/raid1/www/Hosts/bankrupt/TCR_Public/210226.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, February 26, 2021, Vol. 25, No. 56
Headlines
1 BIG RED: U.S. Trustee Unable to Appoint Committee
24 HOUR FITNESS: Faces Challenges After Chapter 11 Exit
381 BROADWAY REALTY: Trustee Taps LaMonica Herbst as Counsel
5401 MONTOYA: Wins Cash Collateral Access Thru March 10
5X5 CAPITAL: Seeks to Hire David M. Serafin as Legal Counsel
975 WALTON BRONX: Case Summary & 20 Largest Unsecured Creditors
ABILITY INC: Board Extends Put Options Until 2026
AERKOMM INC: USPTO Rejects "AERKOMM" Trademark Application
ALANI PROPERTY: Hires Wiggam & Geer as Bankruptcy Counsel
ALL DAY ACQUISITIONCO: Moody's Assigns Caa1 CFR on Bankruptcy Exit
ALLEGHENY SHORES: Case Summary & 12 Unsecured Creditors
ANTARA SYSTEMS: Seeks to Use TCF Bank's Cash Collateral
APPLIED SYSTEMS: Moody's Affirms B3 CFR on EZLynx Acquisition
ARCONIC CORP: Fitch Affirms 'BB+' IDR, Outlook Remains Negative
ATHEROTECH HOLDINGS: 11th Circuit Revives Lawsuit vs. Shareholders
ATHEROTECH INC: Chapter 7 Trustee Renews Lawsuit vs. Shareholders
AVANTOR FUNDING: Moody's Completes Review, Retains B1 CFR
BARTMESS FAMILY: Seeks Approval to Hire Bankruptcy Attorney
BAUMANN SONS: March 24 Hearing on Exclusivity Extension Bid
BELK INC: Case Summary & 30 Largest Unsecured Creditors
BELK INC: Cuts Debt by $450M in One-Day Restructuring
BERRY GLOBAL: Moody's Gives Ba2 Rating on New First Lien Loan
BIOLASE INC: Board Appoints New President, CEO
BLACKJEWEL LLC: Ordered to Remediate Kentucky Coal Mine
BOARDWALK CAPITAL: Voluntary Chapter 11 Case Summary
BOMBARDIER INC: Fitch Withdraws CCC Issuer Default Rating
BULLET TRANSPORT: Gets OK to Hire Cooper Law Firm as Counsel
CALIFORNIA STATEWIDE: Moody's Hikes Series A-2 2007 Bonds to Ba2
CAN B CORP: Unit to Buy IP Assets from Imbibe Health
CENTRAL GARDEN: Moody's Completes Review, Retains Ba3 Rating
CENTURY COMMUNITIES: Moody's Hikes CFR to B1 on Revenue Increase
CHARGING BEAR: Further Fine-Tunes Plan Documents
CHASE MERRITT: Gets OK to Hire W. Derek May as Legal Counsel
CLEAN ENERGY: Seeks to Hire Plante & Moran as Accountant
CLEARWATER SEAFOODS: Moody's Withdraws B2 CFR on Notes Redemption
CLEVELAND BIOLABS: Closes $14M Registered Offering of Common Stock
COBRA PIPELINE: Taps Compass Advisory to Assist in Asset Sale
COEUR MINING: Moody's Raises CFR to B2, Outlook Stable
CRC BROADCASTING: To Seek Plan Confirmation on April 20
DASEKE COMPANIES: Moody's Hikes CFR to B2 & Rates New Term Loan B2
DEAN FOODS: Food Lion & Dairy Farmers Settle Suit Over $433M Deal
DENARDO CAPITAL: Files Chapter 11 to Stall Project Foreclosure
DON BETOS: Gets OK to Hire Janvier Law Firm as Legal Counsel
EAGLE HOSPITALITY: Moves Forward in Probing Former Insiders
EASTERDAY RANCHES: Committee Appointed in Easterday Farms' Case
ENKOGS1 LLC: Gets OK to Hire Bartolone Law as Legal Counsel
ESTHER CORONA: Gets OK to Hire Fuller Law Firm as Counsel
EXTERRAN ENERGY: Moody's Completes Review, Retains B1 CFR
FERRELLGAS PARTNERS: March 5 Plan & Disclosure Hearing Set
FLAMINGO 1500: Gets OK to Hire Richard Siegmeister as Counsel
FLAMINGO 1500: U.S. Trustee Unable to Appoint Committee
FLEURDELIS HOSPITALITY: Case Summary & 20 Top Unsecured Creditors
FLOW SERVICES: Gets OK to Hire Girouard Melancon as Accountant
FRANCHISE GROUP: Moody's Rates New Senior Secured Term Loans 'Ba3'
FRONTIER COMMUNICATIONS: Has Until Oct. 14 to File Chapter 11 Plan
GAMCO INVESTORS: Moody's Withdraws Ba1 Corp. Family Rating
GAMESTOP CORP: CFO Jim Bell to Resign in March
GO DADDY: Moody's Affirms Ba2 CFR & Rates New Unsecured Notes Ba3
GOODYEAR TIRE: Fitch Affirms 'BB-' LongTerm IDRs
GOODYEAR TIRE: Moody's Puts B1 CFR Under Review for Downgrade
GPS HOSPITALITY: Moody's Alters Outlook on Caa1 CFR to Stable
GULFPORT ENERGY: Company & CEO Settle SEC Charges Over Perks
GULFPORT ENERGY: Court Gives Green Light to Seek Plan Votes
HAYWARD INDUSTRIES: Moody's Puts B3 CFR Under Review for Upgrade
HIGHLAND CAPITAL: Court Confirms Asset Monetization Plan
HILLENBRAND INC: Moody's Affirms Ba1 CFR & Alters Outlook to Stable
HOLTS TRUCKING: Files for Chapter 7 Bankruptcy Protection
HUDBAY MINERALS: Moody's Gives B3 Rating on $600MM Unsecured Notes
JOHN PICIRILLI: Seeks to Hire Orville & McDonald Law as Counsel
JOYNER-BYRUM PROPERTIES: Gets OK to Hire J.C. White as Counsel
JUMIO INC: Default Judgment Entered Against Mattes
KEANE GROUP: Moody's Completes Review, Retains B2 CFR
KEIV HOSPITALITY: Mousavi to Contribute $50K; Unsec. to Get 100%
KEIVANS HOSPITALITY: Unsec. Creditors to Get 100% Without Interest
KOSMOS ENERGY: Fitch Assigns B-(EXP) Rating on $400MM Notes
KUSHNER COS.: Times Square Property Nearing Foreclosure
LBD PLLC: Unsecured Creditors' Recovery Cut to 10% in Plan
LI GROUP: Moody's Affirms 'B2' CFR & Rates New $300M Term Loan 'B2'
LONE STAR HOTELS: Unsecured Creditors to Get 2.6% or 8% in Plan
LOUISIANA-PACIFIC CORP: Moody's Alters Outlook on Ba1 CFR to Pos.
LSC COMMUNICATIONS: Chapter 11 Plan With Pension Deal Approved
LSC COMMUNICATIONS: Says Plan Accepted by Each Voting Class
MCELRATH LEGAL: Gets Court Approval to Hire Bankruptcy Attorney
MD AUDIO: Car Stereo Manufacturer in Chapter 11
MISSOURI JACK: Seeks to Hire Summers Compton as Local Counsel
MOSIER MANAGEMENT: Liquidating Plan Confirmed by Judge
NEW HOME: Moody's Affirms B3 CFR on Proposed $35MM Add-on Notes
NORWEGIAN AIR RESOURCES: Files for Chapter 7 Bankruptcy
OPTIMIZED LEASING: Hearing on Disclosures Continued to April 8
OSUM OIL: Waterous Acquisition No Impact on Moody's B3 CFR
PACKERS HOLDINGS: Fitch Assigns B Rating on New First Lien Loans
PARK PLACE: Voluntary Chapter 11 Case Summary
PG&E CORP: Ex-Officers Sued by California Wildfire Victims
PINNACLE REGIONAL: Trustee Given Leave To Amend Complaint
PLANTRONICS INC: Moody's Affirms Ba3 CFR on Strong Market Position
PLASKOLITE PPC: Moody's Hikes CFR to B2 & Alters Outlook to Stable
PLUS THERAPEUTICS: Incurs $8.2 Million Net Loss in 2020
PROFESSIONAL FINANCIAL: New Debtors Seek to Use Cash Collateral
PROJECT RUBY: Proposed Refinancing No Impact on Moody's B3 CFR
PSS INDUSTRIAL: Moody's Completes Review, Retains Caa2 CFR
PUERTO RICO: Says New Debt Deal Opens Path for Bankruptcy Exit
QUIKRETE HOLDINGS: Forterra Deal No Impact on Moody's Ba3 Rating
RAMARAMA INC: CHM Opposes Plan's Treatment of Claims
RAMARAMA INC: Grounfloor Says Plan Disclosures Inadequate
RENOVATE AMERICA: Gets OK to Hire Armanino as Sales Consultant
RENOVATE AMERICA: Gets OK to Hire Bryan Cave as Legal Counsel
RENOVATE AMERICA: Gets OK to Hire Culhane Meadows as Co-Counsel
REXNORD CORP: Regal Transactions No Impact on Moody's Ba3 CFR
RUBY TUESDAY: Emerges From Chapter 11 Bankruptcy
SCOTTS MIRACLE-GRO: Moody's Completes Review, Retains Ba2 CFR
SHARPE CONTRACTORS: Hires Simmons & Jamieson as Accountant
SHILO INN: Wins Cash Collateral Access Thru April 30
SHILOH INDUSTRIES: Unsecureds' Recovery "TBD" in Liquidating Plan
SOUTHERN ROCK: Case Summary & Unsecured Creditor
SOUTHMINSTER INC: Fitch Affirms BB Rating on $86.2MM Mortgage Bonds
STREAM TV: Files for Chapter 11 Bankruptcy Protection
SUGARHOUSE HSP: Moody's Confirms B3 CFR, Outlook Negative
TELEPHONE AND DATA: Fitch Assigns BB- Rating on Preferred Stock
TELEPHONE AND DATA: Moody's Rates New Preferred Stock 'Ba3'
THERMASTEEL INC: Trustee Gets OK to Hire Hicok Brown as Accountant
THERMON HOLDING: Moody's Completes Review, Retains B2 CFR
TOP THAT COMMERCIAL: Seeks to Hire Borenstein as Special Counsel
TRIANGLE FLOWERS: Unsecureds' Recovery Cut to 13% in Amended Plan
TRINET GROUP: Moody's Assigns Ba2 CFR & Rates Unsecured Notes Ba3
TRONOX FINANCE: Moody's Rates New Sec. Bank Credit Facilities 'Ba2'
TRONOX INC: NAACP Bid to Reopen Case Junked
TTM TECHNOLOGIES: Fitch Gives BB Rating on $500MM Unsecured Notes
TTM TECHNOLOGIES: Moody's Rates New $500M Unsecured Notes 'Ba3'
TWM RACING: Unsecureds Owed $75K to Get At Least $750 Per Year
U.S. GLOVE: Has Cash Collateral Access Thru April 28
US1 CORPORATION: Gets OK to Hire Nicholas B. Bangos as Counsel
W3 TOPCO: Moody's Completes Review, Retains B3 CFR
WAVE COMPUTING: Delaware Fee Demands Endangers Bankruptcy Sale
WILLCO XII: FirstBank Agrees to Cash Collateral Use Thru March 31
WINSTEAD'S COMPANY: Unsecured Creditors Will Get 80% in Plan
ZEP INC: Moody's Completes Review, Retains Caa1 CFR
ZOHAR FUNDS: Chancery Doubtful of Tilton Mistake in Fee Settlement
[^] BOOK REVIEW: Macy's for Sale
*********
1 BIG RED: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------
The U.S. Trustee for Region 20 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of 1 Big Red, LLC.
About 1 Big Red
1 Big Red, LLC, a Kansas City, Missouri-based company primarily
engaged in activities related to real estate, sought Chapter 11
protection (Bankr. D. Kan. Case No. 21-20044) on Jan. 15, 2021.
Sean Tarpenning, chief executive officer, signed the petition. The
Debtor was estimated to have assets of $3,500,000 and liabilities
of $3,094,099 as of the bankruptcy filing. Judge Robert D. Berger
oversees the case. Evans & Mullinix, PA serves as the Debtor's
legal counsel.
24 HOUR FITNESS: Faces Challenges After Chapter 11 Exit
-------------------------------------------------------
Katherine Doherty of Bloomberg News reports that fresh out of
bankruptcy, 24 Hour Fitness Worldwide faces many of the same
pandemic problems that forced it to file in the first place.
Though the gym chain was able to cut $1.2 billion of debt in court,
analysts at S&P Global Ratings and Moody's Investors Service say
the company risks running into a liquidity shortfall before the
pandemic is over.
24 Hour Fitness has "little room to underperform" since it's likely
to lose money in the first half of 2021, S&P analysts Jason
Siegfried and Emile Courtney wrote in a note Tuesday, February 23,
2021.
About 24 Hour Fitness
24 Hour Fitness Worldwide, Inc., owns and operates fitness centers
in the United States. As of March 31, 2017, the company operated
426 clubs serving approximately 3.6 million members across 13
states and 23 markets, predominantly in California, Texas and
Colorado. For the 12 months ended March 31, 2017, the company
generated total revenue of about $1.4 billion. In May 2014, 24 Hour
Fitness was acquired by affiliates of AEA Investors LP, Fitness
Capital Partners and Ontario Teachers' Pension Plan for a total
purchase price of approximately $1.8 billion.
24 Hour Fitness Worldwide and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-11558) on June 15,
2020. 24 Hour Fitness was estimated to have $1 billion to $10
billion in assets and liabilities as of the bankruptcy filing. The
Hon. Karen B. Owens is the case judge.
The Debtors tapped Weil, Gotshal & Manges, LLP as lead bankruptcy
counsel, FTI Consulting, Inc. as financial advisor, Lazard Freres &
Co. LLC as investment banker. Pachulski Stang Ziehl & Jones, LLP,
is the Debtors' local counsel. Prime Clerk, LLC, is the claims
agent.
PJT Partners acted as financial adviser and O'Melveny & Myers LLP
acted as legal counsel to the ad hoc group of debt holders.
Richards Layton & Finger PA is the group's local counsel.
Morgan Stanley Senior Funding Inc., as lender administrative and
collateral agent, is represented by Andrew L. Magaziner of Young
Conaway Stargatt & Taylor LLP, and Richard A. Levy and James
Ktsanes of Latham & Watkins LLP.
The U.S. Trustee for Regions 3 and 9 appointed a committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The committee is represented by Cooley, LLP.
* * *
24 Hour Fitness Worldwide in December 2020 won court approval of a
bankruptcy-exit plan that would slash $1.2 billion of debt by
handing the fitness chain over to a group of lenders. Unsecured
creditors owed $900,000,000 were slated to recover only 0.1% to
1.0% under the plan.
381 BROADWAY REALTY: Trustee Taps LaMonica Herbst as Counsel
------------------------------------------------------------
Gregory Messer, Chapter 11 trustee for 81 Broadway Realty Corp.,
received approval from the U.S. Bankruptcy Court for the Southern
District of New York to hire LaMonica Herbst & Maniscalco, LLP as
his legal counsel.
The firm's services will include:
i. assisting the trustee with the maintenance and operation of
the Debtor's real property;
ii. assisting and advising the trustee with the sale of the
real property;
iii. preparing a plan of liquidation and the related disclosure
statement, if necessary;
iv. conducting investigations and examinations and commencing
actions necessary to complete the trustee's statutory duties;
v. investigating and advising the trustee as to the actions
and activities of any insiders and the existence of any claims or
causes of action that can be pursued for the benefit of the
Debtor's estate;
vi. preparing legal papers; and
vii. other legal services.
The firm will be paid as follows:
Partners $675 per hour
Associates $425 per hour
Paraprofessionals $200 per hour
LaMonica Herbst is a "disinterested person" within the meaning of
Bankruptcy Code Section 101(14), according to court papers filed by
the firm.
The firm can be reached through:
Gregory Messer, Esq.
LaMonica Herbst & Maniscalco, LLP
3305 Jerusalem Avenue, Suite 201
Wantagh, NY 11793
Tel: 516-826-6500
About 381 Broadway Realty
381 Broadway Realty Corp. is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)). It owns a real property
worth $19 million, which is located at 381 Broadway, N.Y.
381 Broadway Realty filed a Chapter 11 petition (Bankr. S.D.N.Y.
Case No. 20-12605) on Nov. 6, 2020. At the time of the filing, the
Debtor disclosed $19,021,000 in total assets and $23,119,091 in
total liabilities.
Goldberg Weprin Finkel Goldstein LLP, led by Kevin J. Nash, Esq.,
is the Debtor's legal counsel.
Gregory Messer is the Chapter 11 trustee appointed in the Debtor's
bankruptcy case. The trustee is represented by LaMonica Herbst &
Maniscalco, LLP.
5401 MONTOYA: Wins Cash Collateral Access Thru March 10
-------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Texas, El
Paso Division, has authorized 5401 Montoya Dr. El Paso Texas, LLC
to use cash collateral on an interim basis through March 10, 2021
in accordance with a budget.
The Debtor contends that an immediate need exists for the Debtor to
obtain use of the Cash Collateral to fund critical operations of
the Business.
The Debtor owns a group home which provides a commercial residence
to senior citizens and that the home capacity is six residents and
a staff member. Benjamin Joe Giron, sole member of the Debtor LLC,
maintains residence there as well.
