor New York, NY 10017 Tel: +1 212-812-5926 E-mail: brett.rosenberg@am.jll.com EAST CAROLINA COMMERCIAL: Seeks Approval to Hire Special Counsel ---------------------------------------------------------------- East Carolina Commercial Services, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of North Carolina to employ Laura Biggs, Esq., an attorney at Stubbs & Perdue, P.A., as its special counsel. Ms. Biggs was tapped as special counsel to examine possible avoidable transfers between the Debtor and its principal, Cesar Mendoza. Her hourly rate is $400. Ms. Biggs and her firm neither represent nor hold any interest adverse to the estate, according to court filings. The attorney can be reached at: Laura Biggs, Esq. Stubbs & Perdue, P.A. 2438, 9208 Falls of Neuse Rd #201 Raleigh, NC 27615 Phone: +1 919-870-6258 About East Carolina Commercial Services East Carolina Commercial Services, LLC is a Wilson, N.C.-based commercial solar installation company specializing in module installation and racking installation. East Carolina Commercial Services sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 20-02361) on June 27, 2020. Caesar Mendoza, Debtor's managing member, signed the petition. At the time of the filing, the Debtor disclosed assets of $1 million to $10 million and liabilities of the same range. Judge Joseph N. Callaway oversees the case. Sasser Law Firm and Stubbs & Perdue, P.A. serve as the Debtor's bankruptcy counsel and special counsel, respectively. ECI MACOLA: Moody's Completes Review, Retains B3 CFR ---------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of ECI Macola/Max Holding, LLC (LGP) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations ECi Macola/Max Holding, LLC's (LGP) B3 corporate family rating reflects the company's small business scale in the competitive enterprise resource planning software market, high leverage and aggressive financial policy as a result of private equity ownership. The company's acquisitive strategy raises the risks of potential integration challenges, delayed deleveraging and additional borrowings over time. ECi's benefits from an increasing proportion of subscription based revenue, solid retention rates and strong profitability. Moody's expects ECi to maintain a debt-funded acquisition based growth strategy, which will likely sustain the high leverage and limit free cash flow generation. The principal methodology used for this review was Software Industry published in August 2018. ENSEMBLE RCM: S&P Affirms 'B' ICR on Recapitalization ----------------------------------------------------- S&P Global Ratings affirmed its 'B' long-term issuer credit rating and issue-level ratings on Ensemble RCM LLC, a technology-enabled provider of revenue cycle management (RCM) services to health care providers. S&P said, "Our stable outlook reflects our expectation for adjusted debt to EBITDA in the 5x-6x range and for further deleveraging to be temporary, given our expectation for additional debt-funded dividends and acquisitions. "Our affirmation following the dividend recapitalization reflects our expectation for pro forma adjusted debt to EBITDA in the mid-6x area, declining to the mid-5x area by the end of 2021. Although we previously expected adjusted debt to EBITDA of about 2.8x in 2021, the rating incorporates our expectation that its financial sponsor ownership structure would follow an aggressive financial policy that includes leveraging events like a debt-funded dividend. We believe leverage will remain in the 5x-7x range after 2021 based on the company's growth trajectory (expected above 20% EBITDA growth in 2021 and mid-single digits in 2022 and 2023) and financial policy. We also expect free cash flow to debt of about 4% in 2021. "Ensemble performed relatively well in 2020, supporting its ability to temporarily deleverage following the debt-funded dividend but we expect leverage to remain high in the coming year. The company's adjusted EBITDA declined 4%-5%in 2020 despite investing in servicing new customers and a drastic decline in health system volumes related to the COVID-19 pandemic especially during the trough in the second quarter. Although patient volumes are still a little below pre-pandemic levels, they have been recovering, driving our view for EBITDA growth above 20% in 2021, supplemented further with significant contributions from new customers. Ensemble is likely to continue to attract new customers because the RCM industry still has good growth prospects given a compelling value proposition, and Ensemble has an emerging reputation for quality service. Ensemble also benefits from the revenue growth and acquisitions of its current clients, and hospitals are expected to grow revenue in the mid-single digits percent annually. Despite likely EBITDA growth, we expect leverage to remain high (above 5x) because we expect Ensemble to prioritize shareholder returns over permanent debt reduction. "Our ratings continue to reflect Ensemble's customer concentration and limited track record of retaining clients. Ensemble has a single customer that accounts for nearly half of its revenue, which leaves it vulnerable to any event that may reduce that customer's revenue including divestitures and closures. This large customer concentration risk is partly mitigated by a 10-year contract and the customer's significant minority equity ownership in Ensemble. The remainder of its customer base is smaller health systems that can be the target of consolidators, which is another source of risk outside of Ensemble's control. "RCM relationships are generally durable and mutually beneficial, but clients do occasionally change providers. We believe that Ensemble has a relatively short track record of retaining its clients as the age of most customer relationships is four years or less (especially full outsource solutions). "Our stable outlook reflects our expectation for adjusted debt to EBITDA to peak in the 5x-7x range with periods of deleveraging followed by debt-funded dividends and acquisitions. The outlook also reflects our expectation that the company will continue to grow EBITDA by adding new clients. "We could consider a higher rating if the company further establishes its track record of attracting and retaining a more diversified client base, and we expect adjusted debt to EBITDA to generally remain in the 5x area or below, but we view this as unlikely given financial sponsor ownership. "We could consider a lower rating if we expect adjusted debt to EBITDA to increase above 7x and free cash flow to debt to decline below 3%. This scenario could occur from the loss of several customers or a debt-funded dividend or acquisition." EQT CORP: Moody's Raises CFR to Ba2, Outlook Stable --------------------------------------------------- Moody's Investors Service upgraded EQT Corporation's Corporate Family Rating to Ba2 from Ba3, its Probability of Default Rating to Ba2-PD from Ba3-PD and its unsecured notes rating to Ba2 from Ba3. The Speculative Grade Liquidity rating SGL-2 is unchanged. The rating outlook was changed to stable from positive. "EQT's ratings upgrade reflects the company's substantial improvement in its capital efficiency demonstrated by the reserves growth through 2020, continued progress towards its debt reduction target and mitigation of its refinancing risk. The company's cost structure improvements will allow the company to generate meaningful free cash flow while maintaining its production and its improved credit metrics through the volatile natural gas price environment," commented Sreedhar Kona, Moody's senior analyst. "The company's combo development method to efficiently develop its acreage, its commodity hedge position and the prospect of further debt reduction contribute to the stable outlook." The following ratings/assessments are affected by the action: Ratings Upgraded: Issuer: EQT Corporation Corporate Family Rating, Upgraded to Ba2 from Ba3 Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD Senior Unsecured Medium-Term Note Program, Upgraded to (P)Ba2 from (P)Ba3 Senior Unsecured Notes, Upgraded to Ba2 (LGD4) from Ba3 (LGD4) Senior Unsecured Shelf, Upgraded to (P)Ba2 from (P)Ba3 Outlook Actions: Issuer: EQT Corporation Outlook, Changed to Stable from Positive RATINGS RATIONALE EQT's CFR upgrade to Ba2 from Ba3 was driven by the significant improvement in the company's capital efficiency demonstrated by its year-end 2020 reserves balance and by continued progress towards its debt reduction target and the company's mitigated refinancing risk. EQT's cost structure optimization, specifically its capital efficiency improvement through the combo development method positions the company to maintain its substantial scale while generating positive free cash flow, through the volatile natural gas price environment. EQT Ba2 CFR is supported by its size and scale, high quality acreage position and the acquisition of Chevron Corporation's (Chevron, Aa2 stable) assets in the fourth quarter of 2020. This somewhat deleveraging transaction further increased EQT's size and scale. EQT acquired approximately 335,000 net Marcellus acreage with 450 MMcfe per day of production from Chevron for a purchase price of $735 million. The company reduced debt by about $800 million since year-end 2019, and has strengthened its commodity hedge book for 2021 adding substantial certainty to 2021 cash flow. Moreover, the restrained capital spending in 2020 allowed the company to generate significant free cash flow. Moody's expects the company to exercise similar restraint on 2021 and 2022 capital spending to prioritize debt reduction over reserves and production growth. EQT's stable ratings outlook reflects the potential for the company to further improve its credit metrics through debt reduction largely from free cash flow. The company's substantial size, improved capital efficiency and its commodity hedge position also contribute to the stable outlook. EQT's senior unsecured notes are rated Ba2, the same as the company's CFR, because all of the company's long-term debt, which includes a $2.5 billion revolving credit facility (unrated), is unsecured. However, should the company's revolving credit facility become a secured facility, the unsecured notes ratings could be downgraded. Moody's expects EQT will have good liquidity as reflected in its SGL-2 Speculative Grade Liquidity (SGL) Rating. As of September 30, 2020, EQT had $13.7 million of cash and $245 million of outstanding borrowings under the revolving credit facility maturing in July 2022. The revolver borrowings were primarily used for collateral and margin deposits associated with the company's over the counter derivative instrument contracts and exchange traded natural gas contracts. The company also has approximately $800 million of letters of credit posted from the revolver. EQT's credit facility contains a debt to capital limitation of 65%. The company should remain in compliance with the covenant. EQT also has substantial natural gas reserves and acreage which could be sold or borrowed against to provide additional liquidity if necessary. In addition to the revolver maturity in July 2022, EQT has approximately $25 million of debt due in late 2021 and close to $600 million due in October 2022. Moody's expects the company will be able to extend the maturity for the revolving credit facility, pay off 2021 maturities and at least partially pay down 2022 maturities. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS EQT's ratings could be upgraded if the company executes on its debt reduction targets while maintaining production and generating free cash flow. The company's retained cash flow to debt (RCF/debt) ratio must be sustained above 40% and the leveraged full cycle ratio sustained above 1.5x. EQT's ratings could be downgraded if the company fails to meaningfully reduce debt or if there is a substantial decline in reserves and production. The ratings could be downgraded if RCF/debt ratio falls below 25% on a sustained basis. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. EQT Corporation is an independent exploration and production (E&P) company focused in the Appalachian Basin. EQUESTRIAN EVENTS: Lenders Seek to Prohibit Use of Cash Collateral ------------------------------------------------------------------ Skyylight Services and Silver Bottom LLC ask the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, to prohibit Equestrian Events, LLC, from using cash collateral in which the Lenders assert an interest. The Lenders argue that the Debtor's long history of using its boarding rents to pay for personal expenses of the Debtor's individual manager, the recent disclosure that pre-petition claims have been paid by the Debtor without court approval, and the lack of adequate protection of the Lenders' mortgage lien interests warrant the entry of an order prohibiting the Debtor's use of the Lenders' cash collateral in this case. The Lenders assert they hold mortgage liens against the Debtor's boarding receipts and other rents from the Debtor's boarding facility. Yet, to date the Debtor has neither received nor requested authority from the Lenders or the Court to use cash collateral. Instead, the Lenders have demanded that the Debtor escrow and not use or dissipate in any way the cash collateral subject to the Lenders' interests. The Debtor's testimony at its recent 11 U.S.C. section 341 meeting suggests that expenses incurred by the Debtor's manager regarding six of his personally owned horses boarded at the Debtor's facility have been paid by the Debtor from the Lenders' collateral. Pre-petition claims related to the operation of the Debtor's facility have also been paid without Court approval. The Debtor operates a horse boarding business at 45W015 Welter Rd, Maple Park, Illinois. Prior to the bankruptcy filing, the Lenders had each extended financial accommodations to the Debtor secured by mortgages on the Premises. More particularly, the Debtor executed or delivered these agreements, instruments and documents in the Lenders' favor: (a) Skyylight Services (i) Promissory Note, dated December 13, 2019, in original principal amount of $1,031,197. (ii) Mortgage and Assignment of Leases and Rents, dated as of December 13, 2019, and recorded as number 2020K006127 ; and (iii) all other agreements, instruments and documents more fully described in the Skyylight Mortgage as the "Loan Documents." (b) Silver Bottom LLC (i) Promissory Note, dated December 15, 2019, in original principal amount of $302,817.88; (ii) Mortgage and Assignment of Leases and Rents, dated December 15, 2019, and recorded as number 2020K006128; (iii) Business Services Agreement, dated as of February 12, 2019; and (iv) all other agreements, instruments and documents more fully described in the SB Mortgage as the "Loan Documents." To secure their respective rights and the Debtor's obligations under their respective loan documents and applicable law, the Lenders were granted identical assignments of rents pursuant to the Skyylight Mortgage and the SB Mortgage. Prior to the bankruptcy filing, the Lenders were paid approximately $8,101 per month on the Skyylight Mortgage and related obligations and $2,302.52 per month on the SB Mortgage and related obligations from the Debtor's boarding rents. Unfortunately, the Debtor has not paid the real estate taxes on the Premises. As of the bankruptcy filing, the unpaid real estate taxes were scheduled to be sold at a tax sale to be conducted by the Treasurer for Kane County, Illinois. A copy of the Lenders' Motion is available for free at https://bit.ly/3cLeq4h from PacerMonitor.com. About Equestrian Events Equestrian Events, LLC operates a horse boarding business at 45W015-45W017 Welter Rd, Maple Park, Illinois. It has 100% ownership interest in the property, which has a current value of $2.10 million. Equestrian Events filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-21793) on Dec. 21, 2020. Brian Anderson, its manager, signed the petition. At the time of filing, the Debtor disclosed total assets of $2,186,326 and total liabilities of $3,162,525. Judge Timothy A. Barnes oversees the case. Springer Larsen Greene, LLC serves as the Debtor's legal counsel. Skyylight Services and Silver Bottom, LLC, as Lenders, are represented by: Mark A. Carter, Esq. Richard Polony, Esq. Daniel L. Morriss, Esq. HINSHAW & CULBERTSON LLP 151 North Franklin Street, Suite 2500 Chicago, IL 60606 Telephone: 312-704-3000 Facsimile: 312-704-3001 E-mail: mcarter@hinshawlaw.com rpolony@hinshawlaw.com dmorriss@hinshawlaw.com FDZ HOMES: Seeks Court Approval to Hire Real Estate Agent --------------------------------------------------------- FDZ Homes, Inc. seeks approval from the U.S. Bankruptcy Court for the Central District of California to hire Lauren Reichenberg, a real estate agent at Compass. Ms. Reichenberg will market the Debtor's property located at 3401 Greensward Road, Los Angeles. She will receive a 5 percent commission on the purchase price. In court papers, Ms. Reichenberg disclosed that she is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. Ms. Reichenberg can be reached at: Lauren A. Reichenberg Compass 6430 W Sunset Blvd 6th Floor Los Angeles, CA 90028 Phone: 310-202-0580 Email: larrealestate@gmail.com About FDZ Homes Inc. FDZ Homes, Inc. is the owner of five properties in Los Angeles and Palm Springs, Calif., having a total current value of $7.42 million. FDZ Homes sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Calif. Case No. 20-20772) on Dec. 7, 2020. At the time of the filing, the Debtor disclosed $7,422,233 in assets and $7,464,153 in liabilities. Judge Ernest M. Robles oversees the case. The Bisom Law Group serves as the Debtor's legal counsel. FF FUND: Unsecured Creditors to Recover 100% in 3 Years ------------------------------------------------------- FF Fund I, L.P., and F5 Business Investment Partners, LLC, filed a First Amended Plan of Reorganization and a Disclosure Statement. The Debtors are advancing the Plans described in this Disclosure Statement to enable the Debtors to emerge from the Chapter 11 cases as reorganized entities, which the Debtors anticipate will occur in early 2021. In order to do so, the Plans are premised on the provision (i) by FF Management, the general partner of FF Fund, on the Effective Date of an Investment Guarantee Amount in the amount of $4.0 million in cash, and (ii) by the Exit Lender of the Exit Financing in the form of a line of credit in the amount of $1.5 million. In exchange for the Investment Guarantee Amount, FF Management will retain its General Partner Equity Interest in FF Fund, will be issued the New Limited Partner Equity Interests in the FF Fund Debtor and will manage the Debtors' Assets in the ordinary course of their businesses after the Effective Date. The Investment Guarantee Amount and the Exit Financing will be used by the Reorganized Debtors to finance: (i) the Distributions required under the Plans, including to Holders of Allowed Claims and Allowed Limited Partner Interests, as applicable, (ii) the Debtors' anticipated working capital needs for operations, and (iii) new and existing investments. As a further inducement to Holders of Allowed Claims to accept the Plans, FF Management has agreed to (i) subordinate its $2,000,000 claim against the FF Fund Debtor to all Allowed General Unsecured Claims against the FF Fund Debtor and the F5 Business Debtor (but not to the Holders of Limited Partner Equity Interests) as part of the Plans, and (ii) reduce such claim to $1,000,000 provided that FF Management or its designee is the provider of the Investment Guarantee Amount. Holders of Allowed General Unsecured Claims against each Debtor will be Impaired and will receive 100% of their Allowed Claims over a three-year period, including a 20 percent Distribution on or shortly after the Effective Date of the Plans. Holders of the Limited Partner Equity Interests in the FF Fund Debtor shall receive on account of their Limited Partner Equity Interests, one or more Distributions on a Pro Rata basis, during and/or before the end of the fifth year after the Effective Date in the aggregate amount of $2 million (the "LP Payment"), provided further, that the Reorganized Debtors shall pay interest on the LP Payment in an amount equal to 2 percent per annum, which interest payments shall commence on the one year anniversary of the Effective Date and continue annually thereafter on the same date until the LPPayment is paid in full. A full-text copy of the First Amended Disclosure Statement dated February 1, 2021, is available at https://bit.ly/3aBJkJH from PacerMonitor.com at no charge. Counsel for the Debtors: Paul J. Battista, Esq. Florida Bar No. 884162 Heather L. Harmon. Esq. Florida Bar No. 013192 GENOVESE JOBLOVE & BATTISTA, P.A. 100 SE 2nd Street, 44th Floor Miami, FL 33131 Telephone: (305) 349-2300 Facsimile: (305) 349-2310 About FF Fund FF Fund I, L.P., is a limited partnership that was formed in August 2010. FF Fund's general partner is FF Management. FF Fund's offering documents identified a broad range of investment strategies to achieve its stated objectives of "capital appreciation and current income." FF Fund has 13 subsidiaries and affiliates that FF Management set up and routinely evolved over the roughly 10 years since FF Fund's formation for various accounting, tax, audit, insurance, regulatory, liquidity, operational, and administrative reasons. F3 Real Estate Partners, LLC, was established to invest in real estate primarily from 2011 through 2019. Prior to the CRO's appointment, F3 purchased and then sold a residential complex containing 87 condominium units in West Palm Beach, FL, which sale transaction closed in May 2019. F5 Business Investment Partners, LLC, held and currently owns the majority of the current investments made by FF Fund with monies received from the Limited Partners. The investments made by the F5 consisted mainly of (i) illiquid, non-tradeable privately held shares in early-stage or start-up companies, (ii) minority interests in real estate partnerships, or (iii) unsecured promissory notes. F6 Standard Securities Partners, LLC, held liquid hedge fund investments. The remainder of the subsidiaries had nominal investments. On Sept. 24, 2019, FF Management retained Soneet R. Kapila to manage FF Fund. FF Management was and is controlled by Andrew Franzone. FF Fund I L.P., an investment company based in Miami, Fla., filed a voluntary petition for relief under Chapter 11 of Bankruptcy Code (Bankr. S.D. Fla. Case No. 19-22744) on Sept. 24, 2019. In the petition signed by CRO Soneet R. Kapila, the Debtor estimated $50 million to $100 million in assets and $1 million to $10 million in liabilities. On Jan. 24, 2020, F5 Business Investment Partners, LLC, an affiliate of FF Fund, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 20-10996). The case is jointly administered with that of FF Fund. At the time of the filing, F5 Business estimated assets of between $10 million and $50 million and liabilities of between $1 million and $10 million. Chief Judge Laurel M. Isicoff oversees the cases. Paul J. Battista, Esq., at Genovese Joblove & Battista, P.A., is serving as the Debtors' legal counsel. No creditors' committee has been appointed in the case. In addition, no trustee or examiner has been appointed. FRANCHISE GROUP: S&P Affirms 'B+' ICR, Outlook Stable ----------------------------------------------------- S&P Global Ratings affirmed its 'B+' issuer credit rating on Franchise Group Inc., reflecting its expectation for continued EBITDA expansion following the acquisition. S&P said, "At the same time, we are assigning a 'BB' issue-level rating and a '1' recovery rating to the company's proposed first out term loan, a 'B-' issue-level rating and '6' recovery rating to the proposed last out term loan, and a 'B-' issue-level rating and a '6' recovery rating to the proposed unsecured debt. "The stable outlook reflects our expectation for improving EBITDA and cash flow generation as the company benefits from cost synergies from its recent acquisitions." The Pet Supplies Plus purchase is in line with FRG's acquisitive growth strategy, and further diversifies the company's portfolio and increases its franchise base. The rating affirmation follows FRG's announcement that it has entered into a definitive agreement to acquire Pet Supplies Plus for $700 million. Pet Supplies Plus is a U.S.-based pet care franchisor with 500-plus stores, approximately 60% of which are franchised. S&P said, "We note Pet Supplies Plus recent solid track record with a history of positive same-store sales, good revenue growth, and successful expansion of its store base. We believe this acquisition will contribute to the company's revenue and EBITDA base and increase its portfolio diversification. In addition, the acquisition increases FRG's franchise bases, leading to a pro forma franchise base post-transaction of 67%. We view this as a positive credit factor, given the predictable stream of cash flow from royalties." The pet industry has benefited from increased pet ownership, a trend we believe will continue into 2021. However, we view the industry as highly competitive, further intensified by the rise of online competitors such as Chewy and Amazon. S&P views Pet Supplies Plus as a relatively small player in the industry with a smaller online presence relative to peers, and it considers competitive pressures from larger peers as a risk to the business. The proposed transaction will lead to higher leverage in the low-4x area in 2021 declining to the high-3x area in 2022. To fund the acquisition of Pet Supplies Plus and refinance the existing capital structure, FRG plans to raise a $750 million first out term loan, a $250 million last out term loan and $300 million senior unsecured debt. This leads to S&P Global Ratings' adjusted leverage in the low-4.0x area at the end of 2021. S&P said, "We forecast leverage will steadily decline as a result of EBITDA growth, reflecting its expanding EBITDA base due to acquisitions and continued positive performance trend. We anticipate an increase in S&P Global Ratings' adjusted margins of roughly 120 basis points (bps) to the 17% area in 2021 supported by improved product mix and cost reductions as businesses are integrated." Franchise Group's extremely acquisitive strategy leads to increased execution and integration risk. S&P said, "We based this assessment on the company's recent track record, which includes the acquisition of Sears Outlet and The Vitamin Shoppe in 2019, and American Freight and FFO Home in 2020. We expect the company will remain acquisitive as it seeks future growth and diversification. Although it has funded acquisitions with debt and equity issuance in the past, future acquisitions may still lead to greater earnings and credit measure volatility, including a leverage spike. As such, we assess our comparable ratings modifier as negative." S&P said, "The stable outlook reflects our expectation for improving EBITDA and free operating cash flow generation in the $150 million-$170 million range in 2021 as the company integrates its businesses and realizes cost synergies from its recent acquisitions. "We could lower the rating if deteriorating performance relative to our forecast leads to leverage sustained above 4x. For instance, this could occur if there is a decline in consumer spending or if the company is unable to realize synergies related to its recent acquisitions and EBITDA margins decline more than 200 bps. "We would consider an upgrade if there is a clear track record of successful integration of businesses and if performance strengthens. For an upgrade we would expect the company to maintain a disciplined financial policy that supports its leverage target of 2x to 3x." FREEDOM MORTGAGE: S&P Raises LT ICR to 'B' on Strong Performance ---------------------------------------------------------------- S&P Global Ratings raised its long-term issuer credit rating on Freedom Mortgage Corp. to 'B' from 'B-'. The outlook is stable. At the same time, S&P upgraded the company's senior unsecured notes to 'B' from 'B-'. The recovery rating on the unsecured notes is '4', reflecting its expectation for average recovery (45%) in a default scenario. S&P said, "Our upgrade follows our expectation that Freedom will continue to benefit from low interest rates with strong originations and earnings. While our base-case expectation is that refinance volume and gain on sale margins will be lower in 2021 than in 2020, we still expect the company to generate higher earnings and profitability than in 2019, maintaining adjusted debt to EBITDA below 4x. Over the longer term, we expect leverage to normalize between 4x and 5x as interest rates rise and origination volumes subside." Freedom generated record EBITDA, originations, and gain on sale margins in 2020. The company originated $90.6 billion of mortgages in the first nine months of 2020, an increase of 123% over the first nine months of 2019. Adjusted debt to EBITDA for the rolling 12 months ended Sept. 30, 2020, was 1.3x, compared with 3.9x for 2019. Our measure of EBITDA includes the capitalization of originated mortgage servicing rights (MSRs) and the amortization of purchased MSRs, but not the amortization of originated MSRs to avoid double counting revenue from the same transaction. If S&P calculates EBITDA by excluding the capitalization of originated MSRs but including the amortization of originated MSRs, adjusted debt to EBITDA for the rolling 12 months ended Sept. 30, 2020, would be 2.0x, compared with 12.2x for 2019. Freedom managed unfavorable mark-to-market adjustments on its MSRs in 2020 by organically retaining MSRs from originations and via purchases like the RoundPoint acquisition. The company's servicing-owned portfolio was $291.8 billion of unpaid principle balance as of Sept. 30, 2020, compared with $221.7 billion at year-end 2019, and debt to tangible equity as of Sept. 30, 2020, was 1.3x, compared with 1.5x at year-end 2019. S&P views the increased servicing book favorably because revenue from servicing assets is more consistent than the volatile origination channel. The stable outlook indicates our expectation that over the next 12 months, Freedom will operate with debt to tangible equity under 1.5x and EBITDA interest coverage well above 2x. S&P said, "Although adjusted debt to EBITDA is currently below 2x and we expect it to remain under 4x in 2021, we believe it will likely normalize to 4x-5x when origination volumes eventually subside. Also, we expect that Freedom will continue to organically build its servicing book and maintain sufficient liquidity for forbearance requests." S&P said, "We could lower the ratings over the next 12 months if Freedom faces unexpected liquidity challenges, adjusted debt to EBITDA rises above 5x, debt to tangible equity rises above 1.5x, or EBITDA interest coverage falls under 2x. We could also lower the ratings if the company encounters additional regulatory actions or scrutiny. "We view an upgrade as unlikely in the next 12 months. Over time, we could raise the ratings if we expect Freedom to maintain debt to EBITDA below 4x and debt to tangible equity below 1.25x in a more normal mortgage environment where interest rates are higher and purchase volume as a percentage of total volume is closer to historical levels." FRONTERA HOLDINGS: Lenders to Take 100% Ownership Under Exit Plan ----------------------------------------------------------------- Frontera Holdings LLC, the owner and operator of the only U.S.-based power plant that sells all of its power to Mexico, has sought Chapter 11 protection. Brant Meleski, the Company's vice president, explains in court filings the COVID-19 pandemic has disrupted the world in ways that no one could have predicted or imagined. "And for Frontera to say COVID-19 is the band leader in a parade of horribles would be a gross understatement," he says. "Demand for electricity began to fall from the sky in March 2020, further accelerating through the summer and fall, exactly when demand and profitability historically peak. The numbers do not lie: year-over-year peak pricing was down nearly 70% through September 2020, resulting in lower energy revenues by more than 60% as compared to 2019. To add insult to injury, it is unclear if and when this will all be over and peak demand will return to pre-pandemic levels." On top of various macroeconomic factors, Meleski also points to: * compressed spark spreads because natural gas prices in the U.S. have not fallen as significantly as power prices in Northeastern Mexico; * plummeting oil prices in 2020 making oil-fired power generators more economically competitive; and * recent solar installations exerting downward pressure on prices in Mexico's electricity market. The sudden and profound impact on the Company's liquidity necessitated action and a complete realignment of its capital structure, including a significant reduction of approximately $944 million in indebtedness. Beginning in July 2020, Frontera engaged Kirkland & Ellis LLP as restructuring counsel and PJT Partners LP as investment banker, and subsequently engaged Alvarez & Marsal North America, LLC, as financial advisor to analyze its liquidity and financing needs and consider its capital structure alternatives. Frontera quickly encouraged its senior secured term loan lenders and structurally subordinated secured noteholders to organize over the summer of 2020. An ad hoc group of lenders who hold approximately 92% of Frontera's OpCo Loans -- Ad Hoc Group of Term Loan Lenders -- organized and retained Akin Gump Strauss Hauer & Feld LLP as legal counsel and Houlihan Lokey Inc. as investment banker. At the beginning of November 2020, holders of 100% of Frontera's HoldCo Notes -- HoldCo Noteholders -- also organized and retained Morgan, Lewis & Bockius LLP as legal counsel and Silver Foundry LP as financial advisor. Following negotiations, the parties have reached a restructuring support agreement, which is supported by all stakeholder constituencies, provides for the realignment of the capital structure through a deleveraging of $799 million and the infusion of $70 million to fund operations. More specifically, the Restructuring Support Agreement is supported by approximately 92% of lenders under the Debtors' OpCo Loans, 100% of the HoldCo Noteholders, and the Debtors' non-Debtor parent company, Lonestar Generation LLC. Pre-Arranged Plan The Restructuring Support Agreement contemplates a comprehensive and highly-consensual restructuring transaction that will be implemented through a pre-arranged plan of reorganization, resulting in a substantial deleveraging and an immediate infusion of new capital to fund the Debtors' operations and emergence from chapter 11. The RSA provides: * Certain lenders under the Debtors' OpCo Loans have agreed to backstop a $70 million new money DIP term loan facility to fund the chapter 11 cases, which will roll into a new first lien term loan exit facility upon emergence. * The DIP Facility will receive an equity-based fee upon emergence, in the amount of 87.5% of the equity of reorganized Frontera. * Holders of OpCo Claims will receive their pro rata share of the remaining 12.5% of equity of reorganized Frontera and $75 million in new second lien take-back debt. * Holders of the HoldCo Note Claims will receive their pro rata share of $7.5 million of cash and a warrant package. Lonestar Generation has agreed to fund the $7.5 million cash payment to holders of HoldCo Note Claims in connection with, and contingent upon, the consummation of the restructuring transactions and approval of the releases contemplated by the RSA. * General unsecured claims will be paid in full in the ordinary course of business and will be unimpaired, and any other priority or secured claims will be paid in full in cash upon emergence. Implementation of the transactions contemplated by the RSA and the Plan will position Frontera for long-term success, save jobs, and ensure that Frontera's vendors have a financially sound go-forward business partner. After an extensive review process, the Debtors have determined that the path forward outlined by the Restructuring Support Agreement and Plan maximizes value for all stakeholders and is the only viable path forward. Capital Structure As of the Petition Date, the Debtors have $944 million in aggregate funded debt obligations: * $15.0 million outstanding under OpCo Revolving Credit Loans and $785.8 million outstanding under OpCo Term Loans with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and * $171.2 million outstanding under HoldCo Notes issued pursuant to an indenture with Wilmington Trust, National Association, as administrative agent and collateral agent. About Frontera Holdings Frontera Holdings operates a 526-MW combined cycle natural gas plant near Mission, Texas, and exports power to Mexico. On Feb. 3, 2021, Frontera Holdings LLC and five affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. No. 21-30354) to seek confirmation of a debt-for-equity plan that would reduce debt by $800 million. PJT Partners LP is serving as investment banker for the Company; Kirkland & Ellis and Jackson Walker L.L.P. are serving as legal counsel; and Alvarez & Marsal is serving as financial advisor. Prime Clerk LLC is the claims agent. The term loan lenders' advisors include Houlihan Lokey Inc. and Akin Gump Strauss Hauer & Feld LLP. The noteholders' advisors include Silver Foundry, LP and Morgan, Lewis & Bockius LLP. FRONTIER COMMUNICATIONS: PURA Approves Chapter 11 Plan ------------------------------------------------------ Matt Pilon of Hartford Business reports that the Public Utilities Regulatory Authority PURA) has given final approval to a Chapter 11 bankruptcy reorganization plan submitted by Norwalk-based telecom Frontier Communications. Frontier, which filed for bankruptcy in April 2020, said the restructuring will eliminate more than $10 billion in debt and $1 billion in annual interest payments. PURA's decision, issued Wednesday, Feb. 3, 2021, finds that the transaction is in the public interest and that Frontier and its Southern New England Telephone subsidiary "possess the requisite technological, managerial, and financial suitability and responsibility to operate a public service company and provide safe, adequate, and reliable service to the public." The approval comes with a number of conditions. PURA ordered Frontier -- for a period of two years -- not to reduce its SNET workforce through involuntary attrition and to maintain its corporate headquarters in the state. While Frontier argued that those two conditions are "inconsistent with the limited scope of PURA's regulation of Frontier services" and "only serve to exacerbate the disparate regulatory treatment of Frontier as compared to its competitors," the Communication Workers of America said PURA should impose stricter conditions. The labor union, which represents about 80% of Frontier's nearly 2,100 Connecticut employees, argued that PURA should extend the job and headquarters commitments to three years. Frontier provides data, voice and telephone services. Its number of landline customers in the state has plummeted in the age of the cell phone, and just 2,500 "plain old telephone service" customers now remain, according to PURA. Another condition to PURA's approval this week is that Frontier must expand its fiber to the premises network in the state by at least 100,000 additional locations over the next four years. CWA pointed to recent bankruptcy plan approvals in California and West Virginia, where Frontier agreed to larger fiber deployments and specific capital investments of $200 million and $1.75 billion, respectively. Frontier argued that it had volunteered the 100,000 Connecticut locations despite the fact that it won a minimal amount of money in a recent auction for federal funds aimed at improving rural internet service. The company received more money to support such build-outs in California and West Virginia. CWA, Attorney General William Tong and the Office of Consumer Counsel all asked PURA, ultimately unsuccessfully, to condition its approval of Frontier's plan on the company spending a specific amount of money on its infrastructure here. CWA argued that failing to set a dollar amount increases the chances that "funds will flow out of Connecticut in order for Frontier to meet its obligations in West Virginia and California." PURA's final decision does not include a dollar figure, but requires the company file its fiber expansion and spending plans over the next few years. About Frontier Communications Frontier Communications Corporation (NASDAQ: FTR) offers a variety of services to residential and business customers over its fiber-optic and copper networks in 29 states, including video, high-speed internet, advanced voice, and Frontier Secure digital protection solutions. Frontier Communications Corporation and 103 related entities sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on April 14, 2020. Judge Robert D. Drain oversees the cases. The Debtors tapped Kirkland & Ellis LLP as legal counsel; Evercore as financial advisor; and FTI Consulting, Inc., as restructuring advisor. Prime Clerk is the claims agent, maintaining the page http://www.frontierrestructuring.com/and https://cases.primeclerk.com/ftr The U.S. Trustee for Region 2 appointed a committee to represent unsecured creditors in Debtors' Chapter 11 cases. The committee tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez & Marsal North America, LLC as financial advisor; and UBS Securities LLC as investment banker. FULL HOUSE: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings assigned its 'B-' issuer-credit rating to regional gaming operator Full House Resorts Inc. S&P said, "We are also assigning our 'B-' issue-level and '3' recovery ratings to Full House's senior secured notes, which reflects our expectation for meaningful (50-70%; rounded estimate: 50%) recovery in the event of a payment default. "The stable outlook reflects our expectation that, despite the uncertainty of COVID-19 and construction-related risks, Full House will have sufficient liquidity to withstand potential operating volatility over the next few quarters and complete its redevelopment project, and that it will maintain many of the cost cuts it implemented in 2020 to improve EBITDA. "The 'B-' rating reflects our expectations for elevated leverage of 6.5x-7.5x and negative free operating cash flow through 2022, significant competition in the company's primary markets, the company's small scale, limited cash flow diversity, weaker brand recognition, and market position compared to larger, more diversified regional gaming operators, and execution risk associated with the development project. "We expect leverage to remain elevated at 6.5-7.5x and free operating cash flow to be negative through 2022. The company plans to spend approximately $180 million to redevelop and expand its Bronco Billy's property in Cripple Creek, which it plans to complete in fourth-quarter 2022. As a result, Full House will generate negative free operating cash flow through 2022. We also forecast leverage will remain elevated at 6.5-7.5x, which is very high given that the company will rely on its existing portfolio's small cash flow base to service the debt until the expansion project is completed and the company can sufficiently ramp up operations at the new Bronco Billy's property. Despite these risks, we believe Full House will have ample liquidity at close, including $38 million of cash on the balance sheet and full availability under its $15 million revolver, and incorporating our 2021 operating performance expectations to service its new capital structure." The company faces competitive pressure from larger, better-capitalized rivals and is vulnerable to regional events. Full House's properties are generally not market leaders in their respective markets. These markets have high gaming supply, and Full House faces competition from large, well-diversified, regional and national gaming operators including MGM Resorts International, Caesars Entertainment Inc., and Penn National, which have greater resources to invest in marketing and promotions. These larger operators also have large customer databases and often coordinated marketing programs, which allow them to cross-promote their other properties, whereas Full House does not. Additionally, many of Full House's competitors have better brand recognition including Harrah's, Hard Rock, and Hollywood given that these are well-established and recognizable brands. Given Full House's small scale, it can't invest substantially in its properties without incremental financing, resulting in lower-quality assets with fewer amenities. Furthermore, the company is particularly vulnerable to regional events, including natural disasters (i.e. hurricanes) and other adverse events like changes in the competitive landscape, which could hamper visitation and spending at the Silver Slipper, given its revenue and EBITDA concentration in Mississippi. In 2019, Full House generated 44% of its revenue and 64% of its property EBITDA from Silver Slipper. However, once the redevelopment of the Bronco Billy's property is complete, S&P expects Full House's scale to improve and its reliance on Mississippi will fall. S&P said, "We believe the redevelopment project will improve the company's competitive position, scale, and cash flow diversity, but there are inherent risks. Full House plans to expand its Bronco Billy's property by adding a 300-room hotel, a new parking garage, improved food and beverage (F&B) offerings, and additional amenities. Given the lack of quality four-star hotel offerings in Cripple Creek, we believe the redevelopment will differentiate Bronco Billy's from other properties in the market. Furthermore, Full House has an advantage over other competitors in the market given its land and property holdings, which cannot be easily replicated. The Cripple Creek gaming market caters to the fast-growing Colorado Springs metropolitan area but has been disadvantaged because of its lack of high-quality gaming product. Similar to how changes in gaming regulations and Ameristar's hotel expansion was the catalyst for sizable growth in the Black Hawk, Colo. gaming market, we believe Bronco Billy's will do the same for Cripple Creek. Furthermore, while Bronco Billy's has historically catered to more value-oriented gaming customers, we believe the addition of higher-quality hotel rooms and amenities combined with the passage of Amendment 77, which removes betting limits and allows Colorado casinos to offer new table games like baccarat and pai gow, will enable the company to entice higher-end customers, which will spur growth and boost margins. As a comparison, Ameristar Black Hawk opened its luxury four-star hotel in September 2009 following regulatory changes that allowed the casino to raise bet limits from $5 to $100, increase operating hours, and offer additional table games (roulette and craps). As a result, Ameristar Black Hawk's revenue and EBITDA grew at a compound annual growth rate of 38% and 56%, respectively, between 2008 and 2010, which we believe supports Full House's planned investments." However, there are inherent risks in undertaking a construction project, including possible delays and cost overruns, which could pressure liquidity and cause the company to seek additional funding. There are $19 million in contingencies (approximately 15% of hard costs) set aside in the budget, which can mitigate some of these risks. S&P believes this average for typical gaming projects given that it views the redevelopment as more akin to a greenfield project, since the company is constructing an entirely new building. Full House also plans to negotiate a construction agreement with its general contractor, which may further mitigate construction risks. There is also the risk that the ramp-up of the expanded property could be slower than expected, which could strain liquidity and pressure credit measures, such that leverage remains elevated. The company's efforts to optimize its cost structure will translate to permanent margin expansion. Because of the COVID-19 pandemic, Full House had to close its operations from mid-March to June 2020, furloughing nearly all of its staff. Before reopening its properties in June, the company used the closures to rationalize its cost structure, which included significant labor and marketing reductions and the closure of unprofitable, loss-leading amenities (e.g. buffets), resulting in margin expansion and EBITDA growth in the second half of 2020 despite lower revenues. S&P said, "While we expect costs to rise as occupancy levels increase and certain property offerings re-open, we believe many of Full House's cost reductions, especially labor and marketing, are sustainable longer term, resulting in permanent margin expansion." Full House will also benefit from favorable tax legislation beginning July 2021 in Indiana, which will put the company's Rising Star casino in the lowest gaming tax bracket in the state and increase the amount of free play that is exempt from gaming taxes. Additionally, further supporting the company's continued margin expansion are the incremental benefits from the company's sports wagering contracts, of which $4.5 million has yet to be realized. The economics of these contracts are extremely favorable for Full House, providing contractual revenues with nearly 100% flow-through to EBITDA and potential longer-term upside. S&P said, "We expect the impact from COVID-19 on revenue and EBITDA to be manageable. Despite operating with 45% fewer slot machines, restrictions on table games, and fewer amenities, Full House's revenue fell about 4% and EBITDA more than doubled year over year in the second half of 2020. Going forward, notwithstanding another operational shutdown, we believe the impact of COVID-19 on Full House's revenue and EBITDA should be manageable. Furthermore, we believe Full House is unlikely to face widespread closures like in 2020. We believe closures and operating restrictions will be targeted and the company is less likely to face material restrictions at its largest property in Mississippi compared to other markets. Despite high unemployment, continued high cases of COVID-19, and potentially more restrictions on gaming operators, we believe the company will continue to benefit from good regional gaming demand given the limited availability of leisure and travel alternatives, and customers staying closer to home. In addition, capacity restrictions have not impaired gaming revenue in many markets because historical peak utilization rates were already below those limits in most markets. While we expect table games to remain closed in Colorado and limitations on table positions elsewhere through at least the first half of 2021, we believe the strong demand for slot play will more than compensate for this weakness. For 2021, although we expect revenue will remain 4%-5% below 2019 levels, we expect EBITDA will exceed 2019 given the cost cuts implemented in the first half of 2020, many of which we believe will result in sustained margin expansion. "The stable outlook reflects our expectation that, despite the uncertainty of COVID-19 and construction-related risks, Full House will have sufficient liquidity to withstand potential operating volatility over the next few quarters and complete its redevelopment project, and that it will sustain many of the cost cuts it implemented in 2020 to improve EBITDA." S&P could lower the rating if: -- There are construction delays or cost overruns that require the company to seek additional funding, resulting in leverage that deviates from S&P's base-case forecast, or if the ramp-up in the Bronco Billy's operations is slower than expected post-opening; -- Rising COVID-19 cases result in further restrictions on capacity, another shutdown in operations, or generally weaker demand and strains Full House's liquidity position; or -- Full House can't sustain many of the cost cuts that improved EBITDA and we believe that the capital structure is unsustainable as a result. S&P believes an upgrade is unlikely through 2022 given the redevelopment project and our forecast for high leverage and negative free operating cash flow. However, S&P could consider upgrading the rating if: -- S&P expects Full House's leverage to stay below 6.5x and coverage above 2x; -- It generates positive free operating cash flow; and -- Operations ramp up quickly at Bronco Billy's following the opening of the expansion in fourth-quarter 2022. FURNITURE LAND: Feb. 11 Hearing on Sale of Kissimmee Property ------------------------------------------------------------- Judge Lori V. Vaughan of the U.S. Bankruptcy Court for the District of New Jersey will convene a hearing on Feb. 11, 2021, at 11:00 a.m., to consider Furniture Land East, LLC's sale of the real property and building located at 2345 North Orange Blossom Trail, in Kissimmee, Florida, to Best Price Mattress and Furniture Discount, Inc. for $1.638 million. Interested parties may register for Zoom Meeting at https://pacer.flmb.uscourts.gov/fwxflmb/zoom/. The Debtor proposed to sell free and clear of the Proof of Claim, the Judgment Lien and the Tax Liens, with liens attached to the proceeds. About Furniture Land East LLC Furniture Land East LLC sought Chapter 11 protection (Bankr. D.N.J. Case No. 13-34190) on Nov. 1, 2013. The Debtor estimated assets in the range of $500,001 to $1 million and $1 million to $10 million in debt. The Debtor tapped Thomas W. Williams, Esq., at Law Offices of Thomas W. Williams as counsel. GAINWELL ACQUISITION: Moody's Affirms B3 CFR, Outlook Negative -------------------------------------------------------------- Moody's Investors Service affirmed ratings for Gainwell Acquisition Corp. ("Gainwell", formerly known as Milano Acquisition Corp.), including the B3 corporate family rating; B3-PD probability of default rating; and B2 instrument rating on the first-lien senior secured credit facilities, which include a $400 million revolving facility and a term loan that is being upsized to $4.23 billion, from $2.40 billion. Proceeds from the incremental term loan, from a second-lien term loan (unrated) that is being upsized by $659 million, and $100 million of cash from Gainwell's balance sheet, will be used to acquire, with backing by Gainwell's private equity owner Veritas Capital, certain assets of publicly traded company HMS that focus on the Medicaid market, including for states and managed care organizations. Moody's has changed the company's outlook to negative, from stable. Affirmations: Issuer: Gainwell Acquisition Corp. (formerly known as Milano Acquisition Corp.) Corporate family rating, affirmed B3 Probability of default rating, affirmed B3-PD Gtd. senior secured first-lien revolving credit facility, expiring October 2025, affirmed B2 (LGD3) Gtd. senior secured first-lien term loan, maturing October 2027, affirmed B2 (LGD3) Outlook change: Outlook changed to negative, from stable RATINGS RATIONALE Gainwell's strategic, mostly debt-funded acquisition of HMS's complementary analytics capabilities will increase Moody's-adjusted, pro-forma opening debt-to-EBITDA leverage by nearly a full turn, to 8.0 times. As a result, Moody's expectations for deleveraging that would position the company more solidly within the B3 CFR that Moody's assigned only in August of last year, will be postponed. The factors that Moody's had cited in August as weighing on the rating -- aggressive financial strategy and poor quality of earnings given extensive addbacks and the carve-out company's lack of an operating history -- are incrementally exacerbated by the HMS-assets acquisition. Over the intermediate term, Moody's expects leverage to moderate to a level more appropriate for the B3 CFR, while free cash flow will be only minimally positive. Gainwell will acquire HMS's capabilities focused on states' and managed care organizations' Medicaid efforts in two primary products: coordination of benefits ("COB") and payment integrity ("PI"). The acquisition will enhance Gainwell's current, $1.50 billion revenue base by nearly a third, expanding Gainwell's reach into states served by HMS where Gainwell has no presence. In those new states where Gainwell is not the MMIS vendor, Gainwell expects to cross sell each company's solutions from their combined portfolio. Management envisions realizing more than $100 million in cost savings by addressing duplicative costs, offshoring certain functions, eliminating HMS's public company expenses, and other efficiencies. These savings targets are ambitious relative to HMS's roughly $150 million EBITDA base, although Moody's notes Veritas's overachievement in realizing profitability gains in other investments in the healthcare services industry. Moody's considers MMIS to be a mature IT services segment with muted growth prospects. Incremental growth may arise from just such adjacencies as those provided from the HMS-assets acquisition. Gainwell's outsourcing contracts ultimately rely on the federal government as the main payor, which elevates revenue concentration and which Moody's believes could lead to pricing pressure. And while Moody's does not anticipate systemic changes to the Medicaid model in the near term, regulatory proposals influenced by social pressure to expand healthcare availability, such as a single-payer system, could lead to long-term disruption of Gainwell's business model. The rating is supported by a dominant position in the MMIS segment. Gainwell provides the primary delivery system for state and local Medicaid programs in 29 states, and supports 12 additional states with adjacent solutions. The company's experience and successful track record providing complex outsourced Medicaid services create sticky relationships and a competitive advantage. Long-term outsourcing contracts provide stability, with over 95% of revenue expected in the next two years already in backlog. Milano's scale and competitive position yield healthy Moody's-adjusted EBITDA margins in the mid-30%s, which, combined with low capex requirements result in good cash flow generation capacity. Decades-long relationships with Medicaid agencies facilitate opportunities to expand into fast growing adjacent services, beyond the mature MMIS segment. Moody's considers Gainwell's liquidity to be adequate, with a cash balance of nearly $200 million, even after disbursing $100 million for the HMS acquisition, and an undrawn $400 million revolving credit facility. Free cash flow in fiscal year 2022 (ending March 2022) will be pressured by higher interest expense, one-time costs to achieve cost reduction targets and incremental expenses to build standalone corporate capabilities. Free cash flow will be minimally positive through fiscal 2022, and barely enough to cover mandatory debt amortization payments. The single financial covenant, for the benefit of revolving lenders only, is unusually loose: a static, net first-lien leverage maximum of 8.2 times, applicable only when over 35% of the revolving credit facility is drawn. The individual debt instrument ratings are based on Gainwell's probability of default, as reflected in the B3-PD, and the loss given default expectations of the individual debt instruments. The B2 rating and LGD3 assessment on the first-lien senior secured facilities, including the $400 million 5-year revolver and 7-year $4,227 million term loan, reflect their senior position in the capital structure and loss absorption support provided by the $1,459 million 8-year second-lien senior secured facility (unrated). The negative outlook reflects higher-than originally anticipated debt-to-EBITDA leverage and incrementally worsened quality of earnings given the additional acquisition and the substantial profit addbacks associated with it. Moody's expects low-single-digit-percentage revenue growth over the next 12 months, with possibly stronger growth upon successful expansion into adjacencies such as eligibility and enrollment ("E&E") and analytics, and an increase in Medicaid covered lives in the US. Leverage pro-forma for the HMS assets acquisition will be very high at roughly 8.0 times, Moody's-adjusted, including partial credit for expected cost saving initiatives and other adjustments. Revenue growth and margin expansion will support deleveraging toward 7.5 times over the next 12-24 months. Moody's anticipates weak, but positive, free cash flow over the next 12 months as one-time expenses to achieve cost reduction targets and a high interest expense burden keep FCF/debt at about 1%. Successful cost initiatives will support improving free cash flow metrics thereafter, in the absence of leveraging transactions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if (all metrics Moody's-adjusted): i) Gainwell demonstrates stable growth, margins and cash flow generation capacity over time as a standalone company; ii) the company is able to diversify its revenue base beyond core MMIS projects, into new E&E, analytics and other adjacent opportunities, leading to revenue growth above low single-digits and increased scale; iii) debt/EBITDA decreases toward 6.0 times and free cash flow to debt approaches 5%; and iv) the company maintains good liquidity and exhibits prudent financial policies. The ratings could be downgraded if: i) revenue or profitability as a standalone entity are lower than anticipated, or financial policies become more aggressive, leading to the expectation for debt/EBITDA sustained above 7.5 times or free-cash-flow-to-debt approaching break-even; ii) long-term contract renewal rates diminish, or the company experiences pricing pressure, indicating increased competition in the core MMIS segment; iii) liquidity deteriorates; or iv) adverse regulatory changes challenge the viability of the current business model. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Gainwell Acquisition Corp. provides software and managed services to health and human services ("HHS") agencies in the US. The company generates the majority of its revenue from long-term contracts with Medicaid agencies that outsource the operation and management of their Medicaid Management Information System ("MMIS") to the company. Gainwell is the primary MMIS provider to 30 US states and territories. Including core MMIS and adjacent services, Gainwell serves a total of 42 US states and territories. Pro-forma assuming a full year's revenue contribution from the acquisition of certain HMS assets in early 2021, Moody's estimates the combined companies' fiscal 2021 (ending March 2021) revenue at just under $2.0 billion. GATEWAY RADIOLOGY: Bid to Extend Exclusivity Periods Tossed ----------------------------------------------------------- Judge Michael G. Williamson denied Gateway Radiology Consultants P.A. and PM Radiology, LLC's motion to extend its exclusivity periods, with prejudice. The U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, after reviewing the Motion and considering Philips Healthcare's Objection Pursuant to Section 1121(D)(2) to Debtor's Expedited Motion to Extend Exclusivity and the Achieva Credit Union's Joinder in Philips Healthcare's Objection Pursuant to Section 1121(D)(2) to Debtor's Expedited Motion to Extend Exclusivity, the Court finds as a matter of law that pursuant to 11 U.S.C § 1121(d)(2) the exclusivity period cannot be further extended. Also, the Objection is sustained. The Debtors asked for an expedited hearing on their request on January 27, 2021, at 10:30 A.M. The Debtors' Exclusivity Motion sought for an April 21, 2021 extension of the plan solicitation period. A copy of the Court's Extension Order is available from PacerMonitor.com at https://bit.ly/3tqpslk at no extra charge. About Gateway Radiology Consultants Gateway Radiology Consultants P.A., based in Saint Petersburg, Florida, filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 19-04971) on May 28, 2019. In the petition signed by Gagandeep Manget M.D., its president, the Debtor disclosed $1.2 million in assets and $14.9 million in liabilities as of the bankruptcy filing. The Honorable Michael G. Williamson oversees the case. Joel M. Aresty, P.A., serves as bankruptcy counsel to the Debtors. Beighley Myrick Udell and Lynne; and Paul C. Jensen, Attorney-At-Law, serve as the Debtors' special counsel. GBT GROUP: S&P Assigns 'B' Rating on New $200MM Secured Term Loan ----------------------------------------------------------------- S&P Global Ratings assigned its 'B' issue-level and '3' recovery ratings to GBT JerseyCo Ltd. subsidiary GBT Group Services B.V.'s new $200 million senior secured delayed-draw term loan due in 2025. The '3' recovery rating indicates its expectation for meaningful (50%-70%; rounded estimate: 65%) recovery for lenders in the event of a payment default. S&P said, "We expect the company will draw the full $200 million available over the course of 2021. In addition, as required by the credit agreement, GBT JerseyCo will have received cash equity from a capital contribution drawn under a shareholder equity backstop in an amount no less than the principal amount of the borrowing by GBT Group Services B.V. Total proceeds will be used to enhance liquidity and for working capital. "We have also lowered our issue-level rating on GBT's senior secured debt to 'B' from 'B+' and revised the recovery rating to '3' from '2' to reflect the increased secured debt in its capital structure under our default scenario following the transaction. "We do not view the preferred equity drawn from the cash equity backstop to be a permanent part of the capital structure and treat it as additional debt in our analysis. While we expect business travel in the first half of 2021 to be worse than our September 2020 expectations due to the high number of coronavirus cases that persist globally, although we expect the second half to materially improve as vaccines roll out and companies lift restrictions on employees' nonessential business travel. We expect negative free operating cash flow (FOCF) in 2021 and leverage to improve significantly in 2022 back to the 5x area or lower. "Our negative outlook on GBT reflects the risk that we could lower our issuer credit rating to 'B-' if global business travel conditions remain distressed through the second half of 2021 such that the company's liquidity cushion shrinks materially, and we believe the company will have difficulty reducing net leverage and generating FOCF to debt in the mid-single-digit percentage area when travel volumes return." ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- The incremental delayed-draw term loan reduces recovery prospects for GBT's first-lien debt in S&P's hypothetical default scenario. S&P revised its recovery ratings on its first-lien revolving credit facility and term loan to '3' from '2'. -- S&P based its simulated default scenario on a prolonged decline in business travel volumes as a result of the COVID-19 pandemic and significant competitive pressures. -- S&P values GBT as a going concern, given its leading market position, strong brand, and good client base. -- The company's capital structure consists of a $50 million revolving credit facility maturing in August 2023, $250 million senior secured term loan B maturing in August 2025, $400 million senior secured term loan B maturing in August 2025, and new $200 million senior secured delayed-draw term loan B maturing in August 2025. -- Because of its substantial size, S&P deducts 50% of GBT's pension deficit from the gross enterprise value. Simulated default assumptions -- Year of default: 2024 -- Jurisdiction: U.S. -- EBITDA at emergence: about $140 million -- Implied enterprise value multiple: 5.5x Simplified waterfall -- Gross enterprise value (after pension adjustment) at default: about $645 million -- Net enterprise value after 5% administrative costs: about $615 million -- Value available for senior secured claims: about $615 million -- Estimated senior secured debt claims: about $895 million -- Recovery expectations: 50%-70% (rounded estimate: 65%) All debt amounts include six months of prepetition interest. GIGA-TRONICS INC: Posts $833K Net Income for Quarter Ended Dec. 26 ------------------------------------------------------------------ Giga-Tronics Incorporated filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing net income of $833,000 on $4.08 million of total revenue for the three months ended Dec. 26, 2020, compared to a net loss of $156,000 on $2.63 million of total revenue for the three months ended Dec. 28, 2019. For the nine months ended Dec. 26, 2020, the Company reported net income of $435,000 on $10.32 million of total revenue compared to a net loss of $24,000 on $9.16 million of total revenue for the nine months ended Dec. 28, 2019. Giga-Tronics said, "The COVID-19 pandemic has caused significant disruptions to the global, national, and local economy. The overall economic and other impacts of the COVID-19 pandemic in the areas in which the Company and its customers and suppliers operates is not known and cannot be predicted at this time. Delays in access to customer sites has caused disruptions in our business. While the circumstances relating to the COVID-19 pandemic and governmental responses are expected to be temporary, there is still uncertainty about the duration and the total economic impact. If this situation is prolonged, the pandemic could cause additional delays and could have a short- or long-term adverse impact, possibly material, on the Company's future financial condition, liquidity, and results of operations." As of Dec. 26, 2020, the Company had $8.67 million in total assets, $3.74 million in total liabilities, and $4.93 million in total shareholders' equity. As of Dec. 26, 2020 cash and equivalents more than doubled from March 28, 2020 to $1.3 million, loans payable net of issuance cost decreased to $273,000 from $1.3 million, and shareholders' equity increased to $4.9 million, all of which was mainly due to the gain upon debt extinguishment of $791,000 related to the forgiveness of the Company's PPP loan. John Regazzi, chief executive officer of the Company, said, "Over the past three years we have been executing a significant reorientation of the business, focused on prioritizing growth of the Radar/EW testing division. We are seeing increasing interest for the use of our solutions in an expanding group of applications across the armed forces. With that in mind, we continue to invest in engineering and R&D to enhance our solutions to be in the best position to capture the market opportunity in front of us. Our Microwave filter division, which has encountered some delays in receiving orders, saw a return to order activity during the third quarter which was consistent with the previous year. As we move through the balance of fiscal 2021, we remain on track for a strong year." Lutz Henckels, executive vice president, chief financial officer and chief operating officer stated, "Our growth this quarter reflects the heightened interest we're seeing for our Radar/EW threat emulation products across a growing list of customers and applications. Our product is now used not only in the lab, but also on the pilot training range. With over $24 million invested in our technology, it is gratifying to see our solution gaining traction and we remain focused on gaining market share in the $400 million EW threat emulation market. In addition to delivering strong revenue performance, we continued to manage our costs and drive margins while investing in the development of industry-leading solutions. Furthermore, our Company's liquidity improved during the quarter with increased cash and reduced debt, and we are confident that the combined Microwave Filter and Radar EW businesses will continue to gain traction as we move through the end of the fiscal year." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/Archives/edgar/data/719274/000143774921002016/giga20201226_10q.htm About Giga-tronics Inc. Headquartered in Dublin, California, Giga-tronics is a publicly held company, traded on the OTCQB Capital Market under the symbol "GIGA". Giga-tronics -- http://www.gigatronics.com-- produces RADAR filters and Microwave Integrated Components for use in military defense applications as well as sophisticated RADAR and Electronic Warfare (RADAR/EW) test products primarily used in electronic warfare test & emulation applications. Giga-Tronics Inc. reported a net loss attributable to common shareholders of $2.03 million for the year ended March 28, 2020, compared to a net loss attributable to common shareholders of $1.04 million for the year ended March 30, 2019. As of Dec. 26, 2020, the Company had $8.67 million in total assets, $3.74 million in total liabilities, and $4.93 million in total shareholders' equity. GPD COMPANIES: Moody's Rates New $75MM Add-on Notes 'B3' -------------------------------------------------------- Moody's Investors Service has assigned a B3 rating to the new $75 million senior secured add-on notes to be issued by GPD Companies, Inc., formerly known as Nexeo Plastics Holdings, Inc. Proceeds of the issuance, along with cash on the balance sheet, inclusive of $49 million in net proceeds from recent asset sales and sale-lease back transactions, are expected to be used to purchase Distrupol Limited, a European plastics distribution business from Univar Solutions Inc. The transaction, which is subject to regulatory approvals, is expected to close in the first half of calendar year 2021. Effective January 19, 2021, the name of the company has been changed from Nexeo Plastic Holdings, Inc. to GPD Companies, Inc. The outlook is stable. "The transaction is roughly leverage neutral but leverage is currently stressed for the ratings due to the impact of Covid on earlier quarters," according to Joseph Princiotta, Moody's SVP and senior analyst covering GPD. "Leverage is expected to trend favorably as business conditions recover, already evident in the September and December quarters, and as some free cash flow is used to reduce prepayable debt," Princiotta added. Assignments: Issuer: GPD Companies, Inc. Senior Secured Regular Bond/Debenture, Assigned B3 (LGD4) RATINGS RATIONALE Moody's views the transaction as a good fit as it expands GPD's position and scale in Europe and broadens its thermoplastic product portfolio including a wide range of polypropylene, polyamides and polyethylene products. Distrupol's long term partnerships and relationships with its suppliers have enabled the company to generate robust margins as a plastic product distributer. On the negative side, supplier concentration risk for Distrupol is high, which tends to be inherent to the plastics distribution industry given the concentration of large world scale plastics producers. Distrupol, headquartered in Surrey, England, had LTM sales and EBITDA ending December 2020 of $126 million and $14 million, respectively, serving Industrial, consumer, medical, electronics and transportation end markets across 13 countries concentrated in the UK, the Nordic region and Ireland and adding over 1,300 customers to GPD's profile. GPD's B2 corporate family rating reflects leading market share positions in plastics distribution in North America and Europe, generally stable margins on a multi-quarter and annual basis, expectations for positive free cash flow and good end-market diversification. Other positive factors in the credit profile include a proprietary IT system that provides operational advantages, an asset-light model that requires minimal capex, and prospects for growth in the next few years due to capacity increases in the global plastics supplier industry. The rating also reflects the company's modest scale, high balance sheet leverage, low operating margins and supplier concentration. Metrics are currently stressed for the ratings due mainly to the pandemic impact on plastics production and demand in earlier quarters, with gross adjusted LTM leverage slightly above 6x. Adjusted Debt/ EBITDA is expected to improve to the low 5x range in the next twelve to fifteen months. However, Adjusted net debt / EBITDA, which Moody's currently focuses on should be at or below 5.0x over the same time period. Moody's expects the company to pursue additional M&A activity, but with an emphasis on small or bolt-on acquisitions, particularly in the near term as the company reduces debt to improve leverage. Carve-out and stand-up IT implementation is also a near-term risk in the credit profile. Environmental, social and governance factors are not a driver of this action, but they are relevant factors to GPD's credit profile. The company is exposed to environmental and social risks but the risks are less than chemical companies with manufacturing facilities that produce chemicals. Moreover, most products the company distributes are solid materials which don't have risks associated with spills or discharges. GPD's environmental remediation spending is not publicly disclosed but is likely modest compared to companies that produce chemicals. Governance factors are significant in GPD's profile as it is a private equity-owned company recently carved out from a public entity. The current gross leverage is on the high side for the B2 rating and management can decide how to deploy capital to most effectively support business growth vs. debt reduction. Disciplined use of free cash flow generated would mitigate risks surrounding the modest margins and high leverage. GPD's liquidity is adequate and supported by a recently amended $175 million ABL revolver facility with a borrowing base that exceeds the facility, with ample eligible accounts receivable and inventory at September 30, 2020. The ABL had approximately $56 million in borrowings outstanding as of September 30, 2020. The facility matures in March 2024 and is mainly drawn to support seasonal working capital swings. Balance sheet cash was $84 million as of 30 September 2020. Liquidity is supported by free cash flow generation in the range of $20-25 million per annum in the recent past. FCF this year was challenged primarily due to impact from COVID pandemic as well as one-time TSA related information technology capital expenditures. Management expects capital expenditures will normalize to around $2 million for the fiscal year 2021. The revolver contains a springing fixed charge coverage ratio test that does not become effective unless excess availability plus suppressed availability falls below 10% of the facility. Moody's do not expect the covenants will be tested in the near term. There are no near-term maturities and the company's new bond matures in April 2026. The stable outlook assumes leverage is improved and managed below 5.0x, and EBITDA margins remain stable and do not deviate much from the mid-4% range on an annual basis. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Moody's would consider upgrading the rating if the company exhibits top-line growth, organically or inorganically, that drives EBITDA growth and manages leverage to below 4.0x on a consistent basis. Moody's would likely consider a downgrade if leverage were sustained above 5.0x or if EBITDA margins contract below 4.0%, either on a sustained basis, or if free cash flow declines below $10 million per year. Diminished liquidity could also trigger a review or downgrade of the ratings. M&A activity that increases leverage further above 6x could result in a downgrade. GPD companies, Inc., based in The Woodlands, Texas, is a holding company formed by One Rock Capital Partners, LLC. Its operational entities currently include Nexeo Plastics, a leading plastics distributor in North America and Europe and maintains longstanding relationships with over 150 plastics suppliers and a diverse base of about 11,000 downstream plastic customers. Supplier concentration is a risk in the credit as the top 10 suppliers represent about 75% of plastics supplied. Customers are less concentrated with the top 10 customers representing only about 7% of all customers. Annual revenues for LTM September 30, 2020 were roughly $1.5 billion. The principal methodology used in this rating was Chemical Industry published in March 2019. GRAY TELEVISION: Fitch Places 'BB-' LongTerm IDR on Watch Negative ------------------------------------------------------------------ Fitch Ratings has placed Gray Television Inc.'s 'BB-' Long-Term Issuer Default Rating (IDR) and all issue level ratings on Rating Watch Negative, following the company's announced agreement to acquire Quincy Media for $925 million in cash. In addition, Gray has secured $925 million in committed incremental senior secured term loan capacity to finance all or part of the transaction. While Fitch recognizes the strategic rationale of the acquisition, the Negative Watch reflects the potential for a near-term weakening in credit protection metrics following the transaction, lack of clarity on the final capital structure, as well as the potential impact on Fitch's recovery expectations. Fitch expects to resolve the Negative Watch at close of the Quincy transaction, and will assess the impacts of the acquisition, financing strategy and planned divestitures on Gray's credit profile and leverage trajectory. At that time, Fitch will resolve the Negative Watch with either a downgrade or an affirmation of the existing ratings. KEY RATING DRIVERS Quincy Media Transaction: Fitch expects Gray's acquisition of Quincy Media will have a neutral-to-slightly negative impact on Gray's credit profile in the near term, but will depend on the ultimate funding sources for the transaction. Fitch believes the strategic rationale for the transaction is sound, due to the businesses' complementary station portfolios and the potential for modest synergy realization. Quincy Media is a small scale, family-owned, TV broadcaster based out of Quincy, Illinois, and owns 16 stations primarily located throughout the Midwest, although the company has additional station assets in the Northeast and Southwest. Quincy has nine stations that are ranked #1 or #2 in their respective markets. To comply with FCC regulations, Gray will divest stations in six markets, including stations in Wisconsin, Arizona, Iowa and Illinois. Quincy also owns a small newspaper business, which is not part of the acquisition. Fitch believes the company has flexibility to determine the final funding strategy of the acquisition. Fitch notes that final pro forma leverage could increase or decrease based on the amount of debt ultimately used to fund the acquisition. Currently, Gray has a large readily available cash balance it can use to reduce the amount of debt-funded consideration. In addition, Fitch expects the net proceeds from the six Quincy station divestitures will be applied to debt reduction, which would improve leverage metrics. Fitch also notes that Gray could opt to raise additional unsecured debt instead of borrowing on the committed incremental term loan facility. The ultimate mix of secured and unsecured debt used to finance the acquisition could alter Fitch's expectations for issue-level recoveries. The transaction is expected to increase pro forma two-year average leverage slightly from 5.6x to 5.7x, including the $23 million of identified synergies. Coronavirus Impact on Advertising: The advertising environment has faced significant pressure since the onset of the coronavirus pandemic, owing to widespread government-mandated restrictions on commerce and movement. Fitch expects both local and national advertising revenue to decline by double-digit rates in 2020. However, the pace of the ad market recovery has exceeded Fitch's initial expectations, and Fitch remains cautiously optimistic about the continued ad market recovery in 2021. Positively, declines in Gray's ad revenue were more than offset by record political advertising revenue in 2020, driven by contentious presidential and congressional political races in a number of markets where Gray owns top-ranked stations. Fitch believes Gray is well positioned to manage through weaker operating performance, as contracted retransmission revenues now account for a larger percentage of the revenue base (37.5% in fiscal 2019). Additionally, a weak advertising environment did not appear to materially impact the level of political ad spending in 2020. Highly Levered: Fitch-calculated two-year average gross leverage (total debt with equity credit/Operating EBITDA) is expected to be roughly 5.6x at YE December 2020, excluding the impact of the Quincy acquisition. The leverage impact of the Quincy acquisition will not be clear until the funding structure has been finalized; however, Fitch expects the transaction to be slightly leveraging. Fitch expects Gray will remain outside of Fitch's negative rating sensitivity of 5.5x through 2021, but notes that Gray's deleveraging could be accelerated by optional debt reduction with excess cash flow or lesser debt-funding for the Quincy acquisition. Strong Television Portfolio: Pro forma for the Quincy transaction, Gray will reach 25% of U.S. television households. The company has a strong portfolio of station assets, with #1 ranked stations in 77 of its 102 markets (~75%) and #2 ranked stations in 16 markets. Gray network affiliations are weighted towards NBC and CBS. Gray's legacy television stations were present primarily in smaller designated market areas (DMAs), ranked between 61 and 209, that were generally less competitive and overlap in university towns and state capitals. The Raycom acquisition added a complimentary portfolio of highly ranked television stations located in some larger markets, predominantly in the Southeast. The Quincy acquisition will further add a small, but complementary station portfolio, with top ranked stations in markets primarily across the Midwest Growing Net Retransmission Revenues: Fitch expects that retransmission revenues will grow at a high-single-digit pace over the near to medium term. Fitch expects these fees to continue to increase given the significant gap between a broadcast station's audience share and its share of multichannel video programming distributors' (MVPDs) programming fees. However, Fitch notes affiliates share an increasing proportion of these fees with the networks, which will increase from roughly 51% in 2018 to 55% by YE 2023, per SNL Kagan. Fitch expects net retransmission fees will grow more modestly in the low single-digit range. Improving FCF: TV broadcasters typically generate significant amounts of FCF due to high operating leverage and minimal capex requirements. Gray generated $236 million in Fitch-calculated FCF in fiscal 2019, and generated $459 million in Fitch-calculated FCF in the LTM period ended Sept. 30, 2020. Gray continued to generate significant FCF despite a pullback in advertisers' marketing budget, due to stronger than expected political advertising and stable retrains revenue. Gray and other local broadcasters benefit from having a more material cushion from retransmission and political advertising revenues than in prior economic downturns. Sufficient Liquidity: Liquidity is supported by $467 million in balance sheet cash and full availability under the $200 million revolver as of Sept. 30, 2020. Gray guided to ending 2020 with upwards of $725 million in cash due to strong political advertising in 4Q20. Gray does not have any required debt amortization under its existing term loans. Gray does not have any significant maturities until 2024. Gray also intends to upsize its revolver by $100 million at close of the Quincy acquisition. Advertising Revenue Exposure: Fitch estimates that advertising revenues accounted for roughly 53% of Gray's average two-year total revenues (excluding political). Advertising revenues, especially those associated with TV, are becoming increasingly hyper cyclical and represent a significant risk to all TV broadcasters. Gray works to offset this risk with its focus on increasing its share of more stable local advertising revenues. Local advertising revenues accounted for approximately 80% of Gray's advertising revenues (excluding political) in fiscal 2019. Viewer Fragmentation: Gray continues to face the secular headwinds present in the TV broadcasting sector including declining audiences amid increasing programming choices, with further pressures from over-the-top (OTT) internet-based television services. However, Fitch expects that local broadcasters, particularly those with higher-rated stations, will remain relevant and capture audiences that local, regional and national spot advertisers seek. In addition, Fitch views the increasing inclusion of local broadcast content in OTT offerings as a positive. Growth in OTT subscribers could provide incremental revenues and offset declines of traditional MVPD subscribers. However, Fitch does not believe penetration will be material for Gray over the near term, particularly give the company's predominance in smaller and medium-sized markets. DERIVATION SUMMARY Gray's 'BB-' Long-Term IDR reflects its smaller scale and higher leverage relative to the larger and more diversified media peers, like ViacomCBS, Inc. (BBB/Stable) and Discovery Communications (BBB-/Stable). Gray's ratings incorporate the company's high leverage, which is offset by the company's enhanced scale and competitive position following the Raycom acquisition. Gray is the fifth-largest independent station group by U.S. TV household reach, but maintains the highest broadcast revenue per television household owing to its strong portfolio of highly ranked television stations. Pro forma for the Quincy acquisition, Gray will have #1 ranked television stations in 77 of its 102 markets and #2 ranked television stations in 16 markets. Fitch notes that high ranked stations garner a larger share of the local and political advertising revenues in their markets. Gray also has a favorable mix of affiliated stations weighted towards NBC and CBS. Gray's pro forma average two-year total leverage of 5.7x is favorable to E.W. Scripps's pro forma total leverage of 6.2x (B/Stable). Gray also benefits from its stronger and high performing station portfolio and significant exposure in political battleground geographies, which further supports the rating differential. Gray's EBITDA margins, in the high 30% range (two-year average), lead the peer group. Comparatively, Fitch expects Scripps' EBITDA margins will remain in the high teens range (even-odd year average). KEY ASSUMPTIONS -- Core advertising declines in mid-double digits in 2020, rebounding in 2021 though not returning to 2019 levels. Core advertising returns to flat to low single digit declines thereafter. -- Political advertising revenues of roughly $400 million in 2020 with strong presidential election cycle. -- Gross retransmission revenue growth will decelerate over the ratings horizon, from low-double-digits in 2020 to high single-digits in 2021 and outer years. -- EBITDA margins fluctuate reflecting even year cyclical revenues. Margins compress slightly over time due to expected low single digit ad declines, a growing percentage of retransmission revenues are paid to the networks in reverse retransmission compensation, and fixed costs growing at low single digit rates. -- Capex in a range of 4% of revenues annually. -- Gray pays scheduled debt amortization ($14 million annually). -- Fitch assumes Gray completes the Quincy acquisition early in 3Q21. Identified run-rate synergies are fully realized by 2022. -- Fitch assumes Gray uses a meaningful portion of excess cash flow to focus on near-term debt reduction and beyond that time frame balances acquisitions and shareholder returns RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch expects to resolve the Negative Watch by affirming the ratings if Gray funds the Quincy transaction in a manner that prioritizes deleveraging to below 5.5x (Total Debt with Equity Credit/Last eight quarters annualized [L8QA] EBITDA) in the near term. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Fitch expects to resolve the Negative Watch with a downgrade if the funding structure for the Quincy acquisition is expected to materially delay deleveraging to below 5.5x materially, particularly if station divestiture net proceeds and excess cash are not allocated toward nominal debt reduction. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Comfortable Liquidity: Liquidity was supported by $467 million in balance sheet cash and full availability under the $200 million revolver as of Sept. 30, 2020. Gray expected to close 2020 with more than $725 million in cash, and intends to upsize its revolver by $100 million as part of the Quincy transaction. Gray does not have any required debt amortization under its existing term loan B. Gray's next sizeable maturity is not until 2024, when the $595 million term loan becomes due. In addition, Fitch expects liquidity will be supported by stable free cash flow generation over the rating horizon. Gray continued to generate strong free cash flow in 2020, despite a severely weakened advertising environment. Fitch expects both growing retransmission revenue and strong political ad spending in even years to provide a cash flow generation buffer against potential future advertising downturns. Fitch also expects meaningful net proceeds from the divestiture of six Quincy-owned station assets, which will further boost liquidity. Gray's first-lien credit facilities have modest covenant protections. The revolver has one financial maintenance covenant, a first-lien net leverage ratio of 4.50x, which steps down to 4.25x two years after closing and is only tested when the revolver is drawn. The first-lien credit facilities also require a 50% excess cash flow sweep when first-lien net leverage is greater than 4.50x, stepping down to 25% when leverage is greater than 3.75x and 0% otherwise. SOURCES OF INFORMATION 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. GRAY TELEVISION: Moody's Affirms B1 CFR on Quincy Acquisition ------------------------------------------------------------- Moody's Investors Service affirmed Gray Television, Inc.'s B1 corporate family rating, B1-PD probability of default rating, the Ba2 rating on the company's senior secured debt and the B3 rating on the company's senior notes. The speculative grade liquidity rating is maintained at SGL-1. The outlook is stable. The rating action follows Gray's announcement that it has reached an agreement to acquire Quincy Media, Inc. (Quincy, B2 positive) for $925 million in cash. Gray will divest some Quincy television stations in markets in which it currently owns full-power television stations. Gray intends to finance the transaction with cash on the balance sheet and newly issued debt. The company has received a debt financing commitment for an incremental loan to finance up to the full purchase price of $925 million although the final amount, net of divestitures, is expected to be much lower. Affirmations: Issuer: Gray Television, Inc. Probability of Default Rating, Affirmed B1-PD Corporate Family Rating, Affirmed B1 Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2) Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD5) Outlook Actions: Issuer: Gray Television, Inc. Outlook, Remains Stable RATINGS RATIONALE Following the close of the transaction, Gray will own television stations in 102 designated market areas (DMAs) and will reach 25.4 percent of US television households, including the number-one ranked television station in 77 DMAs and the first and/or second highest ranked television station in 93 DMAs (Comscore's 2020 average all-day ratings). Moody's expects that the transaction will be immediately free cash flow accretive and that the expected $23 million of synergies are easily attainable with a low cost to achieve. Gray's B1 rating reflects the company's exposure to the inherently volatile TV advertising market with around 50% of the company's revenues coming from core (excl. political) TV advertising which declined materially in 2020 as a result of the impact from the COVID-19 pandemic on the economy. The rating also reflects Moody's expectations that Gray's debt to EBITDA (Moody's adjusted) will remain above 5x in the coming 12-18 months. The ratings also incorporate Moody's expectations that the company might engage in further debt funded M&A in the coming year, which would temporarily lead to leverage increasing above Moody's 5.5x rating guidance. Gray's B1 rating also reflects the company's large scale as reflected in a quasi-national footprint of its network of broadcast stations as well as the strong market position of these stations in their DMAs. Gray's rating is also supported by the company's strong cash flow generation with over $500 million generated in 2020 despite the COVID-19 disruption. The stable outlook reflects Moody's expectations that despite the disruption caused by the COVID-19, and the moderate leverage increase caused by the Quincy acquisition, Gray will retain metrics in line with a B1 rating through 2021, in particular leverage (Moody's adjusted on a two year basis) not materially above 5.5x. The stable outlook also reflects Moody's expectations that the company will maintain a very good liquidity profile in 2021 and beyond. Gray has a very good liquidity profile as reflected in the SGL-1 rating of the company. Moody's expects that the company's liquidity will remain strong, supported by around $467 million of cash on hand at 30 September 2020 and expected at above $700 million at year end given the record political revenue and cash flow generated during the presidential election in Q4 2020. The company also has a fully undrawn $200 million revolving credit facility and it is expected to remain free cash flow positive, even under assumptions of continued secular pressures on advertising and accelerating MVPD subscriber attrition. Gray also has the option to pay in kind the dividend on its $650 million preferred shares (8% cash rate, 8.5% PIK) to conserve cash. If it were to draw on its revolver, the company would have to comply with a first lien senior secured net leverage ratio covenant of 4.25x. Moody's expects Gray to maintain ample headroom under the covenant in the coming quarters. The instrument ratings reflect the probability of default of the company, as reflected in the B1-PD Probability of Default Rating, an average expected family recovery rate of 50% at default given the mix of secured and unsecured debt in the capital structure, and the particular instruments' ranking in the capital structure. The Ba2 (LGD2) rating on the company's senior secured credit facilities reflects their first priority ranking above the company's senior notes, which are rated B3 (LGD5). FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the ongoing disruption caused by the COVID-19 pandemic, upwards movement on the rating is currently limited until visibility over the recovery of the TV advertising market is established. Upwards pressure would also require the company to maintain leverage (Moody's adjusted on a two year basis) below 4.5x on a sustained basis while also maintaining its strong free cash flow generation. Downward pressure on the ratings could ensue should Gray's leverage trends above 5.5x on a sustained basis as a result of weak performance or more aggressive financial policies or should liquidity or covenant compliance weaken. Headquartered in Atlanta, GA, Gray Television, Inc. is a television broadcast company that currently owns and operates television stations across 93 markets, broadcasting over 400 separate program streams including 157 Big 4 affiliates and reaching 24% of US households (17% including the UHF Discount). Gray operates the number 1 or 2 ranked stations in about 95% of its markets. Gray is publicly traded with the family and affiliates of the late J. Mack Robinson collectively owning approximately 11% of combined classes of common stock. The dual class equity structure provides these affiliated entities with roughly 40% of voting share. In the last twelve months ended on September 30, 2020, Gray reported revenue of about $2.2 billion. Established in 1926, Quincy Media, Inc. is a family-owned broadcaster and media company. Quincy owns and operates television stations in 16 US markets, broadcasting all major affiliates including NBC, ABC, CBS and FOX. Other assets include interactive media platforms, two newspapers, and two radio stations. Headquartered in Quincy, IL, the company generated net revenue of approximately $268 million for the last twelve months ended September 30 2020. The principal methodology used in these ratings was Media Industry published in June 2017. GREENTEC-USA INC: Feb. 23 Hearing on Bid Procedures for All Assets ------------------------------------------------------------------ GreenTec-USA, Inc., filed with the U.S. Bankruptcy Court for the Eastern District of Virginia a notice of its proposed bidding procedures relating to the sale of substantially all assets to IntelGard, Inc. for $4.25 million, subject to overbid. The Debtor has filed with the Court its Bid Procedures Motion. Copies of the Bid Procedures Motion and attachments may be viewed at the Court's website (http://www.vaeb.uscourts.gov/)or may be obtained from the Debtor's counsel upon request and payment of the copying and delivery charges. A hearing on the Motion is set for Feb. 23, 2021, at 11:00 a.m. The Objection Deadline is Feb. 16, 2021. A copy of the APA and Bid Procedures is available at https://tinyurl.com/1fjno8d1 from PacerMonitor.com free of charge. About GreenTec-USA Inc. GreenTec-USA, Inc. -- https://greentec-usa.com/ -- offers cyber-defense, secure data, secure systems, and secure document storage, video compression, data center modularization and optimization services. Based in Sterling, Va., GreenTec-USA filed a voluntary Chapter 11 petition (Bankr. E.D. Va. Case No. 19-14034) on Dec. 10, 2019. In the petition signed by Stephen Petruzzo, president and chief executive officer, Debtor estimated $1 million to $10 million in both assets and liabilities. Robert M. Marino, Esq., at Redmon Peyton & Braswell, LLP, is Debtor's legal counsel. GREENTEC-USA INC: Sets Bid Procedures for Substantially All Assets ------------------------------------------------------------------ GreenTec-USA, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Virginia to authorize the bidding procedures relating to the sale of substantially all assets to IntelGard, Inc. for $4.25 million, subject to overbid. Since the Petition Date, the Debtor has been actively soliciting potential purchasers for the company's assets, including the Patents and Software. While the Debtor had originally expected to realize the fruits of its marketing efforts by March or April of 2020, the onset of the COVID19 pandemic significantly impaired the process. Indeed, the investment community of potential buyers has been severely tested and limited by the pandemic. IntelGard is one of the prospective purchasers that the Debtor has been negotiating with for a sale of the Assets. IntelGard and the Debtor have previously entered into an agreement in the ordinary course of business to collaborate on integrating hardware and software components to produce bundled secure data storage products for sale. The initial sales relationship provided the impetus for negotiating a sale of the Assets. On Feb. 1, 2021, following the conclusion of lengthy negotiations, the Debtor and IntelGard entered into an Asset Purchase Agreement providing for the sale of substantially all of the Debtor's assets, consisting of patents, trademarks, software products and inventory, as follows: a. Patent Number Patent Title: 7,627,776 - B2 Data Backup Method, 7,822,715 B2 - Data Mirroring Method, 8,401,999 B2 - Data Mirroring Method, 8,473,465 B2 - Data Mirroring System, 9,019,703 B2 - Modular Reconfigurable Computers and Storage Systems, D738,874 S Storage Drive Chassis, D795,243 S - Storage Drive Chassis, 9,214,194 B2 - External Drive Chassis Storage Array, 9,710,028 B2 - External Drive Chassis Storage Array, 9,317,426 B2 - Write Once Read Many Media Methods, 9,632,717 B2 - Write Once Read Many Media Methods and Systems, and 10,073,502 B2 - External Drive Chassis Storage Array; b. Trademarks: WORMdisk(TM), CYBERdisk(TM), WORMcloud(TM), WORMdrive(TM), WORMtray(TM), and WSS(TM); and c. Software Products: GT_WinStatus - Monitoring, alerting, status, auditing and management GUI application software source code and executables; GT_Systray - Lightweight tlock/untlock/enforce/finalize GUI source code and executables; WORMdisk Utilities - gttlock, gtutlock, gtfinal, wvenf, wvlist, wvmap, wvnext, filock, fiulock, filist, mpcreate, mpdelete to include source code, xecutables and associated scripts and documentation in editable form; CYBERdisk Utilities - cdprot to include source code, executables and associated scripts and documentation in editable form; and Video Manager XTC-2200 - camera management GUI application software. The Debtor, in the exercise of its business judgment, has accepted the Purchaser as a "stalking horse bidder" and, has agreed to provide the Purchaser with certain protections customarily afforded stalking horse bidders in comparable situations. As set forth in greater detail in the APA, the proposed transaction provides for the following: (a) Assets to be Purchased: The Assets and all rights thereto (b) Purchase Price: $4.25 million (Stalking Horse Bid) (c) Earnest Money Deposit: $10,000 (initial deposit) (d) Break-Up Fee: $212,500 (equal to 5% of the Purchase Price) (e) Closing Conditions: Entry of an order by the Court approving the sale of the Assets to the Purchaser; entry into a consulting or employment agreement by Stephen Petruzzo, the Debtor's CEO, with the Purchaser on terms acceptable to both. (f) Subject to Higher/Better Offers: The proposed sale is subject to approval of the Court, which may approve a competing higher and/or better offer to purchase the Assets. (g) Closing Date: The sale of the Assets will close no later than 60 days after entry of an order by the Court approving the sale to the Purchaser in the Bankruptcy Case. The Debtor asks that the Court approves the Bid Procedures to facilitate the sale of the Assets. The principal terms of the Bidding Procedures are: a. Bid Deadline: March 31, 2021 at 5:00 p.m. (ET) b. Initial Bid: $4,512,500, which is equal to Cash Consideration of the bid submitted by the Stalking Horse of $4.25 million, plus (i) the break-up fee in the amount of $212,500 c. Deposit: $10,000 d. Auction: The Auction, if any, will be held at the Auction/Sale Hearing before the Bankruptcy Court or such other date, time and place as the Debtor will designate in a subsequent notice to all Qualified Bidders. e. Bid Increments: $20,000 The Debtor asks that the Court schedules the Auction/Sale Hearing on or before April 15, 2021 and that objections, if any, to the Sale be filed no later than seven days prior to the Auction/Sale Hearing; provided, however, that objections to the Court's approval or disapproval of the Successful Bid designation or the Backup Bid designation, or any of the terms of the Successful Bid or Backup Bid that differ from the APA, will be deemed timely made if (but only if) made orally on the record at the Auction/Sale Hearing when requested by the Bankruptcy Court. The Debtor asks Court approval of the manner and form of the Sale and Bid Procedures Notice, which it will serve upon Sale and Bid Procedures Notice parties. It proposes to serve the Sale and Bid Procedures Notice within three business days after entry of the Bid Procedures Order. The Sale and Bid Procedures Notice will provide that any party may obtain a copy of this Motion or the Bid Procedures Order by contacting the Debtor's counsel. Although the Assets are not encumbered by any known liens, the Purchaser is requiring that the Debtor obtains approval of the sale of such Assets free and clear of all liens, claims, encumbrances and interests, with all such valid liens, claims, encumbrances and interests to attach to the proceeds of the sale. A copy of the APA and Bid Procedures is available at https://tinyurl.com/1fjno8d1 from PacerMonitor.com free of charge. The Purchaser: INTERGARD, INC. Attn: Eric Rickard, CEO 1900 Reston Metro Plaza, Suite 500 Reston, VA 20190 The Purchaser is represented by: LAW OFFICE OF JOHN T. DONELANn Attn: John T. Donelan, Esq. 125 S. Royal St. Alexandria, VA 22314 About GreenTec-USA Inc. GreenTec-USA, Inc. -- https://greentec-usa.com/ -- offers cyber-defense, secure data, secure systems, and secure document storage, video compression, data center modularization and optimization services. Based in Sterling, Va., GreenTec-USA filed a voluntary Chapter 11 petition (Bankr. E.D. Va. Case No. 19-14034) on Dec. 10, 2019. In the petition signed by Stephen Petruzzo, president and chief executive officer, Debtor estimated $1 million to $10 million in both assets and liabilities. Robert M. Marino, Esq., at Redmon Peyton & Braswell, LLP, is Debtor's legal counsel. GREER FARMS: Plan Provides for Payment in Full of Allowed Claims ---------------------------------------------------------------- Jimmy G. and Brenda K. Greer and Greer Farms, Inc., small debtors under subchapter V, have filed an Amended Joint Plan of Reorganization. The projections show that the debtors will have net annual income available for Plan payments of from $220,000 to $315,2000 for Greer Farms and $42,850 for the Greers. Plan payments will be annually of approximately $103,397 for Greer Farms and $76,897 for the Greers. Greer Farms will make payments for joint obligations, as well as obligations of the Greers to the extent funds are not otherwise available. As to Jim and Brenda Greer the Plan provides for seven classes of claims: Met Life, Rabo Finance, Fleming Feed, FBN Inputs, First Oak Bank, Cedar Crest Farms, and Unsecured Creditors. As to Greer Farms, the Plan also provides six classes of claims: Met Life, Rabo Finance, Fleming Feed, FBN Inputs, First Oak Bank, and Unsecured Creditors. A small priority claim (IRS) and an unimpaired secured claim (SBA) are also provided for. Each Plan provides for payment in full of allowed claims. The Debtor(s) may file objections to certain claims. The Debtors will continue their farming operation and outside employment. The Debtors will vary their crops and include some custom trucking and cattle work. The Debtors anticipate this will allow them to make the payments for in the Plan. A full-text copy of the Amended Joint Plan of Reorganization dated February 1, 2021, is available at https://bit.ly/3cGIUnQ from PacerMonitor.com at no charge. Attorneys for the Debtors: J. Micheal Morris KENDA AUSTERMANN LLC 201 North Main Street, Suite 1600 Wichita, KS 67202-4816 E-mail: jmmorris@klendalaw.com About Greer Farms Jimmy G. Greer and Brenda K. Greer have been engaged in farming most of their lives. In addition, Jim Greer is employed as a trucker, and Brenda is employed by USD 283. Jim Greer is the sole owner of Greer Farms. The Greers and Greer farms separately own farm ground, all in Montgomery County, Texas. On Sept. 28, 2020, Greer Farms sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Kansas Case No. 20-11214). At the time of the filing, the Debtor disclosed $2,403,490 in assets and $1,845,362 in liabilities. Jimmy G. Greer and Brenda K. Greer also filed their own Chapter 11 petition (Bankr. D. Kan. Case No. 20-11212) on Sept. 28, 2020. Judge Dale L. Somers oversees the cases. Klenda Austerman, LLC and Yerkes & Michels, CPA, LLC serve as the Debtors' legal counsel and accountant, respectively. GRUBHUB HOLDINGS: Moody's Completes Review, Retains B1 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Grubhub Holdings Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations The B1 Corporate Family Rating reflects Grubhub's high business risks from an intensely competitive online food ordering and delivery industry and the low switching costs for diners and restaurants. The company has benefited from the surge in demand for online food orders during the COVID-19 pandemic but EBITDA has continued to decline since 2018 due to elevated investments and competitive pressure. Grubhub expects to close its acquisition by Just Eat Takeaway.com in the first half of 2021. Grubhub's credit profile is supported by its good liquidity, good operating scale, and large network of independent restaurant partners that use its online marketplace. Moody's expects leverage to remain very high but it expects free cash flow of about $75 million to $100 million on a standalone basis over the next 12 months. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. GUIDEHOUSE LLP: Moody's Cuts First Lien Loan Facility Rating to B2 ------------------------------------------------------------------ Moody's Investors Service affirmed the B2 corporate family rating of Guidehouse LLP and concurrently downgraded the first lien bank facility rating to B2 from B1. Moody's also assigned a B2 rating to the company's refinanced first lien term loan for $1.244 billion, the proceeds of which will retire its existing first lien term loan and fully repay the existing second lien term loan, with no change in the company's total debt balance. The first lien debt rating reflects the elimination of the junior debt class that provided uplift to the first lien rating. The current Caa1 rating on the second lien facility will be withdrawn once that facility is terminated. The rating outlook remains stable. According to lead analyst, Bruce Herskovics, "Despite the pandemic in 2020, Guidehouse achieved noteworthy backlog growth while integrating Navigant Consulting and, as expected, credit metrics will support the B2 corporate family rating in 2021." RATINGS RATIONALE The B2 CFR reflects Guidehouse's growing scale, the highly variable cost structure of the consulting services business model, and good diversity across regulated end markets. The company has a brief history as an independent business, with a focus on inorganic growth, elevated financial leverage and recently, progress in strengthening its reported EBITDA margin. Moody's estimates 2020 Debt/EBITDA to be in the low 6x range with funds from operations to debt of about 7%. While free cash flow exceeded 12% of debt in 2020, non-recurring working capital improvements rather than earnings expansion contributed heavily to the cash flow. Guidehouse became an independent company just two years ago and more than doubled in size and market scope upon the late 2019 acquisition of Navigant Consulting. While streamlining and integration related spending began winding down in Q3-2020, the quality of historical earnings has been limited. The stable rating outlook reflects a supportive backlog level and Moody's expectation of earnings expansion in 2021, which will strengthen credit metrics with debt-to-EBITDA in the 5x range. Moody's view governance risk as moderately elevated given the private-equity ownership of Veritas Capital, the company's emphasis on M&A and recognition that Guidehouse's debt balance has more than doubled since ratings were initially assigned in 2018. Liquidity is very good. The liquidity profile is strong owing to $375 million of cash on hand and $125 million of free cash flow expected in 2021, high versus scheduled term loan amortization of only $12 million per year. Moody's estimates that about $250 million of the cash balance is ear-marked for investment or other discretionary purposes, potentially returns to shareholders. The liquidity profile will probably become less robust should the excess cash be used. Nonetheless the company's unused $125 million revolving credit facility is adequately sized as a backstop liquidity source. The first lien bank facility rating of B2 is on par with the CFR as the facility comprises the bulk of the company's debt. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating momentum will depend on continued backlog and revenue growth, expectation of leverage maintained below 5x, funds from operation to debt approaching 15%, free cash flow to debt of 10%, and a good liquidity profile. Downward rating pressure would mount with leverage above 6x, free cash flow below $50 million, and a deteriorating liquidity profile, such as one with an ongoing level of revolver dependence. Affirmations: Issuer: Guidehouse LLP Probability of Default Rating, Affirmed B2-PD Corporate Family Rating, Affirmed B2 Downgrades: Issuer: Guidehouse LLP Senior Secured Bank Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3) Assignments: Issuer: Guidehouse LLP Senior Secured Bank Credit Facility, Assigned B2 (LGD3) Outlook Actions: Issuer: Guidehouse LLP Outlook, Remains Stable Guidehouse LLP, headquartered in McLean, VA, is a provider of strategic advisory services to regulated industries such as healthcare, financial services and energy/infrastructure. Revenues for 2020 are estimated to be $1.55 billion. Guidehouse is majority owned by Veritas Capital. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. H&S EXPRESS: Hearing on 100% Plan Set for March 18 -------------------------------------------------- Judge Gregory L. Taddonio has entered an order conditionally approving the Disclosure Statement of H&S Express, Inc., and setting a hearing for March 18, 2021, at 10:00 a.m. to consider confirmation of the Plan via Zoom, https://www.zoomgov.com/j/ Ballots accepting or rejecting the Plan are due on or before March 1, 2021. Objections to confirmation of the Plan and/or final approval of the Disclosure Statement are due March 8, 2021. The Debtor filed a Chapter 11 Small Business Plan and a Disclosure Statement on Jan. 29, 2021. The Plan provides: * Class 1 are allowed Administrative Claims which will be paid in full. * Class 2 is the allowed secured claim of the Wells Fargo Bank., d/b/a Wells Fargo Auto, which has valid perfected security interest in a 2020 Ford Explorer vehicle. The total amount due and entitled to secured status based on the lien on the title is $61,100. * Class 3 is the allowed secured claim of Citizens Bank, N.A., which has valid perfected security interest in a Ford F450 Truck. The total amount due and entitled to secured status based on the lien on the title is $84,753. * Class 4 are the collective claims of BMO Harris Bank, N.A. Creditor has a security interest in a 2019 Transcraft Trailer, 2020 Peterbilt 389 Series Tractor, 2012 Kenworth W900 Tractor, 2020 Transcraft Trailer, 2018 Peterbilt 389 Tractor, 2019 Fontaine 50 Ton Lowbed Trailer, and 2019 Fontaine 35 Ton Lowbed Trailer. Creditor filed claims 7-13, as amended. All claims by BMO Harris Bank, N.A. have valid security interests in the equipment. The Debtor incorporates the descriptions as detailed in the Motion for Adequate Protection and the Order dated January 29, 2021. * Class 5 is the allowed secured claim of ENGS Commercial Finance Company, which has valid perfected security interest in a 2020 Peterbilt 389 Sleeper Tractor. The total amount due is $163,000. The Debtor intends to surrender this collateral to Creditor. * Class 6 are the allowed collective claims of PNC Equipment Finance, which has a valid perfected security interest in a 2020 Fontaine 4thAxle Flip for Double Drop Trailer, 2020 Fontaine MXT 55 Extendable Low Boy with Pony Motor Trailer, and Fontaine 4th Axle. The total indebtedness secured with the 2020 Fontaine 4th Axle Flip for Double Drop Trailer is $21,001.55 and the total indebtedness secured with the 2020 Fontaine MXT 55 Extendable Low Boy with Pony Motor Trailer, and Fontaine 4thAxle is $166,516.71. The Debtor intends to surrender the 2020 Fontaine MXT 55 Extendable Low Boy with Pony Motor Trailer, and Fontaine 4thAxle. * Class 7 is the priority unsecured claim of the Internal Revenue Service. The total amount due and entitled to priority, based on Claim 6 filed by the Internal Revenue Service is $15,696. * Class 8 is the priority unsecured claim of the Pennsylvania Department of Revenue. The total amount due and entitled to priority is $77.57 based on Claim 5 by the Pennsylvania Department of Revenue. * Class 9 is the non-priority unsecured creditors. Each individual claim will be paid 100% of their allowed claim. The Debtor reserves the right to object to any claims in this class. About H&S Express H&S Express, Inc., a Fairbank, Pa.-based freight shipping trucking company, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Pa. Case No. 20-22811) on Sept. 29, 2020. The petition was signed by Kevin L. Hlatky, the company's president. At the time of the filing, the Debtor estimated assets of between $500,001 and $1 million and liabilities of the same range. Bononi & Company, P.C., is the Debtor's legal counsel. HARSCO CORP: Fitch Withdraws BB Issuer Default Rating ----------------------------------------------------- Fitch Ratings has affirmed Harsco Corporation's Long-Term Issuer Default Rating (IDR) at 'BB', secured revolver and term loans at 'BB+'/'RR1', and senior unsecured notes at 'BB'/'RR4'. The Rating Outlook is Negative. Harsco had $1.3 billion of debt outstanding as of Sept. 30, 2020. The ratings and Negative Outlook reflect Harsco's elevated financial leverage following recent acquisitions and exacerbated by the coronavirus downturn. Harsco completed the acquisition of Stericycle's Environmental Solutions business (ESOL) in April 2020, funding the acquisition primarily with debt. The ratings consider currently weak operating results within the ESOL business and the challenges associated with integrating both ESOL and Clean Earth, which was acquired in June 2019. In the event that a recovery in demand, synergies from acquisitions, or an improvement in margins are delayed, Harsco's credit profile could remain weaker than incorporated in Fitch's current ratings for the company. The ratings are withdrawn for commercial reasons. KEY RATING DRIVERS Higher Financial Leverage: Assuming a full year of ESOL results in 2020, Harsco's debt/EBITDA is estimated to be around 5.0x at YE 2020, and Fitch estimates that leverage will improve to the high-3.0x range in 2021 as the economy recovers and ESOL's margins improve. Leverage is expected to improve to the low-3.0x range in 2022 through a combination of further EBITDA growth and debt reduction from FCF. Near-term Operating Pressure: Fitch expects Harsco's sales will increase by around 24% in 2020 driven by the acquisitions of Clean Earth and ESOL offsetting a projected decline at Harsco Environmental. The company's EBITDA margins are expected to narrow to around 12.2% in 2020 from 18.0% in 2019 due to lower organic sales and the mix effect of the ESOL acquisition. Fitch expects Harsco's organic sales and margins will begin to recover in 2021 and that margins will recover to 15%-16% by 2022 as Harsco's management implements corrective measures at ESOL and achieves planned synergies. FCF Constrained: FCF is estimated to be positive at around 1%-2% of revenues in 2020 as the effect of lower margins is offset by a reduction in capex and working capital, and to be within this range in 2021. FCF is expected to be used for debt reduction while acquisitions are on hold over the medium term as the company focuses on integrating ESOL and Clean Earth. Portfolio Shift: Harsco's portfolio has undergone a significant shift over the past 18 months with the acquisitions of Clean Earth and ESOL and the sale of the company's three industrial businesses. These transactions give Harsco a meaningful presence in environmental solutions and, in particular, hazardous waste disposal, while reducing its exposure to the cyclical industrial sector. Hazardous waste disposal, which will represent around 40% of Harsco's revenues, is less cyclical than Harsco's other businesses and has solid long-term growth prospects. Cyclical End-Markets: The recent portfolio shift notwithstanding, Harsco faces meaningful cyclicality in its other operations, which are tied to the level of steel production and investment in rail equipment, with particular exposure to steel and mineral markets. The company has experienced weaker results in its Harsco Environmental business due to lower services demand and weaker production levels at its steel mill customers and in its rail business due to a mix shift to lower-margin equipment. DERIVATION SUMMARY Harsco is a diversified manufacturer and service provider that participates in a variety of end-markets, each of which has a different set of competitors. Another diversified industrial in the 'BB' category is Trinity Industries, a manufacturer and lessor of rail cars. When compared with Trinity's manufacturing operations, Harsco has lower financial leverage and generates higher EBITDA margins. Trinity has a substantial railcar leasing business that broadens its scale and helps to mitigate the cyclicality in its railcar manufacturing operations. No country ceiling, parent/subsidiary or operating environment aspects affect the ratings. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Sales increase by around 24% in 2020 driven by the acquisitions of Clean Earth and ESOL offsetting a projected decline at Harsco Environmental. Sales grow 15% in 2021 and 10% in 2022. -- EBITDA margins narrow to 12.2% in 2020 from 18.0% in 2019 due primarily to lower sales and the mix effect of the ESOL acquisition. Margins recover to 15%-16% by 2022 due to synergies and operational improvements at ESOL. -- FCF is estimated to be positive in 2020 and 2021 at around 1% 2% of revenues. FCF is assumed to be used for debt reduction over the medium term. RATING SENSITIVITIES Not applicable as the ratings are being withdrawn. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Harsco's liquidity at Sept. 30, 2020 was supported by cash of $84 million and a $700 million secured revolver maturing in June 2024, on which an estimated $421 million was available. Harsco's debt structure as of Sept. 30, 2020 consisted of $254 million drawn on the secured revolver, $280 million outstanding on a secured term loan maturing in June 2024, $218 million outstanding on a secured term loan maturing in December 2024, and $500 million of senior unsecured notes due 2027. 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. Following the withdrawal of ratings for Harsco Corporation, Fitch will no longer be providing the associated ESG Relevance Scores. HCA HEALTHCARE: Leverage Target No Impact on Moody's Ba1 CFR ------------------------------------------------------------ Moody's Investors Service commented that HCA Healthcare, Inc. and its related entities (collectively "HCA") modification to its stated leverage target is credit positive because it indicates the company's willingness to commit to operating with somewhat more conservative financial leverage. There is no change to any of HCA's existing ratings, including its Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, Baa3 senior secured ratings, Ba2 unsecured ratings, and SGL-1 Speculative Grade Liquidity Rating, or its stable outlook. HCA stated on its fourth quarter earnings call that it has lowered its target debt/EBITDA range to 3.0 - 4.0 times (previously 3.5 - 4.5 times). Moody's believes this change signals management's confidence in its ability to weather the more immediate strains on its business related to the COVID-19 pandemic and operate with somewhat lower financial leverage over the longer-term than it has in the past. While historically, HCA has operated with debt/EBITDA around the mid 4.0 times range, more recently its debt/EBITDA has generally been maintained below 4.0 times as per the company's definition. Partly offsetting the credit positive nature of HCA's revised target leverage range was its announcement that it would resume share purchases and reinstate its cash dividend in 2021. HEARTLAND DENTAL: Moody's Completes Review, Retains Caa1 CFR ------------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of HEARTLAND DENTAL, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations HEARTLAND DENTAL, LLC's Caa1 Corporate Family Rating is reflective of its elevated leverage and aggressive growth strategy. The rating is constrained by the company's consumer-driven retail model, which remains susceptible to downturns in consumer spending. The rating benefits from Heartland's leading market position as the largest dental support organization (DSO) in the US, good geographic diversity, and favorable industry dynamics. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. HENRY VALENCIA: Fuentes Say Disclosures Fail to Address Key Issues ------------------------------------------------------------------ Creditor Joseph Fuentes objects to confirmation of Henry Valencia, Inc.'s Amended Chapter 11 Plan of Liquidation and to final approval of the Debtor's Amended Disclosure Statement, and in support of such objection, states: Creditor points out that the Amended Plan and the Amended Disclosure Statement fail to address key issues raised at the January 7, 2021 status conference: * The Disclosure Statement still lacks significant information regarding the Debtor's attempts to liquidate, including how many buyers remain interested in purchasing the Debtor, if any, when discussions began, and when, during 2020, the Debtor placed such discussions "on hold;" * The Disclosure Statement contains no explanation of how the Debtor will be able to continue to operate as a going concern pending sale, as proposed in the Amended Plan, given its declining inventory, money-losing operations and undercapitalization. Creditor further points out that the Disclosure Statement contains no information as to the current financial status of the Debtor, only information on the Debtor's financial status as of the petition date, March 10, 2020, nearly a year ago. According to the Creditor, the Plan itself does not appear to be feasible, based on the available information. The Debtor is not in a financial position to continue to operate for an indefinite period of time. The Debtor's monthly operating reports show it is undercapitalized and losing money. Creditor agrees with the IRS' analysis of the plan: "[a]s proposed the plan appears to be a delaying tactic in order for the Debtor to continue operations without really attempting to market and sell the business." As other creditors have pointed out, the Plan fails to address the Debtor's GM dealer agreement, which Creditor anticipates will be pulled, further negatively impacting the Debtor's ability to operate as a going concern, and its salability as a going concern. As other creditors have pointed out, the discharge provisions in the Plan violate 11 U.S.C. 1141(d)(3), and the retention of ownership's equity even if creditors are not paid in full violates the absolute priority rule. Attorneys for Creditor J. Fuentes: Daniel A. White ASKEW & WHITE, LLC 1122 Central Ave. SW, Suite 1 Albuquerque, NM 87102 Telephone: 505.433.3097 Facsimile: 505.717.1494 E-mail: dwhite@askewwhite.com About Henry Valencia Henry Valencia, Inc. -- https://www.henryvalencia.net -- is a dealer of Buick, Chevrolet, GMC cars in Espanola, NM. It offers new and pre-owned cars, trucks, and SUVs. Henry Valencia sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. N.M. Case No. 20-10539) on March 3, 2020. At the time of the filing, the Debtor estimated $1 million to $10 million in both assets and liabilities. Judge Robert H. Jacobvitz oversees the case. Giddens & Gatton Law, P.C., and Hurley, Toevs, Styles, Hamblin Panter, PA are the Debtor's bankruptcy counsel and special counsel, respectively. The Debtor also tapped Ricci & Company, LLC as its accountant. HIGH LINER: S&P Alters Outlook to Stable, Affirms 'B' ICR --------------------------------------------------------- On Feb. 3, 2021, S&P Global Ratings revised its outlook on Lunenberg, N.S.