The Debtor asserts it is party, as borrower, to a Renewal and
Extension Deed of Trust dated November 18, 2019 with El Paso
National Mortgage, LLC. The Debtor executed a promissory note in
favor of the Lender. As of the Petition Date, the Debtor asserts
that the outstanding balance owed to the Lender is $364,828.
The Debtor asserts its real property is also subject to a lien held
by the City of El Paso for ad valorem taxes in the amount of
$11,848.
The Debtor acknowledges that revenue from the Business may
constitute Cash Collateral. The Debtor believes the Lender and the
City of El Paso may assert an interest in the Cash Collateral.
The Court has authorized the Debtor to use of the Cash Collateral
as set forth in the Budget from the date of the entry of the Order
through and including the date of final hearing on March 10 at 1:30
p.m. The Interim Period may be extended by further Court order. The
Debtor will also make adequate protection payments to the Lender of
$3,623 starting March 1 and the first day of each month
thereafter.
As adequate protection for the Debtor's use of cash collateral, the
Lender and any other secured creditor, are granted valid and
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 Lender's respective pre-petition collateral, to
the extent of any diminution in value of the Cash Collateral,
except that no such replacement liens will attach to the proceeds
of any avoidance actions under Chapter 5 of the Bankruptcy Code.
The Adequate Protection Liens will be deemed automatically valid
and perfected upon entry of the Order.
A copy of the Order and the Debtor's 13-week budget through May 3,
2021 is available at https://bit.ly/3dIs6xq from PacerMonitor.com.
About 5401 Montoya Dr. El Paso Texas, LLC
5401 Montoya Dr. El Paso Texas, LLC filed for bankruptcy under
Chapter 11 on February 1, 2021 (Bankr. W.D. Tex. Case No.
21-30067). The petition was signed by its sole member, Benjamin
Joe Giron. The Debtor estimated its assets at $100,001 to $500,000
and its liabilities at $100,001 to $500,000. The Debtor is
represented by:
Timothy V. Daniel, Esq.
TIMOTHY V. DANIEL, PC
603 Mississippi Ave.
El Paso, TX 79912
Telephone: 915-487-0072
Email: tim@timvdaniel.com
5X5 CAPITAL: Seeks to Hire David M. Serafin as Legal Counsel
------------------------------------------------------------
5X5 Capital LLC seeks approval from the U.S. Bankruptcy Court for
the District of Colorado to hire the Law Office of David M. Serafin
as its legal counsel.
The firm's services will include:
(a) preparing pleadings and applications incidental to the
administration of the Debtor's Chapter 11 case;
(b) developing the relationship of the status of the Debtor to
the claims of creditors;
(c) advising the Debtor of its rights, duties and obligations
under the Bankruptcy Code;
(d) taking other necessary actions incident to the proper
preservation and administration of the Debtor's estate; and
(e) assisting the Debtor in the formulation and presentation
of its Chapter 11 plan.
David Serafin, Esq., the firm's attorney who will be handling the
case, will be paid at the rate of $350 per hour.
The Debtor paid the firm a retainer of $8,000.
The Law Office of David M. Serafin do not hold or represent any
interest adverse to the estate, according to court papers filed by
the firm.
The firm can be reached through:
David M. Serafin, Esq.
Law Office of David M. Serafin
501 S. Cherry St., #1100
Denver, CO 80246
Tel: (303) 862-9124
Email: david@davidserafinlaw.com
About 5X5 Capital
5X5 Capital, LLC owns and operates a franchise of Garlic Jim's
Famous Gourmet Pizza located at 3982 Red Cedar Drive, Highlands
Ranch, Colo.
5X5 Capital sought protection under Subchapter V of Chapter 11 of
the Bankruptcy Code (Bankr. D. Colo. Case No. 21-10405) on Jan. 27,
2021. Brent and Kristen Barnett, owners of 5X5 Capital, signed the
petition. In the petition, the Debtor disclosed assets of between
$100,001 and $500,000 and liabilities of the same range.
Judge Michael E. Romero oversees the Debtor's Chapter 11 case. The
Debtor is represented by the Law Office of David M. Serafin in its
case.
975 WALTON BRONX: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: 975 Walton Bronx LLC
5712 New Utrecth Ave
Brooklyn, NY 11219-4633
Business Description: 975 Walton Bronx LLC is a New York limited
liability company which primarily owns a
multi-family residential apartment building
at 975 Walton Avenue, Bronx, NY containing
approximately 182 apartments and
approximately five commercial leases
including a cell tower.
Chapter 11 Petition Date: February 25, 2021
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 21-40487
Judge: Hon. Jil Mazer-Marino
Debtor's Counsel: Kevin J. Nash, Esq.
GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP
1501 Broadway 22nd Floor
New York, NY 10036
Tel: (212) 221-5700
Email: knash@gwfglaw.com
Estimated Assets: $14.8 million to $21.8 million
Total Liabilities: $24,208,205
The petition was signed by David L. Smith, Esq., manager.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/3U5WSDQ/975_Walton_Bronx_LLC__nyebke-21-40487__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Belkin Burden Wenig $0
& Goldman, LLP
270 Madison Ave #5
New York, NY 10016-0601
2. Boro Water Services $0
5713 11th Ave
Brooklyn, NY
11219-4508
3. Bug A Boo Inc. $3,190
PO Box 140337
Staten Island, NY
10314-0337
4. Correcttemp Inc. $2,081
1463 E 15th St
Brooklyn, NY
11230-6601
5. Estella Jones $0
c/o Mitchell Silbowitz, Esq.
25 W 43rd Street Ste 711
New York, NY 10001
6. G Bauer Inc. $5,819
1624 Webster Ave
Bronx, NY
10457-8016
7. Goodstein PLLC $2,500
501 S G St
Tacoma, WA
98405-4715
8. Green & Cohen, P.C. $470
319 E 91st St
New York, NY
10128-5348
9. Jacobowitz Newman Tversky LLP $2,374
372 Pearsall Ave
Ste C
Cedarhurst, NY
11516-1816
10. JD Environmental Corp. $1,800
5014 16th Ave
Brooklyn, NY
11204-1404
11. JD Lead $3,800
1973 52nd St
Brooklyn, NY
11204-1732
12. Joe and Sons $150,000
145 Main Ave
Passaic, NJ
07055-5452
13. Leroy Sookdeo $0
c/o Ivan Diamond, Esq.
888 Grand Concourse Ste 1-L
Bronx, NY
10451-2802
14. Millenium Elevator $22,923
Enterprises Inc.
2618 Avenue Z
Brooklyn, NY
11235-2052
15. Mizrahi Law Offices, LLC $3,845
PO Box 3254
Teaneck, NJ
07666-9105
16. NYC Water Board $396,951
PO Box 11863
Newark, NJ
07101-8163
17. NYS Dep't of Taxation Tax $0
Bankruptcy/Special Procedure
PO Box 5300
Albany, NY
12205-0300
18. Shinelle Sookdeo $0
c/o Rubenstein & Rynecki
16 Court St Ste 1717
Brooklyn, NY
11241-1017
19. SR Construction USA Inc. $2,450
460 Macdonough St #A
Brooklyn, NY
11233-1510
20. Yardi Systems Inc. $9,708
PO Box 82572
Goleta, CA
93118-2572
ABILITY INC: Board Extends Put Options Until 2026
-------------------------------------------------
The Audit Committee and the Board of Directors of Ability Inc.
approved the extension of the exercise period of the put options
for sale of 117,327 shares, which were granted to Messrs. Anatoly
Hurgin and Alexander Aurovsky, by virtue of the merger agreement
between the Company and Cambridge Holdco Corp. as of Dec. 23,
2015.
The Audit Committee and the Board of Directors approved the
extension of the exercise period of the put options for an
additional five years, until March 1, 2026, during which the
holders of the put options may exercise them in accordance with the
original terms of the put options, subject to compliance with the
Company's statement.
The Audit Committee and the Company's Board of Directors considered
that such approval is in favor of the Company, as the expiration of
the put options will likely lead to litigation procedures with the
authorities and entities that may have claims regarding the
deposit. The procedures may impose significant costs on the
Company, which will negatively impact the Company's financial
stability as well as the shareholders interests.
About Ability Inc.
Ability Inc. is a holding company operating through its
subsidiaries Ability Computer & Software Industries Ltd., Ability
Security Systems Ltd., and Telcostar, which provide advanced
interception, geolocation and cyber intelligence products and
solutions that serve the needs and increasing challenges of
security and intelligence agencies, military forces, law
enforcement agencies and homeland security agencies worldwide.
Ability Inc. reported a net and comprehensive loss of US$7.74
million for the year ended Dec. 31, 2019, compared to a net loss
and comprehensive loss of US$10.19 million for the year ended Dec.
31, 2018. As of June 30, 2020, the Company had US$14.14 million in
total assets, US$21.34 million in total liabilities, and a total
shareholders' deficit of US$7.20 million.
Ziv Haft, Certified Public Accountants (Isr.) BDO Member Firm, in
Tel Aviv, Israel, the Company's auditor since 2015, issued a "going
concern" qualification in its report dated June 15, 2020 citing
that the Company has an accumulated deficit, working capital
deficit, suffered recurring losses and has negative operating cash
flow. Additionally, the Company is under an investigation of the
Israeli Ministry of Defense, which ordered a suspension of certain
export licenses. Additionally, severe restrictions imposed by many
countries on global travel as a result of the coronavirus disease
of 2019 outbreak have impeded the Group's ability to complete the
phase of the systems acceptances. These matters, along with other
reasons, raise substantial doubt about the Company's ability to
continue as a going concern.
AERKOMM INC: USPTO Rejects "AERKOMM" Trademark Application
----------------------------------------------------------
The United States Patent and Trademark Office issued a Final Office
Action relating to Aerkomm Inc. indicating that the Company's US
trademark application (Serial No. 88464588) for the name "AERKOMM,"
which was originally filed with the USPTO on June 7, 2019, was
being rejected because of a likelihood of confusion with a
similarly sounding name trademarked at, and in use from, an earlier
date. The Company is appealing this USPTO Final Office Action but
there can be no guarantee that the USPTO will find on appeal in
favor of the Company. The Company is actively considering changing
its name and may determine to do so prior to any appeal decision by
the USPTO.
About Aerkomm
Headquartered in Nevada, USA, Aerkomm Inc. --
http://www.aerkomm.com-- is a full-service development stage
provider of in-flight entertainment and connectivity (IFEC)
solutions, intended to provide airline passengers with a broadband
in-flight experience that encompasses a wide range of service
options. Those options include Wi-Fi, cellular, movies, gaming,
live TV, and music. The Company plans to offer these core
services, which it is currently still developing, through both
built-in in-flight entertainment systems, such as a seat-back
display, as well as on passengers' own personal devices.
Aerkomm recorded a net loss of $7.98 million for the year ended
Dec. 21, 2019, compared to a net loss of $8.15 million for the year
ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $48.87
million in total assets, $9.04 million in total liabilities, and
$39.82 million in total stockholders' equity.
ALANI PROPERTY: Hires Wiggam & Geer as Bankruptcy Counsel
---------------------------------------------------------
Alani Property Source Co. seeks approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to hire Wiggam & Geer,
LLC as its legal counsel.
The firm's services include:
(a) preparing pleadings and applications;
(b) conducting examination;
(c) advising the Debtor of its rights, duties and obligations
as Debtor-in-possession;
(d) consulting and representing the Debtor with respect to a
Chapter 11 plan;
(e) performing those legal services incidental and necessary
to the day-to-day operations of the Debtor's business, including,
but not limited to, institution and prosecution of necessary legal
proceedings, and general
business and corporate legal advice and assistance;
(f) taking any and all other action incident to the proper
preservation and administration of the Debtor's estates and
business.
The firm's attorneys and legal assistants will charge $425 per hour
and $150 per hour, respectively.
Will Geer, Esq., at Wiggam & Geer, disclosed in court filings that
he and his firm neither hold nor represent any interest adverse to
Debtor and its bankruptcy estate.
The firm can be reached at:
Will B. Geer, Esq.
Wiggam & Geer, LLC
50 Hurt Plaza, SE, Suite 1150
Atlanta, GA 30303
Telephone: (678) 587-8740
Facsimile: (404) 287-2767
Email: wgeer@wiggamgeer.com
About Alani Property Source Co.
Alani Property Source Co., Inc., a Georgia-based commercial real
estate management company, sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-66885) on June 2,
2020. Judge Lisa Ritchey Craig oversees the case. The Debtor
tapped the Law Office of Scott B. Riddle, LLC as its legal counsel.
ALL DAY ACQUISITIONCO: Moody's Assigns Caa1 CFR on Bankruptcy Exit
------------------------------------------------------------------
Moody's Investors Service assigned new ratings to All Day
AcquisitionCo, LLC (dba "24 Hour Fitness"), including a Caa1
Corporate Family Rating and Caa1-PD Probability of Default Rating
in connection with its post-bankruptcy exit financing.
Concurrently, Moody's assigned a B3 rating to the company's
proposed $200 million senior secured term loan due 2026. The
outlook is negative.
24 Hour Fitness Worldwide, Inc. filed for Chapter 11 bankruptcy on
June 15, 2020[1]. On December 30, 2020, the company completed its
financial restructuring and emerged from Chapter 11 Bankruptcy
proceedings [2]. At emergence, the company reduced its debt
relative to the pre-chapter 11 level ($1.4 billion) by about 83% to
approximately $240 million. 24 Hour Fitness is issuing exit
financing credit facilities comprised of an 18 month $40 million
super-priority delayed-draw term loan (unrated; expected to be
fully drawn upon close on February 23, 2021) maturing in August
2022 and a $200 million senior secured first lien term loan due
2026.
24 Hour Fitness's post-emergence balance sheet reflects
dramatically reduced debt in accordance with the substantial
revenue and earnings decline due to the impact from the coronavirus
pandemic as well as portfolio rationalization where the company
closed about 35% of its clubs (reducing club count from 446 to 286
post chapter 11). The new company now operates about 60% of its
clubs in the state of California and about 4% of clubs in the state
of Oregon. Gyms in these two states were ordered to re-close in
November 2020 due to state mandates given rising coronavirus cases
and the timing for re-opening is still uncertain. Moody's baseline
assumption is that California will re-open fitness facilities in
April/May. Although Moody's expects a recovery for the gym sector
to start in the later part of 2021 once a higher share of the
public has been vaccinated and the coronavirus pandemic subsides,
there is still much uncertainty in the timing and extent of an
earnings recovery for 24 Hour Fitness given its portfolio
concentration in the state of California. Additionally, the company
operates in the mid-tier price point segment that has been
experiencing intense and challenging competitive pressures from the
budget clubs and smaller local clubs in recent years. 24 Hour
Fitness was experiencing negative membership trends even prior to
the Covid-19 pandemic. Moody's views there is risk in how the
company will attract and retain members in the post pandemic world,
especially with the rise of at home fitness technology that is
disrupting the fitness industry.
Moody's lease adjusted debt-to-EBITDA leverage is expected to
decline to below 6.0x by year end 2021 from a very high level at
year end 2020 due to an expected earnings recovery as well as the
modest amount of funded debt ($240 million) following the
bankruptcy emergence. However, the negative outlook reflects
Moody's view that there is much operational uncertainty over the
next year and that a delay in opening of California gyms would
create a need for additional capital injections to avoid a
restructuring. Specifically, the negative outlook reflects weak
liquidity given its approximately $75 million of expected cash
following the $40 million delayed draw term loan in February will
decline meaningfully over the next few months while the California
gyms remain closed for indoor usage. Delayed reopening or slow ramp
up in paid membership could deplete the cash by this summer. The
company would also need to build cash or refinance the super
priority delayed draw term loan balance that is expected to grow to
$47 million by the August 2022 due to pay-in-kind interest.
However, given the new equity owners are also lenders of the term
loan and the delayed draw term loan, the owners could be willing to
provide additional cash support depending on the reasons for and
amount of such funding need.
Moody's took the following rating actions:
Issuer: All Day AcquisitionCo LLC
Assignments:
Corporate Family Rating, assigned Caa1
Probability of Default Rating, assigned Caa1-PD
$200 million Senior Secured Term Loan, Assigned B3 (LGD3)
Outlook Actions:
Issuer: All Day AcquisitionCo LLC
Outlook, assigned Negative
RATINGS RATIONALE
24 Hour Fitness's Caa1 CFR broadly reflects its weak liquidity over
the next 12 to 18 months because of the dependence on a reopening
and quick ramp up of paid membership at California gyms within the
next few months to avoid a depletion of cash. The expiration of the
fully drawn $40 million super priority delayed-draw term loan in
August 2022 is also a liquidity weakness. The delayed draw term
loan and the senior secured term loan were structured initially to
have low cash interest with high pay-in-kind (PIK) interest
components to provide the company with more flexibility during the
California facility closures. The interest accretion will
nevertheless increase the debt burden and refinancing risk. The
reliance on the uncertain California recovery and debt with a large
PIK component present equity-like risk for creditors. Moody's lease
adjusted debt-to-EBITDA leverage was very high at year end 2020
(over 20.0x pro forma for the debt extinguished in the bankruptcy)
but is expected to decline to below 6.0x by year end FY2021 with an
earnings recovery. The rating also reflects 24 Hour Fitness's
geographic concentration in California (about 60% of clubs) and the
growing competition from technology-based fitness services that are
not tied to a facility. Furthermore, the rating is constrained by
the highly fragmented and competitive fitness club industry with
high attrition rates, 24 Hour Fitness's positioning in the
industry's more pressured mid-tier price point, as well as exposure
to cyclical shifts in discretionary consumer spending. However, the
rating is supported by the company's well-recognized brand name as
well as the longer-term positive fundamentals for the fitness
industry such as the increased awareness of the importance of
health and wellness. The potential for cash support from equity
holders, which also own the bulk of the debt, and for rent
deferrals if property reopenings or membership ramp up are weaker
than anticipated could also provide more time for the company to
execute an operational turnaround.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of 24
Hour Fitness from the current weak US economic activity and a
gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around Moody's forecasts is unusually high. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety. Specifically, the weaknesses in 24 Hour Fitness's credit
profile, including its exposure to state-by-state efforts such as
facility closures to combat the coronavirus, as well as to
discretionary consumer spending have left it vulnerable to shifts
in market sentiment in these unprecedented operating conditions.
The company remains vulnerable to the ongoing coronavirus pandemic
and social distancing measures. Moody's expects the coronavirus
concern for fitness clubs will start to subside in the second half
of 2021 once a growing share of the public has been vaccinated, but
the timing and strength of any recovery is highly uncertain.
Fitness clubs have sensitive customer data including information
related to health, workout schedules, and credit cards. Protecting
data security is thus important to attracting and retaining
customers, and increases operating costs. Rising labor costs are an
issue. Demographic and societal trends toward health and wellness
are positive social factors supporting demand growth, but growing
competition from technology enabled workouts is likely to weaken
membership for facilities based fitness providers unless they
invest to broaden their service offerings.
Governance risk pertaining to the post the chapter 11
reorganization ownership where the company is owned by a group of
lenders with top three lenders having the majority control.
Moody's views environmental risks as low, but the company must meet
environmental regulations when locating and constructing new
clubs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded should operating performance, credit
metrics and liquidity improve. Specifically, a reopening of gyms,
renewed membership growth that restores property-level EBITDA
closer to pre-pandemic amounts, positive free cash flow, and
Moody's adjusted debt-to-EBITDA sustained below 5.0x along with
good liquidity would be necessary for an upgrade.
The ratings could be downgraded if the reopening of clubs is
delayed more than a few months or the ramp up in paid membership is
weaker than anticipated or insufficient to restore positive monthly
free cash flow. A further deterioration in liquidity, or increased
possibility for a distressed exchange or other default could also
lead to a downgrade.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Headquartered in San Ramon, California, 24 Hour Fitness Worldwide,
Inc. is an operator of fitness centers in the US. Post the chapter
11 bankruptcy, the company operates about 286 clubs predominantly
in California. Revenue is expected to be about $520 million in
2020. Post its chapter 11 reorganization, the company is owned by
the lender group.
ALLEGHENY SHORES: Case Summary & 12 Unsecured Creditors
-------------------------------------------------------
Debtor: Allegheny Shores, LLC
212 45th Street
Pittsburgh, PA 15201
Business Description: Allegheny Shores, LLC is engaged in
activities related to real estate.
Chapter 11 Petition Date: February 25, 2021
Court: United States Bankruptcy Court
Western District of Pennsylvania
Case No.: 21-20386
Debtor's Counsel: Jonathan G. Babyak, Esq.
CAMPBELL & LEVINE, LLC
310 Grant Street, Suite 1700
Pittsburgh, PA 15219
Tel: 412-261-0310
Fax: 412-261-5066
Email: jbabyak@camlev.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Fabian Friedland, managing member.
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/KNCQ6BA/Allegheny_Shores_LLC__pawbke-21-20386__0001.0.pdf?mcid=tGE4TAMA
ANTARA SYSTEMS: Seeks to Use TCF Bank's Cash Collateral
-------------------------------------------------------
Antara Systems, LLC d/b/a Jimdi Plastics asks the U.S. Bankruptcy
Court for the Western District of Michigan for authority to use
cash collateral and provide adequate protection and other relief to
the Debtor's senior secured creditor, TCF Bank.
The Debtor says it is in immediate need of an Order authorizing the
use of cash collateral in order to sustain its operations and
preserve its assets for the benefit of the estate and the
creditors.
The Debtor has various expenses that are essential to its business.
The expenses total approximately $800,000 per month prior to debt
service, professional fees, and a payment to unsecured creditors.
The Debtor relates that as of the Petition Date, it owed $45,000 in
employee compensation and payroll taxes for the time period of
February 15 to February 19, 2021, which was the last week the
Debtor operated. No employee is owed more than $13,650.
The Debtor also pays rent to Richard & Sharon Schrotenboer in the
amount of $14,630 per month.
The Debtor is also obligated to Chemical Bank (Now Known As "TCF")
under these loans:
Term Loan: $1,829,665.94 total amount due
Equipment Loan: $248,650.00 total amount due
Line of Credit: $332,358.00 total amount due
The Debtor maintains its deposit accounts with TCF. The Debtor
intends to continue maintaining all its deposit and checking
accounts with TCF.
The Debtor also has a seller financed promissory note and
subordinated security agreement with Jimdi Receivables in the
amount of $250,000. The Debtor owes Jimdi Receivables $200,000 on
this obligation as of the Petition Date. This obligation is junior
to the TCF Bank secured obligation and there is no equity to which
the Jimdi Receivables obligation may attach. Debtor treats this
obligation as fully unsecured.
As adequate protection for the use of cash collateral, the Debtor
proposes that TCF will retain its security interest and lien on all
assets in its current rank, order, and priority. The Debtor
contends TCF is adequately protected if it retains all of its
security interests in post-petition assets. TCF will be further
entitled to receive ongoing monthly interest payments based on the
secured value of TCF's collateral which are estimated to be $0 for
the months of February and March 2021. The Debtor also notes the
Small Business Administration is paying $9,000 in partial principal
and interest payments for February and March 2021 directly to TCF.
Beginning April 15 and continuing each month until the Chapter 11
Plan is confirmed, $6,278 in payments will be made.
The Debtor's projections reveal that by the week ending March 22,
2021, TCF's collateral position in Accounts Receivable and cash in
the Bank will improve and are not expected to deteriorate.
A copy of the Motion and the Debtor's budget through the week of
May 23, 2021 is available at https://bit.ly/3bzIRrN from
PacerMonitor.com.
About Antara Systems, LLC
d/b/a Jimdi Plastics
Founded in 1997, Antara Systems, LLC dba Jimdi Plastics, produces
injection molded components and assemblies for the agriculture,
automotive, consumer product, office furniture and recreation
markets. It sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mich. Case No. 21-00427) on February
21, 2021. In the petition signed by Reed E. Lawrie, managing
member, the Debtor disclosed $2,112,129 in assets and $4,392,696 in
liabilities.
Judge Scott W. Dales oversees the case.
A. Todd Almassian, Esq. at Keller & Almassian, PLC is the Debtor's
counsel.
Gantry Business Solutions LLC's Dave Distel and Tim Emmitt serve as
financial advisors.
APPLIED SYSTEMS: Moody's Affirms B3 CFR on EZLynx Acquisition
-------------------------------------------------------------
Moody's Investors Service affirmed Applied Systems, Inc.'s B3
Corporate Family Rating and B3-PD Probability of Default Rating
following the company's announced plan to acquire EZLynx, a
property and casualty (P&C) software provider for small market
independent agencies and carriers. Concurrently, Moody's affirmed
the ratings for the senior secured first-lien bank credit
facilities at B2 and the senior secured second-lien term loan at
Caa2. The rating outlook is stable.
In connection with the purchase, Applied Systems will raise $420
million of incremental first-lien term loan, while also upsizing
the company's revolving credit facility to $80 million from $50
million. Net proceeds from the proposed transaction will be used to
fund the acquisition of EZLynx and add $37 million of additional
cash to the balance sheet.
Affirmations:
Issuer: Applied Systems, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Bank Credit Facility, Affirmed B2 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa2
(LGD5)
Issuer: Applied Systems, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The B3 CFR reflects Applied Systems' very aggressive financial
policies as evidenced by numerous debt-funded acquisitions and
shareholder returns over the last five years. The rating also
considers Applied Systems' very high pro forma leverage of about
10x based on estimated results as of December 31, 2020. Leverage
however could be viewed as about 8.5x when adjusting for certain
one-time expenses and anticipated cost synergies. Moody's expects
leverage to improve toward 7x by the end of 2022 absent any further
debt funded acquisitions or dividend payments. In addition, Applied
Systems' credit profile is constrained by a concentrated business
profile and moderate scale.
Although Applied Systems is a niche provider of software to a
single end market, the P&C insurance industry, the company
maintains a very strong market position being one of only two major
software providers in the P&C space. This market position allows
Applied Systems to achieve revenue growth and consistently grow
share with its current customers. The complexity, stickiness, and
value-add of its products support customer retention rates of about
95% and a very strong profit margin profile. The rating also
benefits from Applied Systems' high proportion of recurring revenue
and very limited customer concentration.
The stable outlook reflects Moody's expectation that Applied
Systems will successfully integrate EZLynx and grow revenue in the
high single digit percentage range. This growth will support
deleveraging of about 1x annually and generate free cash flow to
debt in the 2-3% range. Over the next year, Applied Systems will be
weakly positioned in the B3 rating category given these very high
leverage levels, which is offset to some extent by the company's
exceptionally strong business profile.
Applied Systems' liquidity profile is good, supported by balance
sheet cash and Moody's expectation of annualized free cash flow in
the 2%-4% range of debt balances over the next 12-18 months.
Additionally, the company will have an undrawn $80 million
committed revolving credit facility. Pro forma for the transaction,
Applied Systems is expected to have approximately $123 million of
cash on the balance sheet, which Moody's believes will allow
flexibility for integration and restructuring expenses. Revolver
drawings are not currently anticipated.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if Applied Systems' free cash flow to
debt is sustained below 1-2% while the company continues with an
aggressive financial strategy. Conditions that could also put
downward pressure on the ratings include market share losses,
margin erosion, declines in the rate of revenue growth or adjusted
leverage levels exceeding 9x on other than a temporary basis.
Ratings could be upgraded if Applied Systems pursues a more
conservative financial strategy while sustaining organic revenue
and earnings growth in the high-single-digit percentage range, such
that adjusted debt-to-EBITDA stays below 6.5x and free cash
flow-to-debt exceeds 5%.
Applied Systems, headquartered in University Park, Illinois, is a
provider of software solutions to the P&C and benefits insurance
industry, with a focus on insurance brokers and agencies in the US,
Canada, the UK and Ireland. Based on estimated results as of
December 31, 2020, the company's pro forma revenue was $541
million. Applied Systems is owned by private equity investors
Hellman & Friedman (majority), JMI Equity (minority), Stone Point
Capital (minority) and CapitalG (minority).
The principal methodology used in these ratings was Software
Industry published in August 2018.
ARCONIC CORP: Fitch Affirms 'BB+' IDR, Outlook Remains Negative
---------------------------------------------------------------
Fitch Ratings has affirmed Arconic Corp's (ARNC) Issuer Default
Rating (IDR) at 'BB+'. Fitch has also assigned 'BB+'/'RR4'
long-term ratings to ARNC's senior second lien secured notes, which
will be issued to fund the annuitization of a portion of the
company's future pension plan contributions. Fitch has also
affirmed the senior first lien secured ABL facility and notes, each
at 'BBB-'/'RR1', and senior second lien secured notes at
'BB+'/'RR4'. The Rating Outlook remains Negative.
Fitch views ARNC's announced transaction, to issue second lien
notes to fund its pension, as relatively neutral to the company's
credit profile. Although ARNC's debt load will increase as a result
of the transaction, Fitch considers the reduction of future annual
cash contributions as slightly more impactful to the company's
ability to weather cyclical downturns due to the increased
flexibility.
ARNC's ratings are supported by the company's strong financial
structure, which is generally in line with that of companies rated
at investment-grade levels. The company's end markets are also
relatively diversified and composed of industries that are shifting
toward lighter-weight materials, which ARNC specializes in. The
company's commodity price volatility is limited as it is able to
hedge or pass through the majority of metal exposure.
The Negative Rating Outlook reflects the risk that the coronavirus
pandemic could further strain the company's credit profile,
particularly through a prolonged recovery or end-market weakness
beyond Fitch's current forecasts. Fitch believes the company's
limited profitability could be exacerbated in the case of a
prolonged downturn, although the recent transaction modestly
reduces this risk, and its financial structure and end-market
diversification are mitigants. ARNC has not experienced meaningful
operational disruptions as a result of the coronavirus pandemic,
but the risk of future supply-chain disruption exists.
Fitch believes the company requires a strong financial structure to
offset its limited profitability and moderate exposure to broad
economic cycles, which constrain its rating. The company will also
still be required to make material pension contributions going
forward in addition to the announced transaction, which somewhat
strains its financial flexibility. ARNC also assumed the potential
liability that could stem from the Grenfell Towers tragedy in 2017,
which will remain an overhang for the foreseeable future, despite
Fitch's expectation that insurance coverage may offset potential
liabilities.
KEY RATING DRIVERS
Coronavirus Impact Update: Fitch believes the coronavirus pandemic
will continue to negatively affect revenue, profitability and cash
generation in 2021, despite the company modestly outperforming
Fitch's forecasts in 2020. Overall, Fitch forecasts ARNC's revenue
and profitability will approach 2019 levels in 2022. Potential
downside to Fitch's forecasts will largely depend on the duration
of the recovery and end-market sensitivity.
Cyclical, But Diversified End Markets: ARNC's end markets are
highly cyclical, as its customers operate in the commercial
aerospace, ground transportation, packaging, diversified
industrial, and building and construction industries. The exposure
to economic cycles and demand fluctuations within these industries
could result in significant top-line volatility, as seen in the
current market environment, and prolonged market volatility and
uncertainty could lead to negative rating momentum. However, some
of this risk is partially mitigated by the company's diversified
mix of end markets, long production lead time, long-term contracts
and relationships, and innovative offerings. In particular, Fitch
views market diversification as a positive factor for the company's
credit profile in the current environment.
Mixed End-Market Trends: Fitch currently forecasts aerospace
production to remain pressured over the next few years, as OEMs
slowly begin to re-ramp production. Fitch expects many suppliers
will remain in de-stocking mode through 2021. However, near-term
stabilization in autos, packaging and industrials are projected to
offset the impact of the aviation downturn for ARNC. In particular,
the previous trade case in 2017 has afforded ARNC a moderately more
competitive position within the industrial products market.
Additionally, packaging has several positive tailwinds that should
support substantial growth beginning in 2022, including the ramp up
of ARNC's U.S. facility following a non-compete agreement roll-off
with Alcoa, as well as broader market pressures to shift to more
environmentally friendly products such as aluminum. A quicker
rebound in aviation could result in upside to Fitch's forecasts for
ARNC.
Strong Financial Structure: ARNC's leverage is low, even pro forma
for the announced bond issuance, and its financial structure is
strong for the ratings, despite weakness from the coronavirus
pandemic. Fitch forecasts 2021 gross debt/EBITDA to be in the
mid-2.0x range and 2021 FFO leverage approaching 3.2x, which are
more commensurate with 'BBB' category issuers, but outside Fitch'
current negative sensitivities. Fitch believes the company must
maintain lower leverage than similarly rated peers due to the high
degree of cyclicality, profitability consistent with mid-'BB'
category rated issuers and substantial required pension
contributions. However, the recent transaction to lower future
pension contribution requirements should provide the company some
flexibility when measuring against its sensitivities.
Moderate Profitability, Weak but Improving Cash Flow: Fitch expects
the company will generate EBITDA margins in the low-double-digit
range over the next few years, in line with other similarly rated
companies. However, free cash flow will be minimal before 2022 as
the company recovers from the impact of the coronavirus pandemic.
Fitch forecasts cash outflows related to working capital could also
weigh on the company's cash generation in 2021 but would likely
flatten out and result in improved CF in the following few years. A
significant portion of EBITDA will be directed to the company's
annual pension contributions, although at a modestly lesser degree
following the announced transaction. Fitch also believes the
company could institute a dividend in late-2021 or 2022 after
operations begin to normalize.
Strong Liquidity Position: Fitch considers ARNC's liquidity
position to be strong. Total liquidity was composed of nearly $800
million of cash and equivalents and more than $700 million of
availability under its $800 million ABL facility at the end of
2020. Fitch anticipates ARNC will maintain liquidity between $1.0
billion and $1.5 billion on average over the next several years
between cash and its ABL facility, which could be drawn upon during
the year to cover short-term working capital fluctuations but would
likely be subsequently paid down.
DERIVATION SUMMARY
In general, Arconic Corp. has weaker profitability than similarly
rated peers, but a moderately stronger capital structure, which is
more in line with investment-grade issuers. Fitch considers ARNC's
end markets to be relatively diversified and expects the company's
cash flow to gradually improve following several cost-cutting
measures, reduced environmental costs and lower pension
contributions expected following the announced annuitization.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Moderate revenue rebound in 2021 and re-approach 2019 levels
by 2022, driven predominantly by strong trends in ground
transportation, positive tailwinds from previous trade cases
in industrial products and packaging growth;
-- EBITDA margins in the low double digits over the next few
years;
-- Capex between 2% and 3% of revenue per year;
-- Annual dividend instituted after normalization of operations,
up to $100 million per year;
-- Pension contributions plus OPEB payments between $150 million
and $275 million per year between 2021 and 2023, excluding the
expected $300 million to $400 million cost of the
annuitization;
-- Increased working capital cash outflows in 2021 and 2022 in
conjunction with resumption of growth, particularly related to
packaging;
-- No voluntary debt repayment.
Recovery Assumptions
Fitch applied the standard notching suggested for entities with
IDRs of 'BB-' and above, as outlined in the "Recovery Rating and
Notching Criteria." Entities with IDRs in the 'BB' rating category
usually have senior first lien secured instrument ratings one notch
higher than the IDR, reflecting outstanding rates of recovery
across all sectors, and second lien instrument ratings equal with
the issuer's IDR, reflecting average rates of recovery across all
sectors. In the case of ARNC, Fitch rates the company's first lien
secured ABL and notes each 'BBB-'/'RR1', and second lien notes
'BB+'/'RR4'.