-based High Liner Foods Inc. to stable from negative. At the same time, S&P Global Ratings affirmed all of its ratings on the company including its 'B' issuer credit rating on the company. S&P said, "The stable outlook reflects our expectation that High Liner can sustain its improved EBITDA and margins over the next 12 months. We believe the company can sustain EBITDA in the 4.5x-5.0x range over the next 12 months, a level we believe sufficiently supports the rating. "We forecast High Liner will sustain credit measures in the mid-4x area in fiscal 2021. "The outlook revision reflects our favorable view of High Liner's operating performance through 2020. The pandemic-induced increase in at-home food consumption, new business wins, and a preference shift toward higher-margin branded value-added products boded well for High Liner. These favorable consumption trends combined with operating cost savings led to meaningful improvement in the company's EBITDA, margins, and credit measures for the last 12 months ended Sept. 30, 2020, compared with our previous expectations. Even though the company revenues dropped by 12% compared with the same period in 2019, High Liner's EBITDA (S&P Global Ratings' adjusted basis) increased by about US$10 million compared with the same period last year, reflecting a margin improvement of more than 300 basis points. At the same time, the company's debt to EBITDA remained consistent in the mid-4x area. "We expect these positive trends to continue through 2021, albeit at a slower pace. In our opinion, demand for packaged foods should remain positive because more people are working at home. In addition, we expect that High Liner's EBITDA should continue to benefit from the product-mix shift to value-added branded product offerings from unprocessed products and from positive response toward the company's new product rollouts. Furthermore, we believe that High Liner will maintain cost discipline by executing cost-rationalization initiatives. Taking these factors into consideration, we now forecast 2021 operating performance to improve significantly compared with our previous expectations. We now expect 2021 EBITDA and margins on an S&P Global Ratings' adjusted basis in the US$75 million-US$80 million range and 9.0%-9.5%, respectively, from US$60 million-US$65 million and about 6%, respectively, in our previous forecasts. We also forecast debt to EBITDA to remain consistent in the mid-4x area over the next 12 months." Revenues in 2021 should increase modestly despite uncertainties in the food service segment. S&P Global Ratings believes there remains a high degree of uncertainty about the evolution of the coronavirus pandemic. S&P said, "In our opinion, a slower-than-anticipated deployment of the vaccine could slow down the recovery of the food service segment because consumers might be hesitant to visit dine-in food venues at pre-pandemic levels. Furthermore, threats of multiple waves of coronavirus infections could lead to sporadic regional shutdowns and restaurant closures. Therefore, we believe that sales volumes for the food service sector, particularly from casual dining, could remain volatile in the near term. That said, contribution from other channels within the food service sector, such as health care and quick-service restaurants, should remain stable and offset any losses from the restaurant segment. We also note that as the vaccine rolls out, customer mobility will likely increase and consumers will begin to dine out; therefore, the risk remains as to whether the company can sustain its growth in the retail segment in the medium term." High Liner should maintain a sufficient liquidity position in the near term. S&P said, "We expect High Liner will maintain adequate liquidity. We believe the company could modestly increase its capital expenditures (capex) in 2021 relative to 2020. That said, we estimate that the company should be able to generate positive free cash flows of US$30 million-US$35 million. We believe that after dividend payments of about US$7 million-US$8 million, High Liner should have modest discretionary cash to meet its mandatory debt amortization. We also expect the company to maintain sufficient availability under its US$150 million asset-based lending (ABL) facility for additional liquidity cushion. "The stable outlook reflects S&P Global Ratings' expectation that High Liner can sustain its improved EBITDA and margins over the next 12 months. We believe the company can sustain EBITDA in the 4.5x-5.0x range over the next 12 months, a level we believe sufficiently supports the rating. "We could lower the ratings if adjusted debt to EBITDA weakened to the mid-6x area due to deterioration of profit margins and free cash flow. This scenario could unfold if High Liner faces higher-than-anticipated revenue pressures or cost overruns. "We could raise the ratings on High Liner in the next 12 months if debt to EBITDA (on an S&P Global Ratings' adjusted basis) improved to at or below 4x because of stronger business fundamentals through revenue growth and stability in EBITDA margins. The upgrade would also be predicated on the company's commitment to maintain leverage at or below 4x." HIGHLAND CAPITAL: To Use Chapter 11 Plan to Fend Off Ex-CEO ----------------------------------------------------------- Leslie A. Pappas of Bloomberg Law reports that Highland Capital Management LP is seeking bankruptcy court approval of a Chapter 11 plan that would stave off interference from co-founder and former President James Dondero. The proposed Chapter 11 plan, the subject of a two-day hearing in the U.S. Bankruptcy Court for the Northern District of Texas that ended Wednesday, February 3, 2021, includes exculpation provisions that would indemnify an independent director and others involved in company restructuring if they end up owing a judgment from possible lawsuits. The plan also includes a "gatekeeper" provision that would require the bankruptcy court to vet the validity of future litigation. About Highland Capital Management Highland Capital Management LP was founded by James Dondero and Mark Okada in Dallas in 1993. Highland Capital is the world's largest non-bank buyer of leveraged loans in 2007. It also manages collateralized loan obligations. In March 2007, it raised $1 billion to buy distressed loans. Collateralized loan obligations are created by bundling together loans and repackaging them into new securities. Highland Capital Management, L.P., sought Chapter 11 protection (Bank. D. Del. Case No. 19-12239) on Oct. 16, 2019. Highland was estimated to have $100 million to $500 million in assets and liabilities as of the bankruptcy filing. On Dec. 4, 2019, the case was transferred to the U.S. Bankruptcy Court for the Northern District of Texas and was assigned a new case number (Bank. N.D. Tex. Case No. 19-34054). Judge Stacey G. C. Jernigan is the case judge. The Debtor's counsel is James E, O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP. Foley & Lardner LLP, is special Texas counsel. Kurtzman Carson Consultants LLC is the claims and noticing agent. Development Specialists Inc. CEO Bradley Sharp is a financial adviser and restructuring officer. The Office of the U.S. Trustee appointed a committee of unsecured creditors on Oct. 29, 2019. The committee tapped Sidley Austin LLP as bankruptcy counsel; Young Conaway Stargatt & Taylor LLP as co-counsel with Sidley Austin; and FTI Consulting, Inc., as financial advisor. HORIZON THERAPEUTICS: Moody's Affirms Ba2 CFR on Viela Transaction ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings of Horizon Therapeutics USA, Inc., a subsidiary of Horizon Therapeutics plc (collectively "Horizon"). The affirmed ratings include the Ba2 Corporate Family Rating, the Ba2-PD Probability of Default Rating, the Ba1 senior secured rating and the Ba3 senior unsecured rating. The outlook is stable. There is no change to Horizon's SGL-1 Speculative Grade Liquidity Rating. This action follows the announcement that Horizon will acquire Viela Bio, Inc. for approximately $3.05 billion. Roughly $1.3 billion of the purchase price is expected to be funded with new debt. The remainder will be funded with existing cash, which was $2.08 billion as of December 31, 2020. Although Moody's is affirming Horizon's Ba1 senior secured and Ba3 senior unsecured instrument ratings, these ratings could change depending on the specific mixture of secured and unsecured debt expected to be sustained in Horizon's capital structure after the transaction. "The Viela acquisition is credit negative based on R&D execution risk, limited near-term earnings contribution, and debt/EBITDA rising to above 3x on our basis," stated Michael Levesque, Moody's Senior Vice President. "However, the transaction provides significant long-term revenue opportunities based on Viela's pipeline, and we anticipate rapid deleveraging through strong earnings growth," continued Levesque. Ratings affirmed: Horizon Therapeutics USA, Inc. Corporate Family Rating, at Ba2 Probability of Default Rating, at Ba2-PD Senior secured bank credit facilities, at Ba1 (LGD2) Senior unsecured notes, at Ba3 (LGD5) RATINGS RATIONALE Horizon's Ba2 Corporate Family Rating reflects its niche position in the global pharmaceutical industry with annual revenue of slightly more than $2 billion. Horizon's drugs for rare diseases have high price points, good growth opportunities, and generally high barriers to entry. Thyroid eye disease treatment Tepezza has high sales potential based on significant unmet medical need and its very successful initial launch. Horizon's efficient operating structure and high profit margins will drive solid cash flow. Risk factors include declining trends in the inflammation segment, R&D execution risk, and unresolved legal exposures. Product concentration is somewhat high, with the top three drugs generating over half of sales for the foreseeable future. Financial leverage is moderately high based on the announced acquisition of Viela, with pro forma debt/EBITDA of 4.4x as of September 30, 2020 using Moody's calculations. However, high earnings growth will drive deleveraging, absent additional debt-financed acquisitions. Pro forma cash on hand will decline to about $600 million, which together with solid cash flow provides some flexibility for acquisitions. Viela Bio's autoimmune drug, Uplizna, received FDA approved in June 2020 for neuromyelitis optica spectrum disorder (NMOSD), a rare disease that leads to vision and paralysis. Moody's anticipates solid uptake in this indication. However, the success of the acquisition will depend on the outcomes of various other clinical studies, including the use of Uplizna and various pipeline compounds in a wide range of autoimmune and severe inflammatory diseases. ESG considerations are material to the rating. Horizon faces exposure to regulatory and legislative efforts aimed at reducing drug prices. These are fueled in part by demographic and societal trends that are pressuring government budgets because of rising healthcare spending. Due to a niche focus in rare diseases, Horizon's products tend to carry very high gross prices. That being said, orphan drugs are somewhat less likely to be affected by drug pricing reform than traditional and specialty oral products that have very high spending within the Medicare Part D population. Among governance considerations, Horizon underwent substantial deleveraging transactions in 2019, repaying a material amount of debt with public equity offering proceeds and balance sheet cash, in order to align its financial leverage with companies in its defined biopharmaceutical peer group. Moody's viewed this favorably, but notes that the company's M&A strategy will still result in moderate financial leverage over time. Horizon's liquidity will remain strong, reflected in the SGL-1 Speculative Grade Liquidity Rating. This is due to high cash on hand, positive free cash flow, no financial maintenance covenants in the term loan and minimal debt amortization requirements. The rating outlook is stable, reflecting Moody's expectation for strong earnings growth combined with adherence to the company's stated debt/EBITDA targets. These include gross debt/EBITDA of roughly 2.0x (on the company's basis), or 3.0x for an opportunistic acquisition, to be followed by deleveraging. On Horizon's basis, gross debt/EBITDA will rise to 2.8x after the acquisition of Viela. FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade include: significant expansion in scale, improving product diversity, and resolution of the outstanding Department of Justice subpoena into marketing and commercialization practices. Specifically, debt/EBITDA sustained below 3.0x using Moody's definitions could support an upgrade. Factors that could lead to a downgrade include erosion in cash flow that may arise from declining volumes, significant pricing pressure, or generic competition for key products. Debt-financed acquisitions, or an escalation of legal risks could also pressure the ratings. Specifically, debt/EBITDA sustained above 4.0x using Moody's definitions could lead to a downgrade. Headquartered in Deerfield, Illinois, Horizon Therapeutics USA, Inc., is an indirect wholly-owned subsidiary of Dublin, Ireland-based Horizon Therapeutics plc (collectively "Horizon"). Horizon is a publicly-traded pharmaceutical company focused on developing and commercializing innovative medicines that address unmet treatment needs for rare and rheumatic diseases. Annual net sales in 2020 were approximately $2.1 billion. The principal methodology used in these ratings was Pharmaceutical Industry published in June 2017. IDAVM MULTI GROUP: Unsec. Creditors Will Recover 10% in 60 Months ----------------------------------------------------------------- IDAVM Multi Group Enterprises, Inc., filed a Chapter 11 Small Business Plan and a Disclosure Statement. General unsecured creditors in Class 4 and will receive a distribution of 10% of their allowed claims. Creditors will receive $128.63 per month for 60 months. The Debtor paid the secured loan due to Fifth Third Bank in the amount of $25,000 in full. The Debtor paid the secured loan due to US Bank for the 2016 Toyota Prius C in full. During the pendency of this bankruptcy case, the Debtor applied for forgiveness of the PPP loan due to Fifth Third Bank. This loan was given as part of the CARES act and the Debtor expects the loan amount to be forgiven entirely. The Debtor will fund the Plan using its monthly cash flow. A full-text copy of the Disclosure Statement dated February 1, 2021, is available at https://bit.ly/3oIh4tJ from PacerMonitor.com at no charge. About IDAVM Multi Group IDAVM Multi Group Enterprises, Inc. filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 20-12336) on June 12, 2020. Ben Schneider, Esq. of SCHNEIDER & STONE, is the Debtor's counsel. IDERA INC: Moody's Assigns B3 CFR Following Partners Acquisition ---------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating and B3-PD Probability of Default Rating to Idera, Inc. (Partners) ("Idera") following its acquisition by private equity firm Partners Group ("Partners"). Concurrently, Moody's assigned B2 ratings to Idera's first lien bank credit facilities, consisting of a first lien term loan ( $1.117 billion) and a $100 million revolving credit facility, and a Caa2 rating to the proposed $350 million second lien term loan. The outlook is stable. Partners Group is acquiring Idera from private equity firm HGGC. The existing debt will remain in place post-closing. The CFR and PDR for the company under HGGC ownership will be withdrawn at the close of the transaction. Assignments: Issuer: Idera, Inc. (Partners) Corporate Family Rating, Assigned B3 Probability of Default Rating, Assigned B3-PD Gtd Senior Secured 1st Lien Revolving Credit Facility, Assigned B2 (LGD3) Gtd Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3) Gtd Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD6) Outlook Actions: Issuer: Idera, Inc. (Partners) Outlook, Assigned Stable RATINGS RATIONALE Idera's B3 CFR reflects the company's relatively small revenue base and narrow market focus, acquisitive growth strategy and aggressive financial strategy which can lead to recurring increases in adjusted leverage. Pro forma for the acquisition by Partners Group, leverage is estimated at about 8x, but when adjusting for the change in deferred revenue and certain one-time expenses, cash adjusted leverage could be viewed as about 7.5x. In the absence of any additional debt issuance, Moody's expects cash adjusted leverage could decline to 7x over the next 12-18 months. Idera benefits from its largely recurring revenue base, attractive operating margins, and large product portfolio. The company's solutions help database and system administrators as well as software developers improve the overall availability, performance and efficiency of their IT systems. Idera's revenue predictability is supported by high customer retention rates among a customer base that is well diversified across industry and geography, and a strong competitive position within the company's target market for third party database diagnostic tools and complimentary application monitoring and development products. While Idera's database tools segment is not expected to be a strong driver of organic revenue growth, the DevOps segment will likely grow in the low to mid-teens percent range over the next 12-18 months. This should support an overall revenue growth rate in the mid-single digit percent range. Idera's good liquidity position is supported by an expectation for free cash flow to debt of about 4% over the next 12-18 months, an undrawn $100 million revolving credit facility and cash balances of approximately $15 million anticipated at the close of the transaction. The revolving credit facility is subject to a springing covenant when usage exceeds 35% but Idera is expected to maintain substantial headroom under the covenant and does not use the revolver for working capital purposes. The stable outlook reflects Moody's expectation for mid-single digit percent organic revenue growth over the next 12-18 months and healthy free cash flow generation in the range of 4% of Moody's adjusted gross debt. As a software company, Idera's exposure to environmental risk is considered low. Social risks are considered low to moderate, in line with the software sector. Broadly, the main credit risks stemming from social issues are linked to data security, diversity in the workplace and access to highly skilled workers. Idera is owned by funds affiliated with Partners Group, TA Associates and HGGC and is expected to maintain an aggressive financial strategy as evidenced by the high debt levels used to acquire the company. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if Idera demonstrates a more conservative financial strategy while continuing to grow revenues and EBITDA organically such that leverage and FCF / debt would be sustained at 6x and 5%, respectively, over time. Ratings could be downgraded if Idera's revenue and EBITDA levels contract materially from current levels or if the company were to generate negative free cash flow on other than a temporary basis leading to expectations for diminished liquidity. Idera, Inc. based in Houston, TX, is a provider of database, software development and testing software tools. Following the close of the transaction, Idera will be owned principally by funds affiliated with Partners Group, with minority shares held by TA Associates and HGGC. Idera generated pro forma revenues of approximately $345 million in the LTM period ended December 31, 2020. The principal methodology used in these ratings was Software Industry published in August 2018. IMPERVA INC: Moody's Completes Review, Retains B3 CFR ----------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Imperva, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Imperva, Inc.'s B3 corporate family rating reflects the company's modest scale, limited product diversification and high leverage as a result of the company's private equity ownership. The company benefits from its leadership position in web application firewall, distributed denial of service , and data protection and runtime application self-protection markets, and expectations of strong growth in the mid-single digits range. Trailing free cash flow/debt is negative in part due to transaction and restructuring costs and restricted stock payments but should trend positive over the next year as those cash outlays wind down. The principal methodology used for this review was Software Industry published in August 2018. INFORMATICA LLC: Moody's Completes Review, Retains B2 Rating ------------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Informatica LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations The B2 rating reflects Informatica's very high leverage and modest free cash flow generation. The company's profitability has been pressured by the ongoing business transition from perpetual to Software as a Subscription software sales and the slowdown in software sales after the outbreak of COVID-19 pandemic. However, cost restructuring and lower variable expenses have mitigated the impact on profitability. Informatica operates in intensely competitive data management software markets and generates a meaningful share of revenues from products with mature growth prospects. The company's credit profile benefits from its good operating scale, leading products in the enterprise data management software markets, and growing proportion of recurring subscription revenues. The retention rates for Informatica's software maintenance and subscription revenues have remained strong during the pandemic and the company maintains good liquidity comprising cash balances, access an undrawn $150 million revolving credit facility, and Moody's estimates of over $75 million of free cash flow over the next 12 months. The principal methodology used for this review was Software Industry published in August 2018. INNOPHOS HOLDINGS: S&P Affirm 'B' ICR, Outlook Stable ----------------------------------------------------- S&P Global Ratings affirmed the 'B' issuer credit rating on Innophos Holdings Inc., 'B+' issue-level rating and '2' recovery rating on its senior secured debt, and 'B-' issue-level rating and '5' recovery rating on its existing notes. S&P said, "At the same time, we are assigning 'CCC+' issue-level and '6' recovery ratings to the proposed PIK toggle notes to be issued by Iris Holdings Inc. The '6' recovery rating reflects our expectation of minimal (0%-10%; rounded estimate: 0%) recovery in the event of a payment default. "The stable outlook reflects our expectation that operating performance will allow Innophos to maintain credit measures we view as appropriate for the rating, included weighted-average debt to EBITDA in the 6x-7x range." Innophos is planning to issue $175 million of payment-in-kind (PIK) toggle notes, primarily to fund a shareholder distribution and pay fees and expenses related to the transaction. Innophos plans on making a $175 million distribution to its private equity sponsor, One Rock Capital Partners. S&P said, "The company will issue PIK toggle notes to fund the distribution. The additional debt stretches credit metrics, though they're still within the range we consider appropriate for the rating. This transaction brings leverage roughly back to what it was when One Rock completed the acquisition of Innophos in February 2020. Innophos increased margins in 2020, despite operating in a challenging macroeconomic environment. This was due to strong demand in the food, health, and nutrition end markets, price increases, higher-margin product mix, and supply chain optimization. We expect margin expansion to continue as Innophos brings on additional capacity in 2021 and exits lower-margin businesses, supporting increased debt. We do not anticipate further debt-funded shareholder rewards or dividends." S&P continues to assess Innophos' business risk profile as fair. This reflects strengths such as Innophos' leading market position, typically small fraction of customer cost, and high customer switching costs. The company's relatively limited product diversity, some supplier concentration (though it has invested heavily in recent years to diversify its sources of raw materials), and the mature nature of the North American specialty phosphate market offset these strengths. S&P said, "We expect financial sponsor ownership will continue to lead to highly leveraged financial risk and aggressive financial policies. "We believe financial sponsor ownership leads to more aggressive financial policies, as exhibited with this debt-funded distribution only one year after One Rock acquired Innophos. We expect Innophos' financial risk will remain highly leveraged, with weighted-average debt to EBITDA of 6x-7x. "The stable outlook reflects our expectation that Innophos will maintain operational performance and financial policies consistent with maintaining weighted-average debt to EBITDA of 6x-7x. We expect EBITDA margins to improve into the high-teens percent area due to the product mix shift away from lower-margin products and cost savings from strategic value chain initiatives. We assume the company will generate positive free cash flow with no material, debt-funded acquisitions to support its adequate liquidity profile." S&P could lower its ratings in the next 12 months if: -- S&P expects weighted-average debt to EBITDA to exceed 7x, with no prospects for improvement. This could occur if the macroeconomic environment in Innophos' key regions is weaker than anticipated, leading to subdued product demand and higher raw material costs that cannot fully be passed through to customers. In such a scenario, EBITDA margins fall 100 basis points (bps) below its base-case expectations. -- S&P believes the company's financial policy will no longer support its credit quality. This could be the result of a large debt-funded acquisition or an additional dividend recapitalization that stretches credit metrics. -- Its liquidity profile materially weakens such that we expect sources less than 1.2x uses. Although unlikely, S&P could take a positive rating action over the next 12 months if Innophos' operating performance is much better than it expects, such that revenues and EBITDA margins both expand by at least 600 bps beyond our base-case expectation. This would likely come with: -- Innophos expanding its products, winning new business (through cross-selling), and end-market growth in the food, health, and nutrition end markets from increased consumer focus on healthy eating. This results in spending on supplements, fortified foods, and meal replacements. -- Weighted-average adjusted debt to EBITDA consistently improving below 5x on a sustained basis, and that it believes management and ownership financial policies support maintaining such leverage. INTERNATIONAL SEAWAYS: S&P Withdraws 'B-' Issuer Credit Rating -------------------------------------------------------------- S&P Global Ratings is withdrawing all of its ratings on International Seaways Inc., including its 'B-' issuer credit rating and 'B' rating on the company's $25 million senior unsecured notes, at the issuer's request. At the time of the withdrawal, its outlook on the company was stable. INVESTVIEW INC: Unit to Report $2.8M Bitcoin Revenue for January ---------------------------------------------------------------- Investview, Inc. expects to report that its SAFETek subsidiary has reached a new all-time-high monthly revenue and profit margin for a third month in a row. SAFETek increased its Bitcoin Mining Revenue by an estimated 47.3% going from approximately $1.88 million in December 2020 to approximately $2.77 million in January 2021. SAFETek also increased its Profit Margin by an estimated 70.7% going from approximately $1.06 million in December 2020 to approximately $1.81 million in January 2021. SAFETek produced approximately 80 Bitcoin in January averaging approximately 2.58 BTC per day. This growth was made possible through INVU's ongoing strategic investments in cryptocurrency mining hardware, software & enhanced IT operations, and was further bolstered by significant Bitcoin price increases which appreciated by over 41% in January to a high of just over $40,000 and a sustained average monthly value of just over $34,000 per Bitcoin. Investview's EVP of Crypto Operations Rob Walther commented, "We are pleased to announce that for the third month in a row INVU's strategic decisions to further increase/optimize our mining equipment and IT operations has allowed us to generate another record month of revenue and profit. This past month of January represents a new milestone for SAFETek with revenue growth of 47.3% to $2.77 million and profits expanding by nearly 70.7% to $1.81 million." Rob added, "In addition, INVU is excited to announce the relocation of our largest mining operation to a new facility with long-term, low cost and sustainable power & hosting rates. This decision is the culmination of many months of research, investigation and planning to reduce our long-term cost of operation and to facilitate greater re-investment into assets that will continue to grow our mining profits. This move is planned to commence in early February and be complete by March 31, 2021." "The wind down and move of our largest mining facility to a more cost-effective region is a good move for our company and will significantly reduce our overall cost of operations, anticipated to be as much as 25% or $4+ million on an annualized basis, which allows us to continuously improve our capital structure through the pay-off of long-term debt associated with our business growth and facility relocation plan," said Joe Cammarata, CEO of Investview." In addition to the company's new constant-cost energy sustainability mining and production facility, Investview also maintains a constant-cost production mining operation in Colorado. About Investview Headquartered in Salt Lake City, Utah, Investview, Inc., is a diversified financial technology organization that operates through its subsidiaries, to provide financial products and services to individuals, accredited investors and select financial institutions. Investview reported a net loss of $21.28 million for the year ended March 31, 2020, compared to a net loss of $4.98 million for the year ended March 31, 2019. As of Sept. 30, 2020, the Company had $9.71 million in total assets, $29.32 million in total liabilities, and a total stockholders' deficit of $19.61 million. Haynie & Company, in Salt Lake City, Utah, the Company's auditor since 2017, issued a "going concern" qualification in its report dated June 29, 2020, citing that the Company has suffered losses from operations and its current cash flow is not enough to meet current needs. This raises substantial doubt about the Company's ability to continue as a going concern. IRIDIUM SATELLITE: Moody's Upgrades CFR to Ba3, Outlook Stable -------------------------------------------------------------- Moody's Investors Service upgraded Iridium Satellite LLC's Corporate Family Rating and senior secured credit facility to Ba3, from B1. The Probability of Default Rating was upgraded to Ba3-PD, from B1-PD. The outlook is changed to stable, from positive. The upgrade of the CFR reflects better than expected performance through the pandemic and governance considerations, specifically the Company's financial policy to use most free cash flow to aggressively delever until it reaches its company defined leverage target of 2.5x-3.5x net leverage (management's calculation). Moody's project Moody's adjusted leverage to fall below 4x and FCF/debt to rise above 15% over the next 12-18 months. Upgrades: Issuer: Iridium Satellite LLC Corporate Family Rating, Upgraded to Ba3 from B1 Probability of Default Rating, Upgraded to Ba3-PD from B1-PD Senior Secured Bank Credit Facility, Upgraded to Ba3 (LGD4) from B1 (LGD4) Outlook Actions: Issuer: Iridium Satellite LLC Outlook, Changed To Stable From Positive RATINGS RATIONALE Iridium's Ba3 rating is constrained by its small scale and moderate leverage. The Company's revenues were approximately $576 million (through the Last Twelve Months ended September 2020, LTM), lower than higher rated peers. While the company has only one major direct competitor (Inmarsat) within its L-Band satellite spectrum, the size of its market is relatively small and Iridium has less market share. Additionally, we estimate leverage was approximately 5.0x (Moody's adjusted, as of 9/30/20 LTM), above higher rated peers, but projected to fall below 4x over the next 12-18 months with strong free cash flow used to delever. The rating is supported by its niche but established market position with high barriers to entry in the mobile satellite market, supported by steady, rising, and predictable market demand for mobile and fixed voice and data satellite services, especially in the burgeoning Internet of Things (IoT) market. Iridium's ownership of L-band spectrum and a newly deployed, $3 billion next-generation low earth orbit (LEO) satellite constellation (Iridium NEXT, 66 satellite mesh network) are very high barriers to entry. The company has a strong business model, generating high EBITDA margins over 60% that will rise with operating leverage. A large mix (approximately 80%) of revenues are contractual and recurring, and generated from an installed and steady base of more than 1.4 million communication devices (subscribers) used in niche and critical military and commercial applications. Services are offered across many verticals including aviation and maritime, and over remote land masses, open oceans, airways, and polar regions (not served by terrestrial wireless, and much higher speed satellite network operators). It has a large and diverse set of commercial customers, consisting of over 450 partners including service providers, value-added resellers and manufacturers. Iridium also has a large fixed-price contract with the US government (over 17-18% of recurring revenue) and a fixed price contract with Aireon (7-8% of recurring revenue) which hosts the world's largest Air Navigation Service Providers (or "ANSP's") on Iridium's satellite network. Iridium's liquidity is very good (SGL-1), supported by positive operating cash flows over the next 12 months, an undrawn revolver, and covenant-lite loans. Moody's rates the senior secured term loan B and revolving facility Ba3 (LGD4), equal to the CFR. The Ba3 rating reflects the probability of default of the company, as reflected in the Ba3-PD Probability of Default Rating, an average expected family recovery rate of 50% at default given the covenant lite structure, and the term loan's ranking in the capital structure relative to a modest amount of non-debt claims. The stable outlook reflects Moody's expectation that revenues will grow to over $600 million over the next 12-18 months, generating EBITDA of $380 million on margins of over 60% (Moody's adjusted). Free cash flows will rise to near $250 million, with capex near 8% of revenue. Moody's expect leverage (Moody's adjusted debt/EBITDA) to fall below 4x over the next 12-18 months. Moody's project free cash flow to debt (Moody's adjusted) to rise above mid-teen percent over the next 12-18 months. Moody's outlook assumes the Company maintains very good liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could consider a positive rating action if scale increased materially, the company maintained its very good liquidity and market position, and sustained debt/EBITDA (Moody's adjusted) below 3x and free cash flow to debt (Moody's adjusted) above 15%. Moody's would consider a negative rating action if free cash flow to debt (Moody's adjusted) was sustained below 7.5%, or debt / EBITDA (Moody's adjusted) was sustained above 4.5x, or liquidity, scale, or market position deteriorated. The principal methodology used in these ratings was Communications Infrastructure Industry published in September 2017. With headquarters in McLean, Virginia, Iridium Communications Inc. is a provider of mission critical and highly-reliable voice and data communications services to commercial and government customers. Coverage is global, connecting people, organizations and assets over land and sea in maritime, aviation, and other vertical markets using its L-band satellite network. The Company generated $576 million in revenue in the LTM period ended September 2020. IRIS HOLDINGS: Moody's Rates New $175MM HoldCo PIK Notes 'Caa1' --------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to Iris Holdings, Inc.'s proposed $175 million senior unsecured HoldCo PIK toggle notes. Moody's also affirmed Innophos Holdings, Inc.'s (New) B2 Corporate Family Rating, B2-PD Probability of Default Rating, B1 first lien term loan and Caa1 rating on the senior unsecured notes due 2028. The outlook is stable. "The issuance of the HoldCo PIK toggle notes to fund a dividend demonstrates a more aggressive financial policy; however, the company's performance during the pandemic reflects its ability to temporarily exceed leverage expectations," said Domenick R. Fumai, Moody's Vice President and lead analyst for Innophos Holdings, Inc. Assignments: Issuer: Iris Holdings, Inc. Senior Unsecured Regular Bond/Debenture, Assigned Caa1 (LGD6) Affirmations: Issuer: Innophos Holdings, Inc. (New) Corporate Family Rating, Affirmed B2 Probability of Default Rating, Affirmed B2-PD Senior Secured Bank Credit Facility, Affirmed B1 (LGD3) Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5) Outlook Actions: Issuer: Innophos Holdings, Inc. (New) Outlook, Remains Stable Issuer: Iris Holdings, Inc. Outlook, Assigned Stable RATINGS RATIONALE Moody's views the increased debt resulting from the issuance of the HoldCo PIK toggle notes and subsequent $175 million dividend distribution to the sponsor, One Rock Capital, as a credit negative for Innophos Holdings, Inc., and is a more aggressive financial policy compared to our previous expectation of gross debt reduction. However, the affirmation and stable outlook for Innophos reflects its resilient performance during the pandemic as the company has been able to offset weaker topline results in their industrial specialties end market with their participation in more stable markets such as food and beverage, pharma, personal care and health and wellness, as well as continued progress on cost savings initiatives, which generated adjusted EBITDA growth. Additionally, Moody's expects that liquidity will remain strong due to the elevated level of cash on the balance sheet. Innophos' rating is constrained by the company's elevated leverage with Moody's adjusted FY 2020 pro forma leverage of roughly 6.7x, up from 5.5x for the LTM period ending September 30, 2020. Leverage is at the higher end of the range for the B2 rating category, but is moderated by our expectations for leverage to decline toward the low-6x range in FY 2021 and to 5.2x in FY 2022. Innophos' rating is further tempered by lack of scale, limited product diversity and significant concentration in North America. The rating also incorporates low organic growth rates for phosphate-based additives and ingredients, which represent a majority of the company's revenues. Innophos benefits from its position as the only North American vertically integrated specialty phosphate producer with significant barriers to entry. The credit profile is supported by the company's strong market position in the specialty ingredients, diversified customer base and long-term relationships with major global consumer products companies and less cyclical end markets. Innophos' rating is further supported by a good liquidity position with $92 million of cash and $124 million of availability under its ABL revolving credit facility as of September 30, 2020. STRUCTURAL CONSIDERATIONS The Caa1 rating assigned to Iris Holdings, Inc's. proposed senior unsecured HoldCo PIK toggle notes due 2026, two notches below the B2 CFR, and on par with Innophos' unsecured notes, reflects their structural and contractual subordination to Innophos Holdings, Inc.'s unsecured notes. However, the HoldCo notes mature prior to the existing debt at Innophos, ensuring that these notes will be refinanced before the unsecured notes are repaid. The B1 rating on the first lien term loan is rated one-notch above the CFR reflecting its first lien claim on the capital stock and fixed assets of Innophos Holdings, Inc. and second lien on the current assets securing the ABL facility. The unrated $125 million ABL revolving credit facility has a first lien priority on current assets and a second lien on substantially all other assets of the borrower. The Caa1 rating on the senior unsecured notes, two notches below the CFR, reflects limited recovery prospects given its subordination in relation to the ABL and first lien term loan. ESG CONSIDERATIONS Moody's also considers environmental, social and governance factors in the ratings. As a specialty chemicals company, environmental risks are categorized as moderate. Governance risks are above-average, however, due to the risks associated with private equity ownership, which include a limited number of independent directors on the board, reduced financial disclosure requirements as a private company and more aggressive financial policies including higher leverage compared to most public companies. The stable outlook at Innophos and its HoldCo reflect elevated leverage, which stressed the rating, offset by a more stable mix of end markets and the expectation that free cash flow will increase due to additional costs savings and productivity initiatives that will be more than the additional interest cost associated with the PIK notes. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Although not likely over the next 12-18 months given the increase in gross debt, Moody's could upgrade the ratings if adjusted leverage is below 5.0x on a sustained basis, successful implementation of the cost savings initiatives results in further EBITDA growth and margin improvement, and sustained free cash flow-to-debt above 5%. Moody's could downgrade the ratings if adjusted leverage is sustained above 6.5x, free cash flow remains negative for a sustained period of time, a substantial deterioration in liquidity occurs, or if the company makes a significant debt-financed acquisition or has another dividend distribution to the sponsor. The principal methodology used in these ratings was Chemical Industry published in March 2019. JAZZ PHARMACEUTICALS: S&P Places 'BB' ICR on CreditWatch Negative ----------------------------------------------------------------- S&P Global Ratings placed all of its ratings on U.S.-based Jazz Pharmaceuticals PLC, including its 'BB' issuer credit rating, on CreditWatch with negative implications. The CreditWatch placement reflects our expectation that at the close of the transaction, we would lower the ratings by one notch, given the material addition of debt and the increased risk of elevated leverage for the next 12 to 18 months The CreditWatch placement follows Jazz Pharmaceuticals' announcement to purchase U.K.-based GW Pharmaceuticals PLC, a specialty pharmaceutical company focused on cannabinoid therapeutics, for approximately $7.2 billion. The company intends to fund this with a mix of debt, cash, and equity shares. The transaction is subject to regulatory and shareholder approvals. With its leading position within sleep disorder treatment and growing pipeline of oncology products, the acquisition would improve Jazz's overall diversification into a new area of treating epilepsy, which complements Jazz's growing neuroscience portfolio. GW Pharmaceutical's top product, Epidiolex, is a global high-growth cannabinoid that adds to Jazz's existing specialty portfolio of products to address unmet patient needs. The acquisition does significantly increase Jazz's S&P adjusted leverage (for which S&P does not net cash) to above 5x from the current 2.2x and leverage will likely remain elevated for the next two years. However, S&P expects the company will continue to generate material free cash flow and prioritize deleveraging. JFG HOLDINGS: Unsecured Creditors Will Get 100% from Operations --------------------------------------------------------------- JFG Holdings, Inc., filed with the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division, a Disclosure Statement describing Plan of Reorganization dated January 28, 2021. The Debtor filed a voluntary Chapter 11 case on Nov. 2, 2020. The Debtor owns certain real property located in Fort Worth, Texas. In 2006 the Debtor closed on the property at 251 Carroll St. Fort Worth, 76107 ("Property"). The Debtor obtained two loans from CIT for construction. The Debtor owns a 100% interest in the Property. The Debtor believes the current value of the Property is $4,000,000. The Debtor bases this value on an apprisal that was pre-formed for Compass Bank in the refinancing which valued the Property at $200 per square foot. The Reorganized Debtor will continue in business until the sale of the Property. The Plan will break the existing claims into 7 categories of Claimants. These claimants will receive cash payments beginning on the Effective Date. Class 4 Claimants consists of Allowed Secured Claim of Sutherland Asset I and is impaired. On or about December 28, 2007, the Debtor executed that certain Promissory Note in the original principal amount of $875,000 ("Note") in favor of CIT Lending Services Corporation ("Sutherland"). The Note was secured by that certain 2 properly perfected Deed of Trust, Security Agreement and Fixture Filing on the Property. The Debtor believes the amount of the Sutherland debt is approximately $630,000 ("Sutherland Indebtedness"). The Debtor will repay the Sutherland Indebtedness in full in 240 equal monthly payments with interest at the rate of 5% per annum commencing on the Effective Date. The monthly payment will be approximately $4,157. Sutherland shall retain its present lien on the Property in its current priority. Upon payment in full the Class 4 Claim, Sutherland shall release its lien on the Property. Class 5 Claimants consists of Allowed Secured Claim of REMIC TRUSTEE and is impaired. On or about December 28, 2007, the Debtor executed that certain Promissory Note in the original principal amount of $1,459,000 ("Note") in favor of CIT Lending Services Corporation ("REMIC"). The Note was secured by that certain properly 3 perfected Deed of Trust, Security Agreement and Fixture Filing on the Property. The Debtor believes the amount of the REMIC debt is approximately $1,250,000 ("REMIC Indebtedness"). The Debtor will repay the REMIC Indebtedness in full in 240 equal monthly payments with interest at the rate of 4.87% per annum commencing on the Effective Date. The monthly payment will be approximately $8,160. REMIC shall retain its present lien on the Property in its current priority. Upon payment in full the Class 5 Claim, REMIC shall release its lien on the Property. Class 6 Claimant which consists of Allowed Unsecured Creditors Claims are impaired. All creditors holding allowed unsecured claims will be paid from the operations of the company. The Debtor shall pay $250 per month commencing on the Effective Date until all Class 6 Claimants are paid in full. The unsecured creditors shall receive 100% of their allowed claims under this Plan. The Class 6 Creditors are impaired under this Plan. Class 7 Claimants is not impaired under the Plan and shall be satisfied by retaining her interest in the Debtor. Ownership will remain 100% Janice Grimes. The Debtor shall continue to rent the Property to Enchanted Hotel. The rental proceeds shall be used to pay the amount necessary to pay the Allowed Claims of Class 2 through 6. A full-text copy of the Disclosure Statement dated Jan. 28, 2021, is available at https://bit.ly/3tqOWPj from PacerMonitor.com at no charge. Attorneys for the Debtor: Eric A. Liepins ERIC A. LIEPINS, P.C. 12770 Coit Road Suite 1100 Dallas, Texas 75251 Ph. (972) 991-5591 Fax (972) 991-5788 About JFG Holdings JFG Holdings, Inc., a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)), filed a voluntary petition for relief under Chapter 11 of Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-43378) on Nov. 2, 2020. JFG Holdings President Janice Grimes signed the petition. At the time of filing, the Debtor estimated assets of up to $50,000 and estimated liabilities of $1 million to $10 million. Eric A. Liepins, P.C., serves as the Debtor's legal counsel. JPMCC COMMERCIAL 2019-COR4: Fitch Affirms B- Rating on H-RR Certs ----------------------------------------------------------------- Fitch Ratings has affirmed 17 classes and revised the Rating Outlooks to Negative from Stable on nine classes of JPMCC Commercial Mortgage Securities Trust 2019-COR4 commercial mortgage pass-through certificates, series 2019-COR4 (JPMCC 2019-COR4). DEBT RATING PRIOR ---- ------ ----- JPMCC 2019-COR4 A-1 48128YAS0 LT AAAsf Affirmed AAAsf A-2 48128YAT8 LT AAAsf Affirmed AAAsf A-3 48128YAU5 LT AAAsf Affirmed AAAsf A-4 48128YAV3 LT AAAsf Affirmed AAAsf A-5 48128YAW1 LT AAAsf Affirmed AAAsf A-S 48128YBA8 LT AAAsf Affirmed AAAsf A-SB 48128YAX9 LT AAAsf Affirmed AAAsf B 48128YBB6 LT AA-sf Affirmed AA-sf C 48128YBC4 LT A-sf Affirmed A-sf D 48128YAC5 LT BBBsf Affirmed BBBsf E 48128YAE1 LT BBB-sf Affirmed BBB-sf F-RR 48128YAG6 LT BBB-sf Affirmed BBB-sf G-RR 48128YAJ0 LT BB-sf Affirmed BB-sf H-RR 48128YAL5 LT B-sf Affirmed B-sf X-A 48128YAY7 LT AAAsf Affirmed AAAsf X-B 48128YAZ4 LT A-sf Affirmed A-sf X-D 48128YAA9 LT BBB-sf Affirmed BBB-sf KEY RATING DRIVERS Increased Loss Expectations: While the majority of the pool continues to exhibit stable pool performance, loss expectations have increased primarily due to the increased number of Fitch Loans of Concern (FLOCs). Ten loans (29.6% of the pool) are considered FLOCs, including two hotel loans (14.3%) and two retail loan (8.4%) in the top 15. The remaining six FLOCs are secured by hotel and retail properties that have experienced performance declines due to the ongoing coronavirus pandemic. Fitch's ratings are based on base case loss expectations of 5.70%. The Negative Outlooks on classes A-S through H-RR and IO classes X-A, X-B and X-D reflect additional stresses on loans expected to be negatively impacted by the pandemic, which assumes that losses could reach 10.2%. The largest FLOC and largest loan in the pool is the Renaissance Seattle (10% of the pool). It is secured by a 557-room full-service hotel in downtown Seattle, WA and is located approximately one-half mile from the Washington State Convention Center. Per the master servicer commentary, the borrower and servicer agreed to a forbearance, which ended in November 2020; terms included using reserves to keep the loan current and a deferral of reserve payments. Occupancy, ADR and RevPAR for the TTM ended September 2020 were reported to be 39%, $176.63 and $68.76, respectively. This compares to 82%, $209 and $170, respectively at issuance. The hotel is open and operating, but performance for 2021 is expected to be significantly lower compared to prior years due to the coronavirus and lack of business and convention demand. Fitch's analysis includes a 26% stress to the YE 2019 NOI to reflect the continued expected declines in performance. The second largest FLOC is the Saint Louis Galleria (6%), a Brookfield sponsored, super-regional mall located in St. Louis, MO. The subject's three largest tenants include Galleria 6 Cinemas (NRA 4.2%), H&M (NRA 2.8%) and Victoria's Secret (NRA 2.8%), and the subject's non-collateral anchors include Dillard's, Macy's, and Nordstrom. Inline sales excluding Apple fell to $403.94 psf (TTM June 2020) from $469.87 psf (2019) and $561 psf (TTM August 2018). According to the subject's March 2020 rent roll, multiple leases comprising approximately 24% of NRA were scheduled to expire in 2021. The borrower has entered into a forbearance agreement effective between April and December 2020. The third largest FLOC is the sixth largest loan, Grand Hyatt Seattle (4.3%). It is secured by a 457-room full-service hotel in downtown Seattle, WA and is located across the street from the Washington State Convention Center. The loan's sponsor is the same as the aforementioned Renaissance Seattle loan. The subject's TTM occupancy, ADR and RevPAR were 35%, $205.21 and $71.92, respectively, according to the September 2020 STR report. This compares to 85.8%, $239.09 and $205.24, respectively at issuance. As with the Renaissance Seattle, performance for 2021 is expected to face challenges due to the pandemic. The sponsor received relief for a term that ended in January 2021 with similar terms as the Renaissance Seattle loan. Fitch's analysis this loan also includes a 26% stress to the YE 2019 NOI. Coronavirus Exposure: The pool contains five loans (18.7%) secured by hotels with a weighted-average (WA) NOI DSCR of 2.09x. Retail properties account for 27.13% of the pool balance (11 loans) and have WA NOI DSCR of 1.69x. Cash flow disruptions continue as a result of property and consumer restrictions due to the spread of the coronavirus. Fitch's base case analysis applied an additional NOI stress to five hotel loans, six retail loans and one mixed-use loan due to their vulnerability to the pandemic. These additional stresses contributed to the Negative Outlooks on classes A-S through H-RR and IO classes X-A, X-B and X-D. Minimal Change to Credit Enhancement (CE): As of the January 2021 distribution date, the pool's aggregate balance has been reduced by 0.37% to $771.2 million, from $774.1 million at issuance. Fifteen full-term, IO loans account for 49.4% of the pool, and sixteen loans representing 40.8% of the pool are partial IO. The remainder of the pool consists of seven balloon loans representing 9.8% of the pool. Interest shortfalls are currently affecting class NR-RR. Alternative Loss Scenario: In its analysis, Fitch applied a 20% Loss Severity to Saint Louis Galleria (6%) to reflect declining inline sales, the decrease in commerce and tourism amid the coronavirus pandemic and potential for a more prolonged impact on mall performance. The additional loss assumes a 25% stress to YE 2019 NOI and a 14.25% cap rate. The Negative Rating Outlooks on classes A-S through H-RR partially reflects this sensitivity scenario as well as ongoing concerns with the ultimate impact of the pandemic on long-term performance of other loans in the transaction. RATING SENSITIVITIES The Stable Rating Outlooks on classes A-1 through A-SB reflect the overall stable performance of the majority of the pool and expected continued amortization and increased CE. The Negative Rating Outlook on classes A-S through H-RR and IO classes X-A, X-B and X-D reflect the potential for a Downgrade due to concerns surrounding the ultimate impact of the coronavirus pandemic and the performance concerns associated with the FLOCs. Factors that could, individually or collectively, lead to a positive rating action/upgrade: -- Sensitivity factors that lead to Upgrades would include stable to improved asset performance, particularly on the FLOCs, coupled with paydown and/or defeasance. Upgrades of classes B and C could occur with significant improvement in CE and/or defeasance; however, adverse selection and increased concentrations or the underperformance of particular loan(s) could cause this trend to reverse. -- Upgrades to class D would be limited based on sensitivity to concentrations or the potential for future concentration. Classes would not be upgraded above 'Asf' if there is likelihood for interest shortfalls. Upgrades to classes E, F- RR, G-RR and H-RR are unlikely absent significant performance improvement and stabilization of the FLOCs. Factors that could, individually or collectively, lead to a negative rating action/downgrade: -- Sensitivity factors that lead to downgrades include an increase in pool-level losses from underperforming or specially A-3, A-4, A-5, A-SB and A-S and B are less likely due to the high CE, but may occur at 'AAAsf' or 'AAsf' should interest shortfalls occur. -- Classes C, D and E may be downgraded if loans become delinquent and transfer to special servicing. Classes F-RR, G RR and H-RR may be downgraded if performance of the FLOCs continue to decline. The Negative Rating Outlooks may be revised back to Stable should performance of the FLOCs, in particular the Renaissance Seattle, Saint Louis Galleria and Grand Hyatt Seattle, improves and/or properties vulnerable to the coronavirus eventually stabilize. In addition to its baseline scenario, Fitch also envisions a downside scenario where the health crisis is prolonged beyond 2021; should this scenario play out, classes with Negative Rating Outlooks will be downgraded one or more categories. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. 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. JSAA REALTY: Lee Trust Says Plan Disclosures Inadequate ------------------------------------------------------- Hak Man Lee Trust filed an objection to JSAA Realty, LLC's Amended Disclosure Statement. Lee Trust is a secured creditor of debtor JSAA Realty, LLC, pursuant to the transfer of Court Claim Number 2 filed as Document 15 in this action on December 1, 2020. Lee Trust avers that the Court should not approve the Amended Disclosure Statement because it contains inadequate information for creditors to make an informed decision on how to vote: * The Debtor fails to explain the events that led to the bankruptcy. There is no detail what the amounts were spent on, what the additional funds from Sunshine or East Bay were used for, or the current status. The Debtor admits that it had an informal lease with JSAA Enterprises, but the term of said lease were not disclosed. * The Debtor fails to describe its assets and the value. Although Debtor does list the value of the Property, JSAA Realty does not list any bank accounts currently being used by the Debtor and the value of such. Moreover, JSAA Realty describes that it has a long-term tenant (JSAA Enterprises) paying $6,000 a month in rent but fails to provide any further detail of the lease. * The Debtor fails to state the anticipated future of the Company. The Debtor fails to provide insight as to the future of the JSAA Realty. Their Chapter 11 plan, as proposed, attempts to repay the debt held by the Lee Trust, that was to become fully due and payable by 2022, and spread it out over the next 15 years. In the meantime, it appears that it will use funds, from sources not listed, to continue renovations on the Property so it can be turned into a nightclub. * The Debtor fails to state the source of the information in the disclosure statement or the accounting method used. The Debtor fails to state the source of the information or the accounting method used. The Debtor does not disclose who does the accounting as to previous expenses and revenue, and anticipated expenses and revenue. * The Debtor fails to provide information as to the current condition of the Debtor. The Debtor makes mention of continued renovations to the Property to allow a conversion of the space from retail to nightclub, but there is no mention of how Debtor could potentially afford to pay for such improvements. Moreover, the plan provides for no funds for the daily operations of the business * The Debtor fails to explain the relationship of the Debtor with its affiliates. Perhaps most troubling, the Debtor fails to provide any meaningful description of its relationship with its affiliates. The Debtor proposes a plan of 15 years, but under the plan at no point would JSAA Realty start making a profit. JSAA Realty obtained the Property from its affiliate tenant, JSAA Enterprises, shortly before taking out the loan now held by the Lee Trust and another loan apparently with East Bay, Inc. Counsel for Hak Man Lee Trust: Scott Crist TAHERZADEH, PLLC 15851 N. Dallas Parkway, Suite 410 Addison, Texas 75001 Tel: (469) 729-6800 Fax: (469) 828-2772 E-mail: sc@taherzlaw.com About JSAA Realty JSAA Realty, LLC, is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). It is the owner of a fee simple title to a property located at 11505 Anaheim Drive, which is valued at $2.2 million. JSAA Realty filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-32504) on Oct. 2, 2020. Arpit Joshi, the managing member, signed the petition. At the time of the filing, the Debtor disclosed $2.2 million in assets and $651,046 in liabilities. Eric A. Liepins, P.C., serves as the Debtor's legal counsel. KD BELLE TERRE: Unsecureds to Recover 100% in $6.23M Sale Plan -------------------------------------------------------------- KD Belle Terre, L.L.C., filed with the U.S. Bankruptcy Court for the Middle District of Louisiana a Plan of Liquidation and a Disclosure Statement on Jan. 28, 2021. Under the Plan, the Debtor intends to distribute the proceeds from the sale of its shopping center in LaPlace, LA ("Belle Terre Plaza") to holders of allowed claims and interests. After extensive arm's length negotiations, the Debtor and DCR Mortgage reached an agreement regarding the property taxes and rent proration. On the Effective Date, the Debtor will pay DCR Mortgage $57,470.36 in full and complete satisfaction of the DCR Mortgage Disputed Secured Claim. On the Effective Date, DCR Mortgage will pay the Debtor $15,153. To the extent DCR Mortgage's aggregate Claim was not paid from pre-closing amount collected and the proceeds of the sale of Belle Terre Plaza, DCR Mortgage shall be entitled to an Allowed Class 1 General Unsecured Claim. The Debtor and DCR Mortgage reached an agreement regarding the sale of Belle Terre Plaza. Through the efforts of Dowd and Latter & Blum, the Debtor found a buyer for Belle Terre Plaza. MH&JD agreed to pay $6.225 million for Belle Terre Plaza. The Debtor filed a motion to sell Belle Terre Plaza to MH&JD for $6.225 million. The Bankruptcy Court approved the Debtor's motion to sell free and clear by order dated Dec. 18, 2020. The closing of Belle Terre Plaza took place on December 23, 2020. Under the Plan, Class 1 consists of holders of Allowed General Unsecured Claims. The Debtor estimates the aggregate amount of Allowed General Unsecured Claims is approximately $330,000. Each holder of an Allowed General Unsecured Claim will receive a pro-rata share of any cash remaining from the proceeds of the sale of Belle Terre Plaza after payment of Allowed Administrative Expense Claims and the DCR Mortgage Disputed Secured Claim on the Effective Date plus a pro-rata share of 35 periodic payments of $3,000 (estimated) beginning one month after the Effective Date and continuing for the following thirty-four months. The amount of Allowed General Unsecured Claims shall be amortized over a ten-year period. The unpaid principal balance of Allowed General Unsecured Claims shall accrue interest at the rate of 5.25% per annum. Holders of Allowed General Unsecured Claims shall receive a pro rata share of a balloon payment of $238,000 (estimated) on the Final Distribution Date in full and complete satisfaction of their Claims not later than the third anniversary of the Effective Date. This Class shall have a 100% estimated recovery. Class 2 consists of any Intercompany Claimants. The aggregate amount of Intercompany Claims is $218,397. Of this aggregate amount, $181,422 is subject to set off. Thus, the net amount of Class 2 Claims after setoff is $28,975. To the extent any Intercompany Claim is subject to setoff, such Claim will be setoff on the Effective Date. The balance owed on all Intercompany Claims after setoff ($28,975.00) will be treated as Allowed General Unsecured Claims in accordance with Class 1. This Class will have a 100% estimated recovery. Class 3 consists of the membership interests in the Debtor. Michael D. Kimble (40.00%), Mitchell W. Kimble (40.00%) and Poirier Investments, L.L.C. (20.00%) are the members of the Debtor. Their interests are allowed under the Plan. Each holder of an Allowed Interest will retain their interest in the Debtor. Class 4 consists of the DCR Mortgage Disputed Secured Claim. The Debtor and DCR Mortgage disagreed about who was responsible for paying 2020 property taxes. Rather than delay or cancel the closing of the sale of Belle Terre Plaza, the parties agreed to table their disagreement. A full-text copy of the Disclosure Statement dated Jan. 28, 2021, is available at https://bit.ly/3twlXto from PacerMonitor.com at no charge. Attorneys for KD Belle: 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 KD Belle Terre, L.L.C. KD Belle Terre LLC is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)), whose principal assets are located at 150 Belle Terre Boulevard, La Place, La. KD Belle Terre filed a Chapter 11 petition (Bankr. M.D. La. Case No. 20-10537) on July 29, 2020. In the petition signed by Michael D. Kimble, manager, the Debtor was estimated to have $1 million to $10 million in both assets and liabilities. Sternberg, Naccari & White, LLC serves as the Debtor's bankruptcy counsel. KNB HOLDINGS: Moody's Completes Review, Retains Caa3 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of KNB Holdings Corporation and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 22, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations KNB's Caa3 Corporate Family Rating reflects the highly discretionary nature of the company's products, exposure to economic cycles, very high financial leverage, weak liquidity, and aggressive financial strategies under private equity ownership. The rating further reflects the strains from actions to contain the coronavirus outbreak including closure of stores and recessionary job losses that are a drag on consumer spending. The rating also reflects KNB's leading market position in the niche home décor product sector and product diversification which makes its products appealing to retailers that wish to reduce the number of suppliers. The principal methodology used for this review was Consumer Durables Industry published in April 2017. L BRANDS: Plans to Spin Off or Sell Victoria's Secret by August --------------------------------------------------------------- Jonathan Roeder of Bloomberg News reports that L Brands Inc. intends to sell or spin off Victoria's Secret by August 2021 as the company works to separate its beleaguered lingerie chain from the growing Bath & Body Works business. The company hasn't determined the exact method for the split, but said Thursday, February 4, 2021, that it's reviewing "all options, including a spin-off of the Victoria's Secret business into a public company or a private sale of the business." The more-specific timeline comes after the board met with its financial advisers in January, L Brands said. Chief Financial Officer Stuart Burgdoerfer will also retire, the company said. About L Brands Inc. 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 Oct. 31, 2020. Its brands include Victoria's Secret, Bath & Body Works, and PINK. LAX IN-FLITE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: LAX In-Flite Services, LLC DBA Royal Airline Linen, Inc. 125 North Ash Ave Inglewood, CA 90301 Chapter 11 Petition Date: February 5, 2021 Court: United States Bankruptcy Court Central District of California Case No.: 21-10956 Judge: Hon. Neil W. Bason Debtor's Counsel: Jeremy Rothstein, Esq. G&B LAW, LLP 16000 Ventura Boulevard Suite 1000 Encino, CA 91436 Tel: 818-382-6200 Fax: 818-986-6534 Email: jrothstein@gblawllp.com Total Assets: $212,676 Total Liabilities: $6,532,846 The petition was signed by Mark Berlin, 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/ESTTPGI/LAX_In-Flite_Services_LLC__cacbke-21-10956__0001.0.pdf?mcid=tGE4TAMA LE TOTE: Committee Now Backs Plan, HBC Settlement ------------------------------------------------- Le Tote, Inc., et al., submitted a Second Amended Joint Chapter 11 Plan and a Disclosure Statement. The proposed Plan achieves an orderly wind-down of the Debtors' estates that maximizes the value of all estate assets, including the Debtors' remaining inventory and certain potential litigation assets stemming from the 2019 acquisition (the "Acquisition") of Lord & Taylor LLC from HBC US Holdings Inc. ("HBC Holdings"), a subsidiary of Hudson's Bay Company ULC (f/k/a Hudson's Bay Company) ("HBC"), and HBC US Propco Holdings LLC ("HBC Propco" and together with HBC Holdings and Hudson's Bay, the "HBC Parties"), a subsidiary of HBC Holdings, and certain post-Acquisition transactions, and certain other litigation claims. The proposed Plan incorporates an integrated settlement of claims and causes of action among the Debtors and HBC. Through this settlement, the Plan provides the ability of the Debtors to satisfy administrative and priority claims in full and to make a significant distribution to unsecured creditors who likely otherwise would receive minimal and substantially delayed, if any, recovery. The HBC Parties have, among other things, agreed to subordinate their secured claims under their seller note to administrative and priority claims and split recoveries on account of the Debtors' remaining assets with unsecured creditors. The HBC Parties have also agreed to provide key operational support, enabling the Debtors to extend their store-closing sales and deliver additional value. Finally, the HBC Parties have consented to the disallowance of certain rejection damages claims on account of a master lease held by an affiliate of the HBC Parties and to certain pricing reductions for the Debtors' critical transition services agreement with certain of the HBC Parties. The HBC Settlement provides the Debtors a path forward to exit these chapter 11 cases while delivering significant value to unsecured creditors—an outcome that would be fraught with significant uncertainty and litigation risk, and likely not achievable at all, absent the HBC Settlement. Despite the Committee for General Unsecured Creditors' (the "Committee") initial opposition to an earlier version of a settlement with the HBC Parties, on January 26, 2021, following judicial mediation with the Debtors, the Committee and HBC Parties, a global resolution was reached among the parties. As a result, the Committee supports implementation of the HBC Settlement through the Plan and will recommend that Holders of General Unsecured Claims vote to accept the Plan. A cover letter from the Committee indicating its support of the Plan and urging Holders of Class 4 General Unsecured Claims to vote to accept the Plan is forthcoming. The Plan provides that holders of the Seller Note Secured Claim and General Unsecured Claims will receive their pro-rata share of distributable cash pursuant to the Waterfall Recovery. The Waterfall Recovery establishes the following recoveries following payment in full of Administrative Claims (other than the TSA Shortfall Claim) and Priority Claims: * Distributable Cash other than Urban Proceeds is allocated as follows: (i) first, to holders of the Seller Note Secured Claim, until such holders receive $8 million on account of the Seller Note Secured Claim; (iii) second, to holders of Allowed General Unsecured Claims, until such holders have received $3 million on account of such claims; (iv) third, split 50/50 between holders of the Seller Note Secured Claim and the holders of Allowed General Unsecured Claims until the Seller Note Secured Claim is paid in full; and (v) fourth, to the holders of Allowed General Unsecured Claims. * The Urban Proceeds (defined as proceeds from the litigation captioned Le Tote, Inc. v. Urban Outfitters, Inc., No. 20Civ.3009 (E.D.Pa.)) are allocated as follows: (i) first to holders of Allowed General Unsecured Claims until such holders have received $1 million on account of the Allowed General Unsecured Claims; (ii) second, split 75% to holders of Allowed General Unsecured Claims and 25% to holders of the Seller Note Secured Claim; and (iii) third, to holders of Allowed General Unsecured Claims (together with the immediately proceeding paragraph, the ("Waterfall Recovery"). The prior iteration of the Plan and Disclosure Statement contemplated a 50/50 split of the Urban Proceeds by holders of Seller Notes Claims and the General Unsecured Claims after the first $1 million of the Urban Proceeds are paid to general unsecured claims. A full-text copy of the 2nd Amended Disclosure Statement dated February 1, 2021, is available at https://bit.ly/3an58by from cases.stretto.com at no charge. Co-Counsel to the Debtors: Steven N. Serajeddini, P.C. KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 - and - David L. Eaton Jaimie Fedell KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 300 North LaSalle Street Chicago, Illinois 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Michael A. Condyles Peter J. Barrett Jeremy S. Williams Brian H. Richardson KUTAK ROCK LLP 901 East Byrd Street, Suite 1000 Richmond, Virginia 23219-4071 Telephone: (804) 644-1700 Facsimile: (804) 783-6192 About Le Tote Inc. Le Tote, Inc., and its affiliates operate both an online, subscription-based clothing rental service and a full-service fashion retailer with 38 brick-and-mortar locations and a robust e-commerce platform. In response to the COVID-19 pandemic, Le Tote temporarily closed all retail locations in March 2020, although they continue to operate the Le Tote and Lord & Taylor Web sites. Le Tote and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 20-33332) on Aug. 2, 2020. At the time of the filing, the Debtors disclosed assets of between $100 million and $500 million and liabilities of the same range. The Debtors have tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as their legal counsel, Kutak Rock LLP as local counsel, Berkeley Research LLC as financial advisor, and Nfluence Partners as investment banker. Stretto is the notice, claims and balloting agent and administrative advisor. LEVI STRAUSS: Moody's Rates New $500MM Unsecured Notes 'Ba2' ------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to Levi Strauss & Co.'s ("LS&Co") proposed $500 million senior unsecured notes due 2031. LS&Co's existing ratings are unchanged, including its Ba1 corporate family rating, Ba1-PD probability of default rating, Ba2 ratings on its existing unsecured notes, and SGL-1 speculative grade liquidity rating. The rating outlook is stable. Proceeds from the new notes will be used, together with cash on hand, to redeem $800 million in aggregate principal amount of LS&Co's $1 billion unsecured notes due 2025 and to pay related fees and expenses (together, the "transaction"). The assigned rating is subject to review of final documentation. "The transaction is a credit positive because in addition to partially extending its debt maturity profile, Levi will reduce debt by $300 million, resulting in an over one-half turn improvement in financial leverage and around $20 million of interest expense savings," stated Moody's Vice President, Mike Zuccaro. Assignments: Issuer: Levi Strauss & Co. Senior Unsecured Regular Bond/Debenture, Assigned Ba2 (LGD4) RATINGS RATIONALE LS&Co's Ba1 rating reflects governance considerations including a conservative leverage policy and balanced capital allocation priorities including, first, reinvesting in the business and, second, return of capital to shareholders through dividends and share repurchases that offset dilution related to employee stock grants. The rating also reflects its historically solid credit metrics, with lease-adjusted debt/EBITDAR less than 2.5x at the end of fiscal 2019. Although leverage has deteriorated significantly to over 5x in fiscal 2020 due to the unprecedented disruptions caused by the global coronavirus pandemic, Moody's expects that a return to revenue and earnings growth along with debt reduction will lead to substantially improved credit metrics in 2021. Also considered are the iconic nature of the Levi's brand, its global reach with sales in over 110 countries and meaningful scale with net revenues approaching $4.5 billion. Liquidity is very good, supported by nearly $1.2 billion of balance sheet cash, proforma for the incremental $300 million of debt reduction as part of its proposed refinancing transaction, ample excess revolver capacity, and positive free cash flow. Constraining factors include the company's limited, but improving, brand and product diversification, with Levi's brand men's slacks accounting for the significant majority of net revenues, and exposure to fashion risk and volatile input costs which can have a meaningful impact on earnings and cash flows. The stable rating outlook reflects Moody's expectation that, despite near term challenges in the global apparel market, LS&Co will continue to maintain solid market position given the iconic nature of its brand, with a return to solid revenue and earnings growth leading to substantially improved credit metrics while maintaining very good liquidity in the coming year. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Ratings could be downgraded if the company were to experience sustained negative revenue trends or margin erosion, or if financial policies were to become more aggressive such as utilizing debt to fund shareholder returns or large acquisitions. Credit metrics include debt/EBITDA sustained above 3.25 times or interest coverage sustained below 3.25 times. The ratings could be upgraded if the company demonstrates a commitment to maintaining an investment grade profile and capital structure, including credit metrics that are stronger than the quantitative upgrade triggers, with sustained constant-currency revenue growth, which would evidence that it is at least maintaining market share, and continued expansion into other product areas, such as tops, outerwear and accessories. Metrics include debt/EBITDA sustained below 2.75 times and EBITA/interest expense sustained above 4.25 times, and maintaining a very good liquidity profile. The principal methodology used in this rating was Apparel Methodology published in October 2019. Headquartered in San Francisco, California, Levi Strauss & Co. ("LS&Co") designs and markets jeans, casual and dress wear and related accessories under the "Levi's", "Dockers", "Signature by Levi Strauss & Co." and "Denizen" brands. The company sells product in more than 110 countries through chain retailers, department stores, online sites and franchised and company-owned stores. Levi Strauss & Co.'s fiscal 2020 net revenue was nearly $4.5 billion. Descendants of the family of Levi Strauss continue to hold the substantial majority of voting power through the company's dual share structure. LEVI STRAUSS: S&P Rates New $500MM Senior Unsecured Notes 'BB+' --------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating and '3' recovery rating to Levi Strauss & Co.'s proposed $500 million senior unsecured notes. The notes will rank pari passu with the company's existing senior unsecured notes due in 2025 and 2027. Levi will use the net proceeds from the proposed notes, along with $300 million of cash, to redeem $800 million of its existing notes due in 2025. S&P said, "Our negative outlook reflects that the company's credit metrics have deteriorated due to pandemic-related store closures and a decline in consumer spending on non-essential items. Levi is still experiencing double-digit percent declines in its top-line revenue due to lockdown measures in certain regions. We will continue to monitor the ongoing pandemic and analyze its effects on the company. Levi's liquidity remains strong as it had $713.5 million of availability under its senior secured revolver, about $1.5 billion of cash on its balance sheet, and about $340 million of free operating cash flow as of the end of fiscal year 2020. We could lower our ratings on the company in the coming quarters if its operating performance remains weak and we expect it to sustain leverage of more than 3x in fiscal year 2021." ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- S&P is reviewing its recovery ratings in connection with the company's proposed $500 million senior unsecured note offering and subsequent debt repayment. -- Levi's capital structure comprises an $850 million asset-based lending (ABL) revolving credit facility due in 2026 (not rated), $186 million of notes (assuming the $800 million of notes due 2025 are redeemed), and EUR475 million of notes due in 2027 (equivalent to $560.5 million outstanding as of Nov. 29, 2020). -- S&P's '3' recovery rating on the senior unsecured notes indicates its expectation for meaningful recovery (50%-70%; rounded estimate: 60%) in the event of a payment default. -- S&P's simulated default scenario contemplates a default occurring in 2026 and assumes Levi Strauss would reorganize following the default. Therefore, it continues to value the company on a going-concern basis using a 6.5x multiple of its projected emergence EBITDA. Calculation of EBITDA at emergence: -- Debt service: $68 million (default year interest plus amortization) -- Maintenance capital expenditure: $81 million -- Default EBITDA proxy: $149 million -- Operational adjustment: $82 million (55% of preliminary emergence EBITDA) to bring the valuation in line with S&P's valuations of its rated peers -- Emergence EBITDA: $231 million Simulated default assumptions -- Year of default: 2026 -- EBITDA at emergence: $231 million -- Implied enterprise value multiple: 6.5x -- Gross enterprise valuation: $1.5 billion Simplified waterfall -- Net recovery value (excluding administrative expenses): $1.3 billion -- Obligor/nonobligor valuation split: 50%/50% -- Estimated priority claims (ABL and local foreign debt): $460 million -- Remaining recovery value: $854 million -- Estimated senior unsecured notes claim: $1.27 billion --Recovery expectations: 50%-70% (rounded estimate: 60%) Note: All debt amounts include six months of accrued prepetition interest at default. LOGMEIN INC: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed LogMeIn, Inc.'s Long-Term Issuer Default Rating (IDR) at 'B'. The Rating Outlook is Stable. In addition, Fitch has affirmed the company's first lien debt at 'BB-'/'RR2', which includes the $250 million revolving credit facility, $950 million of senior secured notes, and upsized $2.25 billion term loan. Proceeds from the incremental term loan will be used to fully repay the existing $500 million second lien term loan. Upon the completion of the transaction, Fitch will withdraw its rating on the second lien debt. KEY RATING DRIVERS Highly Recurring and Diversified Revenues: Over 97% of LogMeIn's revenues are subscription based with 90% net retention rates, resulting in high revenue visibility. Additionally, over 90% of customer contracts are annual or multi-year contracts, with 60% of its customers paying upfront. Consistent with the fragmented nature of the SMB segment it serves, the company has over two million paying customers with no customer accounting for more than 0.5% of revenues. Secular Tailwind Supports Growth: Fitch believes LogMeIn is well positioned to benefit from the digital transformation of its customers as it creates greater demand for unified communications and customer engagement and support solutions. The UCaaS market is estimated to grow at a 10% CAGR from 2019-2024 driven by low installation and maintenance costs and ability to support remote work and scalability, relative to legacy PBX systems. Penetration of UCaaS systems is currently less than 10%, and Fitch expects LogMeIn is well positioned to benefit from the increasing adoption rates. Additionally, the enhanced cyber risk landscape results in stronger demand for identity and access management solutions. The recent shift to work from home has further exacerbated the demand for these services. The TAM for LogMeIn's services is estimated at $68 billion and growing by double digits. Fitch believes there are additional opportunities for the company to expand its share of wallet within existing customers to improve retention and margins, since less than 10% of its customers buy more than one product. Highly Competitive Marketplace: Fitch expects LogMeIn will be exposed to intensifying competition across each of its core end markets, including from market leaders, who are larger and have greater financial flexibility. While LogMeIn's strategy is focused on providing a comprehensive product platform to the SMB Segment, it competes with other SMB focused competitors like 8x8, enterprise focused competitors like Ringcentral and Vonage; enterprise solution companies with sizeable installed bases like Microsoft and Google, which also offer connectivity solutions to their SMB customers, and point solutions like Zoom. Leverage to Remain Elevated: Fitch expects gross leverage to be 6.1x in fiscal 2020, in line with peers in the 'B' rating category. Fitch expects LogMeIn to maintain gross leverage between 5.0x and 6.0x throughout the rating horizon. Fitch believes the company will make ongoing investments in technologies and products to keep pace with the fast-moving industry, limiting its deleveraging primarily to EBITDA growth. Private Equity ownership will also limit deleveraging to optimize ROE. Strong FCF Characteristics: Fitch projects LogMeIn will generate FCF margins in the mid to high teens over the rating horizon. Despite the high interest burden, FCF margins are buoyed by modest capex, low working capital needs and the deferred revenue cycle. Fitch expects the company will deploy some of this FCF to acquire new technology solutions to expand its range of offerings. DERIVATION SUMMARY LogMeIn is well positioned for its rating given its highly recurring revenue stream and strong profitability and FCF margins. LogMeIn's EBITDA margins and FCF margins are in line with Fitch's software universe and exceed margins for some of its public cloud-based peers such as RingCentral, Okta and Zoom. Fitch expects LogMeIn's leverage to remain in the 5x to 6x range over the rating horizon. LogMeIn's competitive market position, revenue scale, and leverage profile are consistent with the 'B' rating category. The ratings also reflect Fitch's expectation that despite strong secular demand for UCaaS and network security, LogMeIn's growth will lag that of the sector due to the highly competitive landscape and its SMB focus. Increasing adoption of cloud based telephony has driven the growth of the UCaaS industry, with pure-play cloud based providers increasingly taking share away from traditional, on-premise providers. On the enterprise end, traditional players like Cisco and Avaya have expanded their UCaaS offerings through acquisitions. Other enterprise providers include RingCentral and Vonage, as well as Microsoft and Google. Industry research suggests that the five largest UCaaS providers - Ringcentral, Mitel, 8x8, Cisco and Vonage account for over 60% of the market. In the SMB segment, LogMeIn competes with both other UCaaS providers such as 8x8 and Fuze, as well as point solutions such as Zoom. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Strong revenue growth over the next 18 months buoyed by robust demand for UCaaS and LastPass. Longer-term organic revenue growth in the low single digit range; -- EBITDA margins are expected to improve to the high 30% range driven by cost rationalization and more streamlined sales and marketing initiatives; -- Normalized free cash flow margins in the mid-teens. The recovery analysis assumes a going concern EBITDA that captures moderate pressure to the current annualized run-rate EBITDA in the form of sustained customer churn and margin compression on reduced scale. Fitch applies a 6.5x multiple to arrive at an enterprise value (EV) of $2.8 billion. The multiple is higher than the median Telecom, Media and Technology EV multiple, but is in line with the Fitch employed multiple for other 'B'-rated SaaS companies. In the 21st edition of Fitch's Bankruptcy Enterprise Values and Creditor Recoveries case studies, Fitch noted nine past reorganizations in the Technology sector with recovery multiples ranging from 2.6x to 10.8x. Of these companies, only three were in the Software sector: Allen Systems Group, Inc.; Avaya, Inc.; and Aspect Software Parent, Inc., which received recovery multiples of 8.4x and 5.5x, respectively. Avaya, which is a legacy PBX business exited bankruptcy at an 8.1x multiple. Median trading multiples for the sector are in the double-digit range. The 6.5x multiple is supported by LogMeIn's scale, strong margins, highly recurring revenues and strong FCF profile -- Fitch assumes a fully drawn revolver in its recovery analysis since credit revolvers are tapped as companies are under distress. Fitch assumes a full draw on LogMeIn's $250 million revolver. -- Fitch estimates strong recovery prospects for the first lien credit facilities and rates them 'BB-'/'RR2', or two notches above LogMeIn's 'B' IDR. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Total Debt with Equity Credit / Operating EBITDA sustained below 5.0x; -- Sustained revenue growth of mid-single digits, implying stable market position; -- FFO interest coverage sustaining above 3.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Fitch's expectation of total debt with equity credit operating EBITDA sustaining above 6.5x ; -- Sustained negative revenue growth, signaling material customer churn amidst competitive pressures; -- FFO interest coverage sustaining below 2.0x. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE LogMeIn has strong liquidity in the form of $137 million of cash as of September 2020. In addition, the company has full availability of its $250 million revolving credit facility. The company generates significant FCF over the rating horizon with margins sustaining in the mid to high teens, despite the near-term costs related to the cost rationalizations and upcoming RSU payouts. Fitch expects the company to generate in excess of $1 billion in pre-dividend free cash flow over the rating horizon. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch has made no material adjustments that are not disclosed within the company's filings. LUCKIN COFFEE: JPLs File Chapter 15 Bankruptcy Petition ------------------------------------------------------- The Joint Provisional Liquidators (the "JPLs") of Luckin Coffee Inc. (the "Company") (OTC:LKNCY), Alexander Lawson of Alvarez & Marsal Cayman Islands Limited and Wing Sze Tiffany Wong of Alvarez & Marsal Asia Limited, on Feb. 5 filed a verified petition under chapter 15 of title 11 of the United States Code (the "Chapter 15 Petition") with the United States Bankruptcy Court for the Southern District of New York (the "U.S. Bankruptcy Court"). The Chapter 15 Petition seeks, among other things, recognition in the United States of the Company's provisional liquidation pending before the Grand Court of the Cayman Islands (the "Cayman Court"), Financial Services Division, Cause No. 157 of 2020 (ASCJ) (the "Cayman Proceeding")1 and related relief. The Company is negotiating with its stakeholders regarding the restructuring of the Company's financial obligations, to strengthen the Company's balance sheet and enable it to emerge from the Cayman Proceeding as a going concern, for the benefit of all stakeholders. The relief sought in the Chapter 15 Petition is an important component of the Company's restructuring. This relief will promote centralized administration of the Company's assets by permitting coordination between the Cayman Court and the U.S. Bankruptcy Court, to protect the interests of stakeholders while facilitating the Company's restructuring. All Company stores remain open for business, offering products with high quality, affordability and convenience to its customers in China. The filing of the Chapter 15 Petition is not expected to materially impact the Company's day-to-day operations. The Company continues to meet its trade obligations in the ordinary course of business, including paying suppliers, vendors and employees. About Luckin Coffee Luckin Coffee Inc., was a Xiamen, Fujian-based coffee chain. In July 2020, Luckin Coffee called in liquidators to oversee a corporate restructuring and negotiate with creditors to salvage its business, less than four months after shocking the market with a US$300 million accounting fraud, South China Morning Post said. The Company hired Houlihan Lokey as financial advisers to implement a workout with creditors. The start-up company also named Alexander Lawson of Alvarez & Marsal Cayman Islands and Tiffany Wong Wing Sze of Alvarez & Marsal Asia to act as "light-touch" joint provisional liquidators (JPLs) under a Cayman Islands court order, it said in a regulatory filing in New York. The move was in response to a winding-up petition by an undisclosed creditor. MAGELLAN HEALTH: Moody's Completes Review, Retains Ba1 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Magellan Health, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Magellan's Ba1 CFR reflects its good scale, positive growth prospects , and diverse customer base. The credit profile also reflects relatively low financial leverage with gross debt/EBITDA likely to remain low. Tempering these strengths, Magellan competes with much larger health insurance competitors and pharmacy benefits management companies. Other key risks include customer turnover, a reduction in scale following the divestiture of Magellan Complete Care, and the uncertainty created by rapid industry consolidation involving healthcare insurers and providers. The rating was placed under review for downgrade on May 1, 2020; for details see Moody's press release issued on that date. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. MARAVAI INTERMEDIATE: Moody's Completes Review, Retains B2 CFR -------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Maravai Intermediate Holdings, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Maravai's B2 CFR reflects its small size, modest market position, its history of aggressive financial policies and high but improving financial leverage, although Moody's expect a less aggressive financial policy as Maravai transitions to public ownership. The rating is supported by high profit margins and our expectation for at least mid-to-high single digit revenue growth over the next 12 to 18 months. The principal methodology used for this review was Manufacturing Methodology published in March 2020. MARK DAVID TIBBENS: $163K Sale of Cedar Grove Property Approved --------------------------------------------------------------- Judge Catharine R. Aron of the U.S. Bankruptcy Court for the Middle District of North Carolina authorized Mark David Tibbens' sale of the real property located at 849 Moose Tracks Trail, in Cedar Grove, North Carolina, to Angel M. Barnes for $163,000, pursuant to the terms of the Sale Agreement. A hearing on the Motion was set for Jan. 13, 2021. The Sale is free and clear of any and all liens, encumbrances, claims, rights, and other interests, including but not limited to the security interests of First Horizon and Merchants. The Debtor is authorized to enter into any related agreements, documents or other instruments, closing statements, or other reasonable and necessary documents as necessary to effectuate the closing of the sale of the Property as authorized by the Court. The 14-day automatic stay under Bankruptcy Rule 6004(h) is waived. Mark David Tibbens sought Chapter 11 protection (Bankr. M.D.N.C. Case No. 19-80964) on Oct. 28, 2020. MATCHBOX FOOD: Court Approves Disclosure Statement -------------------------------------------------- Judge Lori S. Simpson has entered an order approving the Disclosure Statement of Matchbox Food Group, LLC and Matchbox Rockville, LLC, and setting a hearing for March 9, 2021 at 10:00 a.m via Video Conference for confirmation of the Debtors' Plan. The hearing will take place in Courtroom 3D of the U.S. Bankruptcy Court, U.S. Courthouse, 6500 Cherrywood Lane, Greenbelt, Maryland 20770. March 8, 2021, at 10:00 a.m., is fixed as the last day of filing written acceptances or rejections of the Plan. March 8, 2021, is fixed as the last day for filing and serving written objections to confirmation of the Plan. As reported in the Troubled Company Reporter, the Debtors in October 2020, won court approval to sell substantially all assets to Thompson Hospitality Group. The sale closed Nov. 15, 2020. The Consummated APA required Thompson to make a one-time payment of $11,550,000 for (i) the assets of and equity in the Conveying Subsidiaries; (ii) all intellectual property and intellectual property rights associated with the “Matchbox” brand; and (iii) and for the assumption and assignment of the leases of real property held by the conveying subsidiaries. Thompson agreed to pay to the Debtors estate a consulting fee in the amount of $550,000 at closing (the "Consulting Fee") and agreed to waive certain claims against the Debtors at closing. The Debtors filed a Chapter 11 Plan and a Disclosure Statement on Dec. 21, 2020. EagleBank has been paid in full on its secured claim as of the sale. After payment of EagleBank's secured claims, claims of creditors holding trust fund claims under the Perishable Agricultural Commodities Act, and cure amounts owed to landlords, and reconciling amounts due under the Consummated APA with Thompson, the Debtors are holding approximately $718,000 in Sale Proceeds and the $550,000 Consulting Fee. Under the Plan, the claims of PIT Group in the amount of $13 million in Class 2 payment of the pro-rata amount of its Allowed Class 2 Claim after payment of allowed administrative, priority and U.S. Trustee fees incurred as attributable to sale of substantially all of the Debtors’ assets. To the extent the holder of a Class 2 Claim is not paid in full from the Sale Proceeds, such holder will have an Allowed Class 3 Claim without further action by the holder. General unsecured claims in Class 3 will each receive (1) its pro-rata share of the Consulting Fee after payment of allowed administrative, priority and U.S. Trustee fees incurred as attributable to the Debtors’ operations; and (2) its pro-rata share of any other Assets of the Debtors other than Sale Proceeds, including amounts obtained under the Debtors' reconciliation of amount due from Thompson under the APA, and recoveries of the Causes of Action. A full-text copy of the Disclosure Statement dated December 21, 2020, is available at https://bit.ly/37LOwKw from PacerMonitor.com at no charge. About Matchbox Food Group Matchbox Food Group, LLC, and its affiliates operate a chain of casual-dining brand restaurants. On Aug. 3, 2020, Matchbox Food Group and affiliates filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Lead Case No. 20-17250). The petitions were signed by Edwin A. Sheridan IV, member. At the time of the filing, Matchbox Food Group had estimated assets of less than $50,000 and liabilities of between $50 million and $100 million. Judge Lori S. Simpson oversees the cases. McNamee, Hosea, Jernigan, Kim, Greenan & Lynch, P.A. and The Veritas Law Firm serve as Debtors' bankruptcy counsel and corporate counsel, respectively. The Debtors also tapped Abba Blum and MNBlum, LLC as accountants. MATTHEWS INTERNATIONAL: S&P Affirms 'BB' ICR, Outlook Negative -------------------------------------------------------------- S&P Global Ratings affirmed its 'BB' issuer credit rating on Matthews International Corp., a global provider of brand solutions (about 46% of 2020 revenues), funeral products (about 44%), and industrial technologies (about 10%). At the same time, S&P affirmed the 'B+' issue-level rating on the company's $300 million in senior unsecured notes. The '6' recovery rating, indicating expectations for negligible (0%-10%; rounded estimate: 5%) recovery in the event of default, remains unchanged. S&P said, "The negative outlook reflects credit measures that remain weak for the rating, with leverage well over 5x, and a risk to our base case of low-single-digit revenue growth, improving EBITDA margins in the mid-teens area, and continued debt reduction. The negative outlook also reflects that the company's business lines could recover more slowly post-pandemic and future acquisitions could materially delay deleveraging. "Despite high leverage, we believe the company's underperformance in fiscal 2020 is temporary and predominantly attributable to the COVID-19 pandemic. However, the pandemic also demonstrated the overall resilience of the company's business, with fiscal year 2020 revenues declining only 2.5% as increases in casket sales largely offset declines in the SGK Branded Solutions and Industrial Technologies segments. "Although current leverage is weak for the rating, the company's stated conservative financial policy and demonstrated commitment to debt reduction, as well as our expectations for improved performance in 2021, support the 'BB' rating. We expect adjusted leverage to decline below 4.5x over the coming year as the company benefits from improved sales in its Industrial Technologies segment, SGK Branded Solutions segment, and memorial products subsegment in the second half of fiscal 2021. "We remain concerned that the company's SGK Branded Solutions segment may underperform in the face of industry headwinds, but we expect that Matthews, as one of the largest and most established players in the industry, will gain market share and improve profit margins for the segment through the benefits of its cost-cutting initiatives. These concerns are offset over the near-term by our expectations for solid demand in the Memorialization segment, the largest contributor to EBITDA over the last two years, highlighted by record monthly sales figures and good earnings visibility in its higher-margin casket business "The combination of leadership in multiple segments, as well as diversification among and within the three business lines, support the rating. Matthews consists of three diverse business segments: the branding business (about 46% of 2020 revenues), which designs, manufactures, and markets brand solutions, the funeral products (memorialization) segment, which sells caskets and related products (44%), and the industrial products business (10%). "Free cash flow remains strong, consistently above 10% of debt. We expect the company to prioritize debt reduction and avoid debt-financed acquisitions or significant share repurchases until leverage returns to historical levels. We expect Matthews to maintain leverage below 4.5x in the long run. "The negative outlook reflects credit measures that are currently weak for the rating and a risk to our base case of low-single-digit revenue growth, improving EBITDA margins in the mid-teens area, and continued debt reduction. The negative outlook also reflects the risk that the company's business lines recover more slowly post-pandemic and that future acquisitions could materially delay deleveraging." S&P could lower its rating if: -- S&P expects the company's leverage to remain above 4.5x over the next nine to 12 months; -- The company's financial policy changes; -- Recovery is slower than expected; or -- Its business continues to deterioriate. S&P could revise our outlook to stable if: -- S&P gains confidence Matthews will maintain leverage below 4.5x; and -- It demonstrates stability or growth across its business lines. MCAFEE LLC: Moody's Completes Review, Retains B1 CFR ---------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of McAfee, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations McAfee, LLC's B1 corporate family rating reflects the company's record of steady revenue growth, leading position as an endpoint software security provider across consumer and enterprise markets, and solid liquidity position. Additionally, the company's recent initial public offering is expected to drive a more conservative financial policy. The credit profile is constrained by McAfee's moderately high leverage and softness in growth for its enterprise security business due to competitive pressures. The principal methodology used for this review was Software Industry published in August 2018. MESCO INC: Secured Claimants Say Amended Plan Remains Not Feasible ------------------------------------------------------------------ Secured Claimants, MV Fund I, LLC; Slater Family Trust; Frederick Shih Yang and Jihong Yang as Co Trustees of the Yang Family Trust; and Karen Ann Johnson Revocable Trust DTD August 4, 2004 ("Claimants") submitted a supplemental objection to the First Amended Plan of Reorganization and Disclosure Statement of debtor Mesco, Inc. An objection to confirmation of the Plan was filed by the instant Claimants on Dec. 7, 2020, asserting objections on a variety of grounds. In response to the Claimants' original objection, the Debtor indicated in its Reply Brief and proposed initial modification that the Hazel Bell property would be completed no later than Feb. 28, 2021, and sold no later than June 30, 2021. The Claimants state that there was no realistic possibility that construction would have been completed by the Dec. 31 date, or the Feb. 28 date or the current March 31, 2021 date. The Plan, as currently revised is neither realistic nor feasible since the viability of the entire Plan is premised on the completion and sale of the Hazel Bell property, the Claimants tell the Court. The Claimants say that completion and sale of Hazel Bell within any reasonable timeline is not realistic and therefore, sale of the Silverado property is unrealistic. The Plan, even with the proposed revisions, is unfeasible since feasibility is contingent upon selling these properties and eliminating the payments due to Claimants. The Claimants assert that the Debtor contends that it has some money set aside and some construction material set aside. However, it is not really clear how the Debtor will be able to afford to complete the required construction of the Hazel Bell property to be able to make it presentable for marketing and sale. The Claimants further assert that the Debtor's proposal to make additional payments of $2,000 per month if permits are not issued is, while admirable, not feasible. A full-text copy of the Claimants' objection dated Jan. 28, 2021, is available at https://bit.ly/3cOXcCS from PacerMonitor.com at no charge. Attorney for Secured Claimants: Martin W. Phillips, Esq. Law Offices of Martin W. Phillips 8180 E. Kaiser Boulevard, Suite 100 Anaheim Hills, California 92808 Phone: (714)282-2432 Facsimile: (714)282-2434 About MESCO, Inc. MESCO, Inc., is the fee simple owner of three real properties in Silverado, Calif., consisting of a single-family residence and a parcel of land. The properties have a total current value of $1.45 million. MESCO filed for Chapter 11 bankruptcy protection (Bankr. C.D. Cal. Case No. 20-10262) on Jan. 27, 2020, disclosing $2,087,458 in assets and $1,897,255 in liabilities. The petition was signed by Michael E. Silbermann, president. Judge Catherine E. Bauer oversees the case. Michael G. Spector, Esq., at the Law Offices of Michael G. Spector, serves as the Debtor's legal counsel. MILLS FORESTRY: Solicitation Exclusivity Extended Thru March 9 -------------------------------------------------------------- At the behest of Debtors Mills Forestry Service, LLC, and Sammy Clyde Mills, III, Judge Susan D. Barrett of the U.S. Bankruptcy Court for the Southern District of Georgia, Dublin Division, extended the period in which the Debtors may obtain acceptances through and including March 9, 2021. The Debtors need the additional time to finalize what will end up being a rather intricate Plan and Disclosure Statement and test the proposed Budget. Additionally, it will give Mr. Mills and Ms. Womack, the bookkeeper, the benefit of the weekend to: (i) review the final proposal; (ii) determine whether, in fact, the Debtors stand behind the Plan; and (iii) fully understand their options before invoking a demanding and lengthy confirmation process for the Debtors, their creditors, the Court, and the United States Trustee. Though it already passed, the Debtors' exclusivity period to file a chapter 11 plan was extended through and including January 11, 2021. The Order to extend the Debtors' exclusivity periods was filed on January 29, 2021. A copy of the Debtors' Motion to extend is available from PacerMonitor.com at https://bit.ly/2YBUYhK at no extra charge. A copy of the Court's Extension Order is available from PacerMonitor.com at https://bit.ly/2MeoMid at no extra charge. About Mills Forestry Service Sammy Clyde Mills, III, is a resident of Kite, Georgia. He and his mother each own 50% of the outstanding membership interests in Mills Forestry Service, LLC, a Georgia limited liability company that operates a timber harvesting and forest service business out of Adrian, Georgia. Mr. Mills and Mills Forestry Service sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ga. Case No. 20-30046 and 20-30058) on March 7, 2020. At the time of the filing, Mills Forestry disclosed assets of between $1 million and $10 million and liabilities of the same range. Previously, Judge Edward J. Coleman III oversees the cases. Now Judge Susan D. Barrett presides over the case. The Debtors tapped Stone & Baxter, LLP as legal counsel and Jarrard Law Group, LLC as their special counsel. MR. COOPER: S&P Alters Outlook to Positive, Affirms 'B' ICR ----------------------------------------------------------- S&P Global Ratings revised its outlook on Mr. Cooper Group Inc. (COOP) and its subsidiaries to positive from stable. S&P also affirmed its long-term issuer credit ratings at 'B'. S&P said, "At the same time, we affirmed our 'B' rating on $2.1 billion of unsecured notes. Our recovery rating on the unsecured notes is '4' (45%), indicating our expectation of an average recovery in the event of default. "Our outlook revision to positive is driven by an expected decline in leverage, stronger-than-expected earnings from the originations segment, relatively stable forbearance requests, adequate liquidity, and no immediate refinancing risk. "The positive outlook over the next 12 months reflects S&P Global Ratings' expectation of strong originations to continue in 2021, debt to tangible equity around 1.0x, and adequate liquidity to meet the forbearance requests. Our outlook also considers the company's current market position as the largest nonbank mortgage servicer, coupled with debt to EBITDA of below 4.0x and EBITDA interest coverage well above 3.0x. "We could revise our outlook to stable over the next 12 months if we expect debt to tangible equity to rise above 1.25x on a sustained basis or if the company faces liquidity challenges as forbearance requests rise. We could also revise our outlook to stable if the company discloses significant regulatory or compliance failures that affect its profitability or market position, the tangible net worth covenant cushion on its warehouse facilities declines significantly, debt to EBITDA rises above 4.0x, or EBITDA coverage declines below 2.0x on a sustained basis. "We could raise the ratings over the next 12 months if we expect debt to EBITDA to remain well below 4.0x and debt to tangible equity well below 1.0x on a sustained basis in a normalized environment. An upgrade would also depend on the company maintaining adequate liquidity, its existing market position, and not disclosing any significant regulatory or compliance failures." MUNCHERY INC: Court Gives Settlement Agreement Final OK ------------------------------------------------------- Judge Jacqueline Scott Corley of the United States District Court for the Northern District of California granted Plaintiffs Joshua James Eaton Phillips and Christina Brooks' motion for the final approval of the class action settlement. Judge Corley also granted the Plaintiffs' $126,666.67 in attorneys' fees, $14,591.07 in costs and an incentive award of $2,500 for each Class Representative. Munchery operated an online food delivery service in the San Francisco Bay Area until January 21, 2019 when it went out of business. On January 25, 2019, Plaintiffs filed this action alleging that Munchery failed to comply with the Worker Adjustment and Retraining Notification Act ("WARN Act") and provide 60 days of written notice to its employees before ordering the mass layoff. Two weeks later, Plaintiffs filed a First Amended Complaint ("FAC") adding a claim under the California WARN AcT ("CAL-WARN"). Shortly thereafter Munchery filed for Chapter 11 bankruptcy. The bankruptcy filing resulted in a stay in the action under 11 U.S.C. Section 362(a)(1), which was eventually lifted in May 2019, allowing the proceedings to resume. In August 2019, Plaintiffs filed their motion for class certification. The parties jointly requested that the Court delay hearing the motion for class certification in light of the parties' upcoming mediation with Bankruptcy Judge Roger Efremsky and other constituencies in the Chapter 11 proceeding. Over the next several months, with the assistance of Judge Efremsky, the parties continued to negotiate a collective resolution to the matter culminating in a settlement agreement in February 2020. The settlement agreement contained, among others, the following relevant terms: (a) Settlement Class: The settlement class consists of Plaintiffs and all persons (i) who worked at, were based out of, received assignments from, or reported to Defendant's facility at 200 Shaw Road, South San Francisco, California, (ii) who were terminated without cause, as part of, or as the result of, a mass layoff or plant closing ordered by Defendant and carried out on or about January 21, 2019 and within 30 days of that date or in reasonable anticipation of or as the reasonably foreseeable consequence of the mass layoff or plant closing ordered by Defendant on or about January 21, 2019, (iii) who are affected employees within the meaning of 29 U.S.C. Section 2101(a)(5), and (iv) who have not filed a timely request to opt-out of the class. (b) Payment Terms: The gross Settlement Amount is $400,000. The following amounts will be deducted from the gross settlement amount: Class Representative Payments of $5,000, Class Counsel's fees of up to $126,666.67, expenses of up to $15,000, and the employer's share of the payroll taxes in the amount of $30,622.61. The remaining $222,710 will be distributed to the Class Members in pro rata shares. Class Counsel has provided pro rata calculations for the distributions to Class Members, including the deduction of the employer taxes. Any settlement checks which remain undeposited after 180 days will be electronically transferred by the settlement administrator to the State of California's Unclaimed Property Fund, https://www.sco.ca.gov/upd_rptg.html in the name of the Class Member. (c) Taxes: The Settlement Amount is inclusive of all payroll taxes; the Settlement Administrator retained by Class Counsel is responsible for withholding, paying, and reporting all income tax withholdings and statutory taxes. (d) Release: Upon final approval of the Settlement Agreement, the Class Members shall release "all claims of the members of the Class against the Debtor's estate arising from the facts alleged in the class action Complaint, including, but not limited to, any administrative, priority, and general unsecured claims." (e) Notice: On November 20, 2020, the Settlement Administrator, American Legal Claim Services, LLC ("ALCS"), mailed notice to all 268 Class Members. Twelve class notices were returned as undeliverable. ALCS performed "skip traces" and obtained updated addresses for seven of the twelve individuals. ALCS remailed notice to all seven of these individuals and none of the notices were returned. Class Counsel also published notice of the settlement on the website: https://www.warnlawyers.com/recent-cases/munchery-inc. The website also contains a brief summary of the case, links to the binding term sheet describing the settlement, the parties' joint preliminary approval motion, the order granting preliminary approval, the notice of settlement, the motion for approval of attorneys' fees, costs and class representatives' service awards, and the motion for final approval, as well as information about how to contact Class Counsel directly. (f) Opt-Out and Objections to the Settlement: The deadline to opt-out of or object to the settlement was January 11, 2021 and to date, no opt-outs or objections have been received. Judge Corley found that the Settlement Agreement was not the result of collusion between the parties and that it was the product of arms-length negotiations between experienced and professional counsel. Judge Corley said that there were no objections to address. She also said that the Settlement Agreement passed muster under Rule 23(e) and final approval was appropriate. The case is JOSHUA JAMES EATON PHILIPS, et al., Plaintiffs, v. MUNCHERY INC., Defendant, Case No. 19-cv-00469-JSC (N.D. Cal.). A full-text copy of the Order Re: Plaintiffs' Motion for Final Approval of Class Action Settlement, Motion for Attorneys' Fees, Costs, and Class Representative Award, dated February 1, 2021, is available at https://tinyurl.com/58dyqgaj. About Munchery Munchery, Inc. d/b/a Munchery -- http://www.munchery.com/-- is a food delivery startup offering "fresh, local, and delicious" meals to its customers across the country. On Jan. 21, 2019 Munchery ceased business operations and all its employees were terminated. Munchery filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 19-30232) on Feb. 28, 2019. The petition was signed by James Beriker, president and CEO. The case is assigned to Judge Hannah L. Blumenstiel. At the time of filing, Munchery estimated $1 million to $10 million in assets and $10 million to $50 million in liabilities. Munchery tapped Finestone Hayes LLP as its bankruptcy counsel; Armanino LLP as its financial consultant; and Omni Management Group as its noticing agent. MURRAY ENERGY: CONSOL Appeal Denied ----------------------------------- Judge Tracey N. Wise of the United States Bankruptcy Appellate Panel, Sixth Circuit, denied the appeal filed by Consol Energy, Inc. from the bankruptcy court's order and subsequent memorandum opinion approving a settlement under Rule 9019(a) between Murray Energy Holdings Co. and its affiliated debtor entities, the Official Committee of Retirees, and the United Mine Workers of America 1992 Benefit Plan. In 2013, mining operations were sold to the Debtors by a CONSOL-related entity. The Coal Act requires certain coal companies and their affiliates, referred to as "last signatory operators," to provide health and retiree benefits to retired employees (and their spouses and dependents) through individual employer plans ("IEPs") funded and administered by current or former coal operators. In addition, the Coal Act created the 1992 Plan to provide benefits for eligible retirees who do not receive benefits through a company's IEP. Last signatory operators fund the 1992 Plan, in part, by paying monthly premiums. The Coal Act also requires last signatory operators to provide security to the 1992 Plan. Under the Coal Act, if a company ceases operations, and the 1992 Plan assumes responsibility for that operator's IEP benefits, the 1992 Plan may assert that a prior employer of the terminated operator's employees must pay the benefits. The Debtors operated a coal company and provided healthcare and retiree benefits to about 2,200 retired employees and their spouses and dependents under their IEP (the "Murray IEP"). In 2019, the Benefits cost Debtors about $23 million; by April 2020, Debtors spent $60,000-$65,000 per day on Benefits for the Beneficiaries. In addition, certain Debtors posted a $22.5 million letter of credit, and maintained an escrow account holding about $530,000, as security for the 1992 Plan. Debtors filed chapter 11 petitions on October 29, 2019. Before filing their petitions, the Debtors negotiated agreements to finance the bankruptcy case and position the sale of their assets. Several agreements compelled the Debtors to minimize their liabilities to the Beneficiaries and required the Debtors to pursue relief under Section 1114 should they fail to reach agreement to terminate or modify the Debtors' obligation to pay the Benefits. To begin a process leading to a Section 363 sale of substantially all their assets, the Debtors moved for and obtained entry of an order approving bidding procedures for the sale. This order provided that a stalking horse bidder would submit an initial bid for the Debtors' assets and set out a competitive bidding process. After that process did not generate another qualified buyer, the stalking horse bid presented the sole viable path forward to sell the assets as a going concern to maximize value for the Debtors' estates. The stalking horse bid contained specific terms requiring the Debtors to consensually modify or reject the Benefits as a condition precedent to closing. It also required that a plan confirmation order expressly provide that the purchaser of the Debtors' assets would not assume any obligation to pay the Benefits. To address their Coal Act obligations, the Debtors moved for an order under Section 1114(d) requiring the United States Trustee to appoint a committee to represent Debtors' retirees in negotiations. After the bankruptcy court entered an agreed order granting that motion, the United States Trustee appointed a Retiree Committee. Debtors and the Retiree Committee began discussions regarding the termination of Debtors' obligation to provide Benefits to the Beneficiaries in February 2020, and the parties later included the 1992 Plan in their negotiations. The parties eventually agreed to the Settlement, reflected in a term sheet dated April 13, 2020, by which: (i) the Debtors would provide Benefits to the Beneficiaries until May 1, 2020; (ii) the parties would cooperate to transition the Beneficiaries from the Murray IEP to the 1992 Plan as of May 1 to assure no coverage gap; (iii) the 1992 Plan would receive $12.5 million from the posted security and the Debtors would receive the remainder; and (iv) the Debtors would cooperate in the 1992 Plan's efforts to hold CONSOL responsible as the last signatory operator under the Coal Act for those Beneficiaries who transferred to Debtors in 2013. The bankruptcy court approved the Settlement. At CONSOL's request, the bankruptcy court included a provision in the Settlement Order that reserved CONSOL's right to dispute its potential Coal Act liability for the Benefits: "Nothing herein, or in the Court's subsequent memorandum opinion, shall be construed as a finding that CONSOL is the last signatory operator as that term is used in the Coal Act. CONSOL, the 1992 Plan, and all other parties in interest reserve any and all rights, remedies, and defenses that they may have." In the Opinion, the bankruptcy court explained its conclusion that, in objecting to the Settlement, CONSOL was "'acting not as a concerned creditor of the chapter 11 estates, but as a party who will potentially be held liable for retiree benefits' at some point in the future." The bankruptcy court confirmed Debtors' chapter 11 plan on August 31, 2020, with an effective date of September 16, 2020. The confirmation order approved the proposed asset sale to the stalking horse bidder. The sale closed as of the plan's effective date. CONSOL did not appeal the confirmation order. CONSOL contended that it is a "person aggrieved" because the bankruptcy court interfered with its contract rights. CONSOL further contended it is a "person aggrieved" because the Rulings impair its litigation defenses. Judge Wise held that "the Settlement Order and the Opinion approving the Settlement did not impose liability on CONSOL for the Benefits. On appeal, as in its objection to the Settlement Motion, CONSOL continues to disclaim liability for the Benefits. The bankruptcy court left CONSOL's Coal Act liability for another court to determine; CONSOL only will become liable for the Benefits if a court in a separate action so finds. Moreover, to the extent that the Settlement removes a defense to CONSOL's liability under the Coal Act in separate litigation, that defense is unrelated to an interest that the Bankruptcy Code seeks to protect, which does not satisfy the requirements for appellate standing under the 'person aggrieved' doctrine. Because the entry of the Rulings did not diminish CONSOL's property, increase its burdens, or impair its rights, CONSOL does not have a direct, pecuniary interest in the Rulings and is not a 'person aggrieved' as defined by Sixth Circuit law. As a result, further review of the MIL Order would be moot. For these reasons, the appeal is DISMISSED for lack of standing." The case is In Re: Murray Energy Holdings Co., Debtor. CONSOL ENERGY, INC., Appellant, v. MURRAY ENERGY HOLDINGS CO., OFFICIAL COMMITTEE OF RETIREES, UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN, AD HOC GROUP OF SUPERPRIORITY LENDERS, and OFFICIAL COMMITTEE OF UNSECURED CREDITORS, Appellees, Case No. No. 21b0001a.06 (BAP Sixth Circuit). A full-text copy of the Opinion, dated February 1, 2021, is available at https://tinyurl.com/1dp0u5ms from Leagle.com. Consol Energy, Inc. is represented by: Catherine Steege, Esq. Melissa Root, Esq. JENNER & BLOCK LLP 353 N. Clark Street Chicago, IL 60654-3456 Tel: (312) 222-9350 Email: csteege@jenner.com mroot@jenner.com Murray Energy Holdings Co. is represented by: Kim Martin Lewis, Esq. Alexandra S. Horwitz, Esq. DINSMORE & SHOHL LLP 255 E. Fifth Street Suite 1900 Cincinnati, OH 45202 Tel: (513) 977-8200 Email: kim.lewis@dinsmore.com - and - Mark McKane, Esq. KIRKLAND & ELLIS LLP 601 Lexington Avenue New York, NY 10022 Telephone: 212-446-4800 Email: mark.mckane@kirkland.com Joseph M. Graham, Esq. KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654 Tel: (312) 862-2000 United Mine Workers of America 1992 Benefit Plan and the Official Committee of Retirees are represented by: Michael Healey, Esq. HEALEY BLOCK LLC 247 Ft. Pitt Blvd. 4th Floor Pittsburgh, PA 15222 Tel: (888) 391-6944 Email: mike@unionlawyers.net - and - Filiberto Agusti, Esq. Johanna Dennehy, Esq. STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, NW Washington, DC 20036 Tel: (202) 42-3000 Email: fagusti@steptoe.com jdennehy@steptoe.com Michael Vatis, Esq. STEPTOE & JOHNSON LLP 1114 Avenue of the Americas New York, NY 10036 Tel: (212) 506-3900 Email: mvatis@steptoe.com About Murray Energy Headquartered in St. Clairsville, Ohio, Murray Energy -- http://murrayenergycorp.com/-- is the largest privately owned coal company in the United States, producing approximately 76 million tons of high quality bituminous coal each year, and employing nearly 7,000 people in the United States, Colombia and South America. Murray Energy now operates 15 active mines in five regions in the United States, plus two mines in Colombia, South America. It operates 12 underground longwall mining systems, 42 continuous mining units, 10 transloading facilities, and five mining equipment factory and fabrication facilities. Murray Energy and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ohio Lead Case No. 19-56885) on Oct. 29, 2019. At the time of the filing, the Debtors disclosed assets of between $1 billion and $10 billion and liabilities of the same range. The cases have been assigned to Judge John E. Hoffman Jr. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as general bankruptcy counsel; Dinsmore & Shohl LLP as local counsel; Evercore Group L.L.C. as investment banker; Alvarez and Marsal L.L.C. as financial advisor; and Prime Clerk LLC as notice and claims agent. The U.S. Trustee for Region 9 appointed creditors to serve on the official committee of unsecured creditors on Nov. 7, 2019. The committee tapped Morrison & Foerster LLP as legal counsel; AlixPartners, LLP as financial advisor; and Vorys, Sater, Seymour and Pease LLP as local counsel. MY FL MANAGEMENT: Royal Beach Palace Owners File for Chapter 11 --------------------------------------------------------------- Matthew Arrojas of South Florida Business Journal reports that the owners of Royal Beach Palace hotel in Fort Lauderdale collectively filed for Chapter 11 bankruptcy protection. My FL Management LLC is the primary party listed in the bankruptcy filing, along with affiliates MY FL 3811 LLC and My FL 3821 LLC. The three listed parties in the filing own three out of four properties that make up the 154-room Royal Beach Palace at 3711 N. Ocean Blvd., in Fort Lauderdale, Florida. All four land parcels that make-up Royal Beach Palace were purchased for a combined $9.9 million between 2013 and 2015, according to county records. They are owned by Rental Vacation Property LLC, which is managed by Yury Gnesin, who manages all four companies listed as the owners. Rental Vacation Property LLC is not listed in the bankruptcy filing. The case, filed in U.S. Bankruptcy Court for the Southern District of Florida, comes less than two months after a mortgage lender filed a foreclosure lien against the hotel owners. Hollywood-based A&D Mortgage LLC, as servicer of Imperial Fund I LLC, filed a lis pendes countersuit against the hotel's property owners in mid-December, according to court documents. A&D Mortgage issued an $11 million loan to the companies led by Gnesin in 2017. Monika Siwiec, of Boca Raton-based the Gibson Law Firm P.A., represented the plaintiff in the lis pendes. About Royal Beach Palace MY FL Management LLC, owns Royal Beach Palace, a hotel located in the residential Lauderdale-by-the-Sea, about a 10-minute walk to the beach. Fort Lauderdale, Florida-based MY FL Management LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 21-11028) on Feb. 2, 2021. The Debtor estimated assets and debt of $1 million to $10 million as of the bankruptcy filing. EDELBOIM LIEBERMAN REVAH OSHINSKY PLLC, led by Brett Lieberman, is the Debtor's counsel. NATIONAL VISION: Moody's Raises CFR to Ba3 on Strong Sales ---------------------------------------------------------- Moody's Investors Service upgraded National Vision, Inc.'s (NVI) corporate family rating to Ba3 from B1 and probability of default rating to Ba3-PD from B1-PD. Concurrently, Moody's upgraded the senior secured bank credit facilities ratings to Ba2 from Ba3. The speculative grade liquidity rating was upgraded to SGL-1 from SGL-3 and the outlook remains stable. The upgrades reflect NVI's strong comparable sales and earnings growth following the reopening of its stores, which significantly outperformed Moody's earlier forecast. The SGL upgrade also reflects Moody's expectation for very good liquidity over the next 12-18 months, including high cash balances, modestly positive free cash flow, and full availability under the $300 million revolver. Moody's took the following rating actions for National Vision, Inc.: Corporate Family Rating, upgraded to Ba3 from B1 Probability of Default Rating, Upgraded to Ba3-PD from B1-PD Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-3 Senior Secured Bank Credit Facility, Upgraded to Ba2 (LGD2) from Ba3 (LGD3) Outlook, Remains Stable RATINGS RATIONALE National Vision's Ba3 CFR benefits from its operations in the stable and growing optical retail industry and the company's position as a value player, which further supports the recession-resilient nature of the business. Moody's expects NVI to continue to gain share from independent optometrists, due to its store expansion, attractive value proposition, ongoing investments in labs and technology, and growing vision insurance coverage. The company has executed well on its growth strategy, as demonstrated in its track record of consistent comparable sales and EBITDA growth for the past 17 years prior to the coronavirus pandemic. NVI's very good liquidity also supports its credit profile. In addition, the rating incorporates governance considerations, specifically the company's financial strategy, which aims to balance the use of cash flow for store expansion with the maintenance of a moderate leverage ratio. At the same time, the credit profile is constrained by NVI's small scale compared to other rated retailers and its supplier and customer concentration. While credit metrics have weakened due to pandemic-driven store closures and the 2020 debt raise, Moody's expects significant earnings growth to drive material improvement over the next 12 -18 months. Moody's projects debt/EBITDA to decline to 4.1 times from 4.8 and EBIT/interest expense to increase to 2.4 times from 1.4 times. In Moody's view, the long-term customer shift to e-commerce across retail will lead to increased pricing pressure and investment needs over time in the value eyeglass retail segment, which has been relatively resistant to online growth. In addition, as a retailer, National Vision needs to make ongoing investments in social and environmental factors including responsible sourcing, product and supply sustainability, privacy and data protection. The stable outlook reflects Moody's expectations for solid earnings growth and very good liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if revenue scale increases, earnings growth continues and the company demonstrates financial strategies that sustain debt/EBITDA below 3.5 times and EBITA/interest expense above 3 times. An upgrade would also require an expectation for continued very good liquidity. The ratings could be downgraded if operating performance or liquidity weakens, or if the company engages in debt-funded acquisitions or shareholder distributions. Quantitatively, the ratings could be downgraded if debt/EBITDA is sustained above 4.5 times. National Vision, Inc. (National Vision, NASDAQ: EYE), headquartered in Duluth, Georgia, is a US optical retailer with a focus on low price-point eyeglasses and contacts. As of September 26, 2020, the company operated over 1,100 locations, including its own retail chains of America's Best Contacts and Eyeglasses and Eyeglass World, as well as at host stores including Wal-Mart, Fred Meyer and US military bases. The company also sells contact lenses online. Revenues for the twelve months ended September 26, 2020 were approximately $1.6 billion. The principal methodology used in these ratings was Retail Industry published in May 2018. NEELKANTH HOTELS: Wins April 28 Plan Exclusivity Extension ---------------------------------------------------------- Judge Jeffery W. Cavender of the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division extended the periods within which Debtor Neelkanth Hotels, LLC has the exclusive right to file a Chapter 11 plan through and including April 28, 2021, and to obtain acceptances of the plan through and including June 27, 2021. The Debtor operates a hotel in Conyers, Georgia and, like many businesses, Debtor's business has been significantly impacted in 2020 due to the COVID-19 pandemic. In particular, the Debtor's sales volumes were depressed in 2020 in large measure as a result of the COVID-19 pandemic, harming the Debtor's profitability and ability to timely meet debt obligations. Given the FDA's recent approval of a COVID-19 vaccine and the anticipated approval of other COVID-19 vaccines, the Debtor reasonably believes sales volumes will increase in 2021 and that it will be able to generate greater cash flow with which to reorganize; however, because the COVID-19 vaccine has only recently been released, and because the Debtor's sales volume is usually lower in winter months in any event, the Debtor is not yet able to project accurately how quickly its sales volume will return to normal levels. Without accurate projections of sales, it would be difficult to create and propose a definitive plan of reorganization in this case that will be acceptable to creditors. Moreover, the Debtor has objected to the proof of claim of its largest creditor, U.S. Bank National Association, by and through Midland Loan Services as Special Servicer; however, Midland has requested that an evidentiary hearing not be set on that objection to claim, in order to allow the Debtor and Midland to attempt to stipulate to relevant facts. A resolution of the claim objection is necessary and desirable in order to formulate a definitive plan of reorganization. As a single asset real estate entity, the Debtor has been making monthly payments in accordance with the provisions of 11 U.S.C.