Given the distance to default, recovery ratings in these situations
are not computed via a bespoke analysis. Instead, they serve as a
label to reflect an estimate of the risk of these instruments
relative to other instruments in an entity's capital structure and
instruments issued by entities with non-investment-grade IDRs.
RATING SENSITIVITIES
Fitch could return the Rating Outlook to Stable if there is an
indication that the risk of further end-market deterioration due to
the effects of coronavirus is limited, particularly as it relates
to the duration of the aviation downturn.
Factors that may, individually or collectively, lead to positive
aating action:
-- FFO leverage sustained below 2x and/or gross leverage (total
debt-to-EBITDA) sustained below 1.2x;
-- EBIT margins sustained above 8%;
-- Further reduction of pension obligation leads to lesser
financial burden and improved profitability;
-- Company publicly commits to obtaining and maintaining an
investment grade credit profile.
Factors that may, individually or collectively, lead to negative
rating action:
-- FFO interest coverage sustained below 4x after 12 to 18 months
following the transaction;
-- FFO leverage is sustained above 3x after 12 to 18 months
following the transaction and/or gross leverage (total debt
to-EBITDA) sustained around or below 2x beyond 2021:
-- EBIT margins sustained below 7% after 12 to 18 months
following the transaction;
-- Contingent legal liabilities, pension contributions or
environmental liabilities result in significant cash flow
impact.
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
Strong Liquidity Position: Fitch considers ARNC's liquidity
position to be strong. Total liquidity comprised nearly $800
million of cash and equivalents and more than $700 million of
availability under its $800 million ABL facility at the end of
2020. Fitch anticipates ARNC will maintain liquidity of between
$1.0 billion and $1.5 billion on average over the next several
years between cash and its ABL facility, which could be drawn upon
during the year to cover short-term working capital fluctuations
but would likely be subsequently paid down. ARNC's capital
structure consists of an ABL credit facility, senior first lien
secured notes and senior second lien secured notes outstanding. The
first lien notes are the earliest maturity and are due in 2025.
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.
ATHEROTECH HOLDINGS: 11th Circuit Revives Lawsuit vs. Shareholders
------------------------------------------------------------------
Law360 reports that the Eleventh Circuit has reversed an Alabama
federal court's dismissal of a lawsuit the bankruptcy trustee for a
defunct blood testing business filed against certain shareholders,
saying the district court erred in determining that it could not
hear the case because the state court where the case originated
lacked personal jurisdiction.
The Feb. 23, 2021 decision revives claims from Thomas E. Reynolds,
the Chapter 7 bankruptcy trustee for Atherotech Inc. and Atherotech
Holdings, that Behrman Capital IV LP and other shareholders
arranged for Atherotech to pay them dividends totaling nearly $31.8
million.
In March of 2018, Mr. Reynolds filed a complaint asserting several
federal and state law claims stemming from the dividend issued by
Atherotech Holdings to its shareholders. Mr. Reynolds appealed the
dismissal of his complaint for lack of personal jurisdiction. The
district court, following removal of the case from Alabama state
court, applied the doctrine of derivative jurisdiction articulated
in Lambert Run Coal Co. v. Baltimore & O.R. Co., 258 U.S. 377, 382
(1922), and ruled that because the state court did not have
personal jurisdiction over the defendants under Alabama's long-arm
statute, it too lacked personal jurisdiction. In so ruling, the
district court concluded that Mr. Reynolds could not rely on
Bankruptcy Rule 7004(d) (which looks to a defendant's national
contacts and permits nationwide service of process) to establish
personal jurisdiction. And it denied as futile Mr. Reynolds'
motion to transfer the case to the Southern District of New York
under 28 U.S.C. Sec. 1406, explaining that under the doctrine of
derivative jurisdiction a New York district court would likewise
lack personal jurisdiction over the defendants.
"The district court's dismissal of Mr. Reynolds' complaint pursuant
to the doctrine of derivative jurisdiction is reversed, and the
case is remanded for further proceedings consistent with this
opinion," according to the ruling by the 11th Circuit.
"Our decision in Aguacate Consolidated Mines, 566 F.2d at 525,
makes it clear that the district court could consider Mr. Reynolds'
alternative request for a transfer to the Southern District of New
York pursuant to 28 U.S.C. Sec. 1406 even if there was no personal
jurisdiction over the defendants under Alabama's long-arm statute.
So, if the district court on remand decides that the exercise of
personal jurisdiction under Bankruptcy Rule 7004(d) would violate
the Fifth Amendment as to some or all of the defendants, it will
need to turn to the Sec. 1406 motion to transfer. The defendants
are correct that Aguacate Consolidated Minesdoes not mandate a
transfer, but it does require consideration of Mr. Reynolds'
motion," the 11th Circuit said.
The case is Thomas E. Reynolds v. Behrman Capital IV L.P., et al.,
Case#: 19-13537, Docket#: 2:18-cv-00514-ACA, U.S. Court of Appeals
for 11th Circuit.
A copy of the Feb. 23, 2021 decision is available at:
http://media.ca11.uscourts.gov/opinions/pub/files/201913537.pdf
About Atherotech Inc.
Atherotech's main asset is its VAP cholesterol test, which is
licensed out of the University of Alabama at Birmingham.
Atherotech Inc. filed for Chapter 7 bankruptcy protection (Bankr.
N.D. Ala. Case No. 16-00909) on March 4, 2016. Atherotech Holdings,
Inc., simultaneously filed a separate Chapter 7 petition (Bankr.
N.D. Ala. Case No. 16-00910). Atherotech listed less than $50,000
in assets and between $50,000 and $100 million in liabilities in
its petition, the report said. The Hon. Tamara O Mitchell presides
over the case. Lee Benton -- lbenton@bcattys.com -- of Benton &
Centeno LLP, serves as its bankruptcy counsel.
ATHEROTECH INC: Chapter 7 Trustee Renews Lawsuit vs. Shareholders
-----------------------------------------------------------------
Daniel Gill of Bloomberg Law reports that the Eleventh Circuit
ruled that Atherotech Inc.'s Chapter 7 trustee can rely on a
federal bankruptcy rule to sue the blood lab's institutional
shareholders to recover dividends paid out during a Medicare
overbilling investigation.
Rule 7004(d) of the Federal Rules of Bankruptcy Procedure allows
trustee Thomas Reynolds to sue the Alabama-based lab's shareholders
even though he wouldn't have been able to under the state's law,
the U.S. Court of Appeals for the Eleventh Circuit said Tuesday,
February 23, 2021.
That rule allows plaintiffs in bankruptcy-related lawsuits to serve
defendants anywhere in the U.S., and that creates a basis for
federal court jurisdiction.
About Atherotech Inc.
Atherotech's main asset is its VAP cholesterol test, which is
licensed out of the University of Alabama at Birmingham.
Atherotech Inc. filed for Chapter 7 bankruptcy protection (Bankr.
N.D. Ala. Case No. 16-00909) on March 4, 2016. Atherotech Holdings,
Inc., simultaneously filed a separate Chapter 7 petition (Bankr.
N.D. Ala. Case No. 16-00910). Atherotech listed less than $50,000
in assets and between $50,000 and $100 million in liabilities in
its petition, the report said. The Hon. Tamara O Mitchell presides
over the case. Lee Benton -- lbenton@bcattys.com -- of Benton &
Centeno LLP, serves as its bankruptcy counsel.
AVANTOR FUNDING: Moody's Completes Review, Retains B1 CFR
---------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Avantor Funding, Inc. and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review discussion held on February 23, 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
Avantor's B1 CFR reflects moderately high financial leverage. The
rating is supported by the steady and largely recurring nature of
revenue, as well as high customer switching costs associated with
the ultra-high purity materials business. It also reflects good
scale and good customer, geographic, and product diversification.
Moody's expects Avantor will generate strong free cash flow over
the next 12-18 months.
The principal methodology used for this review was Distribution &
Supply Chain Services Industry published in June 2018.
BARTMESS FAMILY: Seeks Approval to Hire Bankruptcy Attorney
-----------------------------------------------------------
Bartmess Family, LLC seeks approval from the U.S. Bankruptcy Court
for the District of Nebraska to hire Allen Fugate, Esq., an
attorney practicing in North Platte, Neb., to handle its Chapter 11
case.
The attorney will charge $250 per hour for his services.
Mr. Fugate disclosed in a court filing that he does not hold or
represent an interest adverse to the Debtor and its bankruptcy
estate.
The firm can be reached through:
Allen L. Fugate, Esq.
210 North Jeffers Street, Ste. 100
P.O. Box 82
North Platte, NE 69103-0082
Tel: (308) 534-1950
Fax: (308) 532-4247
Email: alfugate@windstream.net
About Bartmess Family
Bartmess Family, LLC, a company that provides support activities
for crop production, filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Neb. Case No.
21-40155) on Feb 16, 2021. At the time of filing, the Debtor
disclosed $1,125,465 in assets and $1,206,308 in liabilities.
Judge Brian S. Kruse oversees the case. Allen L. Fugate, Esq.,
serves as the Debtor's legal counsel.
BAUMANN SONS: March 24 Hearing on Exclusivity Extension Bid
-----------------------------------------------------------
Judge Robert E. Grossman of the U.S. Bankruptcy Court for the
Eastern District of New York granted Baumann & Sons Buses, Inc. and
its affiliated debtors a limited extension of their exclusive
periods to file a chapter 11 plan and solicit acceptances to the
plan through the hearing on the Debtors' Second Motion to Extend
Exclusivity, scheduled for March 24, 2021 at 10 a.m.
A full-text copy of the Ex Parte Order, dated February 23, 2021, is
available for free at https://tinyurl.com/pytckf2k from
PacerMonitor.com.
About Baumann & Sons Buses
Baumann & Sons Buses, Inc. and ACME Bus Corp., along with their
non-debtor parent and two affiliates, operated a large school bus
transportation concern with contracts with a number of school
districts in Nassau, Suffolk and Westchester Counties.
On May 27, 2020, Nesco Bus Maintenance and several other creditors
filed involuntary petitions under Chapter 7 of the Bankruptcy Code
against Baumann & Sons and ACME Bus in the U.S. Bankruptcy Court
for the Eastern District of New York. On July 1, 2020, the court
converted the cases to cases under Chapter 11 (Bankr. E.D.N.Y. Lead
Case No. 20-72121).
On Aug. 3, 2020, Baumann & Sons' affiliates, ABA Transportation
Holding Co. Inc., Brookset Bus Corp. and Baumann Bus Company, Inc.,
each filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code. The cases are jointly administered with Baumann &
Sons (Bankr. E.D.N.Y. Case No. 20-72121) as the lead case. Judge
Robert E. Grossman oversees the cases.
Klestadt Winters Jurellersouthard & Stevens, LLP serves as the
Debtors' legal counsel.
On July 27, 2020, the U.S. Trustee appointed a committee of
unsecured creditors. The committee selected SilvermanAcampora LLP
as its bankruptcy counsel.
BELK INC: Case Summary & 30 Largest Unsecured Creditors
-------------------------------------------------------
Lead Debtor: Belk, Inc.
d/b/a United Electronic Services
(in certain instances in VA)
2801 West Tyvola Road
Charlotte, North Carolina 28217
Business Description: Belk operates a private department store
chain headquartered in Charlotte, North
Carolina. Since opening in 1888 as a single
small bargain store in Monroe, North
Carolina, the Debtors have strategically
grown to 291 stores spread throughout
sixteen states. The Debtors offer a strong
e-commerce platform and employ approximately
17,000 associates.
Chapter 11 Petition Date: February 21, 2021
Court: United States Bankruptcy Court
Southern District of Texas
Eighteen affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Belk, Inc. 21-30630
Belk Department Stores LP 21-30625
Belk Accounts Receivable LLC 21-30626
Bear Parent Inc. 21-30627
Belk Ecommerce LLC 21-30628
Belk Administration, LLC 21-30629
Belk Gift Card Company LLC 21-30631
Belk International, Inc. 21-30633
Belk Merchandising LLC 21-30634
Belk Texas Holdings LLC 21-30635
Belk Sourcing LLC 21-30636
Fashion Holdings Intermediate LLC 21-30637
Belk Stores of Mississippi LLC 21-30638
Belk Stores of Virginia LLC 21-30639
Belk Stores Services, LLC 21-30640
Belk-Simpson Company, Greenville, South Carolina 21-30642
Fashion Intermediate Inc. 21-30643
The Belk Center, Inc. 21-30644
Judge: Hon. Marvin Isgur
Debtors'
General
Bankruptcy
Counsel: Joshua A. Sussberg, P.C.
Steven N. Serajeddini, P.C.
Matthew C. Fagen, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Tel: (212) 446-4800
Fax: (212) 446-4900
Email: joshua.sussberg@kirkland.com
steven.serajeddini@kirkland.com
matthew.fagen@kirkland.com
Debtors'
Local
Bankruptcy
Counsel: Kristhy M. Peguero, Esq.
Matthew D. Cavenaugh, Esq.
JACKSON WALKER L.L.P.
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Tel: (713) 752-4200
Fax: (713) 752-4221
Email: kpeguero@jw.com
mcavenaugh@jw.com
Debtors'
Financial
Advisor: ALVAREZ & MARSAL NORTH AMERICA, LLC
Debtors'
Investment
Banker: LAZARD FRERES & CO. LLC
Debtors'
Notice &
Claims
Agent: PRIME CLERK LLC
https://cases.primeclerk.com/belk/Home-DocketInfo?DocAttribute=6559&DocAttrName=VOLUNTARYPETITIONS_Q
Estimated Assets: $1 billion to $10 billion
Estimated Liabilities: $1 billion to $10 billion
The petitions were signed by William R. Langley, chief financial
officer.
A copy of Belk, Inc.'s petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/2XDQXPI/Belk_Inc_and_Belk_Department_Stores__txsbke-21-30630__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Performics A Division of VN Trade Payable $17,517,559
35 W Wacker
Floor 15
Chicago, IL 60601
United States
Attn: Paul Tibbitt
Title: Chief Executive Officer
Tel: 781-784-0962
Email: ptibbit@cj.com
2. LF Centennial Pte Ltd. Trade Payable $17,355,639
1 Kallang Junction No 05-01
Banchong Bldg
Singapore, 339263
Singapore
Attn: Lesley Ho
Title: Executive Vice President
Tel: 65-6-333-8893
Email: lesleyho@sin.lfcentennial.com
3. Clinique Laboratories Trade Payable $15,440,295
Estee Lauder Inc.
767 5th Avenue
Floor 41
New York, NY 10153
United States
Attn: Carol Tuder
Title: 212-628-3087
Email: ctuder@clinique.com
4. Ruby Rd Trade Payable $8,156,436
Alfred Dunner Inc.