§ 362(d)(3)(B). In addition, the Debtor's United States Trustee reports and fees are current. A copy of the Debtor's Motion to extend is available from PacerMonitor.com at https://bit.ly/3ap3XIF at no extra charge. A copy of the Court's Extension Order is available from PacerMonitor.com at https://bit.ly/3pEYbcz at no extra charge. About Neelkanth Hotels LLC Neelkanth Hotels, LLC is a privately held company in the traveler accommodation industry. It is a single asset real estate (as defined in 11 U.S.C. Section 101(51B)). Neelkanth Hotels filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-69501) on August 31, 2020. In the petition signed by Hemant Thaker, member and manager, the Debtor estimated $1 million to $10 million in both assets and liabilities. Judge Jeffery W. Cavender oversees the case. Schreeder, Wheeler & Flint, LLP is the Debtor's legal counsel. NORTHERN OIL: Fitch Assigns First-Time 'B' LongTerm IDR ------------------------------------------------------- Fitch Ratings has assigned a first-time Long-Term Issuer Default Rating (IDR) of 'B' with a Stable Outlook to Northern Oil & Gas, Inc. (NOG). Fitch has assigned issue-level ratings of 'BB'/'RR1' and 'B'/'RR4' to NOG's reserve-based lending credit facility (RBL) and proposed senior unsecured notes, respectively. Proceeds from the notes will be used to partially fund the Appalachia transaction, reduce borrowings under the RBL, refinance the company's existing second-lien and VEN Bakken notes, and general corporate purposes. NOG's ratings reflect its non-operated status providing capital deployment and well participation flexibility as the expansion into the Appalachia helps add material production and proved developed producing reserves (PDP) size, basin, operator and hydrocarbon diversification. The ratings also consider relatively unique non-operated governance protections, a rolling 18-month, systematic hedging program, forecast Fitch base case sub-2.5x leverage profile, and the expectation of positive FCF generation with a prioritization of RBL repayment. Fitch believes management's risk and treasury management process, including its hedging program, well participation hurdle rates, and M&A return requirements, complements its business model by moderating price, investment and cash flow risks. Fitch recognizes, however, the company's current RBL utilization is elevated and the borrowing base is subject to price fluctuations, which heightens overall liquidity risks. The borrowing base, consisting of at least 85% of proved reserves (1P), exhibited a downward revision in July 2020, currently $660 million compared with originally $800 million. Fitch recognizes the announced Appalachia transaction and recent market pricing strength, and a historical 50%-60% PDP mix, helps offset further revision risk. Another consideration is NOG's lack of operatorship introducing production, cost, and capex risks, but its existing and to be acquired PDP reserves, portfolio of undeveloped non-operating wells, and well participation flexibility help offset these risks. KEY RATING DRIVERS Credit Conscious, Diversifying Transaction: Fitch views NOG's Appalachia transaction favorably, given the credit-conscious funding mix, incremental size and diversification, and relatively unique non-op governance protections. The transaction is approximately 65% equity-funded through the proposed common equity issuance and the proposed notes issuance will allow for repayment of existing debt to simplify the capital structure. This creates a clear maturity runway through the RBL maturity date of 2024. The assets add approximately 109 million cubic feet equivalent per day of gas production, 273 billion cubic feet of PDP reserves, and non-operated interests in approximately 94 work-in-progress wells expected to be completed in 2021-2024 through the Participation and Development Agreement (JDA) and Joint Development Agreement (JDA) with EQT Corporation (BB/Positive). The expansion into the Marcellus also improves hydrocarbon and basin diversification allowing for some incremental investment optionality through commodity price fluctuations. Favorable Capital Deployment Flexibility: Fitch believes NOG's flexibility with well participation and capex, in conjunction with its treasury and risk management processes, allows for economic-driven decisions and supports overall returns and cash flows. The company retains the ability to decline participation in uneconomic or lower return wells, even within a multi-well, multi-reservoir development in some cases, to help optimize returns. As a non-operator, NOG does not have rig, drilling or midstream contracts and has no personnel at the field level, which limits corporate operational and financial obligations, brings lower per-unit general and administrative costs. NOG has historically maintained a solid PDP mix of around 50%-60% given its track record of relatively consistent new well development through price cycles. Favorable Liquidity, Capital Management: NOG's ongoing working relationship with its operators and the long lead times from initial new well development evaluation, investment decision, and funding provide visibility on future capital needs and, in conjunction with its hedging policy, help reduce overall liquidity risk despite the inability to control well timing and completion. The company is typically provided budgets/development plans from its operators a year in advance from the start of a new well providing considerable time to manage capital flows with existing and future production. NOG is generally not a user of working capital and typically receives the revenues from a new well prior to when opex costs are paid, which helps moderate overall liquidity risks. Fitch views these characteristics favorably and does not forecast material near-term liquidity needs in the base case. 18-Month Rolling Hedge Program: NOG historically maintained a strong hedge book and expects to hedge approximately 65% of total production on a rolling 18-month basis going forward. The company has approximately 66% of oil production hedged at an average price of $55 per barrel (bbl) in 2021 and plans to add incremental gas hedges for approximately 75% of the acquisition-related gas production for the next three years by mid-2021. Fitch believes NOG's hedge book supports future cash flows and repayment of the RBL. Positive FCF, Sub-2.5x Leverage: Fitch's base case forecasts positive FCF generation of approximately $50 million-$150 million per year over the rating horizon due to a combination of assumed improving hydrocarbon prices, the company's rolling hedge program and low-to-mid single-digit growth-linked capex. Fitch forecasts NOG's capital program to be around $250 million in 2021 and increasing toward $275 million in 2022. Fitch-calculated gross debt/EBITDA is forecast to remain below 2.5x over the rating horizon given the company's pro forma debt and prioritization of FCF toward reducing RBL borrowings. DERIVATION SUMMARY NOG is a leading non-operator exploration and production (E&P) company focused in the Williston and the Appalachia following the transaction with pro forma 2021F production of approximately 59 thousand barrels of oil equivalent per day (mboepd). The production size is larger than non-operated, mineral and royalty interest owner Viper Energy Partners, LP (BB-/Stable; 26.4mboepd) and Permian operator Double Eagle III Midco (B/Positive; 45.8mboepd) at 3Q20, although Double Eagle is expected to materially increase scale in the near-term. NOG does remain smaller than gas-focused peer Aethon United BR LP (B/Stable; 137mboepd expected as of YE 2021) and Permian operator CrownRock, L.P. (B+/Positive; 76.7mboepd). In terms of cost structure, NOG's Fitch-calculated unhedged cash netback of $9.10 per barrel of oil equivalent (boe) (33% margin) is weaker than Viper ($19.60/boe; 76% margin), and generally lower than Midland-focused operators Double Eagle and CrownRock, given their peer-leading cost structures, but stronger than Aethon ($2.82/boe; 31% margin). As a mineral and royalty interest owner, Viper has minimal operating costs and no capex, which results in netbacks that are generally among the highest of Fitch's E&P peer group. Viper's IDR receives a one notch uplift given its significant operational and strategic ties with its higher-rated parent Diamondback Energy, Inc. (BBB/RWN), which provides unique visibility into future development plans reducing volumetric and cash flow uncertainty. On a debt/EBITDA basis, Fitch expects NOG to maintain a sub-2.5x leverage profile as it allocates FCF toward repayment of the RBL. This is in line with the 'B' category peers which typically see leverage oscillate between 2.0x and 3.0x on a mid-cycle basis. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- West Texas Intermediate (WTI) prices of $42.00/bbl in 2021, $47.00/bbl in 2022, and $50.00/bbl in 2023, and thereafter, respectively; -- Henry Hub prices of $2.45 per thousand cubic feet (mcf) in 2021 and beyond; -- Appalachia transaction assumed to close in 2Q20; -- Completion of the senior unsecured bond offering; -- Transaction-linked production growth in 2021 followed by low to-mid-single digit growth thereafter; -- Capex of $250 million in 2021 and stabilizing at around $275 million in 2022 and beyond; -- Prioritization of forecast FCF toward repayment of the RBL. RATING SENSITIVITIES Factors that could, individually or collectively, lead to a positive rating action/upgrade: -- Consistent FCF generation with proceeds used to reduce outstanding RBL borrowings that leads to mid-cycle debt/EBITDA or FFO leverage sustained below 2.0x; -- Establishment of a more substantial PDP wedge that leads to PDP reserves/production of around seven years and total production sustained at around 85mboepd; -- Continued track record of favorable risk management that leads to financial flexibility and maintenance of proved undeveloped (PUD) opportunities leading to PUD reserves/production of around four years. Factors that could, individually or collectively, lead to a negative rating action/downgrade: -- Inability to generate FCF and reduce outstanding RBL borrowings that leads to mid-cycle debt/EBITDA or FFO leverage sustained above 3.0x; -- Erosion of the PDP wedge that leads to PDP reserves/production of around three years and total production sustained below 50mboepd; -- Limited financial flexibility and a decline in PUD opportunities that limits future production growth potential. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Pro forma the transaction, NOG is expected to have approximately $136 million of borrowing capacity under the $660 million RBL facility. The RBL is subject to a semi-annual borrowing base redetermination in addition to financial covenants, including a maximum total net leverage ratio of below 3.50x and a minimum current ratio of at least 1.0x. The borrowing base, consisting of at least 85% of 1P reserves, exhibited a downward revision in July 2020 and is currently $660 million compared with originally $800 million, but Fitch recognizes that the announced Appalachia transaction and recent market pricing strength, and a historical 50%-60% PDP mix, helps offset further revision risk. Fitch does not see material near-term liquidity needs, given the company's operational and liquidity flexibility and believes NOG's forecast FCF generation supports repayment of the RBL. Clear Maturity Profile: Pro forma the transaction and unsecured notes issuance, NOG's maturity schedule remains light with no maturities until the RBL and senior unsecured notes come due in 2024 and 2028, respectively. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that NOG would be reorganized as a going-concern (GC) in bankruptcy rather than liquidated. GC Approach -- Fitch assumed a bankruptcy scenario exit EBITDA of $275 million. This estimate considers a prolonged commodity price downturn of $32/WTI and $1.65/mcf gas lows in 2021, increasing to $37/bbl WTI and $2.00/mcf gas in 2022, coupled with a combination of prolonged, unexpected production shut-ins, new well/PDP underperformance, higher operating expenses per boe, or working capital delays causing lower than expected production and borrowing base-linked liquidity constraints. -- The GC EBITDA assumption reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon, which we base the enterprise valuation, which reflects the decline from current pricing levels to stressed levels and then a partial recovery coming out of a troughed pricing environment. Fitch believes a weakened pricing environment will weaken the production profile and PDP reserve growth, reduce the borrowing base availability and materially erode the liquidity profile. -- An EV multiple of 3.5x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considered the following factors: -- The historical bankruptcy case study exit multiples for peer companies ranged from 2.8x-7.0x, with an average of 5.2x and a median of 5.4x. -- The multiple also reflects NOG's multi-basin, diversified portfolio of non-operated working interests with only a few potential buyers in addition to the natural gas-oriented Reliance joint venture acquisition multiple of approximately 3.0x. -- These assumptions lead to an enterprise value of approximately $963 million, greater than the liquidation valuation. Liquidation Approach -- The liquidation estimate reflects Fitch's view of the value of the company's E&P assets that can be realized in sale or liquidation processes conducted during a bankruptcy or insolvency proceeding and distributed to creditors. Fitch used NOG's recent transactions and historical third-party, non operated transaction data for both the Williston and Appalachia assets on a $/bbl, $/1P, $/2P, $/acre and PDP PV-10 basis to attempt to determine a reasonable sale. -- The RBL is assumed to be 100% drawn given the currently high utilization and lower likelihood of further negative redetermination in a sustained low-price environment given recent reductions. -- Fitch valued the oil & natural gas assets at approximately $950 million. -- The allocation of value in the liability waterfall results in recoveries corresponding to 'RR1' for the senior secured RBL and 'RR4' for the senior unsecured notes. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of Environmental, Social and Corporate Governance (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. NORTHWEST FIBER: Moody's Rates New $500MM First Lien Loan 'Ba3' --------------------------------------------------------------- Moody's Investors Service has affirmed Northwest Fiber, LLC's B2 corporate family rating and B2-PD probability of default rating; the company does business as Ziply Fiber. Moody's has also assigned a Ba3 rating to the company's new $500 million first lien senior secured term loan B due 2027 and upgraded the company's existing $100 million revolver to Ba3 from B1. The net proceeds from the proposed term loan issuance will be used in conjunction with other debt to fully refinance the company's existing $787 million term loan B due 2027. Moody's also affirmed the Caa1 rating on the company's existing $250 million senior unsecured notes due 2028. The outlook remains stable. Affirmations: Issuer: Northwest Fiber, LLC Probability of Default Rating, Affirmed B2-PD Corporate Family Rating, Affirmed B2 Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5) from (LGD6) Upgrades: Issuer: Northwest Fiber, LLC Senior Secured 1st Lien Revolving Credit Facility, Upgraded to Ba3 (LGD2) from B1 (LGD3) Assignments: Issuer: Northwest Fiber, LLC Senior Secured 1st Lien Term Loan, Assigned Ba3 (LGD2) Ratings Unaffected: Issuer: Northwest Fiber, LLC Senior Secured 1st Lien Term Loan, B1 (LGD3) Outlook Actions: Issuer: Northwest Fiber, LLC Outlook, Remains Stable RATINGS RATIONALE RATINGS RATIONALE Northwest Fiber's B2 CFR reflects governance considerations, specifically Moody's expectation that the company's financial policy includes a significant capital investing strategy to gain market share through telecom infrastructure upgrades which Moody's expects will result in debt leverage increasing to a peak level of 4.2x in 2021 on a Moody's adjusted basis. The company's credit profile also reflects its modest scale, secular pressures in legacy copper-based portions of its ILEC network as evidenced by multi-year declines in revenue due to voice and DSL customer attrition, and the presence of large-scale cable and telecom companies providing competitive services to residential and commercial customers across its markets. These weaknesses are offset by the expected higher population growth in Northwest Fiber's pacific northwest markets versus the US average and more compelling fiber overlay economics given the company's footprint concentration in relatively dense, high income suburbs. The company has an existing core fiber network that serves about 30% of premises out of about 1.7 million premises passed. Northwest Fiber plans to upgrade another nearly 900,000 premises to fiber (approximately 75% of the premises currently served by copper infrastructure). Of this nearly 900,000 to be upgraded premises, about 330,000 premises, or 20% of all premises, are located within 200 feet of Northwest Fiber's existing fiber network and available for fiber-to-the-premise (FTTP) upgrades with relatively short payback periods. Northwest Fiber also believes it can upgrade the remaining approximately 570,000 premises at attractive returns on invested capital. Northwest Fiber benefits from a management team with extensive experience operating broadband-centric businesses and building and upgrading fiber network infrastructure. In addition to achieving steady penetration growth through its pre-funded buildout activity, Northwest Fiber has the potential to improve upon previously undermanaged legacy fiber operations and raise low ARPUs and expand currently weak 28% broadband penetration levels to fair share levels of near 40% by 2026. Northwest Fiber's network is comprised of about 42,000 owned route miles and includes 8,900 fiber miles and 34,000 copper miles, as well as 130 network hub locations. The company's physical network locations include 208 central offices and over 1,100 remote site units. The company's four state-based markets -- Washington, Oregon, Idaho and Montana -- are interconnected through a multi-100 GB/s network utilizing owned and leased fiber connections. In about 95% of its markets, Northwest Fiber faces no more than one competitor comprised of either a cable or telecom operator. The company expects to be the only provider of FTTP broadband in its markets upon completion of its fiber buildout and upgrades. About 1/3rd of the company's capital spending over the next 5-6 years will be upgrade and expansion related, with around 50% tied to success-based FTTP customer installations. Any footprint expansion or tuck-in acquisitions would be contiguous to the existing footprint. Moody's expects Northwest Fiber to have good liquidity over the next 12 months. The company's $100 million revolving credit facility remains undrawn and balance sheet cash pro forma for this refinancing activity is estimated to be $313 million as of December 31, 2020. For 2021, Moody's forecasts Northwest Fiber generating negative free cash flow of about $160 million after accounting for high capital spending of about 60% of revenue. The revolver contains a springing maximum first lien net leverage covenant of 5x to be tested when 35% or more of the revolver is outstanding at the end of each quarter. The stable outlook reflects Moody's view that Northwest Fiber benefits from fully planned and pre-funded capital investing actions to upgrade networks, and that leverage (Moody's adjusted) will peak at slightly above 4x during an upfront-loaded buildout planned over the next two years. FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS: Given the company's current competitive positioning and network upgrade execution risks, upward pressure is limited but could develop should Northwest Fiber's Moody's adjusted debt/EBITDA decrease to below 4x on a sustainable basis on the back of a successful implementation of the company's strategy to increase penetration across its existing footprint and grow EBITDA. An upgrade would also require the company to maintain a good liquidity profile. Downward pressure on the rating could arise should Moody's adjusted debt/EBITDA increase above 5x on a sustained basis or should the company's liquidity deteriorate or should execution of its growth strategy materially slow below budgeted expectations. The principal methodology used in these ratings was Telecommunications Service Providers published in January 2017. Headquartered in Kirkland, Washington, Northwest Fiber operate a copper and fiber communications network, passing 1.7 million total premises consisting of residential premises, located mainly in high density markets in Washington, Oregon, Idaho and Montana as well as commercial premises, located primarily in Washington and Oregon. NORTHWEST FIBER: S&P Rates New $500MM First-Lien Term Loan B 'B+' ----------------------------------------------------------------- S&P Global Ratings assigned its 'B+' issue-level and '1' recovery ratings to Kirkland, Wash.-based telecommunications service provider Northwest Fiber LLC's (doing business as Ziply Fiber) proposed $500 million first-lien term loan B due 2027. The '1' recovery rating indicates its expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of payment default. The company will use proceeds from the term loan, along with new unsecured debt raised in a subsequent transaction, to repay its $787 million first-lien senior secured term loan B and to pay related fees and expenses. S&P said, "At the same time, we raised our issue-level rating on Ziply's existing $100 million revolving credit facility due 2025 to 'B+' from 'B' and revised the recovery rating on this debt to '1' from '2'. We also raised our issue-level rating on Ziply's $250 million of existing unsecured notes due 2028 to 'CCC+' from 'CCC' and revised our recovery rating to '5' from '6'. The '5' recovery rating indicates our expectation for modest (10%-30%; rounded estimate: 15%) recovery in the event of a payment default." Pro forma for the debt repayment, Ziply's total first-lien debt will be reduced by about $287 million, which improves the recovery prospects for the holders of both the first-lien and unsecured debt because of the lower first-lien debt outstanding and the higher pledged value available to unsecured creditors. S&P plans to withdraw its 'B' issue-level and '2' recovery ratings on the existing first-lien term loan once it is repaid. S&P said, "Because the transaction does not affect Ziply's credit metrics, our 'B-' issuer credit rating and stable outlook on the are unchanged. Furthermore, we view the transaction favorably because it will lower the company's interest expense and improve longer-term prospects to generate positive free operating cash flow." NORTONLIFELOCK INC: Moody's Completes Review, Retains Ba2 CFR ------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of NortonLifeLock Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations NortonLifeLock, Inc.'s Ba2 corporate family rating reflects the company's leading position in the consumer security software market, strong EBITDA margins and solid free cash flow generation. The company's position is supported by its Norton branded products in consumer security software and its LifeLock products in identity protection. The credit profile is constrained by NortonLifeLock's moderately high leverage and equity shareholder-based financial policy. Moody's expects the company to prioritize share buybacks and acquisitions, as well as maintaining its regular quarterly dividend program. The principal methodology used for this review was Software Industry published in August 2018. OPEN TEXT: Moody's Completes Review, Retains Ba1 CFR ---------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Open Text Corp. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Open Text's Ba1 Corporate Family Rating reflects its leading position in the large Information Management software market, a high proportion of recurring revenues, strong profitability, and Moody's expectations for free cash flow of over 20% of Moody's adjusted total debt. The company continues to shift its business toward cloud-computing and subscription-based software sales. Open Text operates in highly competitive software markets and Moody's expects modest organic growth as the company generates a large share of revenues from mature products. The company's acquisition growth strategy will continue to periodically increase leverage but management has a long track record of integrating acquisitions, increasing profitability, and deleveraging after acquisitions. The Ba1 rating incorporates Moody's expectations for balanced financial policies and total debt to EBITDA (Moody's adjusted) below the mid 3x level. The principal methodology used for this review was Software Industry published in August 2018. OPTION CARE: Moody's Completes Review, Retains B2 CFR ----------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Option Care Health, Inc and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Option Care Health, Inc.'s B2 CFR reflects the company's high financial leverage and competitive pressures from large, vertically-integrated insurers possessing their own home infusion providers. The rating is further constrained by a challenging reimbursement environment. The rating is supported by Option Care's solid scale and market position in the fragmented home infusion services market as well as meaningful barriers to entry and rising demand for home infusion services. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. OPTIV INC: Moody's Completes Review, Retains Caa1 CFR ----------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Optiv Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Optiv Inc.'s Caa1 corporate family rating reflects the company's high leverage, limited free cash flow and challenges meeting industry growth rates. Moody's expects modest growth in gross revenues. Additionally, the company's financial policy will likely remain aggressive under private equity ownership. Nonetheless, Moody's anticipates that Optiv will remain a leading supplier of security solutions. Optiv benefits as a leading supplier of security solutions and operating as one of the largest value-added reseller and system integrator of security software and related services. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. OUTLOOK THERAPEUTICS: Launches $10M Bought Deal Stock Offering -------------------------------------------------------------- Outlook Therapeutics, Inc. has entered into an underwriting agreement with H.C. Wainwright & Co., LLC under which the underwriter has agreed to purchase on a firm commitment basis 10,000,000 shares of common stock of Outlook Therapeutics, at a price to the public of $1.00 per share, less underwriting discounts and commissions. H.C. Wainwright & Co. is acting as the sole book-running manager for the offering. Outlook Therapeutics also has granted to the underwriter a 30-day option to purchase up to an additional 1,500,000 shares of common stock at the public offering price, less underwriting discounts and commissions. The gross proceeds to Outlook Therapeutics, before deducting underwriting discounts and commissions and offering expenses and assuming no exercise of the underwriter's option to purchase additional common stock, are expected to be approximately $10 million. Outlook Therapeutics intends to use the net proceeds from the offering for working capital and general corporate purposes, including in support of its ONS-5010 development program. The shares of common stock are being offered by Outlook Therapeutics pursuant to a base shelf registration statement on Form S-3 (File No. 333-231922) originally filed with the Securities and Exchange Commission on June 3, 2019 and declared effective by the SEC on June 26, 2019. The offering of the shares of common stock is being made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. A preliminary prospectus supplement and accompanying prospectus relating to, and describing the terms of, the offering will be filed with the SEC and will be available on the SEC's website at http://www.sec.gov. Electronic copies of the preliminary prospectus supplement and accompanying prospectus may also be obtained, when available, by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York, NY 10022, by telephone at (646) 975-6996 or e-mail at placements@hcwco.com. About Outlook Therapeutics Outlook Therapeutics, Inc., formerly known as Oncobiologics, Inc. -- http://www.outlooktherapeutics.com-- is a late clinical-stage biopharmaceutical company working to develop the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications, including wet AMD, DME and BRVO. If ONS-5010, its investigational ophthalmic formulation of bevacizumab, is approved, Outlook Therapeutics expects to commercialize it as the first and only on-label approved ophthalmic formulation of bevacizumab for use in treating retinal diseases in the United States, Europe, Japan and other markets. Outlook Therapeutics reported a net loss attributable to common stockholders of $48.87 million for the year ended Sept. 30, 2020, compared to a net loss attributable to common stockholders of $36.04 million for the year ended Sept. 30, 2019. As of Sept. 30, 2020, the Company had $19.73 million in total assets, $16.91 million in total liabilities, and $2.82 million in total stockholders' equity. KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor since 2015, issued a "going concern" qualification dated Dec. 23, 2020, citing that the Company has incurred recurring losses and negative cash flows from operations since its inception and has an accumulated deficit of $289.7 million as of Sept. 30, 2020 that raise substantial doubt about its ability to continue as a going concern. PADDOCK ENTERPRISES: Seeks May 3 Plan Exclusivity Extension ----------------------------------------------------------- Debtor Paddock Enterprises, LLC asks the U.S. Bankruptcy Court for the Southern District of Delaware, to extend the Debtor's exclusive period to file a Chapter 11 plan through and including May 3, 2021, and to solicit acceptances from April 5 through and including July 5, 2021. Over the past several months, and despite the practical and logistical limitations of negotiating due to the COVID-19 pandemic, the Debtor has been engaged in various negotiations with the Asbestos Personal Injury Claimants ("ACC") and Future Asbestos Claimants ("FCR"), including telephonic and virtual meetings, to develop a framework for a consensual plan. While meaningful progress has been made, certain key issues remain outstanding that must be resolved in order to formulate a plan that addresses the Debtor's asbestos-related liabilities. Accordingly, at this juncture, the Debtor, the ACC, and the FCR have determined that engaging in a consensual mediation is the optimal path to further advance negotiations toward a consensual resolution. The Debtor intends to file additional information on this first week of February with respect to the terms of the mediation in connection with the request for court approval of the proposed mediation process. Additionally, the Debtor has also been engaged with certain governmental authorities regarding the status and expected treatment of its legacy environmental liabilities in the Chapter 11 Case, including participating in an informal information exchange with certain federal and state agencies. The Debtor intends to continue these discussions and the exchange of relevant information in the coming weeks and months. While the Debtor remains committed to progressing the Chapter 11 Case and emerging from bankruptcy as soon as practicable, it requires additional time to negotiate and fully pursue a consensual restructuring. Termination of the Exclusive Periods could deprive the Debtor of a present opportunity to build on the progress of the past several months and achieve a consensual resolution to the Chapter 11 Case. Such termination could alter creditors' willingness to negotiate with the Debtor and disrupt ongoing discussions, including the proposed mediation process. A copy of the Debtor's Motion to extend is available from PacerMonitor.com at https://bit.ly/3pzgcsC at no extra charge. About Paddock Enterprises Paddock Enterprises, LLC's business operations are exclusively focused on (i) owning and managing certain real property and (ii) owning interests in, and managing the operations of, its non-debtor subsidiary, Meigs, which is developing an active real estate business. It is the successor-by-merger to Owens-Illinois, Inc., which previously served as the ultimate parent of the company. Paddock Enterprises is a direct, wholly-owned subsidiary of O-I Glass. Paddock Enterprises sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 20-10028) on January 6, 2020. At the time of the filing, Debtor disclosed assets of between $100 million and $500 million and liabilities of the same range. Judge Laurie Selber Silverstein oversees the case. The Debtor tapped Richards, Layton & Finger, P.A. and Latham & Watkins LLP as legal counsel; Alvarez & Marsal North America, LLC as financial advisor; and Prime Clerk, LLC as claims, noticing and solicitation agent and administrative advisor. James L. Patton Jr. was approved by Court to be the Debtor's legal representative for future asbestos injury claimants. PANDA STONEWALL: S&P Lowers Senior Secured Debt Rating to 'CCC+' ---------------------------------------------------------------- S&P Global Ratings lowered its senior secured debt rating on Panda Stonewall LLC's $500 million term loan to 'CCC+' from 'B-', based on proximity to its maturity. S&P's '2' recovery rating is unchanged. Stonewall is 778-megawatt (MW) power plant that has been operational since 2017. Stonewall sells its power into Pennsylvania-New Jersey-Maryland Interconnection's (PJM) Dominion zone. Near-term refinancing risk is high. Stonewall's $500 million term loan B ($485 million outstanding as of Sept. 30, 2020) matures in November 2021. Without a refinancing, the project will default on its debt. Although S&P believes the project's underlying operational performance supports a sustainable capital structure, the upcoming maturity means Stonewall depends on favorable business, financial, and economic conditions to meet its financial obligations. S&P said, "We believe some type of sale is likely. In the past year, Panda Power Funds, Stonewall's owner, sold three rated projects, all of which were combined-cycle natural gas plants of a similar vintage to Stonewall, that were in financial distress. In June 2020, it sold Panda Patriot and Panda Liberty to a partnership of Carlyle Power Partners II L.P. and EIG Management Co. LLC, which then recapitalized the projects with new equity and debt. In October 2020, Panda Power Funds sold Panda Hummel Station to LS Power. "Following these transactions, we believe Panda Power Funds could sell at least some portion of Stonewall. Such a sale would likely improve the project's ability to refinance its debt, whether by receiving new equity, or by improving lenders' views of the operational capabilities of the project's ownership. We have no knowledge of any pending sale, and we base our assessment that some sort of sale is likely solely on our own views. "Operational and market risks remain elevated. Our base-case forecast--which assumes a successful refinancing of Stonewall's term loan B at its current interest rate--has improved since our rating action in April 2020. We now anticipate a minimum debt-service coverage ratio (DSCR) of 1.21x (in March 2022) with an average DSCR of 1.46x over the life of the asset. However, these metrics are still relatively weak, and they indicate that operational and market risks remain elevated. The project's market risk is further increased by our expectation for Stonewall's HRCOs, which can hedge against a period of weak power prices, to not be renewed after they roll off in May 2021. While we expect Stonewall will eventually re-hedge its power price exposure, the project will be fully merchant for some time, which increases exposure to further declines in power prices and could lead to sudden declines in financial performance. "We see multiple potential rating paths over the next several months, as reflected in our developing outlook. We base this view upon the binary nature of the upcoming term loan maturity: Either Stonewall will successfully refinance its debt or it will not. A successful refinancing would place upward pressure on the rating. This is particularly true because--outside of the looming maturity and the potential liquidity crisis it could cause--we do not view Stonewall's capital structure as necessarily unsustainable. On the other hand, if Stonewall cannot refinance over the spring and summer, we would lower the rating further. Lastly, the rating could remain the same. Although unlikely, Stonewall could refinance, but on more stringent terms, such that we do not view the project's capital structure to be sustainable over the long term. "The developing outlook reflects the possibility for multiple rating paths over the next several months. We could raise the rating if Stonewall successfully refinances its outstanding debt on acceptable terms, such that we believe the project's capital structure is sustainable over the long term. If Stonewall does not announce a credible refinancing plan over the next few months, we will likely lower the rating again. "We would consider a downgrade if Stonewall's maturity is due within six months and the project has still not completed a refinancing. "A successful refinancing would put upward pressure on the rating. Following a successful refinancing, we would reevaluate the sustainability of Stonewall's capital structure to inform our rating." As vaccine rollouts in several countries continue, S&P Global Ratings believes there remains a high degree of uncertainty about the evolution of the coronavirus pandemic and its economic effects. Widespread immunization, which certain countries might achieve by midyear, will help pave the way for a return to more normal levels of social and economic activity. S&P said, "We use this assumption about vaccine timing in assessing the economic and credit implications associated with the pandemic. As the situation evolves, we will update our assumptions and estimates accordingly." PEABODY ENERGY: S&P Downgrades ICR to 'SD' on Distressed Exchange ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based coal producer Peabody Energy Corp. to 'SD' (selective default) from 'CC' and its issue-level rating on its 2022 notes to 'D' from 'CC'. S&P expects to raise its issuer credit rating on Peabody to 'CCC+' in the coming days based on its conventional assessment of its default risk. S&P said, "The downgrade follows the company's completion of an exchange offer for its 2022 notes that we viewed as a distressed debt exchange and tantamount to a default. Following the transaction, the nonparticipating lenders of the 2022 notes will rank junior to the lenders that exchanged their notes in Peabody's capital structure. As such, the nonparticipating lenders will be stripped of the collateral securing their notes, which will become unsecured obligations of the company. The nonparticipating lenders represent about 13.1% of the 2022 notes, which we deem to be a material amount of the notes outstanding, based on the final tender results. "We do not consider the revolving credit facility exchange offer to be a distressed debt transaction because the lenders will receive adequate compensation. In conjunction with the 2022 notes exchange, Peabody received 100% participation from its revolving facility lenders to exchange and extend the maturity of the facility and eliminate the net leverage covenant. The compensation the company is providing, which we consider adequate, includes an at-par exchange for new securities with a higher interest rate." PENNYMAC FINANCIAL: S&P Upgrades ICR to 'BB-', Outlook Stable ------------------------------------------------------------- S&P Global Ratings upgraded PennyMac Financial Services Inc.'s issuer credit rating to 'BB-' from 'B+'. The outlook is stable. At the same time, S&P raised its rating on the company's senior unsecured notes to 'BB-' from 'B+'. The recovery rating remains '3'. The '3' recovery rating indicates its expectation for meaningful (50%-70%; rounded estimate: 55%) recovery for lenders in the event of a payment default. S&P said, "We expect PennyMac will finish 2020 with record EBITDA levels and leverage as measured by adjusted debt to EBITDA of approximately 1.0x. Further, the stability of the company's financial position was on full display in 2020 as the company's mortgage servicing rights (MSR) hedges drastically improved the company's performance. In our view, the company's decision to hedge its MSR portfolio is a significant credit positive and provides substantial stability to the company's balance sheet. "Our base-case expectation assumes that as refinance volume declines and gain-on-sale margins eventually compress to more normalized levels, the company will still operate with leverage between 1.0x-2.0x over the next 12 months. Over the longer term we expect the company will operate with leverage between 2.0x and 3.0x." As of Sept. 30, 2020, PennyMac had year-to-date originations of $127 billion unpaid principal balance (UPB), 42% of which came from purchases. For the nine months ended Sept. 30, 2020, PennyMac had accumulated approximately $1.1 billion in fair value decreases in its MSR portfolio due to changes in valuation inputs, while during the same period the company's associated hedges increased approximately $1 billion. S&P said, "We currently rate the company's senior unsecured notes in line with our issuer credit rating on the company. If the company's MSR portfolio were to substantially decline or if the company significantly increases its secured or unsecured corporate debt outstanding, we could lower the rating on the unsecured notes if the recovery expectations fall below 30%. "The stable outlook reflects our expectation that leverage as measured by debt to EBITDA will remain below 2x over the next 12 months and below 3.0x over the longer term. Our rating incorporates the expectation that EBITDA will remain somewhat volatile, which is partly offset by the strong cash flow from the company's servicing business and the company's associated hedging strategies. "We could lower the rating over the next 12 months if earnings deteriorate beyond expectations, if we expect the company to operate with leverage above 3.0x on a sustained basis, or if debt to tangible equity increases above 1.5x." S&P views an upgrade as unlikely at this time. PHILADELPHIA SCHOOL: Seeks June 10 Plan Exclusivity Extension ------------------------------------------------------------- Debtor Philadelphia School of Massage and Bodywork, Inc. asks the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, to extend by 90 days the exclusive period during which the Debtor may file a chapter 11 Plan through and including June 10, 2021. Issues stemming from the global pandemic continue to negatively impact Debtor's operations, and its ability to forecast its revenues with enough certainty to allow it to put forth a plan. Thus, the Debtor requests additional time to have better clarity on its business going forward. The Debtor believes that, if the exclusive period is extended as requested, the interests of the Debtor and its estate will be protected. Likewise, Debtor anticipates that the business closure and social distancing orders will be lifted by that time period to allow for the formulation of a plan. No harm or prejudice will inure to the creditors of the Debtor if the exclusivity period is extended. A copy of the Debtor's Motion to extend is available from PacerMonitor.com at https://bit.ly/39CdOvB at no extra charge. About Philadelphia School of Massage and Bodywork Philadelphia School of Massage and Bodywork, Inc. filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa. Case no. 20-13642) on September 10, 2020. Judge Eric L. Frank oversees the case. Danek Law Firm, LLC serves as the Debtor's legal counsel. PHILIRON INC: PC Mortgage's Plan Pushes Sale to Pay Off Claims -------------------------------------------------------------- PC Mortgage Funding Associates, a secured creditor, filed an Amended Plan and a Disclosure Statement for debtor Philiron, Inc. The principal assets of the Debtorare the adjoining commercial real properties located at 2 South Main Street, Port Chester, New York10573(Westchester County, Section 142.30, Block 2, Lot 53), 4 South Main Street, Port Chester, New York 10573 (Westchester County, Section 142.30, Block 2, Lot 52), 6 South Main Street, Port Chester, New York 10573 (Westchester County, Section 142.30, Block 2, Lot 51), and 8 South Main Street, Port Chester, New York 10573 (Westchester County, Section 142.30, Block 2, Lot 50)(collectively, the "Properties"). The Plan is a liquidating plan that contemplates the orderly liquidation of all property of the Debtor's estate and as such, the Plan does not entitle the Debtor to a discharge. The actual value of the Debtor's properties is not known at this time but will be determined at the auction. Plan Proponent believes the value of the Properties should be at least $3,500,000, which is the approximate amount of PC Funding's asserted Claim as of Dec. 31, 2020, which collectively constitutes the basis of the Credit Bid portion of the Opening Bid or backstop bid at the auction. To the extent that any portion of PC Funding's claim is disallowed, PC Funding shall make up in cash that disallowed portion of the Credit Bid portion of its Opening Bid or may reduce its Opening Bid by the disallowed portion of its Credit Bid. PC Funding's secured claim of $3,530,815 in Class 2 will recover 80% to 100% of its claims. If PC Funding is the Successful Bidder, the Properties will be transferred to PC Funding in full satisfaction of its Claim. If PC Funding is the winning bidder on its bid, it will pay from the cash component of its bid (i) all unclassified claims in full and (ii) will fund the Creditor Fund with up to $25,000. If PC Funding is outbid by a cash bidder, the unclassified claims and the Class 1, 2, and 3 Claims will be paid from the Sales Proceeds, plus available Cash, and proceeds of Causes of Action if any. Class 3 General Unsecured Claims will recover 1% to 100% of their claims. The Debtor did not schedule any unsecured claims. As of the date hereof, no creditor has filed a General Unsecured Claim. Class 4 interests will recover 0% to 100%. In the event PC Funding is the Successful Bidder and there are no Sales Proceeds for Distribution, then PC Funding shall fund the Creditor Fund in the amount of up to $25,000, plus available Cash, and proceeds of Causes of Action for Pro Rata Distributions within each Class to Class 1 first up to in full, and then Pro Rata to Allowed Claims in Class 3 up to in full. Class 4 Interests shall only receive a Distribution if Classes 1 – 3 are paid in full. All cash necessary for Debtor to make Distributions and payments required under the Plan to holders of allowed claims will be paid by the Plan Administrator from the proceeds of the Auction Sale of the Properties defined in the Plan as the "Sales Proceeds", and from the available Cash proceeds from the Properties, and/or from recoveries from Causes of Action as required. A full-text copy of the Amended Disclosure Statement dated February 1, 2021, is available at https://bit.ly/39Iu8uT from PacerMonitor.com at no charge. Attorneys for PC Mortgage Funding Associates: Gary O. Ravert RAVERT PLLC 116 West 23rd Street, Suite 500 New York, New York 10011 Tel: (646) 966-4770 Fax: (917) 677-5419 About Philiron Philiron, Inc., is a domestic business corporation that owns a property at 2, 4, 6, and 8 Main St., Port Chester, N.Y. Philiron filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case No. 20-22114) on Jan. 23, 2020, disclosing under $1 million in both assets and liabilities. Judge Robert D. Drain oversees the case. The Debtor is represented by Anne Penachio, Esq., at Penachio Malara, LLP. PING IDENTITY: Moody's Completes Review, Retains B1 CFR ------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Ping Identity Corporation and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations The B1 Corporate Family Rating reflects Ping Identity's modest operating scale and the highly competitive Identity and Access Management market. The company generated over 90% of its revenues under subscription agreements and its credit profile benefits from increased financial flexibility after the IPO in 2019. At the same time, Ping Identity's operating margins have been pressured by elevated investments to prioritize revenue growth and revenue growth has slowed dramatically amid economic uncertainties triggered by COVID-19. The B1 rating reflects Moody's expectations that revenue growth should accelerate to at least the mid-teens percentages and growth in Annual Recurring Revenues of mid-to-high teens percentages in 2021, if economic conditions continue to improve. As a result of the erosion in profitability and the full drawdown under its $150 million revolving credit facility in 1Q 2020, Ping Identity's total debt to EBITDA (Moody's adjusted) has increased from 1.5x at year-end 2019, to 6.6x at 3Q '20. The expensing of stock based compensation increased leverage by about 2.4x. The B1 rating is based on our expectation that Ping Identity will generate modest free cash flow in 2021 and it will maintain strong cash position relative to debt while revolver borrowings remain outstanding. The principal methodology used for this review was Software Industry published in August 2018. PROFESSIONAL DIVERSITY: Signs $1M Securities Purchase Agreement --------------------------------------------------------------- Professional Diversity Network, Inc. entered into an agreement with Ms. Yiran Gu, an individual and a resident of the People's Republic of China, in connection with the purchase by the Investor of 500,000 shares of common stock of the Company at a price of $2.00 per share for gross proceeds of $1,000,000. About Professional Diversity Headquartered in Chicago, Illinois, Professional Diversity Network, Inc. -- https://www.prodivnet.com -- is a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse professionals. Through an online platform and its relationship recruitment affinity groups, the Company provides its employer clients a means to identify and acquire diverse talent and assist them with their efforts to recruit diverse employees. Its mission is to utilize the collective strength of its affiliate companies, members, partners and unique proprietary platform to be the standard in business diversity recruiting, networking and professional development for women, minorities, veterans, LGBT and disabled persons globally. Professional Diversity recorded a net loss of $3.84 million for the year ended Dec. 31, 2019, compared to a net loss of $15.08 million for the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $9.06 million in total assets, $5.87 million in total liabilities, and $3.19 million in total stockholders' equity. Ciro E. Adams, CPA, LLC, in Wilmington, DE, the Company's auditor since 2018, issued a "going concern" qualification in its report dated May 1, 2020, citing that the Company has a significant working capital deficiency, has incurred significant losses, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. PROFESSIONAL INVESTORS 31: Involuntary Chapter 11 Case Summary -------------------------------------------------------------- Alleged Debtor: Professional Investors 31, LLC 350 Ignacio Blvd. Novato, CA 94949 Case Number: 21-30093 Business Description: Professional Investors 31, LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). Involuntary Chapter 11 Petition Date: February 4, 2021 Court: United States Bankruptcy Court Northern District of California Judge: Hon. Hannah L. Blumenstiel Petitioner: Professional Financial Investors, Inc. 350 Ignacio Blvd., Suite 300 Novato, CA 94949 Petitioner's Claim Amount & Nature of Claim: $18,446 for management fees and administrative costs Petitioner's Counsel: Ori Katz, Esq. and J. Barret Marum, Esq. SHEPPARD, MULLIN, RICHTER & HAMPTON LLP Four Embarcadero Center, 17th Floor San Francisco, CA 94111 Tel: 415-434-9100 Email: okatz@sheppardmullin.com/ bmarum@sheppardmullin.com A full-text copy of the Involuntary Petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/MAENPSY/Professional_Investors_31_LLC__canbke-21-30093__0001.0.pdf?mcid=tGE4TAMA PROFESSIONAL INVESTORS 49: Involuntary Chapter 11 Case Summary -------------------------------------------------------------- Alleged Debtor: Professional Investors 49, LLC 350 Ignacio Blvd. Suite 300 Novato, CA 94949 Business Description: Professional Investors 49, LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). Involuntary Chapter 11 Petition Date: February 4, 2021 Court: United States Bankruptcy Court Northern District of California Case Number: 21-30094 Judge: Hon. Hannah L. Blumenstiel Petitioner: Professional Financial Investors, Inc. 350 Ignacio Blvd., Suite 300 Novato, CA 94949 Petitioner's Claim Amount & Nature of Claim: $25,672 for management fees and administrative costs Petitioner's Counsel: Ori Katz, Esq. and J. Barret Marum, Esq. SHEPPARD, MULLIN, RICHTER & HAMPTON LLP Four Embarcadero Center, 17th Floor San Franciso, CA 94111 Tel: 415-434-9100 E-mail: okatz@sheppardmullin.com/ bmarum@sheppardmullin.com A full-text copy of the Involuntary Petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/THYGIHA/Professional_Investors_49_LLC__canbke-21-30094__0001.0.pdf?mcid=tGE4TAMA PROJECT LEOPARD: Moody's Completes Review, Retains B2 CFR --------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Project Leopard Holdings Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Project Leopard Holdings Inc.'s (d/b/a Kofax) B2 corporate family rating reflects the company's moderate leverage level and leading position in the multi-channel capture and financial process automation software markets. Kofax's rating is supported by the company's successful integration of the Nuance Document Imaging acquisition and realization of cost synergies associated with the transaction. Reduced spending on IT products due to the negative impact from COVID-19 has led to a decrease in Kofax's revenue and earnings, which has increased leverage; however, the company continues to generate solid free cash flow supporting good liquidity. As the global economy recovers in 2021, Moody's expects a gradual recovery in operating performance and improved credit metrics including lower leverage. The principal methodology used for this review was Software Industry published in August 2018. PROJECT RUBY: Moody's Completes Review, Retains B3 CFR ------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Project Ruby Ultimate Parent Corp. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Project Ruby Ultimate Parent Corp.'s (WellSky) B3 corporate family rating reflects the company's high leverage, aggressive acquisition strategy and modest scale. WellSky benefits from its leading position in the growing electronic medical records software market and stable base of recurring maintenance and subscription revenue complemented with high retention rates. The company is acquisitive, however WellSky's strong EBITDA margins and low capital expenditure allow for consistent free cash flow generation prior to acquisition related charges. The principal methodology used for this review was Software Industry published in August 2018. PURDUE PHARMA: McKinsey Pays $573M to Settle States' Opioid Claims ------------------------------------------------------------------ Attorney General Maura Healey, with a coalition of attorneys general representing 47 states, the District of Columbia and five U.S. territories, announced on Feb. 4, 2021, a $573 million settlement with one of the world's largest consulting firms, McKinsey & Company, resolving investigations into the company's role working for opioid companies, helping those companies promote their drugs, and profiting from the opioid epidemic. Under the terms of the consent judgment, filed Feb. 4 along with a complaint in Suffolk Superior Court, McKinsey will pay a total of $573 million -- with $13 million going to Massachusetts -- which will be used to fund prevention, treatment, and recovery efforts. This is the first multistate opioid settlement to result in substantial payment to the states to address the epidemic. The judgment remains subject to court approval. "Today's agreement sets a new standard for accountability in one of the most devastating crises of our time," AG Healey said in the Feb. 4 announcement. "As a result, our communities will receive substantial resources for treatment, prevention, and recovery services, and families who have seen their loved ones hurt and killed by the opioid epidemic will have the truth exposed about McKinsey's illegal and dangerous partnership with Purdue Pharma." McKinsey is required to turn over tens of thousands of internal documents detailing its work for Purdue Pharma and other opioid companies for public disclosure online. According to the complaint, McKinsey designed Purdue's marketing schemes, including a plan to "turbocharge" OxyContin sales at the height of the opioid epidemic. Today's filings, with evidence about McKinsey's misconduct first uncovered by AG Healey's Office, describe how McKinsey contributed to the opioid crisis by selling marketing schemes and consulting services to opioid manufacturers, including OxyContin maker Purdue Pharma, for over a decade. The complaint, filed with the settlement, details how McKinsey advised Purdue to maximize its OxyContin profits, including by: * Focusing on higher, more lucrative dosages and increased sales rep visits to high-volume opioid prescribers; * Targeting physicians with specific messaging to convince them to prescribe more OxyContin to more patients; * Encouraging opioid manufacturers to band together to "defend against strict treatment by the FDA' on risk mitigation efforts that could have reduced high doses and saved lives; and * Delivering OxyContin directly to patients through mail-order pharmacies to circumvent retail pharmacy restrictions on high dose, suspicious prescriptions. When states began to sue Purdue's directors for their implementation of McKinsey's marketing schemes, McKinsey partners began emailing about deleting documents and emails related to their work for Purdue. Under the terms of the settlement, McKinsey will pay $573 million, with a total of $558 million distributed to states to abate the opioid crisis, and $15 million to fund investigation expenses and support the document repository. In Massachusetts, the settlement will fund the state's newly created Opioid Recovery and Remediation Fund to help expand access to opioid use disorder prevention, intervention, treatment, and recovery options. Along with the payment and the disclosure of documents, the agreement also imposes court-ordered ethics rules that McKinsey must implement, including strict company-wide standards for document retention, and conflict disclosures on state contracts. In addition, McKinsey agreed to stop advising companies on potentially dangerous Schedule II and III narcotics. The filings are the latest action AG Healey has taken to combat the opioid epidemic and hold accountable those who are responsible for creating and fueling the crisis. Since taking office, AG Healey has prioritized combating the opioid epidemic through a multi-disciplinary approach that includes enforcement, policy, prevention, and education efforts. Learn more about AG Healey's work to combat the opioid epidemic here [mass.gov]. The states' investigation, first launched by AG Healey's Office, was led by an executive committee made up of the attorneys general of California, Colorado, Connecticut, Massachusetts, New York, North Carolina, Oklahoma, Oregon, Tennessee, and Vermont. The executive committee is joined by the attorneys general of Alabama, Alaska, Arkansas, Arizona, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Virginia, Wisconsin, Wyoming, the District of Columbia, and the territories of American Samoa, Guam the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. Handling the case for Massachusetts are Assistant Attorneys General Jenny Wojewoda and Sandy Alexander, Senior Enforcement Counsel Gillian Feiner, and Health Care Division Chief Eric Gold, all of AG Healey's Health Care and Fair Competition Bureau, with assistance from Legal Analyst Julia Walsh, Paralegals Philipp Nowak and Indira Rao, Health Care Division Assistant Attorney General Ethan Marks, Civil Investigator Marlee Greer, Assistant Attorney General and eDiscovery Attorney Paula McManus, and Digital Evidence Lab Director Chris Kelly. About Purdue Pharma LP Purdue Pharma L.P. and its subsidiaries -- http://www.purduepharma.com/-- develop and provide prescription medicines and consumer products that meet the evolving needs of healthcare professionals, patients, consumers and caregivers. Purdue's subsidiaries include Adlon Therapeutics L.P., focused on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and related disorders; Avrio Health L.P., a consumer health products company that champions an improved quality of life for people in the United States through the reimagining of innovative product solutions; Imbrium Therapeutics L.P., established to further advance the emerging portfolio and develop the pipeline in the areas of CNS, non-opioid pain medicines, and select oncology through internal research, strategic collaborations and partnerships; and Greenfield Bioventures L.P., an investment vehicle focused on value-inflection in early stages of clinical development. Opioid makers in the U.S. are facing pressure from a crackdown on the addictive drug in the wake of the opioid crisis and as state attorneys general file lawsuits against manufacturers. More than 2,000 states, counties, municipalities and Native American governments have sued Purdue Pharma and other pharmaceutical companies for their role in the opioid crisis in the U.S., which has contributed to the more than 700,000 drug overdose deaths in the U.S. since 1999. OxyContin, Purdue Pharma's most prominent pain medication, has been the target of over 2,600 civil actions pending in various state and federal courts and other fora across the United States and its territories. On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-23649), after reaching terms of a preliminary agreement for settling the massive opioid litigation. The Debtors' consolidated balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets and $562 million in liabilities. U.S. Bankruptcy Judge Robert Drain oversees the cases. The Debtors tapped Davis Polk & Wardwell LLP and Dechert LLP as legal counsel; PJT Partners as investment banker; AlixPartners as financial advisor; and Prime Clerk LLC as claims agent. Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A., represent the official committee of unsecured creditors appointed in Debtors' bankruptcy cases. David M. Klauder, Esq., was appointed as fee examiner. The fee examiner is represented by Bielli & Klauder, LLC. QUANTUM CORP: Prices $90 Million Public Offering of Common Stock ---------------------------------------------------------------- Quantum Corporation has priced the previously announced underwritten public offering of 13,138,686 shares of its common stock at a price to the public of $6.85 per share. All of the shares in the offering are being sold by Quantum. The gross proceeds to Quantum from the offering, before deducting the underwriting discounts and commissions and other offering expenses, are expected to be approximately $90 million. The offering is expected to close on or about Feb. 8, 2021, subject to customary closing conditions. In addition, Quantum has granted the underwriters a 30-day option to purchase up to an additional 1,970,803 shares of its common stock at the public offering price, less underwriting discounts and commissions. Quantum intends to use all of the net proceeds of the offering to repay a portion of the indebtedness under its senior secured term loan. B. Riley Securities, Inc. and Oppenheimer & Co. Inc. are acting as joint book-running managers for the offering. Lake Street Capital Markets, LLC, Craig-Hallum Capital Group LLC and Northland Capital Markets are acting as co-managers for the offering. A shelf registration statement (File No. 333-250976) relating to the shares was previously filed with the Securities and Exchange Commission and became effective on Dec. 9, 2020. The offering will be made only by means of a written prospectus and prospectus supplement that form a part of the registration statement. Copies of the preliminary prospectus supplement and accompanying prospectus relating to the offering may be obtained, when available, by contacting: B. Riley Securities, Inc., Attention: Prospectus Department, 1300 North 17th Street, Suite 1300, Arlington, Virginia 22209, or by telephone at 703-312-9580 or by email at prospectuses@brileyfin.com or Oppenheimer & Co. Inc., Attention: Syndicate Prospectus Department, 85 Broad Street, 26th Floor, New York, New York 10004, by telephone at 212-667-8055, or by email at EquityProspectus@opco.com. About Quantum Corp. Based in San Jose, California, Quantum Corp. (NYSE:QTM) -- http://www.quantum.com-- provides technology and services that stores and manages video and video-like data delivering the industry's top streaming performance for video and rich media applications, along with low cost, high density massive-scale data protection and archive systems. The Company helps customers capture, create and share digital data and preserve and protect it for decades. Quantum Corporation reported a net loss of $5.21 million for the year ended March 31, 2020, a net loss of $42.80 million for the year ended March 31, 2019, and a net loss of $43.35 million for the year ended March 31, 2018. As of Dec. 31, 2020, the Company had $185.78 million in total assets, $379.76 million in total liabilities, and a total stockholders' deficit of $193.97 million. QUANTUM HEALTH: Moody's Completes Review, Retains B3 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Quantum Health, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on February 1, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Quantum's B3 CFR reflects its leading position in the healthcare benefits navigation industry, and its good track record of profitability and positive cash flow. Quantum offers a compelling value proposition in helping employers reduce employee benefit costs and complexity while improving member satisfaction and Moody's anticipates a continuation of new customer wins. These strengths are tempered by very high financial leverage, a business model with a narrow service offering, and uncertain competitive differentiation over the long term. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. QUARTZ HOLDING: Moody's Completes Review, Retains B3 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Quartz Holding Company and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Quartz Holding Company's (d/b/a Quick Base) B3 corporate family rating reflects the company's high leverage, small scale relative to larger capitalized peers, and aggressive financial policies as a result of private equity ownership. The credit rating is supported by a diverse, stable revenue base with high retention rates and solid organic sales growth in Quick Base's differentiated No Code platform. The company's strong profitability and low capital expenditure requirements supports good free cash flow generation. The principal methodology used for this review was Software Industry published in August 2018. QUOTIENT LIMITED: Incurs $29.8MM Net Loss for Quarter Ended Dec. 31 ------------------------------------------------------------------- Quotient Limited filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $29.76 million on $8.75 million of total revenue for the quarter ended Dec. 31, 2020, compared to a net loss of $27.48 million on $7.94 million of total revenue for the three months ended Dec. 31, 2019. For the nine months ended Dec. 31, 2020, the Company reported a net loss of $70.16 million on $33.74 million of total revenue compared to a net loss of $78.05 million on $23.96 million of total revenue for the nine months ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $245.73 million in total assets, $238.06 million in total liabilities, and $7.66 million in total shareholders' equity. Since the Company's commencement of operations in 2007, the Company has incurred net losses and negative cash flows from operations. As of Dec. 31, 2020, the Company had an accumulated deficit of $553.6 million. During the nine month period ended Dec. 31, 2020, the Company incurred a net loss of $70.2 million and used $56.7 million of cash in operating activities. The Company's use of cash during the nine month period ended Dec. 31, 2020 was primarily attributable to its investment in the development of MosaiQ and corporate costs, including costs related to being a public company. From its incorporation in 2012 to March 31, 2020, the Company has raised $160.0 million of gross proceeds through the private placement of its ordinary and preference shares and warrants, $346.7 million of gross proceeds from public offerings of its shares and issuances of ordinary shares upon exercise of warrants and $145.0 million of gross proceeds from the issuance of the Secured Notes. On Sept. 15, 2020, the Company completed a public offering of 20,294,117 newly issued ordinary shares at $4.25 per share, which raised $86.3 million of gross proceeds before underwriting discounts and other offering expenses of $5.6 million. As of Dec. 31, 2020, the Company had available cash, cash equivalents and short-term investments of $134.5 million and $9.0 million of restricted cash held as part of the arrangements relating to its Secured Notes and the lease of its property in Eysins, Switzerland. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1596946/000156459021004320/qtnt-10q_20201231.htm About Quotient Limited Penicuik, United Kingdom-based Quotient Limited is a commercial-stage diagnostics company committed to reducing healthcare costs and improving patient care through the provision of innovative tests within established markets. With an initial focus on blood grouping and serological disease screening, Quotient is developing its proprietary MosaiQTM technology platform to offer a breadth of tests that is unmatched by existing commercially available transfusion diagnostic instrument platforms. The Company's operations are based in Edinburgh, Scotland; Eysins, Switzerland and Newtown, Pennsylvania. Quotient Limited reported a net loss of $102.77 million for the year ended March 31, 2020, compared to a net loss of $105.4 million for the year ended March 31, 2019. As of Dec. 31, 2020, the Company had $245.73 million in total assets, $238.06 million in total liabilities, and $7.66 million in total shareholders' equity. Ernst & Young LLP, in Belfast, United Kingdom, the Company's auditor since 2007, issued a "going concern" qualification in its report dated June 12, 2020, citing that the Company is currently involved in an arbitration dispute with a customer and an adverse outcome of this dispute in addition to the Company's expenditure plans over the next 12 months could result in net cash outflows over the next 12 months exceeding the Company's existing available cash and short-term investment balances, and has stated that substantial doubt exists about the Company's ability to continue as a going concern. RACKSPACE TECHNOLOGY: Moody's Rates New $650MM Secured Notes 'B1' ----------------------------------------------------------------- Moody's Investors Service has affirmed Rackspace Technology Global, Inc.'s B2 corporate family rating, B2-PD probability of default rating, B1 rating on its new $2.2 billion seven-year senior secured term loan B (New TLB), B1 rating on its existing $375 million revolver (undrawn) and Caa1 rating on its $550 million of senior unsecured notes due 2028. Moody's has also assigned a B1 rating to the company's new $650 million first-priority senior secured notes due 2028 (Secured Notes). The Secured Notes and New TLB are secured by the same collateral on a first-priority basis and are equal in priority ranking. The net proceeds from the proposed Secured Notes and New TLB will be used to fully refinance the company's existing $2.8 billion term loan B due 2023. The outlook remains stable. Assignments: Issuer: Rackspace Technology Global, Inc. Senior Secured Regular Bond/Debenture, Assigned B1 (LGD3) Affirmations: Issuer: Rackspace Technology Global, Inc. Probability of Default Rating, Affirmed B2-PD Corporate Family Rating, Affirmed B2 Senior Secured Bank Credit Facility, Affirmed B1 (LGD3) Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD6) Outlook Actions: Issuer: Rackspace Technology Global, Inc. Outlook, Remains Stable RATINGS RATIONALE Rackspace's B2 CFR reflects its high but moderately decreasing leverage, intensely competitive end markets which include large multi-national providers and risks to sustainability of business model evolution despite turnaround evidence and solid growth over recent quarters. The rating is also constrained by the technological and competitive threats inherent in the IT services industry. The rating is supported by Rackspace's moderate scale and strengthening free cash flow profile driven by recurring revenue and recent double-digit bookings growth trends. Rackspace's asset-light multicloud services focus has sustained lower capital intensity. Moody's expects Rackspace's free cash flow to steadily improve in 2021 and 2022, aided by expectations for mid-to-high single-digit revenue growth and lower interest expense associated with reduced debt and refinancing activity following its August 2020 IPO. Rackspace's debt leverage (Moody's adjusted) for the last 12 months ending September 30, 2020 was 5.6x. Rackspace's liquidity is very good, supported by a pro forma cash balance of about $158 million as of September 30, 2020, reflecting November 2020 financing activity, and full availability under a $375 million revolving credit facility. Moody's anticipates the company will rely on its cash balances and utilize its revolver to invest in its business, including targeted M&A to enhance its service offerings similar to the company's November 2019 acquisition of Onica Holdings LLC (Onica). Onica is an Amazon Web Services consulting partner and managed services provider providing cloud-native consulting and managed services, including strategic advisory, architecture and engineering and application development services. Onica has increased Rackspace's service innovation and facilitated expanded customer penetration, and likely serves as a template for future M&A to better leverage global growth opportunities in the multicloud space. The debt instrument ratings of Rackspace 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 secured and unsecured debt in the capital structure, and the loss given default (LGD) assessment of the debt instruments in the capital structure based on a priority of claims. The company's revolver, senior secured term loan and senior secured notes are rated B1 (LGD3), one notch above the B2 CFR, given the loss absorption provided by the unsecured notes. The unsecured notes are rated Caa1 (LGD6), two notches below the B2 CFR due to their junior position in the capital structure. The stable outlook reflects Rackspace's reduced leverage following its August 2020 IPO and strong bookings trends and revenue growth. Moody's expectations for continued increases in the scale and profitability of the company's multicloud services segment will contribute to continued reductions in leverage, further supporting the stable outlook. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade Rackspace's ratings if leverage is sustained below 4.5x and free cash flow/debt is greater than 5% (both on a Moody's adjusted basis). Moody's could downgrade Rackspace's ratings if leverage is sustained above 5.5x (Moody's adjusted) or if free cash flow deteriorates or if liquidity deteriorates. In addition, the rating could be downgraded if the company returns cash to shareholders or if there is deterioration of Rackspace's market position irrespective of its credit metrics. The principal methodology used in these ratings was Communications Infrastructure Industry published in September 2017. Based in San Antonio, Texas, Rackspace combines its broad IT industry expertise with leading technologies across applications, data and security to deliver end-to-end multicloud solutions. The company's 120,000-plus customer base is accessed through a network presence in more than 60 markets around the world. RACKSPACE TECHNOLOGY: S&P Rates New $550MM Sr. Secured Notes 'B+' ----------------------------------------------------------------- S&P Global Ratings assigned its 'B+' issue-level rating and '2' recovery rating to Rackspace Technology Global Inc.'s proposed $550 million senior secured notes due 2028. The '2' recovery rating indicates its expectation for substantial (70%-90%; rounded estimate: 80%) recovery for lenders in the event of a payment default. This reflects its expectation that the senior secured notes will benefit from the same ranking, collateral, and subsidiary guarantees as the company's new term loan. Rackspace plans to use the proceeds from these notes and the recent $2.3 billion term loan to fully repay its outstanding $2.8 billion senior secured term loan due November 2023. S&P views this as a leverage-neutral transaction, thus it does not have a material effect on our base-case forecast for the company. S&P will review the final terms of the transaction when it is completed. If the final terms differ significantly from its assumptions, we may revise our issue-level and recovery ratings. S&P plans to withdraw its existing ratings on Rackspace's $2.8 billion first-lien term loan after it has been repaid. ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- S&P's '2' recovery ratings on the company's revolving credit facility and proposed senior secured debt indicates its expectation for substantial (70%-90%; rounded estimate: 80%) recovery. S&P's '5' recovery rating on the unsecured debt indicates its expectation for modest (10%-30%; rounded estimate: 20%) recovery. -- S&P's simulated default scenario contemplates heightened competitive pressures from information technology (IT) service and third-party cloud providers that leads to increased churn and pricing pressure, which erodes the company's profitability. This would reduce Rackspace's cash flow to the point that it is unable to cover its fixed charges (interest expense, required amortization, and minimum maintenance capex), eventually leading to a default in 2024. -- S&P values the company as a going concern because of its extensive customer relationships and good brand in the multi-cloud IT services industry. Simulated default assumptions -- Year of default: 2024 -- Emergence EBITDA after recovery adjustments: About $500 million -- EBITDA multiple: 6.0x Simplified waterfall -- Gross enterprise value: About $3.0 billion -- Net enterprise value (after 5% administrative costs): About $2.85 billion -- Valuation split (obligors/nonobligors): 72%/28% -- Collateral value available for senior secured claims: About $2.57 billion -- Senior secured debt claims: About $3.3 billion --Recovery expectations*: 70%-90% (rounded estimate: 80%) -- Collateral value available for senior unsecured claims: About $280 million -- Senior unsecured debt claims: About $1.29 billion --Recovery expectations*: 10%-30% (rounded estimate: 20%) *Rounded down to the nearest 5%. Note: All debt amounts include six months of prepetition interest. S&P assumes the revolving credit facility is 85% drawn at default. RACQUETBALL INVESTMENT: Gets Cash Collateral Access Thru April 6 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts has authorized Racquetball Investment Association No. II Limited Partnership to use cash collateral on an interim basis through April 6, 2021, in accordance with the budget. The Debtor has executed and entered into these instruments and agreements with Eastern Bank: (i) a Leasehold Mortgage and Security Agreement on the Building to secure a loan to Burlington Recreation Group, LLC1 , as amended on October 5, 2016 and as modified due to the pandemic on June 28, 2020. In addition, the Bank holds an Assignment of Leases and Rents which is perfected by the filing of a UCC-1 Financing Statement recorded at the Commonwealth of Massachusetts, Secretary of State. (ii) a Commercial Promissory Note which has a principal amount due of $1,191,240.57 plus interest, late charges and legal expenses, and a Note for Costs, executed on October 5, 2016 with a principal balance of $96,692.96 plus interest and late charges. The Debtor granted the Bank a security interest in all of the Debtor's assets, including, without limitation, all of its accounts, accounts receivable, contract rights, chattel paper, inventory, equipment, machinery, furniture, trade fixtures, general intangibles, tax refunds, documents, instruments, books and records, deposit accounts and investment property and products and proceeds thereof. As adequate protection, Eastern Bank is granted a replacement lien in the same amount and with the same priority as enjoyed prior to the Petition Date. The Debtor is also directed to maintain adequate insurance policies and will keep payments current to the Town of Danvers for real estate taxes. Absent further Court Order, authorization of the Debtor to use cash collateral will cease on April 6, however, the Debtor is directed to file a Motion to Extend Use of Cash and Non-Cash Collateral on or before March 26, 2021, and there shall be a hearing on the Motion to Extend on April 6 at 12:15 p.m. Any objections shall be filed by 4:30 p.m. on April 2. A copy of the Order and the Debtor's proposed budget is available at https://bit.ly/3cVnjZ9 from PacerMonitor.com. About Racquetball Investment Association No. II Racquetball Investment Association No. II Limited Partnership filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 20-12304) on November 25, 2020. In the petition signed by James H. Conchie, its general partner, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Frank J. Bailey oversees the case. Parker & Lipton serves as the Debtor's counsel. REALOGY GROUP: Moody's Hikes 2nd Lien Notes Due 2025 to B2 ---------------------------------------------------------- Moody's Investors Service upgraded Realogy Group LLC's senior secured 2nd lien notes due 2025 to B2 from B3. Moody's also affirmed the B2 corporate family rating, B2-PD probability of default rating, Ba2 senior secured 1st lien and Caa1 senior unsecured ratings. The speculative grade liquidity rating remains SGL-2. The outlook is stable. Realogy announced it would sell an incremental $200 million of its 5.75% senior unsecured notes due 2029 and use the net proceeds to repay a portion of its senior secured 1st lien term loan B due 2025. RATINGS RATIONALE The upgrade of the senior secured 2nd lien notes to B2 from B3 reflects both the reduction in the amount of senior secured 1st lien debt, which ranks ahead of the 2nd lien notes in Moody's hierarchy of claims at default, and increase in the amount of junior-ranking unsecured notes, which provide loss-absorption to the 2nd lien notes, following the announced transaction. "Using incremental unsecured debt to repay a portion of the term loan B facility is a positive liquidity development because the transaction extends Realogy's debt maturity profile, but since the move is leverage neutral, the B2 CFR remains unchanged at this time," said Edmond DeForest, Moody's Vice President and Senior Credit Officer. 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 high interest in existing homes from consumers 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 $150 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 sales people. 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 Ba2 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 Ba2 rating, three notches above the CFR, benefits from loss absorption provided by the junior ranking debt and non-debt obligations. The B2 rating on the senior secured second lien notes reflects their subordination to the existing first lien senior secured bank facilities, seniority to the senior unsecured notes, and a LGD assessment of LGD4. The second lien note 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 and full availability under the company's $1.425 billion revolving credit facilities. A $477 million portion of the revolver matures in 2023 while $948 million matures in 2025 so long as Realogy repays or refinances its 4.875% senior notes due June 2023 before March 2023 and repays or refinances its senior secured 1st lien term loan B due February 2025 before November 2024. Realogy's cash flow is seasonal, with negative cash flow typically in the 1st fiscal quarter. Moody's expects Realogy will maintain a comfortable margin below the maximum senior secured net debt to EBITDA (as defined in the facility agreement) financial maintenance covenant applicable to the secured 1st lien debt over the 12 to 15 months. Realogy has around $15 million of required term loan principal payments in 2021. 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. Issuer: Realogy Group LLC Corporate Family Rating, Affirmed B2 Probability of Default Rating, Affirmed B2-PD Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2) Senior Secured Regular Bond/Debenture, Upgraded to B2 (LGD4) from B3 (LGD4) Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5) Outlook, Remains Stable Realogy Holdings Corp. (NYSE: RLGY) provides residential real estate services, encompassing franchise, brokerage, relocation, and title and settlement businesses as well as a mortgage joint venture. Realogy's brand portfolio includes Better Homes and Gardens(R) Real Estate, CENTURY 21(R), Coldwell Banker(R), Coldwell Banker Commercial(R), Corcoran(R), ERA(R), and Sotheby's International Realty(R). Moody's expects 2021 revenues of over $6 billion. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. REALOGY GROUP: S&P Raises Rating on 2nd-Lien Secured Note to 'B+' ----------------------------------------------------------------- S&P Global Ratings raised its issue-level rating on Madison, N.J.-based real-estate services provider Realogy Group LLC's second-lien secured notes due 2025 to 'B+' from 'B' and revised the recovery rating to '3' from '5'. The '3' recovery rating indicates its expectation for average (50%-70%; rounded estimate: 55%) recovery for the noteholders in the event of a payment default. The rating action reflects its assumption that the company plans to issue a $200 million add-on to its existing 5.75% senior unsecured notes due 2029, which it will use the proceeds from to repay its outstanding first-lien secured term loan. S&P said, "The transaction does not affect our 'B+' long-term issuer credit rating or stable outlook on Realogy. We believe the company will continue to benefit from stable housing demand in 2021, leading it to sustain debt leverage in the 5x area while generating good free cash flow to support its strong liquidity position." ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- S&P's simulated default scenario contemplates a payment default occurring in 2025 due to a steep decline in EBITDA and market share combined with an inability to refinance a significant portion of its capital structure. Specifically, it believes persistent declines in the company's transaction volume due a prolonged U.S. recession and increasing competitive pressures, particularly from new entrants that disrupt the traditional home-buying model, are likely factors. -- In a hypothetical default, S&P believes the company's lenders would pursue a reorganization rather than a liquidation and thus apply a 6.5x multiple to its emergence EBITDA to reflect Realogy's diverse brand portfolio and extensive agent network. -- The senior secured credit facility is secured by substantially all of the company's assets and domestic subsidiaries and 65% of the capital stock of its foreign subsidiaries, subject to certain exceptions. The senior secured notes due 2025 are backed by the same collateral package but on a second-lien basis to the credit facilities and rank senior to the unsecured notes. The 2029 senior unsecured notes will rank pari passu with the existing unsecured notes and will be subordinated to all of the company's existing and future secured debt. Simulated default assumptions -- Simulated year of default: 2025 -- EBITDA at emergence: $442 million -- EBITDA multiple: 6.5x Simplified waterfall -- Net enterprise value (after 5% administrative expenses): $2.7 billion -- Obligor/nonobligor valuation split: 88%/12% -- Priority claims: $208 million -- Estimated first-lien secured debt: $2.09 billion -- Value available for first-lien claims: $2.41 billion --Recovery expectations: 90%-100% (rounded estimate: 95%) -- Estimated second-lien secured debt: $571 million -- Collateral value available for second-lien claims: $321 million -- Recovery through deficiency claims: $14 million -–Recovery expectations: 50%-70% (rounded estimate: 55%) -- Estimated senior unsecured debt claims/deficiency claims from first- and second-lien claims: $1,816 million/$250 million -- Value available to unsecured claims: $114 million -–Recovery expectations: 0%-10% (rounded estimate: 5%) Note: All debt amounts include six months of prepetition interest. REDSTONE BUYER: Moody's Completes Review, Retains B2 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Redstone Buyer LLC (RSA Security) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Redstone Buyer LLC's ("RSA Security") B2 corporate family rating reflects the company's high leverage at deal close and execution risk related to the carve out from Dell while implementing cost savings initiatives. The rating also considers RSA Security's larger competitors in the security IT market, who possess greater capital resources and experience stronger growth rates. Nevertheless, the rating is supported by the RSA Security's leading market position in various cyber-security software product lines and expected continued growth in security software products driven by heightened awareness of cyber-attacks and increased regulatory requirements. The principal methodology used for this review was Software Industry published in August 2018. REGALIA UNITS: Court Extends Plan Exclusivity Until March 22 ------------------------------------------------------------ At the behest of Debtors Regalia Units Owner LLC and Regalia Beach Developers LLC, Chief Judge Laurel M. Isicoff of the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division extended by 120 days the period in which the Debtors may file a chapter 11 plan from January 22, 2021, through and including May 20, 2021, and to obtain acceptances from March 20, 2021, through and including July 20, 2021. Since the filing of the bankruptcy case, the Debtors have made good-faith progress toward the conclusion of this case, demonstrating both good-faith and the ongoing negotiations with creditors. The first 2 months after the filing date, the Debtors were uncertain whether it would continue as debtor-in-possession due to various motions filed by creditors and court hearings. Nevertheless, the Debtors successfully negotiated the Atalaya Settlement, which paved the way for the sale of the Properties and payments to creditors, as well as allowing the claim of Atalaya at a fixed amount. Additionally, RBD successfully litigated turnover of the assets of RBD by Drew Dilworth, as Receiver, and the allowance of his claim against the RBD estate in a negotiated amount. And, RBD negotiated a settlement with the Montello Group for the payment of their claims by a non-debtor third party, thereby eliminating one of the largest claims against the RBD estate. On August 28, 2010, the Debtors filed the Objections to Claims to resolve any remaining disputed claims. Each of these actions helps pave the way for the Debtor to file a plan of reorganization. The Debtors are paying their bills as they become due. Also, the Debtors continue to negotiate with their creditors and are working to reduce the claims against the estate in connection with the filing a plan. Based on the progress so far and the continuing efforts, the Debtors are confident that it will be in a position to file and confirm a plan that will be beneficial to all creditors. A copy of the Debtors' Motion to extend is available from PacerMonitor.com at https://bit.ly/2MqjK27 at no extra charge. A copy of the Court's Extension Order is available from PacerMonitor.com at https://bit.ly/2LdLeHK at no extra charge. About Regalia Units Owner Regalia Units Owner LLC, and Regalia Beach Developers LLC, which are engaged in activities related to real estate, sought Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 20-15747) on May 27, 2020. At the time of the filing, both Debtors disclosed assets of between $10 million and $50 million and liabilities of the same range. Chief Judge Laurel M. Isicoff oversees the cases. Pardo Jackson Gainsburg, PL is the Debtors' legal counsel, and Mark Pordes of Pordes Residential Sales and Marketing is the Debtors' real estate agent. RENT-A-CENTER INC: S&P Rates New $450MM Senior Unsecured Notes 'B' ------------------------------------------------------------------ S&P Global Ratings assigned its 'B' issue-level rating and '6' recovery rating to Plano, Texas-based rent-to-own retailer Rent-A-Center Inc.'s (RCII) proposed $450 million senior unsecured notes due 2029. The '6' recovery rating reflects our expectation for negligible (0%-10%; rounded estimate: 0%) recovery in the event of a payment default. The company will use proceeds from the notes to finance its acquisition of Acima, a virtual rent-to-own company, for total consideration of $1.65 billion. S&P's 'BB-' issuer credit rating and stable outlook on RCII reflects our expectation that the Acima acquisition will accelerate revenue and EBITDA growth at RCII, which combined with anticipated debt paydown, leads to improvement from initially elevated leveraging. Recovery Analysis Key analytical factors -- S&P's simulated default scenario contemplates a default in 2025 as a result of a deteriorating economy, a significant slowdown in consumer discretionary spending, an increasingly competitive retail environment, and strategic missteps at RCII. In this scenario, same-store sales turn negative, margins deteriorate, and EBITDA plummets. -- The default scenario assumes that RCII would reorganize as a going concern to maximize lenders' recovery prospects. Therefore, S&P has valued the company on a going-concern basis using a 5x multiple applied to our projected emergence-level EBITDA. -- S&P's recovery analysis assumes that about $250 million of borrowings will be outstanding under the company's proposed $550 million ABL revolver. It does not rate the company's revolver. Simulated default assumptions -- Simulated year of default: 2025 -- EBITDA at emergence: $170 million -- Implied enterprise value (EV): 5x -- Estimated gross EV at emergence: about $850 million Simplified waterfall -- Net EV after 5% administrative costs: about $810 million -- Valuation split (obligors/nonobligors): 100%/0% -- Total senior secured claims: $870 million* --Recovery range: 50%-70%; rounded estimate: 60% -- Senior unsecured debt claims: $470 million* --Recovery range: 0%-10%; rounded estimate: 0% *All debt amounts include six months of pre-petition interest. ROUMELCO PROPERTIES: Lender Seeks to Prohibit Cash Collateral Use ----------------------------------------------------------------- First-Citizens Bank & Trust Company asks the U.S. Bankruptcy Court for the Western District of North Carolina, Bryson City Division, to prohibit Roumelco Properties, LLC from using cash collateral. In addition, First Citizens wants the Debtor to turn over rents that constitute cash collateral. First Citizens says it has not consented and does not consent to the Debtor's use of its cash collateral. First Citizens contends it is under-secured because the appraised value of the Debtor's property -- if it were sold as a resort property -- is considerably less than the amount owed on the Debtor's loan. First Citizens says it is entitled to adequate protection in the form of turnover of Rents. On or about July 9, 2015, the Debtor borrowed $2,450,000 from Macon Bank, Inc. through a loan, as set forth in a Promissory Note and Business Loan Agreement. As security for the Loan, the Debtor executed a Deed of Trust dated July 9, 2015 granting Macon Bank a first-priority lien on the real property and improvements located at 9400 US Highway 19 W, Bryson City, NC 28713, and being more particularly described in a Deed of Trust recorded in Book 431, Page 595 in the Office of the Register of Deeds of Swain County. The Property is approximately 100 acres and comprises a conservation easement, about 30 acres of excess land, and the Nantahala Village Resort. As further security for the Loan, the Debtor executed an Assignment of Rents on or about July 9, 2015 for the benefit of Macon Bank securing, assigning, and granting to Macon Bank all of the Debtor's present and future rights, title and interest in, to and under any and all present and future leases. On October 1, 2015, Macon Bank changed its legal name to Entegra Bank. The Debtor modified the Loan with Entegra Bank by Loan Modification Agreements dated November 15, 2016, November 30, 2017, August 24, 2018, November 21, 2018, and November 18, 2019. First Citizens is the successor to Macon Bank and Entegra Bank. According to First Citizens, the principal balance on the Loan, as of January 5, 2021, is $1,933,441; and the total payoff, which includes fees and expenses, is $2,051,255. Due to the Debtor's defaults, First Citizens instituted a foreclosure proceeding in Swain County, North Carolina Superior Court bearing file number 20-SP-21. The Swain County Clerk of Superior Court entered an Order Allowing Foreclosure on November 6, 2020 and the Trustee noticed a foreclosure sale for January 4, 2021. First Citizens argues that unless it receives adequate protection of its interests, the Court should enter an Order prohibiting the Debtor or any other party from using the cash collateral other than to deliver it or the proceeds thereof to First Citizens. In the alternative, First Citizens says it is entitled to adequate protection in the form of (i) periodic cash payments, (ii) periodic accounting of its Property and the Rents, and (iii) the right to reasonable inspection of its Property and the books and records of the Debtor as they relate to the Property and the Rents. A copy of the the bank's motion is available at https://bit.ly/2MOnN8e from PacerMonitor.com. About Roumelco Properties, LLC Roumelco Properties, LLC, owner of the Nantahala Village Resort, sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D.N.C. Case No. 21-20000) on January 5, 2021. In the petition signed by Constantine Roumel, sole member, the Debtor disclosed between $1 million to $10 million in both assets and liabilities. Judge George R. Hodges oversees the case. Edward Hay, Esq., at PITTS, HAY, HUGENSCHMIDT is the Debtor's counsel. James David Nave, Esq., has been appointed as Subchapter V Trustee. First-Citizens Bank & Trust, as lender, is represented by: Lance P. Martin, Esq. Norman J. Leonard, Esq. Ward and Smith, P.A. Post Office Box 2020 Asheville, NC 28802-2020 Telephone: (828) 348-6070 Facsimile: (828) 348-6077 E-mail: lpm@wardandsmith.com njl@wardandsmith.com RTI HOLDING: Asks for May 5 Chapter 11 Plan Filing Extension ------------------------------------------------------------ RTI Holding Company, LLC and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods for filing a chapter 11 plan and soliciting acceptances to the plan to May 5, 2021 and July 5, 2021, respectively. On November 6, 2020, the Debtors filed their proposed Chapter 11 Plan and, on December 21, the Debtors filed their Amended Chapter 11 Plan. The Plan reflects terms set forth in a Restructuring Support Agreement reached among the Debtors and their Prepetition Secured Creditors -- i.e., Goldman Sachs Specialty Lending Group, L.P.; and TCW Direct Lending LLC, and certain of its affiliates -- to follow a dual path whereby the Debtors will either reorganize via a consensual transaction that would provide for the Debtors to emerge from the Cases under new ownership by the Prepetition Secured Creditors or sell their assets as a going concern. Pursuant to the Plan, the operations of the Debtors will be bifurcated. Specifically, all of Ruby Tuesday, Inc.'s operating assets other than the Debtors' RT Lodge facility in Tennessee and interests in its subsidiaries shall be transferred to an entity which shall be wholly-owned after the Effective Date by TCW, subject to dilution. Also, pursuant to the Plan, the Debtors will transfer to GS, and certain affiliates their pro rata share of 100% of the equity interests in an entity which shall retain the RT Lodge. The Plan "backstops" a marketing and sale process that reached a crossroads on January 14 -- the deadline by which interested parties were to have submitted offers to acquire the Debtors' assets. If the Debtors received one or more bids that constitute a "Topping Bid" -- i.e., bid(s) sufficient to satisfy the Debtors' obligations to their Prepetition Secured Lenders and DIP Lenders in full -- the Debtors would conduct an Auction to determine a Successful Bidder and Back-Up Bidder to which they would sell substantially all of their assets through a transaction that must close by March 23, 2021, as such deadline may be extended or waived by the parties or as ordered by the Court. If the Debtors did not receive a timely Topping Bid, they would pursue the restructuring transactions with GS and TCW as set forth in the Plan. The Debtors relate that on December 21, 2020, the Court approved the Debtors' Disclosure Statement and set a hearing for confirmation of the Plan for February 4, 2021, at 1:00 p.m. No Topping Bids were received by January 14 and on January 18, the Debtors confirmed to the Court that no Topping Bid was received and cancelled an auction. The Debtors rescheduled the Confirmation Hearing until February 10 at 10:00 a.m., in order to facilitate ongoing discussions among the Debtors, Committee, lenders and other parties geared towards reaching a global resolution of disputes. The Debtors tell the Court they believe they are almost at the "finish line" of their restructuring and hope their Plan will be confirmed next week. The Debtors further tell the Court they have filed the motion seeking to extend their exclusivity periods as a precautionary measure in order to allow for any potential flexibility that may be needed to foster a global settlement and account for any unforeseeable circumstances that might lead to the current or a modified Plan not confirmed at the Confirmation Hearing. The Debtors add that the requested extension "will enable the Debtors to make a fully informed decision regarding crucial facets of their business operations in the unanticipated event the Debtors are forced to consider other dispositions of their business" and preclude the costly disruption that would occur if competing plans were to be proposed. The Debtors aver that sufficient "cause" exists pursuant to section 1121(d) of the Bankruptcy Code to extend the Exclusivity Periods. They also cite these factors that favor an extension: (a) The Debtors' Chapter 11 Cases Are Large and Complex. The chapter 11 cases involve 51 Debtor entities who, as of the Petition Date, employed over 7,300 employees. As of the Petition Date, the Debtors operated 236 restaurants nationwide. The cases involve a number of stakeholders with often-divergent interests, and a number of complex operational intricacies, considering that the Debtors operate in multiple jurisdictions. (b) The Debtors Have Made Good Faith Progress Towards Exiting Chapter 11. The Debtors have already satisfied key milestones necessary for their ultimate reorganization, including completion and filing of their schedules and statements, establishing claim bar dates, and the filing of the Plan and Disclosure Statement. The Plan is presently scheduled for confirmation on February 10, 2021. (c) An Extension of the Exclusivity Periods Will Not Prejudice Creditors. The Debtors are requesting an extension of the Exclusivity Periods purely as a precautionary measure in case unpredictable circumstances occur. The Debtors seek to protect their exclusive ability to propose a chapter 11 plan and to maintain flexibility so competing plans do not derail the Debtors' restructuring process in the presumably unlikely event the Plan is not confirmed. All stakeholders will benefit from that continued stability and predictability, which comes only with the Debtors being the sole potential plan proponents. (d) The Cases Are Only Four Months Old. The Debtors' request for an extension of the Exclusivity Periods is the ’ first such request and comes fewer than four months after the Petition Date. During this short time, the Debtors have accomplished a great deal and continue to work diligently with all stakeholders to get their Plan confirmed. (e) An Extension Will Not Pressure Creditors. The Debtors are not seeking an extension of the Exclusivity Periods to pressure or prejudice any of their stakeholders. All creditor groups or their advisors have had an opportunity to actively participate in substantive discussions with the Debtors throughout the chapter 11 cases. The Debtors contend that an objective analysis of the relevant factors demonstrates that they are doing everything necessary to facilitate a successful conclusion to the chapter 11 cases -- the Debtors hope to be days away from Plan confirmation. RTI Holding Company and its affiliated Debtors are represented by: Richard M. Pachulski, Esq. Malhar S. Pagay, Esq. James E. O'Neill, Esq. PACHULSKI STANG ZIEHL & JONES LLP 919 North Market Street, 17 Floor P.O. Box 8705 Wilmington, DE 19899-8705 Telephone: 302-652-4100 Email: rpachulski@pszjlaw.com mpagay@pszjlaw.com joneill@pszjlaw.com About RTI Holding Company RTI Holding Company, LLC and its affiliates develop, operate and franchise casual dining restaurants in the United States, Guam, and five foreign countries under the Ruby Tuesday brand. The company-owned and operated restaurants (i.e. non-franchise) are concentrated primarily in the Southeast, Northeast, Mid-Atlantic and Midwest regions of the United States. On Oct. 7, 2020, RTI Holding Company and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-12456). At the time of the filing, the Debtors disclosed assets of between $100 million and $500 million and liabilities of the same range. Judge John T. Dorsey oversees the cases. Pachulski Stang Ziehl & Jones LLP and CR3 Partners LLC serve as the Debtors' legal counsel and financial advisor respectively. Epiq Corporate Restructuring LLC is the claims, noticing and solicitation agent and administrative advisor. On October 26, 2020, the U.S. Trustee for the District of Delaware appointed an official committee of unsecured creditors in the 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. S2P ACQUISITION: Moody's Completes Review, Retains B3 Rating ------------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of S2P Acquisition Borrower, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations S2P Acquisition Borrower, Inc.'s (dba "Jaggaer") B3 credit profile reflects the company's very high leverage, small size compared to larger and better capitalized competitors, and aggressive financial policy with the likelihood of future debt-financed acquisitions. Reduced global spending and pause in capital investments due to the negative impact from COVID-19 and the economic recession will temporarily slow revenue growth and deleveraging for Jaggaer in the near term. Jaggaer benefits from its good niche position as a provider of cloud-based integrated spend management solutions, improved end-market and geographical diversification following the integration of BravoSolution and Pool4Tool, and highly recurring revenue base with solid customer retention rates. The principal methodology used for this review was Software Industry published in August 2018. SAVAGE ENTERPRISES: Moody's Alters Outlook on B1 CFR to Stable -------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Savage Enterprises, LLC., including the B1 corporate family rating, the B1-PD probability of default rating and the B1 senior secured term loan rating. At the same time, Moody's changed the outlook to stable from negative. The ratings affirmation and change in outlook reflect Savage's improved credit metrics and sustained good liquidity. With the help of divestiture proceeds, and solid cash flow generation, the company was able to paydown $300 million of its term loan notes, thus improving leverage beyond our previous expectations. Moody's anticipates debt to EBITDA to be around 3.5 by the end of 2021, continuing a steady improvement. Further, Moody's expects 2021 to remain challenging as many of the sectors Savage operates in haven't fully recovered, yet expectations are for the company to maintain credit metrics supportive of its rating. RATINGS RATIONALE The ratings, including the B1 CFR, considers the lower financial leverage that improves flexibility to handle the exposure to competitive and cyclical end markets, which are facing headwinds from trade pressures and ongoing economic weakness in 2021. Further, the ratings reflect Savage's progress integrating the Bartlett grain business acquisition, which Moody's views as a transformational acquisition and moves the company away from its legacy business of material handling and logistics and now represents the largest business unit. The agribusiness exposes Savage to volume risk from fluctuations in grain demand as its activities include the storage and sale of grain, and to cross-border risk with a majority of its shipments destined for Mexico. Moderating factors include the company's sizeable scale, even after accounting for the substantial pass-through nature of the agribusiness, and established track record as an important link in the supply and distribution chains of its longstanding blue chip customer base. Moody's believes that commodity pricing risk is minimized through the company's hedging actions. Despite the anticipated top line pressures, Moody's expects leverage to improve towards the mid 3x range over the next year, supported by a commitment to debt reduction. Moody's views liquidity as good. Moody's expects the company to maintain sufficient availability under its $400 million asset-based lending (ABL) revolver, of which $203 million was available as of December 31, 2020. Liquidity is supported by cash of about $67 million for the same period. Going forward, Moody's expects cash to be maintained at about $20 million and no near-term debt maturities until 2023. From a governance perspective, event risk remains moderate considering Savage's focus on growing through acquisitions and the likelihood of undertaking small-to-midsize acquisitions as market conditions recover. Further, the company's board of directors consists of a ten-person board with four independent directors and family members, which ultimately control strategy. Given the somewhat concentrated board composition with insiders, succession risk remains. Lastly, the company pays a somewhat modest annual dividend of $15-$20 million. Savage has manageable environmental risk relating to its agricultural assets which are susceptible to flooding. Additionally, safe transportation of petroleum-related products across long distances could be hazardous to the environment. Moody's view social risk for Savage to be manageable, with the biggest priority to be labor continuity during the truck driver shortage and workplace safety across its facilities. The following rating actions were taken: Affirmations: Issuer: Savage Enterprises, LLC Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B1-PD Senior Secured Term Loan, Affirmed B1 (LGD4) Outlook Actions: Issuer: Savage Enterprises, LLC Outlook, changed to Stable from Negative FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects modest debt-funded acquisition risk along with our expectations of operating profit margins consistent with the B1 rating level and good liquidity, including ample availability under the ABL revolver and positive free cash flow generation that should support debt reduction. Given the company's acquisitive nature, free cash flow is also likely to be used for bolt-on acquisitions. The ratings could be downgraded with a weakening operating margin such that Moody's expects debt-to-EBITDA to approach 5x, or a sustained deterioration in the cash flow profile with funds from operation falling below 10%. A more aggressive financial policy, including debt funded acquisitions or shareholder distributions that increase leverage, would also drive downward ratings pressure. The ratings could be upgraded if Savage is able to demonstrate reduced cyclicality through diversification, sustain stronger credit metrics that include operating margins consistent with higher rated peers, debt-to-EBITDA below 3.5x and funds from operation sustained above 20%. This would need to be done in conjunction with profitably growing revenues with positive end market conditions, and successfully manage the transition to primarily an agribusiness. Savage Companies, through its principal operating subsidiary Savage Enterprises, LLC, is a transport and logistics company providing a range of services, including materials handling, waste disposal and transportation to industrial and rail customers. Savage acquired the grain and milling businesses of Bartlett and Company, LP, an agribusiness focused on the acquisition, storage, transportation, processing and merchandising of grain, and a leading exporter of grain to Mexico from the United States. Revenues were approximately $2.5 billion for the year end December 31, 2020. The principal methodology used in these ratings was Surface Transportation and Logistics published in May 2019. SEAHAWK HOLDINGS: Moody's Completes Review, Retains B3 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Seahawk Holdings Limited and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Seahawk's B3 Corporate Family Rating reflects high financial leverage and limited free cash flow offset by stabilizing performance after years of revenue declines. The profile also considers the strong respective niche positions of Quest and One Identity and ample cash balances. The profile is bolstered by the value of each of the Seahawk businesses and the potential for a sale of either of them to repay a significant portion of debt. Though Moody's expects flat to modestly negative growth, Seahawk should produce solid levels of free cash flow. The principal methodology used for this review was Software Industry published in August 2018. SILGAN HOLDINGS: S&P Alters Outlook to Stable, Affirms 'BB+' ICR ---------------------------------------------------------------- S&P Global Ratings revised its outlook on Silgan Holdings Inc. to stable from negative and affirmed the 'BB+' issuer credit rating. S&P said, "We have also assigned our 'BBB-' issue-level and '1' recovery ratings (rounded estimate: 95%) to Silgan's proposed $500 million senior secured notes (due 2026), the proceeds of which it will use to pay down its $900 million term loan. "The stable outlook reflects our expectation that steady demand--combined with ongoing contributions from the recent acquisition--will enable Silgan to maintain debt leverage below 4x on a sustained basis." The strong demand in 2020 should continue this year. The COVID-19 pandemic proved to be a notable tailwind for Silgan in 2020. The spike in at-home food and beverage consumption and demand for cleaning and sanitizing applications help drive low-teens percent organic volume growth, with consolidated sales increasing 9.6%. S&P said, "We expect these trends to persist through 2021 as the gradual, sporadic adoption of the coronavirus vaccine--combined with what are likely to be enduring changes to consumers' purchasing habits--should support elevated demand across all of Silgan's operating segments. In addition, Silgan will benefit from a full year's contribution from the dispensing business acquisition, which was completed in June 2020. As such, we estimate demand volumes should continue to grow in the low-single-digit percentages across all segments, contributing to modest consolidated sales growth in 2021 and adjusted EBITDA margin slightly expanding to 16.5%-17% due to improved operating leverage and acquisition synergies." The company's strong operating performance has helped offset the elevated debt leverage due to the Albea dispensing acquisition. With strong demand across all operating segments, Silgan's company-adjusted free cash flow increased by $111.8 million (a 41% annual growth rate) for fiscal 2020. The company believes it can maintain free cash flow at close to 2020 level because of the elevated sales volumes and contributions from ongoing productivity-improvement initiatives and the dispensing acquisition. These factors help offset the elevated debt leverage associated with the $900 million of incremental debt incurred from the dispensing acquisition. Improved operating performance and increasing balance-sheet cash should position Silgan to maintain debt leverage below 4x (excluding seasonal working-capital borrowings, which are generally fully repaid during the fourth quarter) over the next 12 months. Specifically, S&P estimates leverage will be 3.8x in 2020 and around 3.3x-3.5x in 2021. S&P said, "Given Silgan's elevated year-end cash balance, we expect lower revolver borrowings over the next 12 months. Silgan ended fiscal 2020 with balance-sheet cash of $409.5 million, which is high compared to historical trends (for example, $203.8 million in fiscal-year 2019 and $72.8 million in 2018). As a result, we expect Silgan's seasonal working-capital revolver borrowings to be notably lower over the next 12 months, which should result in liquidity improvement over the same period." Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety S&P said, "The stable outlook reflects our expectation that steady demand trends--combined with ongoing contributions from the recent acquisition--will enable Silgan to maintain debt leverage below 4x. "We could lower the ratings if Silgan's debt leverage exceeds 4x (excluding seasonal revolver borrowings) on a sustained basis. This could occur if its operating margin deteriorate by 250 basis points (bps) from our base-case scenario. "We could raise the ratings if the company's debt leverage is well below 3x (excluding seasonal revolver borrowings) on a sustained basis. This could occur if operating margins improve by 120 bps from our base-case scenario. To consider an upgrade, we would also require the company to explicitly commit to financial policies that support the improved credit metrics, inclusive of any potential shareholder rewards or acquisitions." SK INVICTUS: S&P Upgrades ICR to 'B' on Improved Performance ------------------------------------------------------------ S&P Global Ratings raised its issuer credit rating on specialty chemical manufacturer SK Invictus Intermediate II S.a r.l. (dba Perimeter Solutions) to 'B' from 'B-'. The outlook is stable. S&P said, "At the same time, we are raising our rating on the company's first-lien credit facility to 'B+' from 'B'. The recovery rating remains '2', indicating our expectation of substantial (70%-90%; rounded estimate: 75%) recovery if a payment default occurs. "In addition, we are raising our rating on the company's second-lien term loan to 'CCC+' from 'CCC'. The recovery rating remains '6', indicating our expectation of negligible (0%-10%; rounded estimate: 0%) recovery if a payment default occurs." Despite the impairment of the oil additives business from COVID-19, Perimeter Solutions' demand has been stronger than expected in fire safety, leading to improved credit metrics. The upgrade reflects the company's better-than-expected operating performance through nine months of 2020, leading to a revision of our expectations for full-year 2020 operating results to be much stronger than previously forecast. S&P said, "As a result, leverage has significantly improved, and we expect the company's debt to EBITDA of around 5x for 12 months ended September 2020, as compared to approaching double-digit percents previously. The company's earnings are tied directly to natural disasters, particularly wildfires, and thus there is a certain unpredictability and uncertainty around future earnings. This is evident in the drastic change from 2019 to expected 2020 earnings as the result of increased U.S. wildfires. In 2019, there were significantly fewer wildfires because of record rainfall that year in the U.S., which we believe is unlikely to repeat itself over the next few years." The company is taking some volatility out of the business through geographic diversification and product enhancements. Historically, the company's fire safety earnings are heavily weighted to the third quarter, coinciding with the busy U.S. wildfire months. The company has taken steps in improving its preventative fire safety business to supply businesses such as utilities, which gives SK's customers the ability to apply preventative fire retardants year-round to help mitigate future fires. This business will add some stability to future earnings and help add to future growth. Additionally, the company is seeking to expand its reach beyond North America, and this could bring stability to increase earnings beyond the third quarter. SK Invictus continues to benefit from high barriers to entry and strong profitability measures. It holds leading market positions and benefits from high barriers to entry, specifically within the fire-retardant segment as a provider of fire retardants for the U.S. Forest Service. The company benefits from a large service component that enables it to maintain long-standing customer relationships with government agencies. Although SK Invictus' fire-safety products fall within governmental budgets, they are under the suppression budget and do not solely depend on the economy. In addition to leading market positions in its fire retardant and class A foams business segments, SK Invictus is a market leader in lubricant quality phosphorus pentasulfide (P2S5) and owns the largest tote bin fleet worldwide, which is required for safe storage and transport of P2S5. Given SK Invictus' leading market positions, strong barriers to entry, and customer stickiness, it benefits from strong profitability. The stable rating outlook on SK Invictus reflects S&P Global Ratings' expectation that weighted-average debt to EBITDA will remain around 5x over the next 12 months as the result of the stronger-than-expected 2020 operating results. Following a historically weak 2019 fire season, 2020 saw a significant increase in North America wildfires, which directly relates to improved operating results. Given its highly unpredictable earnings, which come primarily in the third quarter and is tied directly to wildfires, the company leverage ratios and earnings over the last two years have moved drastically. A negative rating action is possible within the next 12 months if SK Invictus has weaker-than-expected end-market demand driven by a slow fire season in the U.S. (as was the case in 2019) or if competition enters the fire retardant market, causing weighted-average debt to EBITDA to weaken toward 7x. S&P said, "We could take a negative rating action if liquidity significantly lessened such that free cash flow turned negative for consecutive quarters, sources over uses were less than 1.2x, or the company used its revolver, causing the covenant to spring and leaving it not in compliance. We could also do so if SK Invictus pursued large debt-funded shareholder rewards or acquisitions." S&P could take a positive rating action on SK Invictus over the next 12 months if operating performance were much better than it expects, such that leverage was sustained below 5x, along with financial policies consistent with a higher rating and commitment from ownership that leverage would remain at those levels. SKLARCO LLC: US Trustee Opposes to Disclosure Statement ------------------------------------------------------- Patrick S. Layng, the United States Trustee for Region 19, objects to the adequacy of the Disclosure Statement to Accompany Joint Plan of Reorganization filed by Debtors Sklar Exploration Company, LLC and Sklarco, LLC. The U.S. Trustee argues that the Disclosure Statement does not contain adequate information of a kind, and in sufficient detail, to enable a reasonable investor to make an informed decision about the Plan as required by 11 U.S.C. Sec. 1125 for these reasons: * The Disclosure Statement should update the current status of business operations and provide updated financials. The Disclosure Statement should also identify any postpetition payables or tax obligations outstanding. * The Disclosure Statement should update the amount of professional fees in the administrative class (page 16) and provide an estimate to be paid on the effective date. * The Independent Manager who will manage the Debtors post confirmation should be identified and estimated salary cost should be disclosed. * The Plan, pages 24-25, contains a post-Confirmation Date, broad exculpation clause which is not addressed or discussed in the Disclosure Statement. The exculpation clause appears to be a broad release for post-confirmation activity or conduct. A full-text copy of the United States Trustee's objection dated Jan. 28, 2021, is available at https://bit.ly/3rruyfk from PacerMonitor.com at no charge. About Sklarco LLC Sklarco, LLC is an independent oil and gas exploration and production company owned and managed by Howard F. Sklar. Sklarco, LLC, based in Boulder, CO, filed a Chapter 11 petition (Bankr. D. Colo. Case No. 20-12380) on April 1, 2020. In the petition signed by by Howard Sklar, manager, the Debtor was estimated to have $10 million to $50 million in both assets and liabilities. The Hon. Michael E. Romero presides over the case. Keri L. Riley, Esq., at partner of Kutner Brinen, P.C., serves as bankruptcy counsel. SPIRIT REALTY: Moody's Affirms Ba1 Rating on Preferred Stock ------------------------------------------------------------ Moody's Investors Service has affirmed the ratings of Spirit Realty Capital, Inc., including the Baa3 senior unsecured rating of its main operating subsidiary, Spirit Realty, L.P. The rating affirmation reflects the REIT's modest leverage, mostly unencumbered property portfolio, as well as its large, well-occupied portfolio of assets supported by long-term triple-net leases. The positive outlook reflects Moody's expectation that Spirit's high-quality assets will continue to generate relatively stable earnings despite a difficult macroeconomic environment. The outlook also reflects Moody's expectation that the REIT will maintain its conservative financial profile, while executing profitable strategic growth that will continue to improve asset quality and scale. The following ratings were affirmed: Issuer: Spirit Realty, L.P. Backed senior unsecured, Affirmed Baa3 Backed senior unsecured shelf, Affirmed (P)Baa3 Issuer: Spirit Realty Capital, Inc. Preferred stock, Affirmed Ba1 Preferred stock shelf, Affirmed (P)Ba1 Outlook Actions: Issuer: Spirit Realty, L.P. Outlook, changed to Positive from Stable Issuer: Spirit Realty Capital, Inc. Outlook, changed to Positive from Stable RATINGS RATIONALE Spirit's Baa3 senior unsecured rating reflects its high portfolio occupancy and history of stable cash flows derived from long-term, triple-net leases. The REIT's portfolio is large and well-diversified by tenant, industry and geography. Spirit also benefits from modest leverage, low secured debt and a mostly unencumbered property portfolio. The REIT adheres to a consistent financial policy that includes public leverage targets as it executes strategic growth. Moody's also notes that the REIT has overhauled its asset management and underwriting investment platform in recent years, with critical upgrades that have improved the predictability of its earnings through market cycles. The strength of its platform and tenant credit profiles is evidenced by high rent collection rates through the pandemic, reaching 93% for October and November of 2020. Key challenges include Spirit's exposure to industries facing disruption from the coronavirus pandemic and weak macroeconomic environment, including health and fitness (7% of base rents), casual dining (6%), movie theaters (5%), and entertainment venues (4%). Spirit also has a high proportion of middle-market tenants that generally have a higher risk profile, although about 50% are public tenants. Spirit's liquidity is adequate considering its upcoming funding needs. As of October 30, 2020, the REIT had $1.1 billion of liquidity including $800 million available on its unsecured revolver, $130 million of forward equity and cash balances. Upcoming maturities include $190 million coming due in 2021 and $178 million in 2022. Moody's expects that Spirit will continue to fund new investments with a mix of long-term unsecured debt and common equity. The positive outlook reflects Moody's expectation that Spirit's high-quality assets will continue to generate relatively stable earnings despite a difficult macroeconomic environment. The outlook also reflects our expectation that the REIT will maintain its conservative financial profile, while executing profitable strategic growth that will continue to improve asset quality and scale. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating movement would likely reflect maintenance of Net Debt/EBITDA in the mid-5x range, continued earnings stability with fixed charge coverage above 3.5x, secured debt below 10% of gross assets and unencumbered assets above 75% of gross assets. A downgrade is unlikely over the next 12 to 18 months given the positive outlook, but would likely reflect Net Debt/EBITDA approaching 6.5x, secured debt above 25% of gross assets, or fixed charge coverage below 2.7x with diminished financial flexibility. Spirit Realty Capital [NYSE: SRC] is a net-lease real estate investment trust (REIT) that invests in and manages a portfolio primarily of single-tenant, operationally essential real estate throughout the United States. As of March 31, 2020, the REIT had gross assets of $7.0 billion. The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms published in September 2018. SUMMIT VIEW: Plan Exclusivity Period Extended to March 22 --------------------------------------------------------- Judge Michael G. Williamson of the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, extended the period within which Summit View, LLC has the exclusive right to file and obtain confirmation of a Chapter 11 Plan from February 5, 2021 to March 22, 2021. About Summit View Summit View, LLC, is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). It previously filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 09-06495) on April 2, 2009. Summit View again sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 19-10111) on Oct. 24, 2019. At the time of the 2019 filing, the Debtor estimated between $1 million and $10 million in both assets and liabilities. The Debtor tapped Alberto F. Gomez, Jr., Esq., at Johnson, Pope, Bokor, Ruppel & Burns, LLP as bankruptcy counsel. Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., serves as special counsel. SUN PACIFIC: Unit Amends Indenture of Trust with UMB Bank --------------------------------------------------------- MedRecycler-RI, Inc., a subsidiary of Sun Pacific Holding Corp., entered into an amendment to the Indenture of Trust with UMB Bank, extending the term of the two bonds representing bridge financing for the Rhode Island medical waste to energy project for a period of up to one year from the date of signing. The extension of the bonds will accrue interest, including a capitalized extension fee of five percent, at 12% per annum. In addition, the Company has been issued an extension for the term of a secured convertible loan to Pyro SS, LLC, as reported in the Company's Form 10Q for the quarter ended Sept. 30, 2020, until July 28, 2021. The bonds are intended to be paid and extinguished from proceeds from permanent financing. About Sun Pacific Headquartered in Manalapan NJ, Sun Pacific Holding Corp -- http://www.sunpacificholding.com-- offers "Next Generation" solar panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver turnkey solar and other energy efficient solutions. It provides solar bus stops, solar trashcans and "street kiosks" that utilize advertising offerings that provide State and local municipalities with costs efficient solutions. The Company provides general, electrical, and plumbing contracting services to a range of both public and commercials customers in support of its goals of expanding its green energy market reach. Sun Pacific reported a net loss of $1.78 million for the year ended Dec. 31, 2019, compared to a net loss of $1.77 million for the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $8.84 million in total assets, $14.20 million in total liabilities, and a total stockholders' deficit of $5.36 million. Turner, Stone & Company, L.L.P., in Dallas, Texas, the Company's auditor since 2017, issued a "going concern" qualification in its report dated May 20, 2020, citing that the Company has suffered recurring losses from operations since inception and has a significant working capital deficiency, both of which raise substantial doubt about its ability to continue as a going concern. SYNCSORT INC: Moody's Completes Review, Retains B3 Rating --------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Syncsort Incorporated and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Syncsort Incorporated's (dba "Precisely") B3 credit profile is constrained by the company's high leverage, operational risks surrounding the integration of the Software & Data business acquired from Pitney Bowes, Inc., and aggressive financial policy due to private equity ownership. Moody's expects the recent divestiture of the company's Confirm Business to enhance near-term liquidity, despite reducing scale and business diversity. Precisely recently announced proposed repricing of its existing first lien term loan and a $50 million debt prepayment which will improve the company's cost of capital, leading to interest payment savings and improved free cash flow. Precisely's ratings benefit from its niche positioning in the enterprise data management market, increased breadth of product offering in data quality solutions, and a high level of recurring revenue and strong margins. The principal methodology used for this review was Software Industry published in August 2018. TEA OLIVE: Wins Cash Collateral Access Thru Feb. 12 --------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota has authorized Tea Olive I, LLC to use cash collateral on an interim basis through February 12, 2021, in accordance with a budget. As additional adequate protection for the Debtor's use of Cash Collateral in which Worldwide Distributors asserts an interest -- in addition to the adequate protection provided in the Interim Order -- the Debtor will transfer to the Worldwide Account an additional $250,000 on each of February 8 and February 10 for a total $500,000. All of Worldwide's rights to oppose the principal reduction payment scheduled for February 12 in connection with future hearings on this matter are preserved. The Court has and will retain jurisdiction to enforce the Second Interim Cash Collateral Order in accordance with its terms and to adjudicate any and all matters arising from or related to the interpretation or implementation of the Second Interim Order. About Tea Olive I, LLC Tea Olive I, LLC -- https://www.stockandfield.com/ -- is a Minnesota limited liability company formed in 2018 and headquartered in Eagan, Minn. It is a farm, home and outdoor retailer currently operating 25 stores across Illinois, Indiana, Ohio, Wisconsin and Michigan. Tea Olive I conducts business under the name Stock+Field. Tea Olive I filed a Chapter 11 petition (Bankr. D. Minn. Case No. 21-30037) on Jan. 10, 2021. The Hon. William J. Fisher is the case judge. The Debtor estimated $50 million to $100 million in assets and liabilities as of the bankruptcy filing. As of the petition date, the Debtor had $29,724,104 in secured debt under a credit agreement with Second Avenue Capital Partners, LLC, as the administrative agent and collateral agent. The Debtor also has $26,500,000 in trade debt. As of Jan. 8, 2021, the Debtor estimated it holds consolidated inventory valued at $45,692,831. The Debtor also estimated it holds $734,000 in accounts receivable and prepaid assets. The Debtor tapped Fredrikson & Byron, P.A. as its counsel and Steeplechase Advisors LLC as its investment banker. Donlin, Recano & Company, Inc. is the claims agent. The U.S. Trustee for Region 12 has appointed an Official Committee of Unsecured Creditors. TEGRA118 WEALTH: Motive Contribution No Impact on Moody's B2 CFR ---------------------------------------------------------------- Moody's Investors Service said Motive Partners' contribution of Tegra118 Wealth Solutions, Inc. to the newly formed holding company Wealthtech Holdings, LLC is credit positive and has no immediate impact on Tegra118's ratings or outlook. Concurrently with the contribution of Tegra118, Wealthtech acquired wealth management technology provider InvestCloud, received a contribution of wealth management technology provider Finantix from Motive Partners, and received cash equity investments from Motive Partners, Clearlake Capital, Fiserv and Accenture. Wealthtech is controlled by Motive Partners and does not have material third party debt obligations. Tegra118's credit restricted group was undisturbed by the transaction, Moody's don't assume any explicit credit support from the affiliates, and Moody's expect no cash distributions out of the restricted group to the holding company or affiliates. Tegra118's credit profile remains consistent with its B2 Corporate Family Rating. "While Tegra118's near-term credit metrics and debt structure are unaffected by the holding company merger, over time this transaction has the potential to be strategically transformative" said Peter Krukovsky, Moody's senior analyst. "The product capabilities and customer relationships of Tegra118, InvestCloud and Finantix are highly complementary with meaningful cross-sale opportunities, and over time we expect Tegra118 to increasingly partner with InvestCloud and Finantix to provide complete solutions to the combined suite of customers. The resulting increased diversification and bolstered competitive positioning will support the credit profile." TEGRA118 WEALTH: S&P Affirms 'B' ICR Following Merger Announcement ------------------------------------------------------------------ S&P Global Ratings affirmed all of its ratings on Tegra118 Wealth Solutions Inc., including its 'B' issuer credit rating. The stable outlook on Tegra118 reflects S&P's expectation that the combined company will increase its organic revenue by the mid-teen percent area and modestly raise its EBITDA base and free cash flow (FCF) to the $10 million-$20 million range over the next 12 months. Provider of digital wealth and investment management software, Tegra118 Wealth Solutions Inc. will be merging with Finantix Ltd. and InvestCloud Inc. to form Wealthtech Holdings LLC. The affirmation reflects Tegra118's pro forma leverage at high-5x from mid-6x a year ago, excluding the preferred shares, and with preferred shares, of about 16x following the close of the merger. S&P said, "We expect leverage will decline to 10x, with the preferred shares during the next 12 months from organic revenue expansion and EBITDA growth benefiting from achieving the cost-savings plan. Despite the addition of preferred equity, we maintain our view on the company's credit quality, which is supported by its resilient account-based pricing model, long-term client relationships, and highly recurring revenue stream." Tegra118's free cash flow generation ability remains unaffected because there are no required cash distributions from this instrument. As part of the transaction, the combined company will add $102 million of cash, which will provide additional liquidity support. Merging the three entities will strengthen the company's product scope, operational scale, and geographic diversification. InvestCloud provides software that facilitates client automation and management, digital warehousing, analytics and operations automation for financial services companies. Although it benefits from growth rates in the 40% range, InvestCloud operates at a smaller scale and with a lower EBITDA margin in the mid-teens percent area, which compares with Tegra118's 34% margin as of the 12 months ended Dec. 30, 2020. Also merging with Tegra118, Finantix provides front-end solutions geared toward sales and advisory interactions. The merged entity will benefit from Tegra118's portfolio management functionality, which will be integrated with InvestCloud's front-end oriented solutions. Given the increased scope of products and the handling of mission critical workloads, Wealth Tech should enhance customer stickiness while allowing the company to leverage new cross-sell opportunities within its existing base. The addition of Finantix also provides the company with geographic diversification stemming from increased exposure to European and Asian financial markets. Despite a predominantly point-solution occupied wealth-management industry, we view Tegra118 as having a unique position providing solutions to seven of the top 10 U.S. broker-dealers and nine of the top 12 U.S. retail asset managers. The company's highly recurring processing revenue and high retention rates over 95% support its good revenue visibility. Under its contracts, which average about three to five years in length, the company structures its pricing, in addition to its minimum fees, based on the number of accounts. This suggests that its revenue profile is more stable than those of its peers which determine their pricing by the level of assets under management. Since the carveout from Fiserv Inc. in 2020, the company has invested heavily on platform enhancements along with incurring high one-off costs associated with restructuring and cost optimization. Nevertheless, its EBITDA growth is underpinned by organic growth in the mid-single digit range, stemming from new clients as well as strong renewals by and sales to the existing client base. S&P said, "We expect the combined company's revenue to increase in the mid-teen percent area in 2021 underpinned by an increase in its number of new accounts and cross-selling initiatives, bolstered by the recent program enhancements as well as the vertically integrated solution set. We expect the increasing scope of products will support program expansion and the onboarding of clients who currently rely on expensive point solutions. We expect EBITDA margins to decline to mid-20% in 2021 from 34% in 2020, mainly due to the absorption of lower-margin businesses. EBITDA margins are also affected by the ongoing restructuring expenses of $19 million as the company invests in platform enhancements and integrates the different solutions. We assess the company's EBITDA on an adjusted basis by subtracting its capitalized software costs, which we consider to be an operating expense, and expect it to remain near $16 million over the next 12 months as the business continues to develop its software capabilities. "The stable outlook on Tegra118 reflects our expectation that the company will increase its revenue by the mid-teen percent area and modestly raise its EBITDA base. Additionally, we expect the company to experience modest one-time cash outflows associated with its merger integration and anticipate that it will generate FOCF in the $10 million-$20 million range over the next 12 months. "We could lower our rating on Tegra118 if its free cash flow deteriorates below $10 million, which could occur if the company experiences material customer losses or a deterioration in its profitability stemming from pricing pressure or an inability to achieve its cost-savings plans. "Although unlikely over the next year, we could consider raising our rating on Tegra118 if it exhibits organic revenue growth significantly above our forecast and substantially increases its profitability such that it sustains FOCF above $50 million. Additionally, the current private-equity ownership constrains the likelihood of higher rating." THRYV HOLDINGS: S&P Assigns 'B' ICR, Outlook Stable --------------------------------------------------- On Feb. 2, 2020, S&P Global Ratings assigned its 'B' issuer credit rating to Dallas-based print and digital marketing services and software company Thryv Holdings Inc. Thryv has proposed to borrow a $700 million term loan B. The company will use the proceeds to refinance its existing term loan due 2023 in full, repay a portion outstanding under its asset-based loan (ABL) revolver, and fund the acquisition of Sensis for approximately $200 million. S&P said, "We assigned our 'B' issue-level and '3' recovery ratings to the company's proposed term loan B. "The stable outlook reflects our view that the company will prioritize debt repayment to maintain leverage of less than 3x and cost reductions to sustain its EBITDA margins in the 30% area despite the secular declines in its marketing services business. "Our issuer credit rating on Thryv reflects its participation in the print and internet-based directory services business (which is experiencing annual secular declines of about 20%), the small scale and low profitability of its software as a service (SaaS) business, its high degree of competition from internet-based services, and its industry's limited barriers to entry. These challenges are somewhat offset by the company's record of cutting costs and maintaining EBITDA margins of about 30% in its marketing services business as well as its healthy cash flow generation, which should allow it to use its excess cash flow to pay down debt and maintain leverage in the 2x-3x range over the coming years. In addition, the rating reflects our view that Thryv will need to refinance the ABL prior to its maturity in 2023." Declines in Thryv's core print directory services business due to secular pressures will be partially offset by growth in SaaS business. Thryv's print directory business is in long-term structural decline as users shift their marketing expenditure to online services. This trend has resulted in customer attrition and declining average revenue per user/customer trends for Thryv's legacy marketing services business. The acquisition target company, Sensis, has seen similar secular declines in its marketing and internet directory services business. Thryv's SaaS business participates in a competitive space, although it has good growth potential through the cross-selling of its services to Thryv's existing client base, including opportunities in the international markets following the Sensis acquisition. S&P said, "Thryv has converted more than 10% of its legacy clients to its SaaS offering so far and we expect the number to increase in the U.S. and in Australia as the company increasingly focuses on growing and cross-selling its SaaS business. Although we expect the SaaS business to grow, we do not expect its growth to offset the revenue declines from the company's directory business." Thryv has healthy EBITDA margins and a flexible cost structure. Thryv's EBITDA margins are healthy in the 30% area albeit somewhat lower than other director publishing peers, in part due to the lower-margin SaaS business. S&P said, "We expect the company's recent restructuring efforts and cost savings, along with the addition of Sensis' higher-margin business, will offset the expected organic revenue decline of about 20% such that its EBITDA margin rises above the 30% area in 2021 from our expectation of slightly below 30% in 2020. Thryv benefits from a variable cost structure with the ability to cut mostly outsourced costs as its client base, directory circulation, and the demand for its internet directory search decline. We believe the variable cost structure in its directory business will allow Thryv to manage healthy EBITDA margins, although we expect overall EBITDA margins to dilute somewhat as the SaaS business makes up a greater percentage of revenues and EBITDA." S&P said, "We expect the company to maintain leverage in the mid- to high-2x range and use its excess cash flows to reduce debt. We estimate the company's September 2020 adjusted leverage will approximate 2.5x pro forma for the transaction and the acquisition. However, we expect leverage to modestly increase over the next two years toward the 2.8x area primarily due to EBITDA losses from the secular decline in its marketing services business. We expect Thryv's free operating cash flow (FOCF) to debt will remain well above 15% over the next two years and that the company would use its excess cash flows primarily to repay debt. "The stable outlook reflects our view that the company will prioritize debt repayment to maintain leverage of less than 3x and cost reductions to sustain its EBITDA margins in the 30% area despite the secular declines in its marketing services business." S&P could lower its rating on Thryv over the next 12 months if it increases and sustains leverage above 3x, which would likely occur due to: -- An acceleration of the secular decline in its print business following the COVID-19 pandemic and an inability to fully offset the revenue declines with cost cuts; -- Its use of cash flows to fund dividends or share buybacks; or -- An inability to pay down or refinance its ABL facility well before its maturity. An upgrade is unlikely over the next 12 months and would depend upon Thryv materially expanding its SaaS business and improving its margins such that it is able to more than offset the secular declines in its marketing services business. THRYV INC: Moody's Gives 'B3' CFR, Rates New $700MM Term Loan 'B3' ------------------------------------------------------------------ Moody's Investors Service assigned a B3 corporate family rating and a B3-PD probability of default rating to Thryv, Inc. Moody's also assigned a B3 rating to Thryv's proposed $700 million senior secured term loan B. Concurrently, Moody's assigned the company an SGL-2 speculative grade liquidity rating. The outlook is stable. The structural decline in Thryv's Yellow Pages marketing segment is mitigated by the company's prudent financial policy and expectations that leverage will be reduced to around 1.9x by year-end 2021. Assignments: Issuer: Thryv, Inc. Corporate Family Rating, Assigned B3 Probability of Default Rating, Assigned B3-PD Speculative Grade Liquidity Rating, Assigned SGL-2 Senior Secured 1st Lien Bank Credit Facility, Assigned B3 (LGD4) Outlook Actions: Issuer: Thryv, Inc. Outlook, Assigned Stable RATINGS RATIONALE Thryv's B3 CFR reflects the company's large exposure to the structurally declining yellow pages business as well as the uncertainty over the future pace of decline of this revenue stream which represents 89% of the company's revenue. The continual shift to new technologies, such as online searches or dedicated service-oriented apps, continues to pose a threat to the existence of legacy directories businesses. The B3 rating also reflects the company's strong free cash flow generation ability and management's publicly stated prudent financial policy to apply free cash flow to debt repayment. The rating also reflects Moody's expectations that Thryv's leverage will decline to around 1.9x at year end 2021 - pro-forma for the acquisition of Australian Yellow and White pages business Sensis (Project Sunshine IV Pty Ltd, B2 stable) and drop to around 1.7x by the end of 2022 as Thryv applies cash flow to reduce debt. Thryv is the leading yellow pages publisher in the large US market. The company's number one market share, geographic reach across all of the US and exposure to less cyclical verticals (e.g. professional services) means that while revenue will continue to erode, it will continue to do so at a manageable and somewhat expectable pace. To counter the decline in its legacy business, Thryv has invested in growing its software as a service (SaaS) business which targets SMBs and provides them with a software system that features calendar and appointments, estimates, invoices and payments, and reputation management. Given the margins on SaaS products (high single digit), Moody's expect growth in this segment to compress Thryv's currently strong EBITDA margins of around 35%. Also, this is a very fragmented market where competition is fierce from both small start-up like competitors and large tech companies. Thryv's focus on the SMB market means that it can service a very large addressable base of clients but it also means churn is likely to be higher, especially in periods of economic weakness when default rates of SMBs tend to be higher. The acquisition of Sensis will allow Thryv to diversify part of its revenue into a new geography and gain access to Sensis' customer base which could present a sizable opportunity to cross-sell Thryv's Software as a Service (SaaS) products. Sensis's revenue have also been declining by near 18-20% over the past couple of years in line with the industry but, like Thryv, Sensis benefits from high EBITDA margins and low capital expenditure and it generates sizeable free cash flow. The acquisition is expected to result in minimal integration costs. Social risks taken into Thryv's ratings include evolving demographic and social trends, and changing consumer services. The yellow pages industry has been affected by changing demographics and shifts in consumer behavior for a preference towards the use of social media and search engines for listing inquiries. In addition, the rating also takes into account social risk from potential data privacy breaches and cyber risk. Governance risks taken into consideration includes the company's conservative financial policy. The company has historically operated with leverage (Moody's adjusted) below 1.8x, with some increases to 2.1x for acquisitions and debt funded share repurchases. Thryv has quickly reduced leverage back down to 1.8x through debt repayment. Following the close of the Sensis acquisition, Moody's expects the company's pro forma leverage to be about 2.1x. The B3 rating on the Term Loan B reflects the probability of default of the company, as reflected in the B3-PD Probability of Default Rating, an average expected family recovery rate of 50% at default, and the term loan's ranking in the capital structure. Thryv's SGL-2 rating reflects Moody's expectation that the company will maintain good liquidity over the next 12 to 18 months, driven by strong free cash flow generation. In 2021, Moody's expect the company to generate about $190 million of FCF, although most of this will be used for debt repayment as per the mandatory cash flow sweep requirements beginning 30 June 2021 (100% excess cash flow sweep when total net leverage exceeds 1.5x, 75% when it is above 1x, 50% when it is above 0.5x, and 25% when total net leverage is less than or equal to 0.5x.) The company also has a revolving credit asset backed liquidity line of $150 million the majority of which is expected to be undrawn at close of the Sensis acquisition. The senior secured term loan B also includes a 3x maximum total net leverage financial covenant and we expect the company to have solid cushion on this covenant ratio over the next 12 to 18 months. The stable outlook reflects Moody's expectations that the company's leverage will decline to below 2x by year end 2021 as a result of the company repaying debt from the cash generated in the year. The stable outlook also reflects Moody's assumptions that the rate of decline in the legacy business's revenue will remain in line with expectations over the next twelve months given around 50% of the print yellow pages 2021 revenue is currently committed. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the secular pressures the company's legacy business is under, upward rating movement is currently limited. Ultimately, an upgrade would require the company's Moody's adjusted debt/EBITDA to be maintained below 1.5x in conjunction with the SaaS business making up a more material portion of revenue and EBITDA. Ratings could be downgraded should the pace of revenue decline in the legacy business accelerate leading to Moody's adjusted debt/EBITDA rising above 2.5x on a sustained basis. A downgrade could also occur should the company's liquidity deteriorate or free cash flow generation ability be materially weaker than expected. Headquartered in Dallas, Texas, Thryv, Inc. (Thryv) provides small-to-medium sized businesses with print and digital marketing services and Software as a Service (SaaS) business management tools. Thryv owns and operates Print Yellow Pages and Internet Yellow Pages and offers digital marketing and media services, such as search engine marketing (SEM), online display advertising, search engine optimization (SEO), and stand-alone websites. Thryv began trading on the Nasdaq Capital Market as of October 1, 2020. In the last twelve months ending on September 30, 2020, Thryv generated about $1.2 billion of revenue. The principal methodology used in these ratings was Media Industry published in June 2017. TNP SPRING: Creditors to Be Paid From Property Sale or Refinance ---------------------------------------------------------------- TNP Spring Gate Plaza, LLC, filed with the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division, a Combined Disclosure Statement and Chapter 11 Plan dated Jan. 28, 2021. The Debtor is a single asset real estate company. The Debtor owns certain real property consisting of commercial office space and located at 1650 Spring Gate Lane, Las Vegas, Nevada (the "Property"). The Debtor's only asset is the Property with an estimated value of $14,500,000. The Debtor's liabilities consist only of (i) the Secured Claim of ANICO in the estimated amount of $9,754,145 (plus attorneys fees and expenses and other amounts owed pursuant to terms of loan documents, and accuring interest), (ii) the Secured Claim of Halaj in the estimated amount of $575,000 and (iii) the claim of Department of the Treasury – Internal Revenue Service in the amount of $700 ($400 of which is claimed as priority under 507(a)(8) and $300 of which is claimed as a General Unsecured Claim). There are no other General Unsecured Claims against the Debtor's Estate. The Debtor does not believe it is necessary to estimate the recovery to be achieved by the Debtor in view of the nature of the Plan. The recovery for Distributions in full of all Allowed Claims depends solely on the Debtor's ability to refinance or sale of the Property. Class 2-A consists of General Unsecured portion of Claim of Department of Treasury - Internal Revenue Service in the amount of $300. Creditors holding Allowed General Unsecured Claims will be paid a Distribution of the available Cash on hand estimated to be an amount that will allow for Class 2-A Claims to be paid full. Alternatively, for an administrative convenience class, this one member Class of General Unsecured Claims of less than $500 will be paid in full on the Effective Date. Upon any sale of the Property, the existing Equity Interests will effectively be canceled. The Debtor's plan is a reorganization plan. The Plan relies on the Debtor's rent revenues from the Property, as well as proceeds from the sale or refinance of the Property. The Debtor expects the sale or refinance of the Property to close within the second quarter of 2021, at which time the Debtor will be able to pay all of its debts. Upon the Effective Date, the property of the Debtor's Estate will vest in the Reorganized Debtor and, in accordance with the Plan, will carry out the provisions of the Plan as Disbursing Agent. The Disbursing Agent will have sole and exclusive authority to make distributions to creditors to pay allowed claims pursuant to the Plan, including payment of the administrative fees and expenses of the Disbursing Agent. A full-text copy of the Disclosure Statement dated Jan. 28, 2021, is available at https://bit.ly/3ayFRLH from PacerMonitor.com at no charge. Attorneys for the Debtor: Leonard M. Shulman SHULMAN BASTIAN FRIEDMAN & BUI LLP 100 Spectrum Center Drive, Suite 600 Irvine, California 92618 Telephone: (949) 340-3400 Facsimile: (949) 340-3000 E-mail: Lshulman@shulmanbastian.com About TNP Spring Gate Plaza TNP Spring Gate Plaza, LLC, based in Irvine, CA, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-11963) on July 10, 2020. In its petition, the Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in liabilities. The petition was signed by Anthony W. Thompson, officer of managing member of TNP Spring Gate Plaza, LLC. The Hon. Scott C. Clarkson presides over the case. SHULMAN BASTIAN FRIEDMAN & BUI LLP serves as bankruptcy counsel to the Debtor. The Debtor tapped Colliers Nevada LLC as its broker. TRAIL MANAGEMENT: District Court Dismisses Michael Kim Suit ----------------------------------------------------------- Judge Karthryn Kimball Mizelle of the United States District Court for the Middle District of Florida, Tampa Division, ordered the dismissal of Plaintiff Michael Kim's case, with prejudice. Judge Mizelle also denied Mr. Kim's Motion for Summary Judgment and Motion for Temporary Restraining Order as moot. "Mr. Kim's initial complaint was dismissed with prejudice as to Bankruptcy Judge McEwen and District Judge Jung, both of whom enjoy absolute immunity for actions taken in their judicial capacity... Mr. Kim was permitted to file an amended complaint, 'but [he] may not include these judges in it for any act done as a judge" and was directed to "omit these judges entirely'... Mr. Kim was also advised that '[f]ailure to file an amended complaint in accordance with this Order will result in the dismissal of this case,'" Judge Mizelle narrated. "Having been forewarned, Plaintiff nonetheless filed an 84-page amended complaint alleging (by a modest count) seventeen claims against nine defendants, including allegations about wrongdoing by judges for acts taken in their official capacity... Plaintiff's claims range from conspiracies of racketeering and extortion to violations of his civil rights, and he complains of procedural due process violations in proceedings not properly before the Court for review. As best as the undersigned can tell, Plaintiff's ire centers on property disputes related to a bankruptcy proceeding that remains ongoing," Judge Mizelle added. The Court cited the following reasons, among others, for dismissing Mr. Kim's lawsuit: (1) As Plaintiff was expressly directed (both in this case and in other lawsuits he has filed throughout the District), the amended complaint should not allege claims based on official judicial acts. Although he deftly avoids naming federal judges as defendants or attempting to have summons issued to them, the allegations consistently remain targeted at actions that judges have taken in their official capacities; (2) The claims are plainly frivolous and warrant dismissal. The Plaintiff lodges numerous ad hominem attacks against judges and others involved in his legal woes, but they plainly fail to state any cognizable causes of action; (3) because the amended complaint involves the disposition of property that is the subject of ongoing bankruptcy proceedings, Plaintiff appears to be willfully violating the automatic stay that is operative under 11 U.S.C. Section 362. Plaintiff's amended complaint seeks to quiet title to a property owned by Trail Management, LLC, which has filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. Plaintiff's claims appear to be an "act to obtain possession of property of the estate" of Trail Management and are therefore subject to an automatic stay. Plaintiff assuredly knows this lawsuit is a violation, as the bankruptcy court has twice issued sanctions against him for filing proceedings related to the property of this estate. Judge Mizelle found that "Plaintiff's instant lawsuit follows in his earlier bad faith attempts to use the judiciary to harass others with whom he has had prior legal encounters, and he only confirms the Court's view by filing a motion for summary judgment before all defendants were even served, much less had an opportunity to respond to his amended complaint. This Court concludes that his attempts to abuse the judicial system should not be afforded further judicial resources, particularly as Plaintiff was already granted leave to amend in this instant case but to no avail." The case is MICHAEL KIM, an individual, Plaintiff, v. THE UNITED STATE BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF FLORIDA, THE UNITED STATES OF AMERICA, STEPHEN L. MEININGER, an individual, WESTWATER CONSTRUCTION, INC., SHIRIN MOHAMMADBHOY VESELY, an individual, MARK S. MILLER, an individual, LISA M. CASTELLANO, an individual, STEPHANIE C. LIEB, an individual, ERIC JACOBS, an individual, inclusive, Defendants, Case No. 8:20-cv-2791-KKM-AAS (M.D. Fla.). A full-text copy of the Order, dated January 28, 2021, is available at https://tinyurl.com/1pwmw6uy from Leagle.com. About Trail Management LLC. Trail Management filed its Chapter 11 Petition on February 4, 2020 (Bankr. M.D. Fla. Case No. 20-00963). The Debtor is represented by Amber Robinson, Esq., at Robinson Law Office PLLC. TUMBLEWEED TINY HOUSE: Gets Cash Collateral Access Thru March 31 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado has authorized Tumbleweed Tiny House Company, Inc. to use cash collateral through March 31, 2021. The Debtor and PIRS Capital, LLC have reached an agreement regarding the terms and conditions for the Debtor's use of cash collateral. As adequate protection, PIRS is granted a replacement lien and security interest upon the Debtor's postpetition assets and Collateral with the same priority and validity as PIRS's pre-petition liens to the extent of the Debtor's post-petition use of the proceeds of PIRS's pre-petition Collateral. PIRS will also be granted a superpriority administrative expense claims if the Adequate Protection Liens prove to be insufficient. The Debtor will pay to PIRS: -- 3% of the Debtor's gross receipts for January 2020 on February 15, 2021, -- 3% of the Debtor's gross receipts for February 2021 on March 15, 2021, and -- 3% of the Debtor's gross receipts for March 2021 on April 15, 2021, or as set forth in a confirmed plan of reorganization. The Debtor is also directed to provide a copy of its monthly operating report to PIRS by the 21st day of each month. PIRS reserves the right to assert that: -- 8.2% of the Debtor's accounts receivable are not part of the Debtor's estate but rather, owned by PIRS, and that the accounts receivable should, among other things, be segregated, set aside and paid over to PIRS, and -- PIRS's security interest should extend to accounts receivable newly created post-petition. A copy of the order is available for free at https://bit.ly/36JXHdF from PacerMonitor.com. About Tumbleweed Tiny House Company, Inc. Tumbleweed Tiny House Company, Inc., a manufacturer of tiny house RVs, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 20-11564) on March 4, 2020. At the time of the filing, the Debtor estimated between $500,000 and $1 million in assets and between $1 million and $10 million in liabilities. Judge Kimberley H. Tyson oversees the case. Wadsworth Garber Warner Conrardy, P.C. is the Debtor's legal counsel. The Debtor hired Stockman Kast Ryan + Company as its accountant. In April 2020, the Office of the U.S. Trustee said no official committee of unsecured creditors has been appointed in the case. UBS COMMERCIAL 2017-C1: Fitch Lowers Class F-RR Certs to 'CCC' -------------------------------------------------------------- Fitch Ratings has downgraded one and affirmed 12 classes of UBS Commercial Mortgage Trust 2017-C1 commercial mortgage pass-through certificates, series 2017-C1. DEBT RATING PRIOR ---- ------ ----- UBS 2017-C1 A2 90276EAB3 LT AAAsf Affirmed AAAsf A3 90276EAD9 LT AAAsf Affirmed AAAsf A4 90276EAE7 LT AAAsf Affirmed AAAsf AS 90276EAH0 LT AAAsf Affirmed AAAsf ASB 90276EAC1 LT AAAsf Affirmed AAAsf B 90276EAJ6 LT AA-sf Affirmed AA-sf C 90276EAK3 LT A-sf Affirmed A-sf D 90276EAN7 LT BBB+sf Affirmed BBB+sf D-RR 90276EAQ0 LT BBB-sf Affirmed BBB-sf E-RR 90276EAS6 LT BB-sf Affirmed BB-sf F-RR 90276EAU1 LT CCCsf Downgrade B-sf X-A 90276EAF4 LT AAAsf Affirmed AAAsf X-B 90276EAG2 LT A-sf Affirmed A-sf KEY RATING DRIVERS Increased Loss Expectations Drive Downgrade: Loss expectations have increased since issuance and are driving the downgrade of class F-RR to 'CCCsf' from 'B-sf'. Seven loans (12.1%) have transferred to special servicing since the prior rating action, and 17 loans (27.1%), including the specially serviced loans, have been designated as Fitch Loans of Concern (FLOCs). Fitch's current ratings incorporate a base case loss of 5.90%. The Negative Rating Outlooks factor in additional stresses related to the coronavirus pandemic, reflecting losses that could reach 6.60%. Five loans (4.0%) are defeased. Specially Serviced Loans: The largest specially serviced loan is the Art Van Portfolio (3.3%), a five-property retail/industrial portfolio that was previously 100% occupied by Art Van Furniture. The loan transferred to special servicing in April 2020 after Art Van filed bankruptcy and vacated. The borrower has found replacement tenants for all of the properties and leases began between August and October 2020. A reinstatement agreement was executed in October 2020 and the borrower brought the loan current; however, they re-defaulted after facing difficulties with one of the replacement tenants. The Special Servicer is working with the borrower to keep the loan current and resolve issues with the new tenant. Fitch's loss expectation of approximately 5% is based on an updated appraisal from the special servicer. The Unisquare Portfolio (2.4%) is a 417-bed student housing portfolio near Indiana University of Pennsylvania. The loan transferred to special servicing in September 2020 for imminent monetary default. The borrower previously requested relief in February 2020, prior to the pandemic, due to declining enrollment at the university that has made the portfolio unprofitable. As of the 2Q20 rent roll, the portfolio is 83% occupied compared with 82% at YE 2018 and 91% at YE 2017. 2Q20 NOI debt service coverage ratio (DSCR) was -0.60x. The servicer is negotiating a modification with the borrower while also pursuing foreclosure. Fitch's analysis included a 30% stress to the YE 2018 NOI due to poor performance since issuance and declining enrollment which resulted in a 45% loss severity. Smaller specially serviced loans include five hotels that have suffered declines due to the pandemic and two REO multifamily properties that the special servicer is working to stabilize. Fitch Loans of Concern: The largest non-specially serviced FLOC is Baypoint Commerce Center (3.2%), a 689,778 sf office property in St. Petersburg, FL. Per the 3Q20 servicer-reported OSAR, the property is 93% occupied; however, tenants accounting for 17.4% of NRA have leases expiring in 2021. Due to the low leverage, Fitch did not model a loss on this loan. Smaller FLOCs include one multifamily, one hotel, and three retail loans where additional cash flow stress was applied due to the coronavirus pandemic and two office/retail loans where a major tenant has departed. Regional Mall: One loan (2.0%) is collateralized by a regional mall, the Lormax Stern Retail Development, known as Macomb Mall, in Roseville, MI. Major tenants at the mall include Kohl's, Dick's Sporting Goods and Michael's. Seritage owns the non-collateral anchor box that was formerly leased to Sears. Sears vacated in 2017 and most of the space has been leased to At Home and Hobby Lobby. As of 3Q20, the property was 93% occupied and performing at a 2.01x NOI DSCR. Coronavirus Exposure: The pool contains 13 hotel loans (17.8%) with a weighted average (WA) NOI DSCR of 2.31x. Retail properties account for 15 loans (21.5%) and have a WA NOI DSCR of 1.81x. Cashflow disruptions continue as a result of property and consumer restrictions due to the spread of the coronavirus. Fitch's base case analysis applied an additional NOI stress to four hotel loans and eight retail loans due to their vulnerability to the pandemic. Minimal Change to Credit Enhancement (CE): As of the January 2021 distribution date, the pool's aggregate principal balance has been reduced by 8.6% to $876.1 million from $959.0 million at issuance. Ten loans (26.0%) are full- term interest-only and 18 loans (29.4%) are partial-term interest-only loans, 13 of which (18.7%) have begun amortizing. Interest shortfalls are currently impacting class NR-RR. Two loan (5.1%) mature in 2022, three loans (1.9%) mature in 2026, and the remaining 60 loans (93.0%) mature in 2027. RATING SENSITIVITIES The Negative Outlooks on classes D, D-RR, E-RR, and F-RR reflect the potential for downgrades should the performance of the specially serviced assets and FLOCs continue to deteriorate. The Negative Outlooks also reflect concerns with hotel and retail properties due to declines in travel and commerce as a result of the pandemic. The Stable Outlooks on all other classes reflects the overall stable performance of the remainder of the pool. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Sensitivity factors that lead to upgrades would include stable to improved asset performance coupled with paydown and/or defeasance. Upgrades of classes B, C, and X-B would only occur with significant improvement in CE and/or defeasance, but would be limited unless the specially serviced assets and FLOCs stabilize. -- An upgrade to classes D, D-RR, E-RR, and F-RR is not likely until the later years in a transaction and only if the performance of the remaining pool is stable and/or if there is sufficient CE, which would likely occur when the senior classes payoff and if the non- rated classes are not eroded. While uncertainty surrounding the coronavirus pandemic continues, upgrades are not likely. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Sensitivity factors that lead to downgrades include an increase in pool level losses from underperforming or specially serviced loans. Downgrades to classes A-2, A-3, A-4, A-SB, X-A, A-S, and B are less likely due to the high CE and continued amortization but may occur at 'AAAsf' or 'AAsf' should interest shortfalls occur or if an outsized loss on a specially serviced asset or a FLOC becomes more likely. -- Downgrades to classes C and X-B would occur should overall pool losses increase and/or one or more large loans, such as the Unisquare Portfolio loan, have an outsized loss which would erode CE. Downgrades to classes D, D-RR, E-RR, and F-RR would occur should loss expectations increase due to an increase in specially serviced loans or an increase in the certainty of a loss on a specially serviced loan. -- The Negative Outlooks may be revised back to Stable if performance of the FLOCs and specially serviced assets improves and/or properties vulnerable to the pandemic stabilize once the health crisis subsides. In addition to its baseline scenario, Fitch also envisions a downside scenario where the health crisis is prolonged beyond 2021; should this scenario play out, Fitch expects that a greater percentage of classes may be assigned a Negative Outlook, or those with Negative Outlooks will be downgraded one or more categories. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. 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. UKG INC: Moody's Completes Review, Retains B2 Rating ---------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of UKG Inc., formerly known as Ultimate Software Group, Inc. (The), and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 28, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations UKG Inc., formerly known as The Ultimate Software Group, Inc., was formed by the merger between Kronos Incorporated and Ultimate Software in April 2020. The B2 rating reflects UKG's large operating scale with revenues approaching $3 billion, strong market positions in the Workforce Management (WFM) and HCM software segments, and a large proportion of recurring software maintenance and subscription revenues. The rating is constrained by elevated financial leverage and Moody's expectations for only modest free cash flow in 2021. But Moody's expects revenue growth in the high single digits and growing profitability to drive deleveraging to below 6x (including change in deferred revenue and Moody's standard analytical adjustments) by 2022. The company maintains very good liquidity. The rating additionally reflect Moody's expectations for shareholder-friendly financial policies and history of high financial tolerance under the ownership of financial sponsors. The principal methodology used for this review was Software Industry published in August 2018. UNITI GROUP: Completes $1.11 Billion Senior Notes Offering ---------------------------------------------------------- Uniti Group Inc. has successfully completed its previously announced private offering of $1.11 billion aggregate principal amount of 6.50% senior notes due 2029 by its subsidiaries, Uniti Group LP, Uniti Group Finance 2019 Inc. and CSL Capital, LLC and the early settlement election exercised by the Issuers of their previously announced cash tender offer to purchase any and all of the Issuers' outstanding 8.25% Senior Notes due 2023 and the related solicitation of consents to certain proposed amendments to the indenture governing the Existing Notes to eliminate substantially all of the restrictive covenants and certain events of default. The Offer is being made pursuant to an Offer to Purchase and Consent Solicitation Statement dated Jan. 19, 2021, which more fully sets out the terms of the Offer and Consent Solicitation. The Issuers accepted for purchase, and paid for, $1,050,928,000 aggregate principal amount of Existing Notes that were validly tendered (and not validly withdrawn) at or prior to 5:00 p.m. New York City time, on Feb. 1, 2021. Holders of Existing Notes that have been accepted for purchase in connection with the Early Tender Date received the applicable total consideration of $1,016.70, which includes an early tender premium of $30.00 per $1,000 principal amount of the Existing Notes accepted for purchase. Holders of Notes accepted for purchase pursuant to the Offer also received accrued and unpaid interest on the Existing Notes from the last interest payment date to, but not including, Feb. 2, 2021. The Issuers used the net proceeds from the sale of the New Notes to fund the purchase of Existing Notes accepted for purchase pursuant to the Offer. Pursuant to the Consent Solicitation, the Issuers obtained the Requisite Consents, which allows the Issuers to amend the Existing Notes Indenture. The Issuers and trustee to the Existing Notes Indenture have executed a supplemental indenture to the Existing Notes Indenture to implement the Proposed Amendments. The Financing Condition (as defined in the Statement) was satisfied upon the Issuers' successful completion today of its private offering of the New Notes. The Offer expires on the Expiration Date, which is currently expected to occur at 11:59 p.m., New York City time, on Feb. 16, 2021, unless extended, earlier expired or terminated by the Company in its sole discretion, and, in the case of extension of the Expiration Date, will be such date to which the Expiration Date is extended. Holders who tender Existing Notes after the Early Tender Date will receive the tender offer consideration of $986.70 per $1,000 principal amount of the Existing Notes but will not receive the early tender premium. Tenders of Existing Notes submitted after the Expiration Date will not be valid. In connection with the Offer and Consent Solicitation, Citigroup Global Markets Inc. is acting as the dealer manager for the Offer and solicitation agent for the Consent Solicitation. Global Bondholder Services Corporation is serving as the information and tender agent. Requests for assistance or copies of the Statement or any other documents related to the Offer and Consent Solicitation may be directed to the Information and Tender Agent at (866) 924-2200 or contact@gbsc-usa.com. Questions or requests for assistance in relation to the Offer and Consent Solicitation may be directed to the Dealer Manager and Solicitation Agent at (212) 723-6106 (collect) or (800) 558-3745 (toll-free). The Offer is not being made to Holders of Existing Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In any jurisdiction in which the securities laws or blue sky laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Issuers by the Dealer Manager and Solicitation Agent, or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. About Uniti Headquartered in Little Rock, Arkansas, Uniti -- http://www.uniti.com-- is an internally managed real estate investment trust. It is engaged in the acquisition and construction of mission critical communications infrastructure, and is a provider of wireless infrastructure solutions for the communications industry. As of Sept. 30, 2020, Uniti owns 6.7 million fiber strand miles and other communications real estate throughout the United States. PricewaterhouseCoopers LLP, in Little Rock, Arkansas, the Company's auditor since 2014, issued a "going concern" qualification in its report dated March 12, 2020, citing that the Company's most significant customer, Windstream Holdings, Inc., which accounts for approximately 65.0% of consolidated total revenues for the year ended Dec. 31, 2019, filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, and uncertainties surrounding potential impacts to the Company resulting from Windstream Holdings, Inc.'s bankruptcy filing raise substantial doubt about the Company's ability to continue as a going concern. As of Sept. 30, 2020, the Company had $4.83 billion in total assets, $6.83 billion in total liabilities, and a total shareholders' deficit of $1.99 billion. * * * In March 2020, S&P Global Ratings placed all ratings on U.S. telecom REIT Uniti Group Inc., including the 'CCC-' issuer credit rating, on CreditWatch with positive implications. The CreditWatch placement follows the company's announcement it reached an agreement in principle with its largest tenant Windstream Holdings Inc. to resolve all legal claims it asserted against Uniti in the context of Windstream's bankruptcy proceedings. UNIVERSITY PLACE: Has Cash Collateral Access Thru February 8 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Washington has authorized University Place Rehabilitation Center and affiliates to use cash collateral on an interim basis pursuant to a budget through February 8, 2021. The court says the terms of the Emergency Order Authorizing Interim Use of Cash Collateral, Granting Interim Approval of Adequate Protection, Authorizing Post-Petition Financing and Setting Final Hearing, Dkt. No. 38, are incorporated by reference and remain in full force and effect, with the exception of the modification in Paragraph 2. Pursuant to 11 U.S.C. sections 363 and 364, the Debtors are authorized on an interim basis, and only in accordance with the terms of the Interim Order and the Interim Budget, to (i) use Cash Collateral to fund the reasonable, necessary and ordinary costs and expenses of their operations, and (ii) continue requesting and receiving Loan Advances from the First Lienholder on the same terms and conditions as the Loan provided, however, the authority to use Cash Collateral and the DIP Loan will immediately terminate upon the earlier of (a) February 8, 2021 (b) entry of a subsequent order of the Court terminating the Debtors' authority to use Cash Collateral or the DIP Loan; or (c) the occurrence of a Change Event. A copy of the Order is available for free at https://bit.ly/39PMlXB from PacerMonitor.com. About University Place Rehabilitation Center University Place Rehabilitation Center, LLC owns and operates a skilled nursing care facility in University Place, Wash. University Place Rehabilitation Center and its affiliates, Renton Healthcare Rehabilitation Center LLC and Talbot Rehabilitation Center LLC, filed Chapter 11 petitions (Bankr. W.D. Wash. Lead Case No. 20-42793) on Dec. 18, 2020. CEO Eric Orse of Orse & Company, Inc. signed the petitions. In the petitions, University Place Rehabilitation Center disclosed $3,746,381 in assets and $5,684,608 in liabilities. The Debtors tapped Bush Kornfeld LLP as their bankruptcy counsel, and Tracy Law Group, PLLC and McNaul Ebel Nawrot & Helgren PLLC as special counsel. The U.S. Trustee for Region 18 appointed an official committee of unsecured creditors in the Debtors' cases on Jan. 4, 2020. The committee hired Troutman Pepper Hamilton Sanders LLP as bankruptcy counsel and Groshong Law PLLC as local counsel. US STEEL: Equity Proceeds No Impact on Moody's Caa1 Rating ---------------------------------------------------------- Moody's Investors Service noted that United States Steel Corporation's (U. S. Steel, Caa1 stable) use of the majority of the proceeds from its secondary equity offering to redeem a portion of its 12% senior secured notes due 2025 is credit positive since it will result in a material pay down of high cost debt and significant interest cost savings. Headquartered in Pittsburgh, Pennsylvania, United States Steel Corporation is the third largest flat-rolled steel producer in the US in terms of production capacity. The company manufactures and sells a wide variety of steel sheet, tubular and tin products across a broad array of industries including service centers, transportation, appliance, construction, containers, and oil, gas and petrochemicals. It also has an integrated steel plant and coke production facilities in Slovakia (U. S. Steel Kosice). Revenues for the twelve months ended December 31, 2020 were $9.7 billion. VALKYR PURCHASER: Moody's Completes Review, Retains B2 Rating ------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Valkyr Purchaser, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Valkyr Purchaser, LLC's (dba Veracode) B2 credit profile reflects the company's moderately high leverage, small business scale and exposure to the fragmented and highly competitive application security market, and aggressive financial policy due to private equity ownership with the likelihood of debt financed acquisitions resulting in elevated integration risks and increased debt levels. In addition, the economic recession has moderately slowed down the company's rapid revenue growth, but Moody's still expect high single digit revenue growth in the near term. Veracode benefits from its leading position in the application security market, its comprehensive portfolio of application security testing services, as well as solid organic growth potential driven by the increasing number of enterprise applications, growing adoption of DevOps (a combination of development and IT operations that aims to shorten application development and deployment) and rising cybersecurity concerns. The majority of the company's revenue is generated on recurring SaaS and subscription basis, which coupled with historically solid retention rates provides good revenue predictability. The principal methodology used for this review was Software Industry published in August 2018. VALKYR PURCHASER: Moody's Completes Review, Retains B2 Rating ------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Valkyr Purchaser, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Valkyr Purchaser, LLC's (dba Veracode) B2 credit profile reflects the company's moderately high leverage, small business scale and exposure to the fragmented and highly competitive application security market, and aggressive financial policy due to private equity ownership with the likelihood of debt financed acquisitions resulting in elevated integration risks and increased debt levels. In addition, the economic recession has moderately slowed down the company's rapid revenue growth, but we still expect high single digit revenue growth in the near term. Veracode benefits from its leading position in the application security market, its comprehensive portfolio of application security testing services, as well as solid organic growth potential driven by the increasing number of enterprise applications, growing adoption of DevOps (a combination of development and IT operations that aims to shorten application development and deployment) and rising cybersecurity concerns. The majority of the company's revenue is generated on recurring SaaS and subscription basis, which coupled with historically solid retention rates provides good revenue predictability. The principal methodology used for this review was Software Industry published in August 2018. VERSCEND HOLDING: Moody's Hikes Rating on First Lien Debt to B2 --------------------------------------------------------------- Moody's Investors Service affirmed Verscend Holding Corp.'s (dba "Cotiviti") B3 corporate family rating and B3-PD probability of default rating. Moody's upgraded instrument ratings to B2, from B3, on the healthcare information technology and analytics provider's first-lien debt, which includes a $300 million revolving facility and a term loan that is being upsized to $3.69 billion, from $3.14 billion. Proceeds from the incremental term loan, from a new, $275 million second-lien term loan (unrated), $150 million of preferred equity, and $128 million of cash from Cotiviti's balance sheet will be used to acquire, with backing from Cotiviti's private equity owner Veritas Capital, certain assets from another Veritas-backed company that that company is currently buying from publicly traded entity HMS. The assets that Cotiviti will be acquiring, indirectly, from HMS are related to commercial coordination of benefits, population health management, and Medicare- and health-plan-related payment integrity assets. Cotiviti's outlook remains stable. Affirmations: Issuer: Verscend Holding Corp. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD6) from (LGD5) Upgrades: Issuer: Verscend Holding Corp. Senior Secured Bank Credit Facility, Upgraded to B2 (LGD3) from B3 (LGD3) Outlook Actions: Issuer: Verscend Holding Corp. Outlook, Remains Stable RATINGS RATIONALE Cotiviti's strategic, mostly debt-funded acquisition of additional IT and analytics capabilities from the HMS assets will increase Moody's-adjusted, pro-forma opening debt-to-EBITDA leverage by just over a half turn, to about 7.7 times. This leverage level is nevertheless improved by more than two turns from when we rated the company in August 2018 when Verscend, with Veritas's backing, undertook a heavily leveraged acquisition of Cotiviti. As a result, Moody's views Cotiviti today as more securely positioned within the B3 CFR, despite the moderately leveraging impact from the addition of the HMS assets. By the end of 2021, Moody's expects Cotiviti's leverage to ease towards 6.5 times, and for free cash flow as a percentage of debt to approach 5%, both measures positioning the company comfortably in the B3 CFR. Since the 2018 merger of Verscend and Cotiviti, the combined company has successfully managed rapid growth and synergy realization while improving its liquidity. It continued to achieve these successes through the COVID-19 pandemic in 2020, when mid-single-digit revenue declines, due to timing delays caused by pandemic related cancellations of elective procedures, mostly in the second quarter, were offset by cost cutting efforts that boosted the company's already strong profit margins. Cotiviti has delivered on what Moody's had viewed as an aggressive goal of nearly $200 million in operating synergies. The resultant reduction in addback assumptions has improved Cotiviti's quality of earnings as well. Demand for elective and preventative procedures and services ramped up in the latter half of the year as states eased lock-up guidelines and as telemedicine was increasingly employed. Ratings are supported by Cotiviti's leading revenue scale in prospective- and retrospective medical-claims-accuracy solutions, a developing segment of healthcare whose fundamentals Moody's expects will provide tailwinds. The addition of the HMS Medicare assets boosts Cotiviti's $1.1 billion revenue base by nearly 20%. HMS's post-payment capabilities (in areas such as clinical claims review, fraud, and data mining) would complement Cotiviti's strong presence in pre-payment claims solutions. Management sees cost reduction opportunities through headcount reduction and, mostly, non-headcount efficiencies through scale benefits, platform integration and vendor consolidation, and the elimination of public company costs. The nearly $50 million in savings goals are ambitious relative to the target entity's $31 million in acquired EBITDA, but Moody's notes Veritas's overachievement in realizing profitability gains with both Verscend's predecessor company (Verisk Health) and Cotiviti itself. Moody's also considers governance matters as a driver of the ratings action. The company has delevered to levels more appropriate for the CFR, and in this transaction it is incorporating preferred equity that helps subdue the acquisition's leveraging impact. The slowdown in 2020 notwithstanding, Cotiviti has realized revenue growth in recent years that has exceeded the PI market's mid-single digit revenue growth. Moody's expects the company to again exceed overall industry growth over the next 12 to 18 months, given the strength of its offerings, customer relationships, and market position. Industry tailwinds include favorable demographics, the need to contain rising healthcare spend, increasing regulatory complexity, and eligibility expansion of Medicaid and Medicare. A healthy and quickly building cash balance, to over $200 million in 2021, and no drawings under Cotiviti's $300 million revolver through all of 2020 and, Moody's expects, through 2021 as well, underscore the company's adequate and improving liquidity position. Pro-forma for the nearly $120 million that will be swept to effect the HMS acquisition, Cotiviti at December 31, 2020 has a better than $110 million cash balance. Moody's expects free cash flow of better than $200 million in 2021. Since the merger with Verscend in August 2018, the company has not needed to draw from its ample $300 million revolving credit facility. Moody's expects the combined company to realize revenue growth of at least 10% while, with the realization of management's forecast synergies, EBITDA margins will approximate 50%, the strongest among our rated universe of healthcare analytics companies. Required annual amortization payment on the term loan is $37 million, while interest expense is about $325 million a year and capex is nearly $150 million. The revolving credit facility (only) has a springing first-lien net leverage ratio covenant, applicable when at least 35% of the revolver is drawn. It is set very loosely, at 8.5 times. Moody's do not expect revolver drawings will trigger the covenant requirement over the next twelve months. Neither the term loan nor the unsecured notes are subject to financial maintenance covenants. The ratings for Cotiviti's debt instruments reflect both the overall Probability of Default of the company, reflected in the B3-PD Probability of Default rating, and a loss given default assessment of the individual debt instruments. Because Cotiviti's capital structure at the time of our original, 2018 ratings assignment had been unusually levered -- leverage through the first lien was (and continues to be) about 6.0 times, on a Moody's-adjusted basis -- and because the company had been weakly positioned in the B3 CFR, Moody's reasoned that a B3 facility rating more accurately captured the risk that first-lien lenders face. In this transaction, both the introduction of $275 million of second-lien debt, which adds instrument-ratings support to Cotiviti's first lien debt, and the stronger overall credit profile of the company, compel Moody's to upgrade the first-lien debt to B2, in accordance with its LGD framework. The stable rating outlook reflects our expectation that as regions gradually reopen across the country, consumer demand for elective and preventative procedures will revert to normalized levels. Revenue in 2021, after falling mid-single-digit percentages in 2020, will rebound to grow at better than 10%. Economies of scale and judicious cost cutting will enable the company to continue to deliver very strong, roughly 50% EBITDA margins. Moody's expects leverage will moderate towards 6.5 times in 2021. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's would consider a ratings upgrade if: i) Cotiviti is able to deliver healthy revenue gains while maintaining profitability and good liquidity; ii) Moody's expects debt-to-EBITDA will be sustained below 6.5 times, and; iii) Moody's expect free cash flow as a percentage of debt will be sustained above 5%. Moody's would consider a downgrade if: i) the improving debt-to-EBITDA leverage trend reverses itself; ii) Moody's expects free cash flow to deteriorate to breakeven, or; iii) Moody's anticipates liquidity will deteriorate. With Moody's-expected 2021 revenues approaching $1.5 billion, Verscend Holding Corp. (dba "Cotiviti", headquartered in Atlanta, GA) provides data analytics services to healthcare insurance payors and healthcare providers that enable those customers to drive financial performance. Private equity sponsor Veritas Capital Fund Management bought Verscend from parent company Verisk Analytics in June 2016. In August 2018 the company closed on the $4.9 billion acquisition of Cotviti, a leading provider of technology-enabled pre- and post-payment integrity solutions to health insurers and the CMS, as well as to retail businesses. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. VERTEX ENERGY: Regains Full Compliance With Nasdaq Requirement -------------------------------------------------------------- Vertex Energy, Inc. received a letter on Feb. 2, 2021 from The Nasdaq Stock Market indicating that Vertex has regained full compliance with the minimum bid price for continued listing on the Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2). As indicated in the letter, Nasdaq determined that for 10 consecutive business days, the closing bid price of Vertex's common stock was at or above $1.00 per share. Accordingly, Vertex has regained compliance with the Minimum Bid Price Requirement. About Vertex Energy Houston-based Vertex Energy, Inc. (NASDAQ: VTNR) is a specialty refiner of alternative feedstocks and marketer of petroleum products. Vertex is one of the largest processors of used motor oil in the U.S., with operations located in Houston and Port Arthur (TX), Marrero (LA) and Heartland (OH). Vertex also co-owns a facility, Myrtle Grove, located on a 41-acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydro-processing and plant infrastructure assets, that include nine million gallons of storage. The Company has built a reputation as a key supplier of Group II+ and Group III base oils to the lubricant manufacturing industry throughout North America. Vertex reported a net loss of $5.48 million for the year ended Dec. 31, 2019, compared to a net loss of $1.98 million for the year ended Dec. 31, 2018. VESTAVIA HILLS: Court Extends Plan Exclusivity Thru July 3 ---------------------------------------------------------- At the behest of Debtor Vestavia Hills, Ltd. d/b/a Mount Royal Towers, Judge Louise Decarl Adler of the U.S. Bankruptcy Court for the Southern District of California extended the period in which the Debtor may file a chapter 11 plan through and including July 3, 2021, and to solicit acceptances through and including September 3, 2021. The Debtor is current on all of its post-petition liabilities and significant good-faith progress has been made in this case already, including: (i) stabilizing the Debtor's businesses and operations; (ii) seeking and obtaining Court approval of a process for the sale of substantially all assets; (iii) securing much-needed PPP funds to help with operations during the pandemic; and (iv) establishing constructive working relationships with the United States Trustee and with the Court's intervention also with the Debtor's senior secured creditor, Wells Fargo Bank, N.A.