1333 Broadway
11th Floor
New York, NY 10018
United States
Attn: Stephanie Baron
Title: Senior Vice President
Email: sbaron@alfreddunner.com
5. Polo Ralph Lauren Corp Trade Payable $7,642,009
Ralph Lauren Childrenswear
650 Madison Avenue
New York, NY 10022
United States
Attn: Jacqueline Philbin
Title: Vice President
Tel: 212-221-6533
Email: jacqueline.philbin@ralphlauren.com
6. PEM-America Inc. Trade Payable $6,755,956
230 5th Avenue
Suite 200
New York, NY 10001
United States
Attn: Aaron Kopolow
Title: Senior Vice President
Tel: 888-368-5374
Email: aaron.kopoloaw@pemamerica.com
7. One Jeanswear Group LLC Trade Payable $5,488,279
1441 Broadway
New York, NY 10018
United States
Attn: Jack Gross
Title: Chief Executive Officer
Tel: 212-575-2571
Email: jackgross@gloria-vanderbilt.com
8. MerchSource LLC Trade Payable $5,416,480
7755 Irvine Center Dr
Irvine, CA 92618
United States
Attn: Adam Gromfin
Title: President
Email: agromfin@skx.com
9. Columbia Sportswear Co. Trade Payable $4,486,818
14375 NW Science Park Drive
Portland, OR 97229
United States
Attn: Abel Navarrete
Title: Vice President
Tel: 503-574-4224
Email: anavarrete@columbia.com
10. Hanesbrands Inc. Trade Payable $4,296,698
5995 Museum Drive
Winston Salem, NC 27105
United States
Attn: Joia Johnson
Title: Chief Administrative Officer
Tel: 336-403-1729
Email: joia.johnson@hanesbrands.com
11. Richline Group Trade Payable $4,047,082
1385 Broadway
New York, NY 10018
United States
Attn: Mark Hanna
Title: Chief Marketing Officer
Email: mark.hanna@richlinegroup.com
12. F&F Apparel Int'l Inc. Trade Payable $3,903,731
1370 Broadway
5th Floor
New York, NY 10018
United States
Attn: Jan Marchant
Title: Chief Executive Officer
Email: jmarchant@tesco.com
13. Westpoint Home Inc. Trade Payable $3,629,630
28 East 28th Street
Concourse Level
New York, NY 10016
United States
Attn: Jonathon Witmer
Title: Chief Executive Officer
Email: jwitmer@westpointhome.com
14. Vinatex International JSC Trade Payable $3,502,859
Road Number 3
Hoa Khanh Industrial Zone
Lien Chieu
Da Nang
Vietnam
Attn: Joe Nguyen
Title: Managing Director
Email: nguyen@vinatex.com
15. Michael Kors (USA) Inc. Trade Payable $3,489,066
11 W 42nd Street
New York, NY 10036
United States
Attn: Michael Cole
Title: Vice President
Email: michael.cole@michaelkors.com
16. MGF Sourcing US LLC Trade Payable $3,300,677
4200 Regent Street
Suite 205
Columbus, OH 43219
United States
Attn: James Schwartz
Title: Chief Executive Officer
Tel: 614-337-5600
Email: james.schwartz@mgfsourcing.com
17. Skechers USA Inc. Trade Payable $3,117,449
225 Sepulveda Blvd
Manhattan Beach, CA 90266
United States
Attn: Kristen Vancott
Title: Senior Vice President
Tel: 310-619-7511
Email: kristen@skechers.com
18. Under Armour Trade Payable $3,112,526
1020 Hull Street
Baltimore, MD 21230
United States
Attn: Meeta Patel
Title: Vice President
Email: meeta.patel@underarmour.com
19. Jones Lang LaSalle Trade Payable $3,028,375
200 E randolph Drive
Chicago, IL 60601
United States
Attn: Marcus Pitts
Title: Managing Director
Email: marcus.pitts@jll.com
20. IZOD Trade Payable $2,857,700
One Bowerman Drive
Beaverton, OR 97005
United States
Attn: Mike Shaffer
Title: Chief Financial Officer
Email: shafferm@izod.com
21. G-III Leather Fashions Inc. Trade Payable $2,822,771
512 7th Avenue
New York, NY 10018
United States
Attn: Roni Seiderman
Title: President
Email: roni.seiderman@G-III.com
22. Euroitalia USA Inc. Trade Payable $2,777,303
260 Madison Ave
17th Floor
New York, NY 10016
United States
Attn: Giovanni Sgariboldi
Title: President
Email: gsgariboldi@euroi.com
23. Footwear Unlimited Inc. Trade Payable $2,653,042
99 Larkin Williams Ind Court
Fenton, MO 63026
United States
Attn: Bill Downey
Title: Vice President
Tel: 636-680-2750
Email: bdowney@footwareunlimited.com
24. Brahmin Leather Works Trade Payable $2,401,121
77 Alden Road
Fiarhaven, MA 02719
United States
Attn: Susan Thacker
Title: Chief Executive Officer
Tel: 508-994-4000
Email: sjthacker@sbcglobal.net
25. Haddad Apparel Group Ltd. Trade Payable $2,309,861
100 West 33rd Street
Suite 115
New York, NY 10001
United States
Attn: Amy Salerno
Title: Senior Vice President
Tel: 516-456-2303
Email: amys@haddad.com
26. Haggar Apparel Co. Trade Payable $2,040,337
11511 Luna Road
Dallas, TX 75234
United States
Attn: Michael Stitt
Title: Chief Executive Officer
Email: mstitt@haggar.com
27. Santa Fe Apparel LLC Trade Payable $1,954,966
463 Fashion Ave
Room 600
New York, NY 10018
United States
Attn: Joe Tano
Title: Chief Executive Officer
Email: jtano@santafey.com
28. Keeco LLC Trade Payable $1,902,499
26460 Corporate Avenue
#250
Haywarrd, CA 94545
United States
Attn: Kevin Lawrence
Title: Chief Operating Officer
Tel: 510-324-880
Email: klawrence@lkeeco.com
29. Fred David Int'l USA Trade Payable $1,833,155
1407 Broadway
Suite 710
New York, NY 10018
United States
Attn: Andy Kirstein
Title: Chief Executive Officer
Email: akirstein@freddavid.com
30. Rare Editions For Girls Trade Payable $1,725,676
1250 Broadway
18th Floor
New York, NY 10001
United States
Attn: Ravi Sulaiman
Title: Managing Director
Tel: 516-371-0700
Email: rsulaiman@rareeditions.com
BELK INC: Cuts Debt by $450M in One-Day Restructuring
-----------------------------------------------------
Belk on Feb. 24, 2021, announced that it has successfully completed
its financial restructuring, finalizing an expedited pre-packaged,
one-day reorganization, and emerged well-positioned for long-term
growth. Belk's plan of reorganization received nearly unanimous
support from its existing lenders and provides for suppliers and
landlords to be paid in full as normal operations continue at all
store locations and on Belk's e-commerce platform.
"We are pleased to have received nearly unanimous support from all
of our stakeholders to complete this restructuring in just one day,
positioning us to pursue our growth initiatives and move the
company forward from a strengthened financial foundation," said
Lisa Harper, Belk CEO. "We're immensely grateful for our loyal
customers, dedicated associates, and supportive vendor partners who
enabled us to complete this restructuring efficiently, without
delay or disruption. We have a bright future ahead, and I'm
looking forward to growing our more than 130-year legacy as a
trusted retailer for many years to come."
As a result of the restructuring, Belk has received $225 million of
new capital, significantly reduced its debt by approximately $450
million and extended maturities on all term loans to July 2025.
"I want to congratulate the team at Belk for its impressive
transformation from a traditional department store business into a
full omni retailer," adds Stefan Kaluzny, Managing Director of
Sycamore Partners. "The company has tripled its web business and
currently fulfills over 70% of its web orders from its stores,
providing a nimble and scalable platform for expansion. It has been
a remarkable undertaking in a very challenging macro environment."
The infusion of cash and reduction in debt provides Belk with
increased liquidity to focus on its key initiatives for growth,
including further enhancements to its omnichannel capabilities and
the expansion of merchandise offerings into new, relevant product
categories. Belk is growing its merchandise assortments in popular
areas like home, wellness and outdoor, and plans to continue
diversifying its inventory to fit the evolving lifestyle of its
customers, all while strengthening its $1 billion+ and growing
e-commerce segment.
About Belk Inc.
Belk, Inc., is an American department store chain founded in 1888
by William Henry Belk in Monroe, North Carolina. Now based in
Charlotte, Belk serves customers at nearly 300 Belk stores in 16
Southeastern states, at belk.com and through the mobile app.
The company was acquired by Sycamore Partners in a transaction
valued at $3 billion in December 2015.
Store closures and suppressed consumer demand from COVID-19 have
affected Belk and other retailers. Belk raised alarms among
suppliers in late 2020 after delaying vendor payments for months
amid pandemic shutdowns.
Belk announced Jan. 26, 2021, that it has reached agreement on
terms of a prepackaged plan negotiated by its majority owner,
Sycamore Partners, with the holders of more than 75% of its
first-lien term loan debt and holders of 100% of its second-lien
term loan debt.
Belk Inc. and 17 of its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 21-30630) on Feb. 23, 2021,
confirming its prepackaged plan just a day after its bankruptcy
filing.
Under the Plan, Sycamore Partners will retain majority control of
Belk. The retailer has received financing commitments for $225
million in new capital from Sycamore Partners, investment firms KKR
and Blackstone Credit, and certain existing first-lien term
lenders. Members of an ad hoc crossover lender group led by KKR
Credit and Blackstone Credit and other participating lenders will
acquire minority ownership. The Plan will reduce debt by $450
million.
The Debtors tapped Kirkland & Ellis LLP and Jackson Walker LLP as
restructuring counsel and Lazard Freres & Co. LLC as investment
banker. Alvarez and Marsal Holdings, Inc., have been onboard as
restructuring advisor since April 2020. Prime Clerk LLC is the
claims and solicitation
agent.
Sycamore Partners Management, L.P., as Plan Sponsor, engaged Latham
& Watkins, LLP, as legal advisor; the Ad Hoc Crossover Lender Group
engaged Willkie Farr & Gallagher LLP, as legal advisor, and PJT
Partners LP, as investment banker; and the Ad Hoc First Lien Term
Lender Group engaged O'Melveny & Myers LLP, as legal advisors, and
Evercore LLC, as investment banker.
BERRY GLOBAL: Moody's Gives Ba2 Rating on New First Lien Loan
-------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Berry Global
Inc.'s (a wholly owned subsidiary of Berry Global Group Inc.
("Berry")) proposed senior secured first lien term loan due 2026.
Berry's existing ratings, including the Ba3 Corporate Family Rating
and Ba3-PD Probability of Default Rating are unchanged. The outlook
remains stable. Berry's SGL-2 Speculative Grade Liquidity Rating is
also unchanged.
The terms and conditions of the new term loan are expected to be
the same as the existing. The proceeds from the new term loan will
be used to repay the existing senior secured first lien term loan
due 2026 at par and pay fees and expenses. Moody's considers the
transaction credit neutral. The rating on the existing term loan
will be withdrawn at the close of the transaction.
The Ba2 ratings on the first lien senior secured term loans and
notes, one notch above the Ba3 CFR, reflect the instruments'
subordination to the asset based revolver for the most liquid
assets (accounts receivable and inventory) and the benefit of the
loss absorption provided by a considerable amount of second lien
debt. The Ba3 CFR reflects an expectation of continued high
leverage through 2021 resulting from the debt financed acquisition
of RPC Group PLC (RPC) in July 2019.
Assignments:
Issuer: Berry Global Inc.
Senior Secured 1st Lien Term Loan, Assigned Ba2 (LGD3)
The rating is subject to the receipt and review of the final
documentation.
RATINGS RATIONALE
Moody's expects Berry to improve leverage to 4.7 times by year-end
2021 driven primarily by debt reduction as the company continues to
use free cash flow to pay down debt. Strengths in Berry's credit
profile include its considerable scale (revenue), a concentration
of sales in relatively stable end markets (food and healthcare),
and strong free cash generation. Berry is the largest rated
packaging manufacturer by revenue and has 75% of its customer
business under long-term contracts with cost pass-through
provisions (raises customer switching costs and protects against
increases in volatile raw material costs). Governance risks are low
given that Berry is a public company and nine of its ten board
members are independent.
Weaknesses in Berry's credit profile include high leverage, some
exposure to more cyclical end markets and lengthy lags in
contractual cost pass-through mechanisms with customers (leaving
the company exposed to changes in volumes before increases in raw
material prices can be passed through). Berry operates in the
fragmented and competitive packaging industry which has many
private, unrated competitors and strong price competition.
The stable outlook reflects management's pledge to direct all free
cash flow to debt reduction until metrics improve to
pre-acquisition levels.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The rating could be upgraded if the company sustainably improves
credit metrics within the context of a stable competitive
environment while maintaining good liquidity. Specifically, the
ratings could be upgraded if funds from operations to debt is above
15.5%, debt to EBITDA is below 4.25 times, and EBITDA to interest
expense is above 5.25 times.
The rating could be downgraded if Berry fails to improve credit
metrics or there is any deterioration in liquidity or the
competitive environment. Additional debt financed acquisitions or
excessive acquisitions (regardless of financing) could also prompt
a downgrade. Specifically, the ratings could be downgraded if funds
from operations to debt is below 13%, debt to EBITDA is above 4.8
times, or EBITDA to interest expense is below 4.25 times.
Based in Evansville, Indiana, Berry Global Group Inc. is a
manufacturer of both rigid and flexible plastic packaging for food,
beverage, health care, personal care, and industrial end markets.
Berry generates approximately 51% of sales in North American, 40%
in EMEA, 5% in Asia Pacific, and 4% in the rest of the world. Net
sales for the twelve months ended September 30, 2020 totaled
approximately $11.7 billion.
The principal methodology used in this rating was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
BIOLASE INC: Board Appoints New President, CEO
----------------------------------------------
The Board of Directors of Biolase, Inc. appointed John R. Beaver
president and chief executive officer of the Company effective Feb.
23, 2021.
The appointment followed the resignation of Todd Norbe as head of
the Company and member of the Board.
Mr. Beaver was most recently the Company's executive vice
president, chief operating officer and chief financial officer. He
joined BIOLASE in 2017 as senior vice president and chief financial
officer. He assumed roles of varying responsibilities over the
past few years, including interim chief executive officer of
BIOLASE from April 2017 until the hiring of Mr. Norbe.
Mr. Beaver has a Bachelor of Business Administration degree in
Accounting from the University of Texas at Austin and is a
Certified Public Accountant.
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.
BLACKJEWEL LLC: Ordered to Remediate Kentucky Coal Mine
-------------------------------------------------------
Law360 reports that a West Virginia bankruptcy judge said
Wednesday, Feb. 24, 2021, that coal miner Blackjewel LLC must move
forward to remediate potentially dangerous conditions at one of its
Kentucky mines despite that state's failure to show that hazards to
the environment and human health are imminent.
U.S. Bankruptcy Judge Benjamin A. Khan made the order during an
emergency hearing that stems from a discovery by Kentucky officials
in January that sedimentation ponds at one of the company's mines
were full and could breach at any time, which the state's Energy
and Environment Cabinet said poses a significant threat to the
environment and to residents.
About Blackjewel LLC
Blackjewel L.L.C.'s core business is mining and processing
metallurgical, thermal and other specialty and industrial coals.
Blackjewel operates 32 properties, including surface and
underground coal mines, preparation or wash plants, and loadouts or
tipples. Combined, Blackjewel and its affiliates hold more than
500 mining permits. Operations are located in the Central
Appalachian Basin in Virginia, Kentucky and West Virginia and the
Powder River Basin in Wyoming.
Blackjewel L.L.C. and four affiliates filed voluntary petitions
seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
W.Va. Lead Case No. 19-30289) on July 1, 2019. Blackjewel was
estimated to have $100 million to $500 million in asset and $500
million to $1 billion in liabilities as of the bankruptcy filing.
The Hon. Frank W. Volk is the case judge.
The Debtors tapped Squire Patton Boggs (US) LLP as bankruptcy
counsel; Supple Law Office, PLLC as local bankruptcy counsel; FTI
Consulting Inc. as financial advisor; Jefferies LLC as investment
banker; and Prime Clerk LLC as the claims agent.
The Office of the U.S. Trustee on July 3, 2019, appointed five
creditors to serve on the official committee of unsecured creditors
in the Chapter 11 case of Blackjewel LLC. Whiteford Taylor &
Preston LLP is the Committee's counsel.
BOARDWALK CAPITAL: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Boardwalk Capital, SPE, LLC
A Delaware Limited Liability Company
25 East Foothill Blvd.
Arcadia, CA 91008
Chapter 11 Petition Date: February 24, 2021
Court: United States Bankruptcy Court
Central District of California
Case No.: 21-11464
Judge: Hon. Barry Russell
Debtor's Counsel: Jeffrey B. Smith, Esq.
CURD, GALINDO & SMITH, LLP
301 E. Ocean Blvd., Suite 1700
Long Beach, CA 90802
Tel: 562-624-1177
Fax: 562-624-1178
E-mail: jsmith@cgsattys.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Kin Hui, manager of the General Partner
of the Managing Member.
The Debtor stated it has no creditors holding unsecured claims.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/2GSPQTA/Boardwalk_Capital_SPE_LLC_A_Delaware__cacbke-21-11464__0001.0.pdf?mcid=tGE4TAMA
BOMBARDIER INC: Fitch Withdraws CCC Issuer Default Rating
---------------------------------------------------------
Fitch Ratings has affirmed Bombardier Inc.'s (BBD) Issuer Default
Rating (IDR) at 'CCC'. Fitch has also upgraded BBD's senior
unsecured notes to 'CCC+'/'RR3' from 'CCC'/'RR4' and affirmed
preferred shares at 'CC'/'RR6'. The upgrade of BBD's senior
unsecured notes reflects an increase in Fitch's estimated recovery
for senior unsecured notes following the repayment of a $750
million secured term loan effective Feb. 19, 2021. Bombardier had
approximately $10 billion of debt outstanding at Dec. 31, 2020.
Fitch has simultaneously withdrawn the ratings.
DEBT RATING RECOVERY PRIOR
---- ------ -------- -----
Bombardier Inc. LT IDR CCC Affirmed CCC
LT IDR WD Withdrawn CCC
senior unsecured LT CCC+ Upgrade RR3 CCC
senior unsecured LT WD Withdrawn CCC
preferred LT WD Withdrawn CC
preferred LT CC Affirmed RR6 CC
The ratings are withdrawn for commercial reasons.
KEY RATING DRIVERS
The ratings for BBD incorporate the company's high leverage,
negative FCF and concentrated exposure to the large- and medium
business jet market following large divestitures since the
beginning of 2020 and its recent decision to end Learjet production
by the end of this year although BBD will continue to provide
aftermarket services for the aircraft and support the specialized
aircraft business. Proceeds from the sale of Bombardier
Transportation (BT) on Jan. 29, 2021 are being used to reduce debt,
but Fitch estimates leverage, including debt/EBITDA which is well
above 10x, will remain high while BBD reduces it cost structure to
align with a smaller revenue base.
Negative FCF: In 2020, FCF was negative $3.2 billion at the
consolidated business including BT. Fitch expects FCF could be as
much as negative $400 million-$500 million in 2021 at BBD's
remaining Aviation business. The timing of a return to positive
cash flow is uncertain and will be affected by the pace of recovery
in demand for business jets, BBD's ability to realize $400 million
of cost savings from a restructuring plan being implemented this
year, and future reductions in interest expense.
Cash requirements for capex will be modest in the near term at
approximately $200 million annually but Fitch expects a return to
higher capex will eventually be needed to support BBD's competitive
position and that high leverage could potentially constrain BBD's
flexibility to invest over the long term. Other cash flow
requirements include working capital requirements, retained
liabilities related to the sale of the regional jet program, and
pension contributions which were underfunded by $1.3 billion (77%
funded) at the end of 2020, excluding BT.
Liquidity Concerns: A key credit concern is liquidity after 2021.
Proceeds from asset dispositions will support debt reduction in
2021 and into 2022; however, Fitch estimates BBD could be
challenged to meet funding needs by late 2022, including the full
repayment of $1.2 billion of debt scheduled to mature in October
2022, if FCF does not become solidly positive and access to capital
markets is constrained. Fitch's base case assumes BBD maintains
steady year-end cash balances at approximately $1.8 billion
reported at the 2020, excluding BT, which would be available to
fund seasonal cash requirements that typically are highest in the
first part of the year.
Gradual Recovery in the Business Jet Market: The business jet
market experienced significant disruption in 2020 due to the
coronavirus pandemic, although conditions improved in the second
half. Fitch expects further recovery could be slow until the
coronavirus pandemic is resolved. BBD has a concentrated exposure
to the business jet market although it is well positioned to
compete following investments in its large business jet platforms.
In 2020, higher deliveries of Global 7500 aircraft offset lower
volumes for other business jets; services revenue was down 21% for
the year. BBD's business aircraft backlog was $10.7 billion at Dec.
31, 2020 compared to $14.4 billion one year earlier.
Operating Performance Expected to Improve: BBD Aviation segment
reported a loss in 2020 on an adjusted EBIT basis excluding
one-time gains and other special items. Fitch's base case assumes
margins will become solidly positive in 2021 and improve further as
the company reduces its cost structure and the Global 7500 becomes
profitable. However, even at higher margins, Fitch expects BBD's
smaller size could make it challenging to rebuild its balance
sheet, fund debt service and invest in its aircraft platforms.
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
-- FCF in 2021 negative by more than $400 million and remains
negative in 2022;
-- Liquidity is adequate to fund scheduled debt maturities
through mid-2022 but may be insufficient to repay all $1.2
billion of notes due in the second half of the year;
-- EBITDA margins increase over the next two-to-three years as
revenue recovers, BBD generates a higher mix of aftermarket
revenue, the Global 7500 becomes profitable and cost savings
are realized from restructuring;
-- Year-end cash balances are maintained at a level of at least
$1.8 billion;
-- Aviation revenue is flat in 2021, with upside potential from a
more favorable mix of aircraft, and improves gradually
thereafter;
-- Learjet production ends in 2021.
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 low demand for
business jets, negative FCF, 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 $336
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.
-- The recovery model produces a Recovery Rating of 'RR3' for
unsecured debt, reflecting good recovery prospects (51%-70%)
in a distress scenario. Recovery prospects are higher than the
previous Recovery Rating of 'RR4' (31%-50%) as senior secured
creditors no longer have a claim following repayment of BBD's
$750 million secured term loan. The 'RR6' for preferred stock
reflects poor recovery prospects due to a low priority
position relative to BBD's debt.
RATING SENSITIVITIES
Not applicable as the ratings have been 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
BBD's liquidity at Dec. 31, 2020 included cash of approximately
$1.8 billion, excluding BT. BBD does not have a bank credit
facility. Reported long-term debt totaled $10.1 billion at Dec. 31,
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 of $10.3 billion as calculated by Fitch, excluding BT, also
includes half of BBD's preferred shares and amounts sold under
extended payment terms. BBD's net pension obligation at Dec. 31,
2020 was approximately $1.3 billion net of net pension obligations
transferred with BT.
BULLET TRANSPORT: Gets OK to Hire Cooper Law Firm as Counsel
------------------------------------------------------------
Bullet Transport, LLC, received approval from the U.S. Bankruptcy
Court for the District of South Carolina to hire The Cooper Law
Firm as its legal counsel.
The firm will provide services in connection with the Debtor's
Chapter 11 case, which include legal advice regarding its powers
and duties under the Bankruptcy Code and the preparation of a
Chapter 11 plan of reorganization.
The firm will be paid at these rates:
Robert Cooper, Esq. $295 per hour
Associate Lawyers $150 - $195 per hour
Paralegals $95 per hour
Under the agreement between the Debtor and The Cooper Law Firm, the
fee for the firm's services will be $15,000. The filing fee is
$1,738.
Robert Cooper, Esq., at The Cooper Law Firm, disclosed in a court
filing that he and his firm are "disinterested" within the meaning
of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Robert H. Cooper, Esq.
The Cooper Law Firm
150 Milestone Way, Suite B
Greenville, South Carolina 29615
Tel: 864-271-9911
Fax: 864-232-5236
Email: rhcooper@thecooperlawfirm.com
About Bullet Transport
Bullet Transport, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.S.C. Case No. 20-04647) on Dec. 30, 2020.
At the time of the filing, the Debtor disclosed assets of between
$100,001 and $500,000 and liabilities of the same range. Judge
Helen E. Burris oversees the Debtor's Chapter 11 case. Robert H.
Cooper, Esq., at The Cooper Law Firm, is the Debtor's legal
counsel.
CALIFORNIA STATEWIDE: Moody's Hikes Series A-2 2007 Bonds to Ba2
----------------------------------------------------------------
Moody's Investors Service has upgraded the California Statewide
Communities Development Authority, CA's Taxable Pension Obligation
Bonds, 2007 Series A-2 Bonds (Capital Appreciation Bonds) to Ba2
from Caa2 and revised the outlook for the 2007 Series A-2 bonds to
stable from positive. This rating action affects $10.7 million of
debt outstanding for this series.
RATINGS RATIONALE
The upgrade to Ba2 from Caa2 of the California Statewide
Communities Development Authority, CA's Taxable Pension Obligation
Bonds, 2007 Series A-2 Bonds (Capital Appreciation Bonds) reflects
a significant improvement in the credit quality of the largest pool
participant, the Town of Paradise. The town received a $270 million
payment from Pacific Gas & Electric Company (PG&E, B1 stable) as a
settlement for its role in causing the November 2018 Camp Fire that
almost completely destroyed the town. The town's full payment of
two years of debt service following the Camp Fire, despite the
resulting financial devastation, are a governance consideration
driving the current rating action. While the town is still in the
process of developing a plan for use of the settlement payment, the
infusion of cash significantly improves its ability pay debt
service while maintaining operations and investing in capital
needs. Given the infusion of cash and demonstrated commitment to
meeting debt service, the city is very well positioned to make its
next service payment on June 1, 2022.
The Ba2 rating is constrained to one notch above the credit quality
of the weakest pool participant because it is an unenhanced pool
that lacks a step-up provision or debt service reserve and the
weakest participant is equal to over 25% of the pool. The pool
participants' remaining share of debt service are as follows: the
City of Palm Springs (27.5%), the Town of Paradise (39.0%) and the
City of Port Hueneme (33.5%). Paradise share of the pool is
declining but remains material until fiscal 2028. Thereafter,
Paradise's share will decline rapidly through fiscal 2031 when Port
Hueneme will become the sole pool participant.
RATING OUTLOOK
The stable outlook on the authority's Taxable Pension Obligation
Bonds, 2007 Series A-2 Bonds reflects Moody's view that the
settlement payment from PG&E will stabilize Paradise's financial
position, which remains had been weakened by the loss of nearly all
ongoing revenue sources.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
-- Adoption of long-term financial plan by the Town of Paradise
that provides path for ongoing financing of city operations,
capital investments and debt service
-- Economic recovery and rebuilding of Paradise
-- Improvement in the weighted average credit quality of pool
participants
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
-- Rapid depletion of Paradise's reserves that does provide
pathway ongoing payment of debt service
-- Decline in the credit quality of the two currently stronger
pool participants
LEGAL SECURITY
Payments by the participating municipalities to the authority for
their share of debt service are their unconditional obligations,
payable from any legally available funds. There is no cross
collateralization or cross default. Therefore, no municipality is
responsible for the bond repayments of any other municipality, and
default of one municipality will not constitute default of any
other municipality. Additionally, the authority's general funds are
not pledged for payment of the bonds. There is no debt service
reserve fund.
Under the terms of separate trust indentures, the participating
municipalities make debt service payments to the trustee, Wells
Fargo Bank, N.A. (Aa1). The terms in the agreements are similar
except for the debt service schedules. Payments sufficient to pay
the municipality's proportionate share of principal and interest on
the bonds are due to the trustee on August 1 each year. For capital
appreciation bonds, payment of principal and accreted interest is
due to bondholders in the following June.
Once the funds are received by the trustee, they are deposited into
a bond fund, where there are held until they are transferred for
payment to bondholders. If any funds remain after full debt service
has been paid, those funds will be returned to the appropriate
municipality by the trustee. Failure to pay principal and/or
interest by August 1 constitutes a default under the trust
agreement. If a default occurs, the municipality is given a 60-day
period by the trustee to cure the default.
PROFILE
The California Statewide Communities Development Authority's
Pension Obligation Bond Program provides an opportunity for local
governments in California (Aa2 stable) to finance their unfunded
pension liabilities. Each of the local governments issued pension
obligation bonds, which were sold to the authority to finance all
or a portion of their unfunded pension liability.
Pool participants in the 2007 Series A-2 Bonds include the City of
Palm Springs, the Town of Paradise and the City of Port Hueneme.
METHODOLOGY
The principal methodology used in this rating was Public Sector
Pool Programs and Financings Methodology published in April 2020.
CAN B CORP: Unit to Buy IP Assets from Imbibe Health
----------------------------------------------------
Can B Corp. entered into a material definitive agreement with its
wholly owned subsidiary, Radical Tactical, LLC, a Nevada limited
liability company, and Imbibe Health Solutions, LLC, a Delaware
limited liability company, pursuant to which Imbibe agreed to sell
certain of its assets to Radical Tactical. The assets to be
purchased include the intellectual property rights, including
trademarks, logos, know how, formulations, productions procedures,
copyrights, social media accounts, domain names and marketing
materials relating to its branded products containing CBD,
including a muscle and joint salve, unscented fizzy bath soak, CALM
massage oil, Me x 3 Metabolic Energy (energy and dietary
supplement), and Muscle, Joints & Back CBD Cryo Gel; inventory; and
goodwill. In exchange for the Assets, the Company has agreed to
pay Imbibe $65,000 in the form of shares of common stock of the
Company at a price per share equal to the average price of the
common stock of the Company during the 10 consecutive trading days
immediately preceding the closing.
The closing of the purchase and sale of Assets shall take place at
the offices of Radical Tactical, on a date and at a time to be
determined, or at such other place, time or date (including by the
exchange of facsimile or PDF signatures) as may be mutually agreed
upon in writing by the parties to the Acquisition Agreement.
Radical Tactical has agreed to indemnify Imbibe for certain
breaches of covenants, representations and warranties and for
claims relating to the Assets following closing. Imbibe has agreed
to indemnify Radical Tactical and the Company for certain breaches
of covenants, representations and warranties, claims relating to
the Assets prior to closing, tax and employment claims relating to
Imbibe's business and liabilities of Imbibe. The parties have
agreed to keep each other's confidential information confidential.
Imbibe and its manager have agreed not to engage in activity that
would compete with the Assets for one year following closing. The
Acquisition Agreement otherwise contains standard representations,
warranties and covenants common in transactions of this type.
About Can B Corp
Headquartered in Hicksville New York, Canbiola, Inc. (now known as
Can B Corp) -- http://www.canbiola.com-- develops, produces, and
sells products and delivery devices containing CBD. Cannabidiol
("CBD") is one of nearly 85 naturally occurring compounds
(cannabinoids) found in industrial hemp (it is also contained in
marijuana). The Company's products contain CBD derived from Hemp
and include products such as oils, creams, moisturizers, isolate,
and gel caps. In addition to offering white labeled products,
Canbiola has developed its own line of proprietary products, as
well as seeking synergistic value through acquisitions of products
and brands in the Hemp industry.
Can B Corp. reported a loss and comprehensive loss of $4.59 million
for the year ended Dec. 31, 2019, compared to a loss and
comprehensive loss of $4.11 million for the year ended Dec. 31,
2018. As of Sept. 30, 2020, the Company had $6.27 million in total
assets, $2.47 million in total liabilities, and $3.81 million in
total stockholders' equity.
BMKR, LLP, in Hauppauge, NY, the Company's auditor since 2014,
issued a "going concern" qualification in its report dated March
26, 2020 citing that the Company incurred a net loss of $4,592,470
during the year ended Dec. 31, 2019, and as of that date, had an
accumulated deficit of $23,361,223. The Company is in arrears on
accounts with certain vendor creditors which, among other things,
cause the balances to become due on demand. The Company is not
aware of any alternate sources of capital to meet such demands, if
made. The auditor said the Company's significant operating losses
raise substantial doubt about its ability to continue as a going
concern.
CENTRAL GARDEN: Moody's Completes Review, Retains Ba3 Rating
------------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Central Garden & Pet Company and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review discussion held on February 9, 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
Central Garden & Pet's credit profile (Ba3) reflects its moderate
financial leverage with Moody's adjusted debt/EBITDA of 2.8x for
the trailing twelve months ended September 26, 2020. The credit
profile is constrained by the seasonality of earnings and cash
flows, as well as weather dependency for its lawn and garden
business (42% of total revenue). The somewhat discretionary nature
of certain products and its highly concentrated customer base also
constrain the company's credit profile. However, Central's credit
profile is supported by its strong market position in the highly
fragmented pet and lawn & garden industries and strong brand
recognition. The company's long-term growth plan incorporates
tuck-in acquisitions to expand its product offerings, especially
within the pet business. Its sizable cash balance of $653 million
(as of September 26, 2020) vs total debt outstanding ($820 million)
is a credit positive. Moody's views many of its products as
consumer staples, which will provide earnings resilience during an
economic downturn.
The principal methodology used for this review was Consumer
Packaged Goods Methodology published in February 2020.
CENTURY COMMUNITIES: Moody's Hikes CFR to B1 on Revenue Increase
----------------------------------------------------------------
Moody's Investors Service upgraded Century Communities, Inc.'s
Corporate Family Rating to B1 from B2, Probability of Default
Rating to B1-PD from B2-PD and the ratings on the company's senior
unsecured notes to B1 from B2. The outlook was changed to positive
from stable. Moody's also upgraded Century's Speculative Grade
Liquidity rating to SGL-2 from SGL-3.
The ratings upgrade reflects Century's increase in revenue scale,
in excess of $3 billion in 2020, track record of geographic
expansion through organic growth and acquisitions, reduction in
adjusted debt to capitalization to close to 42% at December 31,
2020, improving liquidity, including positive free cash flow, and
Moody's expectations of further strengthening of the company's
credit profile.
"Century's performance in 2021 will be supported by solid
homebuilding sector fundamentals and robust demand for entry-level
homes given the company's strong market position in this product
segment and constraints on home inventory levels" says Natalia
Gluschuk, Moody's Vice President -- Senior Analyst.
The positive outlook reflects Moody's expectation of solid top line
growth and further strengthening of Century's key credit metrics
over the next 12 to 18 months. The company's conservative financial
strategies and a plan to operate with lower than historical levels
of leverage also support the outlook.
The Speculative Grade Liquidity Rating upgrade to SGL-2 reflects
Moody's expectation that Century will maintain good liquidity over
the next 12 to 15 months. Liquidity is supported by the company's
cash balance of $394 million at December 31, 2020, Moody's
expectation of modest positive cash flow from operations, ample
availability under $640 million revolving credit facility expiring
in 2023, and good room under financial covenants.
The following rating actions were taken:
Upgrades:
Issuer: Century Communities, Inc.
Corporate Family Rating, Upgraded to B1 from B2
Probability of Default Rating, Upgraded to B1-PD from B2-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD4)
from B2 (LGD4)
Outlook Actions:
Issuer: Century Communities, Inc.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Century's B1 Corporate Family Rating is supported by the company's:
1) track record of solid growth organically and through
acquisitions; 2) good market position in the first-time and
entry-level homebuyer segment, where inventories of available homes
remain low; 3) broad geographic footprint across 28 major
metropolitan markets in 17 states; and 4) governance considerations
including a track record of deleveraging, willingness to issue
equity and conservative strategies with respect to shareholder
returns.
At the same time, Century's credit profile reflects: 1) the
company's acquisitive nature, which can present integration
challenges and raise debt leverage; 2) the high level of homes
constructed on spec (without a purchase order), approximately 80%
to 85% of total, which entails a risk of elevated unsold inventory
during a market weakening; 3) the potential for cash flow from
operations to turn negative if investment in growth is accelerated;
4) the cyclicality of the homebuilding industry and exposure to
volatility in results.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company continues to expand
scale and improve geographic diversity; if total debt to
capitalization is sustained below 45%, interest coverage above 4.5x
and gross margins approach 20%; if conservative financial policies,
including with respect to acquisitions are maintained; and good
liquidity, including robust cash flow, is sustained.
The ratings could be downgraded if end market conditions weaken
causing a decline in revenue and earnings and an increase in
impairments; if homebuilding debt to book capitalization approaches
55% and interest coverage declines below 3.0x; if the company
pursues aggressive shareholder friendly activities or large scale
debt funded acquisitions; or if liquidity deteriorates.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Founded in 2002 and headquartered in Greenwood Village, Colorado,
Century Communities, Inc. is a builder of single-family homes,
townhomes, and flats, focusing on the entry-level product segment
for about 80% of home closings. Century operates in 28 major
metropolitan markets in 17 states, including Alabama, Arizona,
California, Colorado, Florida, Georgia, Indiana, Iowa, Michigan,
Ohio, Nevada, North Carolina, South Carolina, Tennessee, Texas,
Utah, and Washington. The company's reportable segments are West,
Mountain, Texas, Southeast, Century Complete, and Financial
Services. In 2020, Century generated approximately $3.1 billion in
homebuilding revenue and $206 million in consolidated net income.
CHARGING BEAR: Further Fine-Tunes Plan Documents
------------------------------------------------
Charging Bear, LLC, submitted a Corrected Disclosure Statement
describing Plan of Reorganization dated Feb. 19, 2021.
The Corrected Disclosure Statement added this sentence: "This Plan
does not provide for Debtor's discharge from debt."