-–all while facing and dealing with the exigencies and emergency responses required by the coronavirus pandemic. The request for exclusivity extension is not a tactic to pressure creditors. All parties in interest agreed that under the current circumstances that exist, compounded by the COVID-19 pandemic, a sale of the Debtor's operating business is the most reasonable path for this case, not only to maximize value but also to protect the health and welfare of the elderly residents of Mount Royal Towers (MRT). The sale order was not appealed and hence is a final order of the Court, and the parties to the sale–-the Debtor and the buyer, MED Healthcare Partners, LLC-–have been working together diligently to obtain the necessary approvals and transfers of licenses so that the sale can close. The closing process has been delayed by the COVID pandemic that has hit the Alabama area surrounding MRT (including the first outbreak of COVID virus detected within the facility) but also by certain tactics by a third party which further placed roadblocks in the licensing process. In addition, the Debtor is working diligently to ensure that it will not only be able to keep the PPP funds it received following the Court's favorable rulings on its motion for a preliminary injunction against the SBA but now is working to obtain forgiveness of the PPP "loan" while litigation with the SBA (including the SBA's appeal of this Court's injunction order) is pending in the district court. Resolution of the SBA litigation will have a material impact on the Debtor's reorganization. The extension will allow the Debtor to continue to focus on preserving the health and safety of the elderly residents of Mount Royal Towers and enhancing going concern value, and then monetizing it for the benefit of creditors through the Court-approved sale process. The additional time will not only allow the Debtor and MED to close the court-approved sale of the MRT assets of the Debtor, but it likely will allow the Debtor and the Limited Partners to reach a further agreement with Wells Fargo regarding treatment and satisfaction of its claim. It will also permit the Debtor to propose a plan to deal with the remaining claims, including the litigation with Commonwealth which is currently stayed) as well as other litigation-related matters concerning, inter alia, the Small Business Administration and property tax assessments remain open and unfinished. A copy of the Debtor's Motion to extend is available from PacerMonitor.com at https://bit.ly/2YwyMpB at no extra charge. A copy of the Court's Extension Order is available from PacerMonitor.com at https://bit.ly/3thEXvR at no extra charge. About Vestavia Hills Ltd. Vestavia Hills, Ltd., which conducts business under the name Mount Royal Towers, operates a continuing care retirement community and assisted living facility for the elderly in Vestavia Hills, Ala. It offers individualized senior living options for a convenient community lifestyle and provides personalized nursing care. Vestavia Hills sought Chapter 11 protection (Bankr. S.D. Cal. Case No. 20-00018-11) on January 3, 2020. Debtor disclosed $18,531,957 in assets and $29,742,790 in liabilities as of the bankruptcy filing. Judge Louise Decarl Adler oversees the case. The Debtor tapped Sullivan Hill Rez & Engel as its legal counsel and Harbuck Keith & Holmes, LLC as its special Alabama licensing and regulatory counsel. VIDEOMINING CORP: Asks Ct. to Extend Plan Exclusivity Until May 29 ------------------------------------------------------------------- Debtor VideoMining Corporation asks the U.S. Bankruptcy Court for the Western District of Pennsylvania, to extend the Debtor's exclusive period to file a plan of reorganization and to solicit acceptances to May 29, 2021, and July 28, 2021, respectively. On November 24, 2020, this Honorable Court approved the Third Stipulation and Consent Order Modifying and Extending Orders Authorizing DIP Financing and Use of Cash Collateral. Importantly, under the Third Cash Collateral Stipulation, the Debtor and its secured creditors agreed to new dates for which the Debtor is to implement a sales process for some or all of its assets. Specifically, the Debtor is to enter into a binding asset purchase agreement for some or all of its assets by March 31, 2021. Further, and in the event that the Debtor has not entered into a binding asset purchase agreement on or before March 31, 2021, the Debtor shall commence and conduct an auction for its patent assets by April 30, 2021. Such a sale or auction will significantly affect the direction of this case and the Debtor submits that the exclusivity periods should be extended until the Debtor has had time to implement either scenario. The requested extension is in the best interest of this Estate and all parties in interest. A copy of the Debtor's Motion to extend is available from PacerMonitor.com at https://bit.ly/3r7k0ll at no extra charge. About Videomining Corporation VideoMining Corporation -- http://www.videomining.com/-- is an in-store behavior analytics for Consumer Packaged Goods (CPG) manufacturers and retailers. VideoMining's analytics platform utilizes a patented suite of sensing technologies to capture in-depth shopper behavior data. These previously unmeasured insights are then integrated with multiple other data sources such as transactions, planograms, product mapping, loyalty and promotions to fuel comprehensive solutions for optimizing shopper experience and sales performance. VideoMining Corporation filed a Chapter 11 petition (Bankr. W.D. Pa. Case No. 20-20425) on February 4, 2020. In the petition signed by Rajeev Sharma, chief executive officer, the Debtor was estimated to have between $10 million and $50 million in assets and between $1 million and $10 million in liabilities. Judge Gregory L. Taddonio oversees the case. The Debtor tapped Robert O Lampl Law Office as the legal counsel and Onmyodo, LLC as financial consultant, and ICAP Patent Brokerage LLC to market its patents. VIRTUOLOTRY LLC: Seeks to Hire Spencer Fane as New Legal Counsel ---------------------------------------------------------------- Virtuolotry, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to hire Spencer Fane L.L.P. as its legal counsel in substitution of Pronske & Kathman, P.C. as of Jan. 1. Pronske & Kathman attorneys of record in the Debtor's Chapter 11 case, Jason Kathman, Esq., Gerrit Pronske, Esq., and Megan Clontz, Esq., joined Spencer Fane effective Jan. 1. Spencer Fane will charge at its normal billing rates for attorneys and legal assistants and will request reimbursement for its out-of-pocket expenses. Mr. Kathman disclosed in court filings that the firm and its attorneys are "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Jason Patrick Kathman, Esq. Spencer Fane L.L.P. 5700 Granite Parkway, Suite 650 Plano, TX 75024 Tel: 972-324-0300 Fax: 972-324-0301 Email: jkathman@spencerfane.com About Virtuolotry LLC Virtuolotry, LLC, a company engaged in renting and leasing real estate properties, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas Case No. 19-33900) on Nov. 22, 2019. At the time of the filing, the Debtor had estimated assets of less than $50,000 and liabilities of between $1 million and $10 million. Judge Harlin DeWayne Hale oversees the case. The Debtor tapped Spencer Fane L.L.P. as its new legal counsel. Pronske & Kathman, P.C. had previously represented the Debtor in its Chapter 11 case. VISTAGEN THERAPEUTICS: Names Mark Ginski as SVP, Head of CMC ------------------------------------------------------------ Mark J. Ginski, Ph.D. joined VistaGen Therapeutics, Inc. as senior vice president, Head of CMC (Chemistry, Manufacturing and Controls). Dr. Ginski, 49, joined VistaGen with over 25 years of broad CMC leadership experience, spanning preclinical and clinical development through commercial manufacturing of both drug substance and drug product for small molecules, peptides and biologics. Since September 2020, Dr. Ginski has been acting as a part-time consultant to the Company, providing certain CMC advisory services to the Company. Prior to September 2020, Dr. Ginski served as vice president, Product Development for ANI Pharmaceuticals from May 2016 to June 2020. From July 2013 to May 2016, Dr. Ginski served as Senior Director, CMC and Operations, Autoimmune and Rare Diseases for Questcor Pharmaceuticals/Mallinckrodt Pharmaceuticals. Dr. Ginski has previously held various leadership positions with Guilford Pharmaceuticals, Shire Pharmaceuticals and Alba Therapeutics. Dr. Ginski holds a B.S. in Biological Sciences from the University of Maryland and received his Ph.D. in Pharmaceutical Studies from the University of Maryland School of Pharmacy. There are no arrangements or understandings between Dr. Ginski and any other person pursuant to which he joined the Company, and Dr. Ginski is not a participant in any related party transaction required to be reported pursuant to Item 404(a) of Regulation S-K. About VistaGen Headquartered in San Francisco, California, VistaGen Therapeutics -- http://www.vistagen.com-- is a clinical-stage biopharmaceutical company developing new generation medicines for CNS diseases and disorders where current treatments are inadequate, resulting in high unmet need. VistaGen's pipeline is focused on clinical-stage CNS drug candidates with a differentiated mechanism of action, an exceptional safety profile in all clinical studies to date, and therapeutic potential in multiple large and growing CNS markets. VistaGen reported a net loss attributable to common stockholders of $22.04 million for the fiscal year ended March 31, 2020, compared to a net loss attributable to common stockholders of $25.73 million for the fiscal year ended March 31, 2019. As of Sept. 30, 2020, Vistagen had $20.27 million in total assets, $16.05 million in total liabilities, and $4.22 million in total stockholders' equity. OUM & CO. LLP, in San Francisco, California, the Company's auditor since 2006, issued a "going concern" qualification in its report dated June 29, 2020, citing that the Company has not yet generated sustainable revenues, has suffered recurring losses and negative cash flows from operations and has a stockholders' deficit, all of which raise substantial doubt about its ability to continue as a going concern. VITALITY RE XII 2021: S&P Assigns 'BB+ (sf)' Rating on Cl. B Notes ------------------------------------------------------------------ S&P Global Ratings assigned 'BBB+ (sf)' and 'BB+ (sf)' ratings to the Class A and B notes, respectively, to be issued by Vitality Re XII Ltd. The notes will cover claims payments of Health Re Inc.-- and ultimately, Aetna Life Insurance Company (ALIC; A-/Stable/--)--related to the covered insurance business to the extent the medical benefits ratio (MBR) exceeds 104% for the Class A notes and 98% for the Class B notes. The MBR is calculated on an annual aggregate basis. S&P based its ratings on the lowest of the following: -- The MBR risk factor on the ceded risk ('bbb+' for the Class A notes and 'bb+' for the Class B notes), -- The rating on ALIC (the underlying ceding insurer), or -- The rating on the permitted investments ('AAAm') that will be held in the collateral account (there is a separate collateral account for each Class of notes) at closing. According to the risk analysis provided by Milliman Inc., one of the world's largest providers of actuarial and related products and services, the primary driver of historical financial fluctuations has been the volatility in per capita claims cost trends and lags in insurers' reactions to these trend changes in their premium rating increases. Other volatility factors include changes in expenses and target profit margins. Although these factors cause the majority of claims' volatility, the extreme tail risk is affected by severe pandemic. This is the sixth Vitality Re issuance that permits the probability of attachment--for the Class A notes only--to be reset higher or lower than at issuance. For each reset of the Class A notes, if any Class B notes are outstanding on the applicable reset calculation date, the updated MBR attachment of the Class A notes will be set so it is equal to the updated MBR exhaustion for the Class B notes. VS BUYER: Moody's Completes Review, Retains B2 CFR -------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of VS Buyer, LLC (Veeam) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on January 27, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Veeam's B2 Corporate Family Rating reflects the company's high leverage offset by the leading market position in the backup and recovery software market and a strong growth profile. Veeam has built a particularly strong position as a provider of backup and recovery software for virtualized environments. Cash flow benefits from the PIK nature of the holding company seller notes, but given the high coupon on the PIK notes, deleveraging will be limited due to the increasing debt levels. The principal methodology used for this review was Software Industry published in August 2018. WC 4811 SOUTH: 4811 SoCo Says Disclosures Lack Information ---------------------------------------------------------- 4811 SoCo, LP filed this Objection to Approval of the WC 4811 South Congress, LLC's Disclosure Statement and respectfully states as follows: 4811 SoCo is the assignee to First State Bank, Central Texas, under a loan in the amount of $4,745,000 pursuant to a certain Loan Agreement dated March 31, 2017. The Lender claims that the Debtor's Disclosure Statement is so lacking in "adequate information," as required by 11 U.S.C. Sec. 1125 and outlined by courts in this Circuit, that it is completely indecipherable on key issues affecting creditor votes. For example, the Disclosure Statement lacks adequate information such as a description of the events leading to the Debtor's Chapter 11 filing, the Debtor's available assets and their value, the estimated administrative expenses, and the relationship of the Debtor with its affiliates. Further, the Lender points out that the Disclosure Statement does not contain any financial information, data, valuations or projections relevant to the creditors' decision to accept or reject the Chapter 11 plan, the accounting method utilized to produce financial information and the name of the accountants responsible for such information, the source of information stated in the Disclosure Statement, the present condition of the Debtor while in Chapter 11, the future management of the Debtor, or the actual or projected realizable value from recovery of preferential or otherwise voidable transfers. To make matters worse, none of this information is otherwise available to the creditors, as the Debtor has failed to provide any business records requested by the US Trustee and has only filed one Monthly Operating Report since filing for chapter 11 protection in October 2020. In addition to failing to provide adequate information, the Lender claims that the Disclosure Statement describes a plan that is patently unconfirmable on its face. Nearly one month has passed since the Debtor was required to file its Plan and Disclosure Statement under 11 U.S.C. Sec. 362(d)(3), yet the Debtor has not provided (a) any evidence of committed refinancing or the amount it is seeking to refinance the Property for, (b) any indication that it has taken steps to procure a sale of the Property, (c) the name of any affiliate willing and able to provide an equity infusion to the Debtor or the amount of this equity infusion, or (d) any financial projections whatsoever. Further, the Lender avers that the Disclosure Statement and the Plan contain impermissible non-debtor releases, which have been expressly prohibited by the Fifth Circuit. Counsel for 4811 Soco, LP: Jason G. Cohen BRACEWELL LLP 711 Louisiana, Suite 2300 Houston, Texas 77002 Telephone: (713) 223-2300 Facsimile: (713) 221-1212 E-mail: Jason.Cohen@bracewell.com Chris.Dodson@bracewell.com About WC 4811 South Congress WC 4811 South Congress LLC, a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)), owns an income-producing mixed-use real estate development located at 4811 South Congress Ave. in Austin, Texas that includes a mobile home park, rental buildings and land to be used for future development. World Class Holdings III, LLC, is the managing member of WC 4811 South Congress and is an affiliate of Natin Paul. WC 4811 South Congress sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-11105) on Oct. 6, 2020. The petition was signed by Natin Paul, president of the managing member. At the time of the filing, the Debtor had estimated assets of between $10 million and $50 million and liabilities of between $1 million and $10 million. Fishman Jackson Ronquillo PLLC is the Debtor's legal counsel. WC HIRSHFELD: Court Approves Disclosure Statement ------------------------------------------------- Judge Tony M. Davis has entered an order approving the Disclosure Statement filed by the WC Hirshfeld Moore, LLC. Feb. 26, 2021, at 4:00 p.m. (CT), is fixed as the last day for submitting ballots for acceptances or rejections of the Plan. Feb. 26, 2021, at 4:00 p.m. (CT), is the last day for filing and serving written objections to confirmation of the Plan. By March 2, 2021, counsel for the Debtor will file with the Court a ballot summary. March 4, 2021, at noon (CT), is the deadline for Debtors to file a reply to any unresolved objections filed to the Plan. March 5, 2021, at 9:00 a.m. (CT), at the U.S. Bankruptcy Court, Courtroom No. 1, 903 San Jacinto Blvd., Austin, Texas, is fixed as the time and place of the hearing on confirmation of the Plan and any objections thereto. About WC Hirshfeld Moore WC Hirshfeld Moore, LLC, et al., are entities formed by Nate Paul to purchase properties in May 2018 to July 2018 in Austin, Texas. Nate Paul is a successful real estate entrepreneur very active in the Austin market, one of the hottest real estate markets in the country. World Class Holdings XI, LLC, is the sole member of each of the Debtors. WC Hirshfeld Moore, LLC and seven debtor-affiliates filed Chapter 11 petitions (Bankr. W.D. Tex. Lead Case No. 20-10251) on Feb. 3, 2020. The debtor-affiliates are (i) WC 103 East Fifth, LLC, (ii) WC 320 Congress, LLC, (iii) WC 422 Congress, LLC, (iv) WC 805-809 East Sixth, LLC, (v) WC 901 East Cesar Chavez, LLC, (vi) WC 1212 East Sixth, LLC and (vii) WC 9005 Mountain Ridge, LLC. Judge Tony M. Davis oversees the cases. At the time of the filing, WC Hirshfeld Moore disclosed assets of between $10 million and $50 million and liabilities of the same range. The Debtors tapped Ciardi, Ciardi & Astin as their primary restructuring counsel, and Loewinsohn Flegle Deary Simon LLP as Ciardi's co-counsel. WC TEAKWOOD: 8209 Burnet Says Plan Disclosures Insufficient ----------------------------------------------------------- 8209 Burnet, LP, filed an objection to approval of the WC Teakwood Plaza, LLC's Disclosure Statement. 8209 Burnet avers that the Debtor's Disclosure Statement is so lacking in "adequate information," was required by 11 U.S.C. Sec. 1125 and outlined by courts in this Circuit, that it is completely indecipherable on key issues affecting creditor votes. For example, the Disclosure Statement lacks adequate information such as a description of the events leading to the Debtor's Chapter 11 filing, the Debtor's available assets and their value, the estimated administrative expenses, and the collectability of accounts receivable. Further, according to 8209 Burnet, the Disclosure Statement does not contain any financial information, data, valuations or projections relevant to the creditors' decision to accept or reject the Chapter 11 plan, the accounting method utilized to produce financial information and the name of the accountants responsible for such information, the source of information stated in the Disclosure Statement, the present condition of the Debtor while in Chapter 11, the future management of the Debtor, the actual or projected realizable value from recovery of preferential or otherwise voidable transfers, or the relationship of the Debtor with its affiliates. To make matters worse, 8209 Burnet points out that almost none of this information is otherwise available to the creditors, as the Debtor has failed to provide any business records requested by the US Trustee and has only filed one Monthly Operating Report since filing for chapter 11 protection in October 2020. In addition to failing to provide adequate information, 8209 Burnet claims that the Disclosure Statement describes a plan that is patently unconfirmable on its face. It notes that nearly one month has passed since the Debtor was required to file its Plan and Disclosure Statement under 11 U.S.C. Sec. 362(d)(3), yet the Debtor has not provided (a) any evidence of committed refinancing or the amount it is seeking to refinance the Property for, (b) any indication that it has taken steps to procure a sale of the Property, (c) the name of any affiliate willing and able to provide an equity infusion to the Debtor or the amount of this equity infusion, or (d) any financial projections whatsoever. Further, according to 8209 Burnet, the Disclosure Statement and the Plan contain impermissible non-debtor releases, which have been expressly prohibited by the Fifth Circuit. Counsel for 8209 Burnet, LP: Jason G. Cohen Christopher L. Dodson BRACEWELL LLP 711 Louisiana, Suite 2300 Houston, Texas 77002 Telephone: (713) 223-2300 Facsimile: (713) 221-1212 E-mail: Jason.Cohen@bracewell.com Chris.Dodson@bracewell.com About WC Teakwood Plaza Based in Austin, Texas, WC Teakwood Plaza LLC owns and operates a 3.4-acre shopping center at 8201-8209 Burnet Road, Austin, Texas that houses a number of business tenants. World Class Holdings III, LLC, is the managing member of WC Teakwood and is an affiliate of Natin Paul. WC Teakwood Plaza sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-11104) on Oct. 6, 2020. The petition was signed by Natin Paul, president of managing member. At the time of the filing, the Debtor had estimated assets of between $10 million and $50 million and liabilities of between $1 million and $10 million. Fishman Jackson Ronquillo PLLC is the Debtor's legal counsel. WHEEL PROS: Moody's Affirms B3 CFR & Cuts First Lien Debt to B3 --------------------------------------------------------------- Moody's Investors Service downgraded the first lien debt ratings of Wheel Pros, Inc. to B3 from B2 and affirmed the B3 corporate family rating and Probability of Default rating at B3-PD. The rating outlook is stable. The downgrade reflects the expectation of a $200 million increase in first lien debt with proceeds used to repay all of Wheel Pros second lien debt. As the loss absorption of the second lien debt will no longer be in place, the rating of the first lien debt was downgraded to the level of the CFR. Moody's will withdraw the rating on the second lien debt following the close. RATINGS RATIONALE Wheel Pros ratings, including the B3 CFR, reflect the company's high, albeit improving, financial leverage, along with the highly discretionary nature of its custom vehicle wheels and elevated event risk for debt-funded acquisitions. Wheel Pros does maintain a leading market position in this specialty segment with some brand recognition for its products, a generally flexible cost structure, low capital requirements, and favorable customer diversification. Wheel Pros is likely to continue to benefit over the very near term from demand for its specialty vehicle wheels that has been far higher than anticipated, resulting in better than expected earnings, cash flow and financial leverage. Nonetheless, sustainability at that high pace is uncertain once consumers have a range of alternatives for their disposable income, or if Wheel Pros resumes its active acquisition activity. Moody's expects 2021 revenue to grow in the mid-single digit range, with EBITA margins maintained above 15% as the company realizes cost synergies from its 2020 acquisition of Just Wheels and Tires. This should allow Wheel Pros to improve its leverage profile to around mid-5x debt/EBITDA in 2021. Despite the expected improvement in interest expense, Wheel Pros' acquisitive nature and moderately high financial leverage remain constraining factors. The B3 first lien rating takes into account that the first lien debt is the substantial portion of Wheel Pros liability structure, with only the $100 million asset-based lending facility ("ABL") has a superior claim position. The second lien debt, which will be repaid, was junior to the first lien debt, and represented first-loss absorption. The Probability of Default Rating is not affected given the ABL and the first lien debt represent different debt claims. Wheel Pros is expected to maintain adequate liquidity into 2021, with free cash flow of at least $65 million through strong earnings and prudent working capital management. Cash flows are seasonal, with the first quarter typically a period of cash burn, during which time Moody's expects moderate use of the $100 million five-year ABL facility. Effective inventory planning and management, especially as uncertainty around consumer demand persists into 2021, will be a driving factor to cash flow. The risk is that inventory builds in advance of demand which doesn't materialize at the expected growth rate, leaving cash flow strained by lower earnings and working capital build. The stable outlook reflects Moody's view that Wheel Pros will maintain EBITA margins in the mid-teens range and generate solidly positive free cash flow to maintain adequate liquidity should demand decrease in 2021. The outlook also incorporates Moody's expectations for leverage to improve to below 5.5x debt/EBITDA over the next 12 months. In terms of carbon transition risk Wheel Pros' is not material given the nature of its product and that it is an aftermarket provider. Moody's view social risk for Wheel Pros to be manageable, with the biggest priority to be product safety for customers and protecting any customer personal information through a point of sale. The company will also need to ensure the continuity of its workforce, maintaining safety precautions across its distribution centers in North American and abroad. From a corporate governance perspective, the company's high leverage and recent shareholder-friendly actions reflect its private equity ownership. Event risk is high, considering Wheel Pros aggressive pace of acquisitions over recent years, with transactions funded primarily with debt. A continuation of an aggressive financial policy through debt-funded acquisitions could pressure the credit profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Wheel Pros ratings could be upgraded if the company demonstrates a financial policy that supports debt/EBITDA sustained below 5.5x even when considering its acquisition growth strategy, and retained cash flow-to-debt maintained above 10%. Consistently positive free cash flow generation and maintaining an adequate liquidity profile would also be considerations of an upgrade. The ratings could be downgraded if Moody's believes that demand weakens and the company is unable to take actions around working capital and costs such that either cash flow or earnings are pressured. Continuation of an aggressive financial policy with a material debt-funded acquisition would pressure the ratings. EBITA margins expected to be in the low teens percentage or debt/EBITDA likely to be sustained higher than the mid 6x level could result in lower ratings, as could deterioration in company's liquidity, including free cash flow-to-debt below 2% or ongoing reliance on its ABL to fund operations. The following rating actions were taken: Downgrades: Issuer: Wheel Pros, Inc. Senior Secured 1st Lien Term Loan, Downgrade to B3 (LGD3) from B2 (LGD3) Withdrawals: Senior Secured 2nd Lien Tern Loan, to be withdrawn at close Affirmations: Issuer: Wheel Pros, Inc. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Outlook Actions: Issuer: Wheel Pros, Inc. Outlook, Remains Stable The principal methodology used in these ratings was Automotive Supplier Methodology published in January 2020. Wheel Pros, headquartered in Greenwood Village, Colorado, is a wholesale distributor of custom and proprietary branded wheels, performance tires and related accessories in the aftermarket automotive segment. The company is majority-owned by private equity financial sponsor Clearlake Capital Group, L.P. Management reported revenues for the twelve months ending December 31, 2020 of approximately $1 billion. WHEEL PROS: S&P Affirms 'B-' Rating on Term Loan on $200MM Add-On ----------------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issue-level rating on Wheel Pros Inc.'s first-lien term loan following the company's proposed $200 million add-on to its existing $815 million term loan B due 2027. S&P revised the recovery rating to '4' from '3', indicating its expectation for average (30%-50%; rounded estimate: 45%) recovery in a default scenario. The add-on will be roughly neutral for leverage, with the small increase of debt offset by the benefit of lower interest expense because the company will use the proceeds to pay off its $185 million second-lien term loan. ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors S&P valued the company on a going-concern basis using a 5.0x multiple of its emergence EBITDA. Our simulated default scenario assumes a payment default occurring in 2023 due to a combination of the following factors: a sustained economic downturn that reduces the demand for custom wheels and tires, intense pricing pressure from competitive actions by other manufacturers, and order fill rate and quality issues that cause its customers to procure their products from other aftermarket suppliers. S&P expects these conditions to reduce Wheel Pros' volumes, revenue, gross margins, and net income and eventually cause its liquidity and operating cash flow to decline. Simulated default assumptions -- Year of default: 2023 -- Jurisdiction: U.S. -- LIBOR of 250 basis points; -- A 60% draw under the asset-based lending (ABL) revolving credit facility at default; -- All debt includes six months of accrued interest; and -- Administrative claims of 5% of enterprise value. Simplified waterfall -- Gross enterprise value: $555 million -- Administrative expenses: $28 million -- Enterprise value multiple: 5.0x -- Net enterprise value: $528 million -- Obligor/nonobligor valuation split: 95%/5% -- Priority claims: $62 million -- Total collateral value for secured debt: $465 million -- Total first-lien debt: $1031 million --Recovery expectations: 30%-50% (rounded estimate: 45%) Ratings List To From Wheel Pros, Inc. Issuer Credit Rating B-/Stable/-- B-/Stable/-- Issue-Level Ratings Affirmed; Recovery Ratings Revised Wheel Pros, Inc. Senior Secured B- B- Recovery Rating 4(45%) 3(50%) WHITE STALLION: Court Okays 1.5M Ton Coal Shipment -------------------------------------------------- Law360 reports that a Delaware bankruptcy court judge Thursday, Feb. 4, 2021, gave Indiana coal producer White Stallion Energy permission to release 1.5 million tons of coal to Duke Energy Indiana after hearing an agreement had been reached to resolve a storage fee dispute another day. At a short virtual hearing Thursday, Feb. 4, 2021, U.S. Bankruptcy Judge Laurie Selber Silverstein approved the Duke coal loading agreement after being told the owner of the land the coal is being kept on had dropped its opposition to the shipment in return for being allowed to assert its storage fee claims at a later date. About White Stallion Energy White Stallion Energy, LLC was founded in February 2010 for the purpose of developing and operating surface mining complexes in Indiana and Illinois and subsequently grew through a series of strategic acquisitions. It operates six high-quality, low-cost thermal surface mines in Indiana and Illinois with approximately 200 million tons of demonstrated reserves. On Dec. 2, 2020, White Stallion Energy and 18 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-13037) on Dec. 2, 2020. White Stallion and its affiliates reported between $100 million and $500 million in assets and liabilities. The Hon. Laurie Selber Silverstein is the case judge. The Debtors tapped Paul Hastings LLP as bankruptcy counsel, Young Conaway Stargatt & Taylor, LLP as local counsel, and FTI Consulting, Inc., as financial advisor. Prime Clerk LLC is the claims agent and administrative advisor. The U.S. Trustee for Region 3 appointed an official committee to represent unsecured creditors in the Debtors' cases. The committee tapped Cooley LLP as its bankruptcy counsel, Robinson & Cole LLP as Delaware counsel, and Province LLC as its financial advisor. WHITE STALLION: Granted Cash Collateral Use on Final Basis ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has authorized White Stallion Energy, LLC and its debtor-affiliates to, among other things, use cash collateral on a final basis in accordance with a budget. The Debtors need to obtain continued access to use Cash Collateral to among other things, protect and preserve all of the assets of the Debtors' estates and fund the administration of the Bankruptcy Cases. A Binding Term Sheet setting forth the terms of an agreement regarding the use of cash collateral provides that, in view of the limited funds available to fund the expenses of the Debtors' Chapter 11 cases, the Parties agree that the Debtors will conduct a limited sale process during the pendency of the chapter 11 case, according to this timeline: 1. On or before February 1, 2021, the Debtors would produce a bid package briefly describing the Debtors' mining operations and assets and soliciting preliminary bids for any and all of such operations and assets for distribution to potential bidders for the Debtors' mines and assets; 2. On or before February 3, 2021, the Debtors would distribute the Bid Package to any and all parties who may have an interest in the Debtors' mining operations and assets. 3. The Bid Package would establish a deadline for parties to submit preliminary bids of February 24, 2021. Following the Bid Deadline, the Parties shall consult regarding the further prosecution of any proposed sale of the Debtors' properties and assets, it being understood that (a) the pursuit of any sale of the Lenders' collateral (including the sale of spare parts inventory reflected in the Budget) and the terms and process therefor shall require the affirmative prior consent of the Lenders, (b) any proposed sale shall be on notice as required under the Bankruptcy Code, the Bankruptcy Rules, and the local rules of the Bankruptcy Court, and (c) any proposed sale of collateral to the Lenders or their affiliates shall be subject to higher and better offers. As of the Petition Date, each of the Debtors was indebted and jointly and severally liable to the ABL Lender under a Credit Agreement dated as of October 22, 2018 in the aggregate principal amount of not less than $6,968,883, plus accrued and unpaid interest, costs and other charges or amounts, indemnification obligations and further including all "Obligations." The ABL Loans were validly purchased by the Term Lenders on December 31, 2020, pursuant to the terms of the Intercreditor Agreement with the effect that Riverstone Credit Management, LLC is the successor agent under the ABL Credit Agreement and the Term Lenders are the successor lenders thereunder. As of the Petition Date, each of the Debtors was indebted and jointly and severally liable to the Term Lenders under a Credit Agreement dated as of April 17, 2017 in the aggregate principal amount of not less than $90,900,000 under the Term Loan Credit Agreement, inclusive of $900,000 in bridge loans advanced to pay the Debtors' professionals and some of the fees of the Lenders' Counsel immediately prior to the commencement of the Bankruptcy Cases. Each of the Debtors is indebted and jointly and severally liable to the Term Lenders under the First Interim Order and the DIP Facility Term Sheet in the aggregate principal amount of $1,400,000 under the DIP Documents. KeyBank National Association acted as prepetition collateral agent under the ABL Loan. Riverstone acted as collateral agent under the Term Loan, and serves as collateral agent under the DIP Facility. The Final Order provides that as adequate protection, the Secured Parties are granted superpriority claims and a replacement security interest in and lien upon all of the Collateral to the extent of any diminution in value, subject only to a Carve Out. The Carve Out consists of all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee under 11 U.S.C. section 1930(a) and 31 U.S.C. section 3717; and (b) reasonable fees, costs and expenses of any chapter 7 trustee in an amount not to exceed $50,000. For the avoidance of doubt, the Carve Out will be enforceable against all entities with an interest in the Collateral and will be senior to all liens and claims securing the Prepetition Obligations, the DIP Obligations, and the Adequate Protection Obligations. The Debtors are also authorized and directed to pay all accrued and unpaid interest on account of all Obligations and all accrued and unpaid fees and disbursements owing to the Secured Parties under the Prepetition Credit Agreements and the DIP Documents. A copy of the Final Order and the Debtor's budget is available at https://bit.ly/3tBSEpu from Prime Clerk. About White Stallion Energy White Stallion Energy, LLC, was founded in February 2010 for the purpose of developing and operating surface mining complexes in Indiana and Illinois and subsequently grew through a series of strategic acquisitions. It operates six high-quality, low-cost thermal surface mines in Indiana and Illinois with approximately 200 million tons of demonstrated reserves. On Dec. 2, 2020, White Stallion Energy and 18 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-13037) on Dec. 2, 2020. White Stallion and its affiliates reported between $100 million and $500 million in assets and liabilities. On Jan. 26, 2021, Eagle River Coal, LLC filed a voluntary Chapter 11 petition. Eagle River is seeking for its case to be jointly administered with the Initial Debtors' cases. The Hon. Laurie Selber Silverstein is the case judge. The Debtors tapped Paul Hastings LLP as bankruptcy counsel, Young Conaway Stargatt & Taylor, LLP as local counsel, and FTI Consulting, Inc., as financial advisor. Prime Clerk LLC is the claims agent and administrative advisor. The U.S. Trustee for Region 3 appointed an official committee to represent unsecured creditors in the Debtors' cases. The committee tapped Cooley LLP as its bankruptcy counsel, Robinson & Cole LLP as Delaware counsel, and Province LLC as financial advisor. Riverstone Credit Management, LLC serves as DIP Agent. Its advisors are Bailey & Glasser LLP and Simpson Thacher & Bartlett LLP. WILLCO X DEVELOPMENT: Has Until Feb. 26 to File Plan Disclosures ---------------------------------------------------------------- Judge Thomas B. McNamara of the U.S. Bankruptcy Court for the District of Colorado has ordered that Debtor Willco X Development, LLP, a Colorado Limited Liability Limited Partnership, d/b/a Hilton Garden Inn of Thornton is granted an extension of time of thirty days, through and including February 26, 2021, within which to file its Disclosure Statement. As reported in the Troubled Company Reporter, in seeking the 30-day extension, the Debtor's counsel explained that the Debtor has been working on a draft of the Disclosure Statement with Debtor and additional time is necessary to complete work on the Disclosure Statement specifically with respect to Debtor's financial projections, liquidation analysis, and other exhibits. A full-text copy of the order dated Jan. 28, 2021, is available at https://bit.ly/3pQ9jTZ from PacerMonitor.com at no charge. The Debtor's counsel: Jeffrey A. Weinman WEINMAN & ASSOCIATES, P.C. 730 17th Street, Suite 240 Denver, CO 80202-3506 Telephone: (303) 572-1010 Facsimile: (303) 572-1011 E-mail: jweinman@weinmanpc.com About Willco X Development Willco X Development, LLLP, operator of the Hilton Garden Inn of Thornton in Colo., filed a Chapter 11 petition (Bankr. D. Colo. Case No. 20-16438) on Sept. 29, 2020. The Debtor was estimated to have $10 million to $50 million in assets and liabilities as of the bankruptcy filing. Judge Thomas B. Mcnamara oversees the case. Weinman & Associates, P.C., led by Jeffrey A. Weinman, is the Debtor's legal counsel. YOUNGEVITY INTERNATIONAL: Delisted from Nasdaq ---------------------------------------------- The Nasdaq Stock Market LLC has determined to remove from listing the common stock and 9.75 Series D Cumulative Redeemable Perpetual Preferred Stock of Youngevity International, Inc., effective at the opening of the trading session on Feb. 12, 2021. Based on review of information provided by the Company, Nasdaq Staff determined that the Company no longer qualified for listing on the Exchange pursuant to Listing Rule Listing Rule 5250(c)(1). The Company was notified of the Staff determination on Sept. 29, 2020. The Company appealed the determination to a Hearing Panel on Oct. 6, 2020. On Nov. 18, 2020, upon review of the information provided by the Company, the Panel determined to deny the Company request to remain listed in the Exchange and notified the Company that trading in the Company securities would be suspended on Nov. 20, 2020. The Listing Council did not call the matter for review. The Staff determination to delist the Company became final on Jan. 4, 2021. About Youngevity Chula Vista, California-based Youngevity International, Inc. -- https://ygyi.com -- is a multi-channel lifestyle company operating in three distinct business segments including a commercial coffee enterprise, a commercial hemp enterprise, and a multi-vertical omni direct selling enterprise. The Company features a multi country selling network and has assembled a virtual Main Street of products and services under one corporate entity, YGYI offers products from the six top selling retail categories: health/nutrition, home/family, food/beverage (including coffee), spa/beauty, apparel/jewelry, as well as innovative services. Youngevity reported a net loss attributable to common stockholders of $23.50 million for 2018 following a net loss attributable to common stockholders of $12.69 million for 2017. As of Sept. 30, 2019, the Company had $141.18 million in total assets, $85.01 million in total liabilities, and $56.17 million in total stockholders' equity. Mayer Hoffman McCann P.C., in San Diego, California, the Company's auditor since 2011, issued a "going concern" qualification in its report dated April 15, 2019, on the consolidated financial statements for the year ended Dec. 31, 2018, citing that the Company has recurring losses and is dependent on additional financing to fund operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. YRC WORLDWIDE: Changes Name to Yellow Corp; Reports 2020 Results ---------------------------------------------------------------- YRC Worldwide Inc. has changed its name to Yellow Corporation and it will begin trading under the NASDAQ ticker symbol YELL effective Feb. 8, 2021. The Company's LTL brands Holland, New Penn, Reddaway and YRC Freight, as well as HNRY Logistics continue to operate under their existing names. "As we continue our transformation into a super-regional, LTL freight carrier, it is the right time to reintroduce the Yellow Corporation name and modernize the holding company brand," said Darren Hawkins, chief executive officer. Once we announced our plans to rebrand, our customers and employees shared their excitement. The Yellow brand is synonymous with the LTL industry and we are honored to continue its proud legacy of service with one of the largest, most comprehensive logistics and LTL networks in North America. "Migrating to one Yellow technology platform and creating one Yellow network are the key enablers of our enterprise transformation strategy, which is to provide a superior customer experience under one Yellow brand." The Company also reported results for fourth quarter and year ended Dec. 31, 2020. Fourth quarter 2020 operating revenue was $1.165 billion and operating income was $13.7 million. In comparison, operating revenue in fourth quarter 2019 was $1.160 billion and operating income was $9.8 million, which included a $10.1 million net gain on property disposals. Operating revenue for full year 2020 was $4.514 billion and operating income was $56.5 million, which included a $45.3 million net gain on property disposals. This compares to full year 2019 operating revenue of $4.871 billion and operating income of $16.2 million, which included a $13.7 million net gain on property disposals and $8.2 million for a non-cash impairment charge related to the write-down of an intangible asset. Net loss for fourth quarter 2020 was $18.7 million, or $0.37 per share compared to net loss of $15.3 million, or $0.46 per share, in fourth quarter 2019. Full year net loss for 2020 was $53.5 million, or $1.28 per share, compared to a full year net loss in 2019 of $104.0 million, or $3.13 per share, which included a $11.2 million loss on extinguishment of debt associated with a refinancing of the Company's term loan agreement. Hawkins continued, "During the fourth quarter volume and pricing continued to improve in a tighter capacity environment. As the industrial and retail segments of the economy rebound a shortage of drivers is keeping a lid on LTL capacity. Overall, the industry is stable and well positioned for a strong 2021. "With a strong liquidity position of $440 million at the end of 2020, along with the next $176 million of CARES Act loan Tranche B funds that we received in January, we are positioned to continue making significant investments into our business. We expect capital expenditures in 2021 to be in the range of $450 million to $550 million, with planned investments in tractors, trailers, technology, box trucks, containers, liftgates and other assets. Much of the new equipment is expected to enhance safety and improve fuel efficiency. "In addition to a robust capital expenditure plan our key priorities in 2021 include meeting our customers' evolving needs, mitigating increased purchased transportation expense and remaining focused on hiring and training drivers in a capacity constrained marketplace. "During a challenging and unprecedented 2020, our nearly 30,000 employees persevered, continuing their essential service for our customers and the communities we serve with a proud sense of patriotism. They are heroes and their dedication and commitment are greatly appreciated. I have never been prouder of our team," concluded Hawkins. Financial Update * On a non-GAAP basis, the Company generated Adjusted EBITDA of $57.9 million in fourth quarter 2020, a $10.6 million increase compared to $47.3 million in the prior year comparable quarter. Last twelve months (LTM) Adjusted EBITDA was $191.9 million compared to $210.6 million in 2019. * In fourth quarter 2020 the Company invested $99.2 million in capital expenditures which is equal to 8.5% of operating revenue. This compares to $31.7 million in capital expenditures and $18.5 million in capital value equivalent in new operating leases, for a total of $50.2 million and 4.3% of operating revenue in fourth quarter 2019. Operational Update * The operating ratio for fourth quarter 2020 was 98.8 compared to 99.2 in fourth quarter 2019. * Fourth quarter LTL revenue per hundredweight, excluding fuel surcharge, increased 2.2% and LTL revenue per shipment increased 4.8% compared to the same period in 2019. Including fuel surcharge, fourth quarter LTL revenue per hundredweight decreased 0.7% and LTL revenue per shipment increased 1.8%. * Fourth quarter 2020 LTL tonnage per day increased 2.4% when compared to fourth quarter 2019. Liquidity Update * The Company's available liquidity, which is comprised of cash and cash equivalents and Managed Accessibility under its ABL facility, was $440.2 million as of Dec. 31, 2020 compared to $80.4 million in the prior year, an increase of $359.8 million. * The Company's outstanding debt was $1.284 billion as of Dec. 31, 2020, an increase of $381.2 million compared to $902.8 million as of Dec. 31, 2019. * For full year 2020, cash provided by operating activities was $122.5 million compared to $21.5 million in 2019. About Yellow Corporation Yellow Corporation -- www.myyellow.com -- owns a comprehensive logistics and less-than-truckload (LTL) network in North America with local, regional, national, and international capabilities. Through its teams of experienced service professionals, Yellow Corporation offers flexible supply chain solutions, ensuring customers can ship industrial, commercial, and retail goods with confidence. Yellow Corporation, headquartered in Overland Park, Kan., is the holding company for a portfolio of LTL brands including Holland, New Penn, Reddaway, and YRC Freight, as well as the logistics company HNRY Logistics. YRC Worldwide reported a net loss of $104 million for the year ended Dec. 31, 2019. As of Sept. 30, 2020, the Company had $2.11 billion in total assets, $711.5 million in total current liabilities, $1.09 billion in long-term debt and financing (less current portion), $104.2 million in pension and postretirement, $196.2 million in operating lease liabilities, $320.3 million in claims and other liabilities, and a total stockholders' deficit of $323.1 million. * * * As reported by the TCR on July 14, 2020, S&P Global Ratings raised its issuer credit rating on Overland Park, Kan.-based less-than-truckload (LTL) and logistics company YRC Worldwide Inc. to 'CCC+' from 'CCC' after the company announced the U.S. Department of the Treasury will lend it an aggregate of $700 million under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and that it has amended its term loan agreement to waive the minimum EBITDA covenant through December 2021. In July 2020, Moody's Investors Service confirmed the ratings of truck carrier YRC Worldwide Inc., including the Caa1 corporate family rating, following YRC's announcement that the United States Department of Treasury intends to provide a $700 million loan to YRC under authorization of the CARES Act. The Caa1 CFR considers the company's position as one of the largest less-than-truckload truck carriers in North America, thin operating margins and substantial debt balance, in part due to Moody's adjustments related to underfunded pension obligations. Z & J LLC: March 2 Plan Confirmation Hearing Set ------------------------------------------------ On Jan. 22, 2021, debtor Z & J, LLC, d/b/a/ Appeal Tech, filed with the U.S. Bankruptcy Court for the Southern District of New York a Second Amended Disclosure Statement referring to a Second Amended Chapter 11 Plan. On Jan. 28, 2021, Judge James L. Garrity, Jr. approved the Disclosure Statement and ordered that: * March 2, 2021, at 10:00 a.m. at the United States Bankruptcy Court, One Bowling Green, Courtroom 601, New York, New York 10004 is the hearing to consider confirmation of the Plan. * There shall be no requirement to solicit votes of creditors seeking approval of the Plan, based upon the Debtor's Plan proposing a 100% distribution to all classes of creditors and there being no impaired classes of creditors. * Feb. 23, 2021, by 5:00 p.m. is fixed as the last day to file objections to confirmation of the Plan. A full-text copy of the Disclosure Statement dated Jan. 28, 2021, is available at https://bit.ly/3aAJrVJ from PacerMonitor.com at no charge. Attorney for the Debtor: Daniel S. Alter 360 Westchester Avenue #316 Port Chester, New York 10573 Tel: (914) 393-2388 About Z & J LLC Z & J, LLC, which conducts business under the name Appeal Tech, is an appellate service provider based in New York. It was founded in 1998 and works with law firms, government agencies, companies and non-profit organizations to perfect appeals in the State Appellate Courts, the Federal Circuit Courts of Appeals, and the U.S. Supreme Court. Z & J sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 19-11502) on May 9, 2019. At the time of the filing, Debtor disclosed $1,523,690 in assets and $1,083,211 in liabilities. Judge James L. Garrity Jr. oversees the case. The Debtor has tapped Daniel Scott Alter, Esq., as its bankruptcy attorney, Mazzola Lindstrom LLP as special counsel, and JGS, C.P.A., P.C., as accountant. ZEP INC: S&P Upgrades ICR to 'B-' on Strong Operating Performance ----------------------------------------------------------------- S&P Global Ratings raising its issuer credit rating on Zep Inc. to 'B-' from 'CCC+'. S&P said, "At the same time, we are raising our issue-level rating on the company's secured cash flow revolver and first-lien term loan to 'B-' from 'CCC+' and our issue-level rating on its secured second-lien term loan to 'CCC' from 'CCC-'. Our '3'(60%) recovery rating on the cash flow revolver and first-lien term loan and '6'(0%) recovery rating on the secured second-lien term loan remain unchanged. "The upgrade reflects Zep's improving leverage, moderate projected free cash flow generation, and our view that a default scenario is unlikely over the next 12 months. The company has reported stronger product demand than we previously expected, which led its performance to surpass our recent estimates. This demand came, in part, from the consumer, industrial, and food and beverage end markets, which are increasingly using Zep's cleaning and sanitation products. We expect the demand for these products to remain elevated over the next 12-18 months as companies and households adopt and maintain new procedures related to hygiene and sanitation. In addition, we project the company will continue to generate free cash flow and expand its EBITDA margins over the next 12 months. "Our assessment of Zep's business risk incorporates its weaknesses, such as its small size in the end markets it serves, its niche product offerings, its relatively low--albeit improving--EBITDA margins, and its limited geographic diversity with most of its sales made in the U.S. Also, the company's chemical products compete in highly competitive and fragmented markets, such as food processing, vehicle care, auto maintenance, and maintenance and cleaning chemicals. Its competitors include larger, financially stronger companies as well as focused operators in niche spaces that compete on quality, price, brand name, and customer service. However, Zep's sizable product and customer base offset these weaknesses. Management's cost-savings initiatives and an improvement in its product mix have also supported an increase in its EBITDA margin. "We expect the company's financial-sponsor ownership to continue to contribute to our highly leveraged view of its financial risk. Specifically, we anticipate Zep's financial risk will remain highly leveraged with weighted-average debt to EBITDA of about 7x over the next 12 months. We view the private-equity-owned company's financial policy as aggressive and believe its ownership by financial sponsor New Mountain Capital LLC may lead it to sustain high leverage over the long run, including the potential for debt-funded dividends similar to the one it completed in 2017. "The stable outlook on Zep Inc. reflects our expectation that the demand for its cleaning and sanitation products will remain robust over the next 12 months, leading to rising EBITDA, margin expansion, and moderate free cash flow generation. Under our base-case forecast, we assume the company's S&P Global Ratings-adjusted average debt to EBITDA will remain slightly above 7x over the next 12 months before falling below this level in 2022. Our stable outlook also incorporates the company's adequate liquidity, including its ample balance sheet cash and undrawn revolver, as well as our expectation that its liquidity sources will be more than 1.2x its uses over the next 12 months. "We could lower our ratings on Zep over the next 12 months if its liquidity weakens materially or its debt to EBITDA approaches the double digits, increasing the likelihood that it would breach its covenants. This could occur if its industry conditions worsen materially, if its positive demand-driven trends reverse, or if the company pursues a debt-funded acquisition. We could also consider downgrading Zep if its cash flows become materially negative over the next 12 months. "We could raise our ratings on Zep in the next 12 months if it reduces its debt levels or its business performance remains strong such that its debt to EBITDA falls below 6x on a sustained basis. Under such a scenario, we would expect the company to materially expand its EBITDA margins and report strong revenue growth without taking on additional debt." [*] Akin Gump's Beckerman Named Manhattan Bankruptcy Judge ---------------------------------------------------------- Akin Gump on Feb. 5 disclosed that financial restructuring partner Lisa G. Beckerman has been appointed a United States Bankruptcy Judge for the Southern District of New York. The appointment was made by the U.S. Court of Appeals for the 2nd Circuit, and she will be sworn in on February 26, 2021. Ms. Beckerman has more than 30 years' experience in corporate restructurings, with a particular focus on creditors' rights. She first joined Akin Gump in 1999 and works on both chapter 11 cases and out-of-court restructurings, advising clients across a broad range of industries, including manufacturing, airlines, media, energy and real estate. "Lisa is an extremely talented lawyer who will be deeply missed by her colleagues as well as her clients," said Ira S. Dizengoff, a partner in Akin Gump's financial restructuring practice. "With this appointment, the Southern District of New York is gaining a jurist who is extremely knowledgeable in bankruptcy law and who will be a fantastic colleague, and I could not be happier for Lisa. We wish her all the best in this next chapter of her career." Akin Gump's financial restructuring practice is widely recognized as one of the world's leading restructuring groups with unparalleled bench depth and experience. Spanning the world's major financial centers on three continents, the team has been involved in some of the largest, most complex, groundbreaking restructurings in recent history. Akin Gump Strauss Hauer & Feld LLP is an international law firm with more than 900 lawyers and advisors in offices throughout the United States, Europe, Asia and the Middle East. Founded in 1945, the firm is proudly celebrating its 75th anniversary in 2020. [*] U.S. Attorney David Jones Moves to Manhattan Bankruptcy Bench ----------------------------------------------------------------- Audrey Strauss, the United States Attorney for the Southern District of New York, on Feb. 4, 2021, announced that David S. Jones, the Deputy Chief of the Office's Civil Division, has been appointed to serve as a United States Bankruptcy Judge in Manhattan. Mr. Jones will officially assume his duties on February 19, 2021. Mr. Jones has served in the Office's Civil Division for nearly 25 years. Mr. Jones previously served as Chief of the Tax and Bankruptcy Unit from 2002 to 2007, and as Chief Civil Division Appellate Attorney from 2007 until he assumed his current role in 2009. Mr. Jones is a past recipient of the Henry L. Stimson Medal for outstanding contributions to the Office. Prior to joining the Office in 1996, Mr. Jones was in private practice for four years and was a law clerk to U.S. District Judge Morris E. Lasker. He is a graduate of Harvard Law School and Brown University. U.S. Attorney Audrey Strauss said: "I am pleased and proud that David Jones has been selected to serve as a Bankruptcy Judge in this District. David has been a valued mentor and friend to so many colleagues in our Office. I am confident that David will be an exemplary Bankruptcy Judge." [^] BOND PRICING: For the Week from February 1 to 5, 2021 --------------------------------------------------------- Company Ticker Coupon Bid Price Maturity ------- ------ ------ --------- -------- Altria Group Inc MO 3.490 103.167 2/14/2022 BPZ Resources Inc BPZR 6.500 3.017 3/1/2049 Basic Energy Services Inc BASX 10.750 18.894 10/15/2023 Basic Energy Services Inc BASX 10.750 18.894 10/15/2023 Briggs & Stratton Corp BGG 6.875 8.625 12/15/2020 Bristow Group Inc/old BRS 4.500 0.001 6/1/2023 Bristow Group Inc/old BRS 6.250 6.250 10/15/2022 Buffalo Thunder Development Authority BUFLO 11.000 50.000 12/9/2022 CBL & Associates LP CBL 5.250 38.423 12/1/2023 Chesapeake Energy Corp CHK 11.500 38.000 1/1/2025 Chesapeake Energy Corp CHK 5.500 6.125 9/15/2026 Chesapeake Energy Corp CHK 7.000 6.230 10/1/2024 Chesapeake Energy Corp CHK 4.875 6.278 4/15/2022 Chesapeake Energy Corp CHK 11.500 31.250 1/1/2025 Chesapeake Energy Corp CHK 8.000 6.500 6/15/2027 Chesapeake Energy Corp CHK 6.625 5.900 8/15/2020 Chesapeake Energy Corp CHK 5.750 6.250 3/15/2023 Chesapeake Energy Corp CHK 8.000 6.050 1/15/2025 Chesapeake Energy Corp CHK 6.875 4.940 11/15/2020 Chesapeake Energy Corp CHK 7.500 6.000 10/1/2026 Chesapeake Energy Corp CHK 8.000 4.750 3/15/2026 Chesapeake Energy Corp CHK 8.000 6.034 1/15/2025 Chesapeake Energy Corp CHK 8.000 5.912 3/15/2026 Chesapeake Energy Corp CHK 8.000 6.069 6/15/2027 Chesapeake Energy Corp CHK 6.875 6.033 11/15/2020 Chesapeake Energy Corp CHK 8.000 6.034 1/15/2025 Chesapeake Energy Corp CHK 8.000 6.069 6/15/2027 Chesapeake Energy Corp CHK 8.000 5.912 3/15/2026 Dean Foods Co DF 6.500 2.000 3/15/2023 Dean Foods Co DF 6.500 1.925 3/15/2023 Diamond Offshore Drilling DOFSQ 7.875 17.000 8/15/2025 Diamond Offshore Drilling DOFSQ 3.450 16.000 11/1/2023 ENSCO International Inc VAL 7.200 7.500 11/15/2027 EnLink Midstream Partners LP ENLK 6.000 55.500 N/A Energy Conversion Devices ENER 3.000 7.875 6/15/2013 Energy Future Competitive Holdings Co LLC TXU 0.991 0.072 1/30/2037 Exela Intermediate LLC / Exela Finance Inc EXLINT 10.000 31.594 7/15/2023 Exela Intermediate LLC / Exela Finance Inc EXLINT 10.000 32.073 7/15/2023 Federal Farm Credit Banks Funding Corp FFCB 0.200 99.845 1/27/2022 Federal Farm Credit Banks Funding Corp FFCB 0.200 99.884 9/8/2021 Federal Home Loan Banks FHLB 0.450 99.838 6/15/2023 Federal Home Loan Banks FHLB 0.500 99.861 12/29/2023 Federal Home Loan Mortgage FHLMC 1.640 99.584 2/10/2023 Federal Home Loan Mortgage FHLMC 1.600 99.482 2/12/2024 Fleetwood Enterprises Inc FLTW 14.000 3.557 12/15/2011 Frontier Communications Corp FTR 10.500 55.875 9/15/2022 Frontier Communications Corp FTR 7.125 53.688 1/15/2023 Frontier Communications Corp FTR 8.750 54.500 4/15/2022 Frontier Communications Corp FTR 6.250 53.563 9/15/2021 Frontier Communications Corp FTR 9.250 51.500 7/1/2021 Frontier Communications Corp FTR 10.500 55.475 9/15/2022 Frontier Communications Corp FTR 10.500 55.475 9/15/2022 GNC Holdings Inc GNC 1.500 1.250 8/15/2020 GTT Communications Inc GTT 7.875 28.171 12/31/2024 GTT Communications Inc GTT 7.875 30.314 12/31/2024 Global Eagle Entertainment GEENQ 2.750 0.010 2/15/2035 Goodman Networks Inc GOODNT 8.000 22.500 5/11/2022 Great Western Petroleum LLC / Great Western Finance Corp GRTWST 9.000 80.125 9/30/2021 Great Western Petroleum LLC / Great Western Finance Corp GRTWST 9.000 80.070 9/30/2021 Hi-Crush Inc HCR 9.500 0.063 8/1/2026 Hi-Crush Inc HCR 9.500 1.646 8/1/2026 High Ridge Brands Co HIRIDG 8.875 1.500 3/15/2025 High Ridge Brands Co HIRIDG 8.875 1.009 3/15/2025 HighPoint Operating Corp HPR 7.000 43.568 10/15/2022 Hornbeck Offshore Services HOSS 5.875 0.777 4/1/2020 J Crew Brand LLC / J Crew Brand Corp JCREWB 13.000 52.367 9/15/2021 LSC Communications Inc LKSD 8.750 8.000 10/15/2023 LSC Communications Inc LKSD 8.750 12.875 10/15/2023 Liberty Media Corp LMCA 2.250 46.992 9/30/2046 Life Time Inc LTM 8.500 99.218 6/15/2023 MAI Holdings Inc MAIHLD 9.500 15.875 6/1/2023 MAI Holdings Inc MAIHLD 9.500 15.875 6/1/2023 MAI Holdings Inc MAIHLD 9.500 15.875 6/1/2023 MF Global Holdings Ltd MF 6.750 15.625 8/8/2016 MF Global Holdings Ltd MF 9.000 15.625 6/20/2038 Mashantucket Western Pequot Tribe MASHTU 7.350 15.000 7/1/2026 Men's Wearhouse LLC/The TLRD 7.000 1.750 7/1/2022 Men's Wearhouse LLC/The TLRD 7.000 1.241 7/1/2022 NWH Escrow Corp HARDWD 7.500 32.500 8/1/2021 NWH Escrow Corp HARDWD 7.500 27.866 8/1/2021 Navajo Transitional Energy NVJOTE 9.000 62.500 10/24/2024 Neiman Marcus Group LLC/The NMG 7.125 4.345 6/1/2028 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.000 4.872 10/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 14.000 27.250 4/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.750 4.872 10/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 14.000 27.250 4/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.000 4.872 10/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.750 4.872 10/25/2024 Nine Energy Service Inc NINE 8.750 40.621 11/1/2023 Nine Energy Service Inc NINE 8.750 41.674 11/1/2023 Nine Energy Service Inc NINE 8.750 41.682 11/1/2023 Northwest Hardwoods Inc HARDWD 7.500 30.750 8/1/2021 Northwest Hardwoods Inc HARDWD 7.500 28.318 8/1/2021 OMX Timber Finance Investments II LLC OMX 5.540 1.250 1/29/2020 Optimas OE Solutions Holding LLC / Optimas OE Solutions Inc OPTOES 8.625 90.000 6/1/2021 Optimas OE Solutions Holding LLC / Optimas OE Solutions Inc OPTOES 8.625 90.000 6/1/2021 Pride International LLC VAL 6.875 7.250 8/15/2020 Pride International LLC VAL 7.875 13.000 8/15/2040 Renco Metals Inc RENCO 11.500 24.875 7/1/2003 Revlon Consumer Products REV 6.250 34.347 8/1/2024 Rolta LLC RLTAIN 10.750 2.000 5/16/2018 SESI LLC SPN 7.125 32.250 12/15/2021 SESI LLC SPN 7.750 36.000 9/15/2024 SESI LLC SPN 7.125 36.000 12/15/2021 SESI LLC SPN 7.125 29.750 12/15/2021 Sears Holdings Corp SHLD 8.000 3.382 12/15/2019 Sears Holdings Corp SHLD 6.625 6.110 10/15/2018 Sears Holdings Corp SHLD 6.625 3.246 10/15/2018 Sears Roebuck Acceptance SHLD 6.750 0.415 1/15/2028 Sears Roebuck Acceptance SHLD 7.000 0.584 6/1/2032 Sears Roebuck Acceptance SHLD 6.500 0.705 12/1/2028 Sempra Texas Holdings Corp TXU 5.550 13.500 11/15/2014 Summit Midstream Partners LP SMLP 9.500 37.000 N/A TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019 Toys R Us Inc TOY 7.375 1.317 10/15/2018 Transworld Systems Inc TSIACQ 9.500 30.000 8/15/2021 Voyager Aviation Holdings LLC / Voyager Finance Co VAHLLC 9.000 56.500 8/15/2021 Voyager Aviation Holdings LLC / Voyager Finance Co VAHLLC 9.000 56.178 8/15/2021 ZF Automotive US Inc TRW 4.500 96.047 3/1/2021 ZF Automotive US Inc TRW 4.500 96.047 3/1/2021 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog, Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***