The Corrected Disclosure Statement does not alter the proposed
treatment for creditors and the equity holder:
* The Oklahoma County Treasurer is a member of Class 1 under
the Plan. The Treasurer has filed a secured proof of claim (POC 1)
in the amount of $101,998 for 2018 and 2019 delinquent ad valorem
taxes. The allowed Secured Claim of the Treasurer will be paid in
full from sale proceeds or in cash from a capital contribution of
new value.
* Bank 7 is the Class 2 secured creditor who has filed a
secured Proof of Claim (POC 2) in the amount of $2,057,464. The
Debtor intends to satisfy the secured claim of Bank 7 either from
the proceeds of the sale of the collateral by private sale or
auction or by payment of the allowed secured claim with a capital
contribution of new value.
* Walt's Trucking LLC is the Class 3 secured creditor who has
a second mortgage on the real estate to secure its personal
guaranty of affiliate debt. The secured claim of Walt's Trucking,
LLC will be satisfied either from the sale proceeds of the real
property or through the reaffirmation of the secured debt. The
latter option will elevate the Walt's debt to a first mortgage
position.
* CrossFirst Bank is the Class 4 secured creditor who has a
third mortgage on the real estate to secure a guaranty. The
secured claim of CrossFirst Bank will be satisfied either from the
sale proceeds of the real property or through the reaffirmation of
the secured debt.
* Class 5 are General Unsecured Claims are unsecured claims
not entitled to priority under Section 507(a) of the Code. As of
the writing of this Disclosure Statement, the scheduled unsecured
claims of the Debtor are Aqualife Aquarium Systems, Inc., in the
amount of $486.82 for services rendered, MacArthur Crossing Office
Park, Inc., in the amount of $14,875 for business park association
dues. The remaining unsecured claim of Travelers Insurance Company
was scheduled in error and should not have been scheduled. The Plan
does not contemplate payments to unsecured creditors.
* Charles Long is the sole member of the Debtor and the only
interest holder. In the event Debtor's real property is sold, the
Debtor will cease to operate and will be rendered dormant.
The Debtor will fund the Plan from the sale of its sole asset or
from a contribution of new value to satisfy the fully secured claim
of the Class 2 creditor.
A full-text copy of the Corrected Disclosure Statement dated Feb.
19, 2021, is available at https://bit.ly/3uu5Ddb from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Douglas N. Gould, Esq.
Douglas N. Gould P.L.C.
5500 N Western., Ste. 150
Oklahoma City, OK 73118
Telephone: (405) 286-3338
Facsimile: (405) 841-1001
Email: dg@dgouldlaw.net
About Charging Bear
Charging Bear LLC is a single asset real estate debtor (as defined
in 11 U.S.C. Section 101(51B)). It is the owner of fee simple
title to certain parcels located in Oklahoma City, Oklahoma having
an appraised value of $3.4 million.
Charging Bear sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Okla. Case No. 20-13610) on Nov. 11, 2020.
Charles V. Long, Jr., managing member, signed the petition.
At the time of the filing, the Debtor had total assets of
$3,400,544 and total liabilities of $4,081,531.
Douglas N. Gould, PLC, is Debtor's legal counsel.
CHASE MERRITT: Gets OK to Hire W. Derek May as Legal Counsel
------------------------------------------------------------
Chase Merritt Global Fund, LLC, received approval from the U.S.
Bankruptcy Court for the Central District of California to hire the
Law Office of W. Derek May as its legal counsel.
The firm's services include:
a. advising the Debtor concerning the requirements of the
bankruptcy court and the U.S. trustee;
b. advising the Debtor regarding matters of bankruptcy law;
c. conducting examinations of witnesses, claimants or adverse
parties;
d. preparing legal papers;
e. representing the Debtor in court proceedings or hearings;
f. reviewing claims and, if appropriate, preparing and filing
objections to disputed claims;
g. assisting the Debtor in the negotiation, formulation,
confirmation and implementation of a Chapter 11 plan of
reorganization;
h. assisting the Debtor in negotiation with the estate's
secured creditors;
i. representing the Debtor in any adversary proceedings; and
j. other legal services necessary to administer the Debtor's
Chapter 11 case.
W. Derek May, Esq., the firm's attorney who will be handling the
case, will be paid at the rate of $350 per hour. The retainer fee
is $3,000.
Mr. May disclosed in a court filing that his firm is
"disinterested" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
W. Derek May, Esq.
Law Office of W. Derek May
400 N. Mountain Ave., Suite 215B
Upland, CA 91786
Tel: (909) 920-0443
Email: wdmlaw17@gmail.com
About Chase Merritt
Chase Merritt Global Fund, LLC sought protection under Chapter 11
of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-10135) on Jan.
20, 2021. Paul Nguyen, manager, signed the petition. At the time
of the filing, the Debtor disclosed $2.7 million and liabilities of
$1.315 million.
Judge Scott C. Clarkson oversees the case. The Debtor is
represented by the Law Office of W. Derek May.
CLEAN ENERGY: Seeks to Hire Plante & Moran as Accountant
--------------------------------------------------------
Clean Energy Collective, LLC, seeks approval from the U.S.
Bankruptcy Court for the District of Colorado to hire Plante &
Moran, PLLC as its accountant.
The Debtor needs an accountant to keep financial records, prepare
tax returns and tax-related documents, and provide other accounting
services.
Plante & Moran will charge the Debtor a flat rate of $62,800 for
the preparation of 2020 federal income tax return and various state
returns and reports. The hourly rates for additional services
range from $225 to $550.
Plante & Moran is "disinterested" within the meaning of Section
101(14) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Brent Hendricks, CPA
Plante & Moran, PLLC
8181 East Tufts Avenue #600
Denver, CO 80237
Tel: 303-846-3327
Email: Brent.Hendricks@plantemoran.com
About Clean Energy Collective
Clean Energy Collective, LLC -- https://www.cleanenergyco.com/ ???
is a clean energy company that is based in Louisville, Colo.,
serving residential, commercial, and non-profit customers. It
developed a model of delivering clean power-generation through
medium-scale facilities that are collectively owned by
participating utility customers.
Clean Energy Collective filed a voluntary petition for relief under
chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No.
20-17543) on Nov. 20, 2020. In the petition signed by Thomas M.
Jannsen, chief executive officer and chief financial officer, the
Debtor disclosed $1,870,355 in total assets and $39,998,916 in
total liabilities.
Judge Michael E. Romero oversees the case.
Wadsworth Garber Warner Conrardy, P.C. and Plante & Moran, PLLC
serve as the Debtor's legal counsel and accountant, respectively.
CLEARWATER SEAFOODS: Moody's Withdraws B2 CFR on Notes Redemption
-----------------------------------------------------------------
Moody's Investors Service has withdrawn Clearwater Seafoods
Incorporated's B2 Corporate Family Rating, B2-PD probability of
default rating, SGL-2 Speculative Grade Liquidity Rating, and
stable outlook following the full redemption of its senior
unsecured notes.
Withdrawals:
Issuer: Clearwater Seafoods Incorporated
Corporate Family Rating, Withdrawn, previously rated B2
Probability of Default Rating, Withdrawn, previously rated B2-PD
Speculative Grade Liquidity Rating, Withdrawn, previously rated
SGL-2
Outlook Actions:
Issuer: Clearwater Seafoods Incorporated
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Moody's has withdrawn all ratings for Clearwater because the
company has redeemed the entire outstanding balance of its senior
unsecured notes in connection with the closing of the acquisition
of Clearwater's issued and outstanding common shares by Premium
Brands Holdings Corporation and a coalition of Mi'kmaq First
Nations.
Moody's no longer rates any of Clearwater's debt obligations post
redemption, resulting in the withdrawal of the issuer's corporate
family rating, speculative grade liquidity rating and its
probability of default rating.
Clearwater Seafoods Incorporated is a vertically integrated
harvester, processor, and distributor of premium wild shellfish and
is the largest holder of shellfish licenses and quotas in Canada.
Revenue for the twelve months ended October 3, 2020 was C$507
million. Pursuant to the closing of the arrangement, the company's
shares were delisted from trading on the Toronto Stock Exchange
(the "TSX") at the close of business on January 26, 2021.
CLEVELAND BIOLABS: Closes $14M Registered Offering of Common Stock
------------------------------------------------------------------
Cleveland BioLabs, Inc. has closed its previously announced
registered direct offering for the issuance and sale of 2,000,000
shares of its common stock at a purchase price of $7.00 per share.
H.C. Wainwright & Co. acted as the exclusive placement agent for
the offering.
The gross proceeds to the Company from the offering were $14
million. The Company currently intends to use the net proceeds
from the offering for general corporate purposes.
The shares were offered and sold by the Company in a registered
direct offering pursuant to a "shelf" registration statement on
Form S-3 (Registration No. 333-238578), including an accompanying
prospectus previously filed with, and declared effective by the
Securities and Exchange Commission (the "SEC") on May 29, 2020.
The offering was made only by means of a prospectus supplement that
forms a part of the registration statement. A final prospectus
supplement and accompanying prospectus relating to the offering was
filed with the SEC and is available on the SEC's website located at
http://www.sec.gov. Electronic copies of the prospectus supplement
and the accompanying prospectus may also be obtained by contacting
H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York,
NY 10022, by phone at 646-975-6996 or e-mail at
placements@hcwco.com.
About Cleveland BioLabs
Cleveland BioLabs, Inc. -- http://www.cbiolabs.com-- is a
biopharmaceutical company developing novel approaches to activate
the immune system and address serious medical needs. The Company's
proprietary platform of Toll-like immune receptor activators has
applications in radiation mitigation and oncology. The Company's
most advanced product candidate is entolimod, which is being
developed as a medical radiation countermeasure for the prevention
of death from acute radiation syndrome and other indications in
radiation oncology. The Company was incorporated in Delaware in
June 2003 and is headquartered in Buffalo, New York.
Cleveland Biolabs recorded a net loss of $2.69 million for the year
ended Dec. 31, 2019, compared to a net loss of $3.71 million for
the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company
had $3.23 million in total assets, $483,873 in total liabilities,
and $2.75 million in total stockholders' equity.
Meaden & Moore, Ltd., in Cleveland, Ohio, the Company's auditor
since 2005, issued a "going concern" qualification in its report
dated April 14, 2020 citing that the Company continues to have
negative cash flow from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
COBRA PIPELINE: Taps Compass Advisory to Assist in Asset Sale
--------------------------------------------------------------
Cobra Pipeline Co., Ltd. seeks approval from the U.S. Bankruptcy
Court for the Northern District of Ohio to employ Compass Advisory
Partners, LLC to assist in its efforts to conduct a successful sale
of its assets.
The firm's services include:
(a) development of a confidential information teaser or
informational memorandum;
(b) development and oversight of a data room for prospective
buyers;
(c) solicitation of interests from potential qualified buyers;
and
(d) coordination of the due diligence process and provision of
hands-on support in responding to requests for information, as
needed, by various interested parties.
The firm requested monthly fees consisting of $20,000 upon approval
of the engagement, and $10,000 in each of the following three
months thereafter.
Nicholas Arrington, the managing member of Compass, disclosed in a
court filing that the firm is "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Nicholas W. Arrington, Esq.
Compass Advisory Partners, LLC
480 One Eleven Place
Cookeville, TN 38506
Phone: 931-400-0012
Fax: 931-400-0013
Email: Nick@CompassAdvisoryPartners.com
About Cobra Pipeline
Cobra Pipeline Co., Ltd., is an Ohio-based intrastate natural gas
pipeline company. The Debtor filed for relief under Chapter 11 of
the Bankruptcy Code (Bankr. N.D. Ohio Case No. 19-15961) on Sept.
25, 2019 in Cleveland, Ohio. In the petition signed by Jessica
Carothers, general manager, the Debtor was estimated to have assets
of at least $50,000, and liabilities of between $10 million and $50
million as of the petition date.
Judge Arthur I. Harris oversees the case.
The Debtor tapped Coffey Law LLC to serve as its legal counsel and
Compass Advisory Partners, LLC to assist in the sale of its assets.
COEUR MINING: Moody's Raises CFR to B2, Outlook Stable
------------------------------------------------------
Moody's Investors Service upgraded the Corporate Family Rating of
Coeur Mining, Inc. to B2 from B3, the probability of default rating
to B2-PD from B3-PD and assigned a B3 rating to the company's new
$350 million senior unsecured notes due 2029. The proceeds from the
proposed notes will be used to refinance the existing senior
unsecured notes due 2024, pay for related transaction fees and
expenses, and for general corporate purposes. The rating of the
existing notes will be withdrawn after the close of the
transaction. The Speculative Grade Liquidity Rating remains SGL-3.
The outlook is stable.
"The upgrade reflects the company's strengthened credit profile and
Moody's expectations that Coeur's will maintain an adequate
liquidity position and credit metrics commensurate with a B2 rating
throughout the expansion of its Rochester mine in Nevada," said
Botir Sharipov, Vice President - Senior Analyst and lead analyst
for Coeur.
Upgrades:
Issuer: Coeur Mining, Inc.
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Assignments:
Issuer: Coeur Mining, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned B3 (LGD5)
Outlook Actions:
Issuer: Coeur Mining, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Coeur's B2 corporate family rating reflects its modest scale,
relatively high cost position and exposure to volatile gold and
silver prices. The rating favorably considers the fact that Coeur
generates more than 60% of its revenues in the U.S. and that the
company's geologically prospective assets in Nevada offer ample
organic growth opportunities. However, the rating also takes into
account the relatively short mine life of some of its operating
assets, significant capital required to complete the Rochester
expansion as well as ongoing investments in exploration and other
growth initiatives.
The upgrade factors in a substantial improvement in the company's
credit metrics and liquidity position which were driven largely by
debt reduction, higher gold and silver prices and improved cash
flow over the last 18 months. The upgrade also assumes that Coeur
will complete the Rochester expansion as planned and that the
company will realize the expected benefits of the project,
including lower operating costs, after the ramp-up to commercial
production.
After a significant deterioration in operating and financial
performance in 2018 largely as a result of challenges at the
Silvertip mine, Coeur used $125 million from two equity offerings,
$25 million from a prepayment for a portion of Kensington
concentrate, cash on hand and a $20 million exchange of its senior
notes to reduce its debt load by over $160 million in 2019.
Silvertip was put on care and maintenance (credit-positive) to
invest in exploration, grow its mineral resource base and evaluate
mill upgrade and expansion opportunities. Higher gold and silver
prices, better operating margins and cash flow generation enabled
the company to fully repay borrowings under its revolving credit
facility and reduce leverage, as adjusted by Moody's, to about to
1.3x in FY2020 from 3.8x as of June 30, 2019. The company has also
entered into net-zero-cost collar contracts on about 285koz of
expected 2021-2022 gold production at weighted average floor and
ceiling prices of $1,612/oz and $1,943/oz, respectively. These
hedges are expected to provide a partial downside protection from
the potential volatility in gold prices during the construction
phase of the Rochester expansion project.
The expansion includes the construction of a new leach pad, a
crushing system with two high-pressure grinding roll (HPGR) units,
a Merrill-Crowe process plant and ancillary facilities at the
expected capital cost of $397 million, which is large for the
company with annual revenues of $785 million (2020). Once
completed, the project is expected to more than double gold and
silver production, materially reduce operating costs and increase
cash flow generation. However, meaningful risks remain with respect
to completing the project on time and on budget, achieving the
required economies of scale and metallurgical recoveries.
Volatility in gold and silver prices could also have a significant
impact on the company's cash flow generation and liquidity.
Assuming gold price of $1,500/oz and silver price of $21/oz, the
top end of Moody's price sensitivity ranges, and factoring in the
existing gold hedges, Moody's adjusted Debt/EBITDA could increase
to 2.5x in 2021. Leverage is expected to remain at or below 2x in
2021 if the company realizes gold and silver prices of or higher
than $1,700/oz and $23/oz, respectively.
The stable outlook reflects Moody's expectations that Coeur will
complete the Rochester expansion as planned and that currently high
operating costs at Rochester will decline materially after the
ramp-up to commercial production. The outlook also assumes that
Coeur's credit metrics will remain commensurate with B2 rating and
that the company will maintain an adequate liquidity profile
throughout the construction phase.
Coeur, like other mining companies, faces a number of ESG risks
including but not limited to environmental and asset retirement
obligations, cyanide use, water management and water rights. In
addition, the company is subject to significant governmental
regulations including the U.S. Mine Safety and Health Act. Coeur
has tailings facilities located at three of its mining sites, which
it continually monitors. The company has also committed to reduce
waste and water usage at its mining facilities. Key environmental
goals include reducing landfill waste by 10% across all sites by
2025 as well as decreasing discharge exceedances in 2020 as
compared to 2019.
The SGL-3 rating reflects the company's adequate liquidity profile
with FY2020 year-end cash balance of $93 million and, net of $35
million in outstanding letters of credit, $265 million available
under the recently upsized $300 million revolving credit facility
(RCF). Proforma the notes issuance, cash and cash equivalents are
expected to increase to $195 million and the maturity of the RCF
planned to be extended by 3 years to 2025. The RCF is secured by
substantially all of the assets of the company and its domestic
subsidiaries, as well as a pledge of the shares of certain of the
Company's subsidiaries. Moody's expects Coeur to be FCF negative in
2021-2022 and to rely heavily on the facility to complete the
expansion before returning to positive cash generation in 2023. The
level of cash burn could range widely depending on commodity prices
and the company's ability to reduce cash costs, particularly at
Rochester. The credit agreement contains financial covenants
including maximum net leverage ratio of 3.5x and minimum interest
coverage ratio (EBITDA/Interest Charges) of 3.0x. We expect the
company to remain in compliance with covenants in the next 12
months.
Under Moody's Loss Given Default for Speculative-Grade Companies
methodology, the B3 rating on the new senior unsecured notes, one
notch below the CFR, reflects their lower priority position in the
capital structure and their effective subordination to the RCF
(unrated). The notes will be guaranteed by subsidiaries of the
company representing a majority of Coeur's FY2020 sales and total
assets as of December 31, 2020. Non-guarantor subsidiaries
represented about 37% of Coeur's FY2020 sales and 36% of total
assets as of December 31, 2020.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would be considered if the company successfully
completes the Rochester expansion project, ramps up the expanded
mine to commercial production as planned and is able to generate
sustained positive free cash flow. Quantitatively, Moody's would
consider an upgrade if, post Rochester expansion, the company were
expected to sustain an adjusted leverage of below 3.0x
(debt/EBITDA) and EBIT margin of at least 8%.
A negative rating pressure could develop if gold and silver prices
decline materially from current levels, if there are material
delays or capex overruns with respect to the Rochester expansion
project and if the company experiences operational issues at its
mines, which could result in lowered production, higher costs and
leverage and greater than anticipated cash burn. Quantitatively,
Moody's would consider a downgrade if the leverage ratio increases
to and is sustained above 3.5x and (CFO - Dividends)/Debt) declines
below 20% of outstanding debt. A significant reduction in borrowing
availability or liquidity could also result in a downgrade.
The principal methodology used in these ratings was Mining
published in September 2018.
Coeur Mining, Inc. is a mid-tier gold and silver producer. The
company's producing properties include Rochester silver-gold mine
in Nevada, Palmarejo gold-silver complex in Mexico, Wharf gold mine
in South Dakota and Kensington gold mine in Alaska. The company
also owns the Silvertip mine (silver-zinc-lead) in Canada,
Sterling/Crown Gold Project in Nevada, multiple exploration assets
in North America and interests in early stage precious metals
companies. Coeur generated about $785 million of revenue in FY2020.
CRC BROADCASTING: To Seek Plan Confirmation on April 20
-------------------------------------------------------
Judge Paul Sala has entered an order approving the Disclosure
Statement of CRC Broadcasting Company and setting a hearing on the
Debtor's Plan.
The Court will consider whether to confirm the Plan at a telephonic
hearing on April 20, 2021, at 1:30 p.m.
Any party desiring to object to confirmation of the Plan must file
and serve a written objection by April 13, 2021.
Any creditor desiring to vote for or against confirmation of the
Plan must complete and sign a Ballot. To be timely, a completed
Ballot must be delivered to the Proponent by April 13, 2021.
As reported in the Troubled Company Reporter, CRC Broadcasting
Company submitted an Amended Chapter 11 Plan and an Amended
Disclosure Statement on Dec. 17, 2020. All allowed and approved
unsecured claims in Class 8 will be paid in full from all funds
available for distribution. Payment to Class 8 may be extended for
a period of 24 months (Jan. 15, 2026 through Dec. 15, 2027) if
necessary to complete a full payment plan to this Class.
About CRC Broadcasting Company
CRC Broadcasting Company, Inc., a broadcast media company based in
Scottsdale, Ariz., filed a voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-02349) on March 6,
2020, listing under $1 million in both assets and liabilities.
Allan D. NewDelman, Esq., at Allan D. NewDelman, P.C., is the
Debtor's legal counsel.
DASEKE COMPANIES: Moody's Hikes CFR to B2 & Rates New Term Loan B2
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of flatbed and
specialty truck carrier Daseke Companies, Inc., including the
corporate family and senior secured ratings to B2 and the
probability of default rating to B2-PD. Moody's also assigned a B2
senior secured rating to the new $400 million senior secured term
loan due 2028 that the company plans to arrange in connection with
the refinancing of its existing $500 million senior secured term
loan due 2024. The Speculative Grade Liquidity rating remains
SGL-3. The rating outlook is stable.
The upgrade of the ratings reflects Moody's expectation that the
operational and cost measures that Daseke implemented in the last
18 months will sustainably improve the efficiency of its
transportation services.
RATING RATIONALE
The ratings of Daseke consider the company's position as a leading
provider of open deck transportation services using flatbed
trailers as well as specialized open deck trailers for heavy haul,
over-dimensional and high value freight. Daseke implemented a range
of operational and cost measures in the last 18 months, including
operational integrations that reduced the number of operating units
to nine from 16 previously, corporate cost reductions, and other
business improvements. The company also strengthened its corporate
structure to manage its operations more effectively, including
through the appointment of a new management team. The current lack
of a permanent CEO poses a governance risk, however.
Moody's expects debt/EBITDA to remain at 4 times in 2021 in the
absence of debt-funded acquisitions. Although leverage is moderate,
the company is exposed to end-markets that are correlated with
cyclical industrial production and construction spending in North
America. Moody's expects Daseke's EBITA margin to be approximately
4.5% in 2021, likely somewhat below the margins in 2020 that were
impacted by robust demand in the renewable energy end-market in the
company's higher margin specialty segment. These margins represent
a step-up from the low single-digit margins prior to 2020.
As an operator of heavy-duty trucks with diesel engines, Daseke is
exposed to the environmental risk that emission regulations will
become more stringent, which could result in higher engine costs.
Liquidity is adequate (SGL-3). Moody's expects free cash flow to be
about breakeven in 2021, in part due to considerable investments in
tractors and trailers that will help to lower the fleet age. Free
cash flow is calculated including fleet investments funded through
equipment loans but excluding proceeds from the sale of used
vehicles. The availability of Daseke's $100 million revolving
credit facility is approximately $85 million. Moody's expects the
company's cash balance to exceed $100 million in 2021 in the
absence of acquisitions.
The $400 million senior secured term loan due 2028 that Daseke
plans to arrange is rated B2, the same level as the corporate
family rating. This reflects the very high proportion of secured
debt in the company's capital structure, comprising the asset-based
revolving credit facility, the senior secured term loan and the
equipment loans that are secured by newly purchased tractors.
Considering the respective collateral of the secured debt, the
recovery rate of the revolving credit facility would be highest,
but there is no material differentiation in recovery rate at this
point between the term loan and equipment loans.
The stable rating outlook reflects Moody's expectation that Daseke
will be able to grow its revenues moderately while sustaining EBITA
margins at around 5% amid improving prospects for US industrial
production and construction activities. The outlook also assumes
that Daseke's acquisition strategy will be measured and will
balance the impact of any incremental debt on the company's capital
structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if EBITA margins are at least 6%,
debt/EBITDA is maintained at 4 times or less, and the company
demonstrates consistently positive free cash flow while maintaining
adequate investments in its fleet, such that (retained cash flow
minus capital expenditures)/debt is at least 4%, taking into
account fleet investments funded through equipment loans.
(FFO+interest)/interest of at least 4 times is also an important
consideration for an upgrade.
The ratings could be downgraded if Moody's expects EBITA margins to
decrease below 4%, debt/EBITDA to increase above 5 times or free
cash flow to be consistently negative. (FFO+interest)/interest of
less than 3 times, tightening liquidity and an accelerated pace of
debt-funded acquisitions could also cause a ratings downgrade.
The following rating actions were taken:
Upgrades:
Issuer: Daseke Companies, Inc.
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Senior Secured Bank Credit Facility, Upgraded to B2 (LGD4) from B3
(LGD4)
Assignments:
Issuer: Daseke Companies, Inc.
Senior Secured Bank Credit Facility, Assigned B2 (LGD4)
Outlook Actions:
Issuer: Daseke Companies, Inc.
Outlook, Remains Stable
The principal methodology used in these ratings was Surface
Transportation and Logistics published in May 2019.
Daseke Companies, Inc., headquartered in Addison, TX, is a leading
provider of open deck transportation and logistics services and a
direct subsidiary of Daseke, Inc., a company listed on NASDAQ
Capital under the ticker "DSKE". Revenues were $1.5 billion in
2020.
DEAN FOODS: Food Lion & Dairy Farmers Settle Suit Over $433M Deal
-----------------------------------------------------------------
Law360 reports that Food Lion and a regional dairy cooperative have
agreed to settle their lawsuit in North Carolina federal court that
challenged Dairy Farmers of America's purchase of assets in the
Carolinas as part of a broader $433 million deal with bankrupt milk
producer Dean Foods.
Food Lion and the Maryland & Virginia Milk Producers Cooperative
were challenging the acquisition of three processing facilities in
North and South Carolina that were part of DFA's deal to buy a
majority of Dean Foods' assets at a bankruptcy auction.
About Southern Foods Group
Southern Foods Group, LLC, which conducts business under the name
Dean Foods, is a food and beverage company and a processor and
direct-to-store distributor of fresh fluid milk and other dairy and
dairy case products in the United States.
Southern Foods and its affiliates filed for bankruptcy protection
on Nov. 12, 2019 (Bankr. S.D. Texas, Lead Case No. 19-36313). The
petitions were signed by Gary Rahlfs, senior vice president and
chief financial officer. Judge David Jones presides over the
cases.
The Debtors posted estimated assets and liabilities of $1 billion
to $10 billion.
The Debtors have tapped David Polk & Wardell LLP as general
bankruptcy counsel, Norton Rose Fulbright US LLP as local counsel,
Alvarez Marsal as financial advisor, Evercore Group LLC as
investment banker, and Epiq Corporate Restructuring LLC as notice
and claims agent.
The Office of the U.S. Trustee appointed creditors to serve on the
official committee of unsecured creditors on Nov. 22, 2019. The
committee is represented by Philip C. Dublin, Esq., at Akin Gump
Strauss Hauer & Feld LLP.
* * *
In early April 2020, a U.S. bankruptcy court in Texas approved the
sale of Dean Foods plants to Dairy Farmers of America for $433
million.
DENARDO CAPITAL: Files Chapter 11 to Stall Project Foreclosure
--------------------------------------------------------------
Bill Heltzel of Westchester and Fairfield County Business Journals
reports that Irvington builder Joseph DeNardo's DeNardo Capital
Management and DeNardo Capital II filed for Chapter 11 bankruptcy
two days before a foreclosure auction was to be held on townhouse
project, Marker 27.
The goal, Mr. DeNardo states in an affidavit, is to find new
financing that will enable completion of the Marker 27 condominium
project in Irvington, pay off creditors and realize "millions of
dollars invested and years of hard work."
If the project cannot be refinanced, he said he will try to sell
the property.
Marker 27, also referred to as The Walk at MarkeRidge, is on a
plateau overlooking the Hudson River, near the Irvington train
station. Plans call for building 27 townhouses.
In 2018, the DeNardo companies refinanced the project with an $18
million loan from two lenders. Silver Point Finance of Greenwich,
Connecticut, is the agent for the lenders. The loans were backed
by the Irvington project and a property in Long Island City,
Queens, and personally guaranteed by DeNardo and his wife, Sylvia.
After a deal to sell the Long Island City property fell through in
2019, the lenders issued a default notice, according to DeNardo,
and demanded new agreements that imposed "harsh restrictions,
onerous terms and costly fees."
Fearing that his Irvington project would be derailed, he signed the
agreements.
DeNardo found a new buyer for the Long Island City property, at
$8.2 million, but the March 2020 closing was halted because of the
coronavirus pandemic. In June, the same buyer offered $7.6
million, and the closing was scheduled for Sept. 30, 2021.
Silver Point issued a new default notice before the closing and
demanded full payment on the loan and 24% default interest
retroactive to March 2019.
Then Silver Point filed a foreclosure lawsuit on the Long Island
City property and gave notice of an auction to sell the DeNardos???
interest in DeNardo Capital II.
The closing was canceled.
DeNardo had also been negotiating a deal with a "well-known real
estate developer" to buy the Irvington property, he says. But the
prospective buyer stopped negotiating this past October 2020,
apparently at the behest of Silver Point.
Silver Point filed a foreclosure lawsuit on the Irvington property
in October 2020 and an auction was scheduled for Dec. 17, 2020 and
then rescheduled for Feb. 18, 2021.
"Faced with the possible loss of ownership and control of the
project," DeNardo states in his bankruptcy affidavit, he filed the
Chapter 11 petitions, two days before the auction.
He said the protection of bankruptcy court "will help put an end to
??? bad faith tactics."
The DeNardo companies use harsher language in a lawsuit filed in
December against Silver Point and the lenders, describing them as
"loan to own lenders" who created sham defaults so they could seize
the highly valuable Irvington project.
DeNardo discontinued the lawsuit a week after it was filed.
Silver Point describes the DeNardo companies as engaging in a
"continued pattern and practice of enabling defaults," in the
foreclosure lawsuits.
The DeNardo companies had failed to complete construction of
certain townhouses in Irvington by last June, for instance, failed
to discharge mechanics liens and failed to maintain insurance on
the properties.
Manhattan attorneys Mark S. Lichtenstein and Jamie B. Shyman, and
Armonk attorney Prassana Mahadeva represent Silver Point's
interests in the bankruptcy cases.
About DeNardo Capital
DeNardo Capital II LLC owns a residential development project
located in Irvington, New York. DeNardo Capital Management LLC is
its sole member.
DeNardo Capital Management LLC and affiliate DeNardo Capital II LLC
sought Chapter 11 protection (Bankr. S.D.N.Y. Case Nos. 21-22098
and 22099) on Feb. 16, 2021. DCM estimated at least $10 million in
assets and liabilities as of the bankruptcy filing.
Kirby Aisner & Curley LLP, led by Dawn Kirby, serves as counsel to
the Debtors.
DON BETOS: Gets OK to Hire Janvier Law Firm as Legal Counsel
------------------------------------------------------------
Don Betos Tacos-Clayton, Inc., received approval from the U.S.
Bankruptcy Court for the Eastern District of North Carolina to hire
Janvier Law Firm, PLLC as its legal counsel.
The firm will assist the Debtor in the preparation of its plan of
reorganization and will provide other legal services necessary to
administer its Chapter 11 case.
Janvier Law Firm will be paid at these rates:
William Janvier $490 per hour
William Brewer $490 per hour
Samantha Moore $360 per hour
William Braziel III $360 per hour
Kathleen O'Malley $290 per hour
Erin Duffy $270 per hour
Law Clerk/Paralegal $145 per hour
The firm received a retainer of $10,000 from the Debtor.
William Janvier, Esq., at Janvier Law Firm, disclosed in a court
filing that he and his firm neither hold nor represent any interest
adverse to Debtor and its bankruptcy estate.
The firm can be reached through:
William P. Janvier
Janvier Law Firm, PLLC
311 East Edenton Street
Raleigh, NC 27601
Phone: (919) 301-0628
Fax: 866-809-2379
About Don Betos Tacos-Clayton
Don Betos Tacos-Clayton, Inc., sought protection under Chapter 11
of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 21-00168) on Jan.
28, 2021. At the time of the filing, the Debtor had estimated
assets of less than $50,000 and liabilities of between $100,001 and
$500,000. Judge Stephani W. Humrickhouse oversees the case.
Janvier Law Firm, PLLC is the Debtor's legal counsel.
EAGLE HOSPITALITY: Moves Forward in Probing Former Insiders
-----------------------------------------------------------
Allison McNeely of Bloomberg News reports that the bankrupt U.S.
arm of Eagle Hospitality Trust, a Singapore-based real estate
investment trust with hotels across America, is likely to get the
go-ahead to investigate former insiders it says are responsible for
the firm's troubles.
Judge Christopher Sontchi declined to approve a motion allowing
Eagle Hospitality to investigate the insiders at a hearing
Wednesday, February 24, 2021, but indicated he would approve a
version of the motion at a hearing on March 15, 2021, after further
discussion over the scope of the investigation between the two
sides.
Eagle Hospitality Trust is seeking court approval to subpoena and
compel documents from Taylor Woods.
About Eagle Hospitality
Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality
stapled group comprising Eagle Hospitality Real Estate Investment
Trust and Eagle Hospitality Business Trust. Based in Singapore,
Eagle H-REIT is established with the principal investment strategy
of investing on a long-term basis in a diversified portfolio of
income-producing real estate, which is used primarily for
hospitality or hospitality-related purposes as well as real
estate-related assets in connection with the foregoing, with an
initial focus on the United States.
EHT US1, Inc. and 26 affiliates, including 15 LLC entities that
each owns hotels in the U.S., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 21-10036) on Jan. 18, 2021. EHT US1
estimated $500 million to $1 billion in assets and liabilities as
of the bankruptcy filing.
The Debtors tapped Paul Hastings LLP and Cole Schotz P.C. as their
bankruptcy counsel, FTI Consulting Inc. as restructuring advisor,
and Moelis & Company LLC as investment banker. Rajah & Tann
Singapore LLP and Walkers serve as Singapore Law counsel and Cayman
Law counsel, respectively. Donlin, Recano & Company, Inc. is the
claims agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee of unsecured creditors in the Debtors' Chapter 11 cases
on Feb. 4, 2021. The committee is represented by Morris James, LLP
and Kramer Levin Naftalis & Frankel, LLP.
EASTERDAY RANCHES: Committee Appointed in Easterday Farms' Case
---------------------------------------------------------------
Gregory Garvin, Acting U.S. Trustee for Region 18, appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Easterday Farms, an affiliate of Easterday Ranches, Inc.
The committee members are:
1. Labor Plus Solutions, Inc.
Juan Ochoa
1603 W. A Street
Pasco, WA 99301
Tel: (509) 551-2223
E-mail: becky@jpochoa.com
2. The McGregor Company
P.O. Box 740
401 Colfax Airport Rd
Colfax, WA 99111
Attention: Bill Knox
Tel: (509)397-4355
Email: billknox@mcgregor.com
3. John Deer Financial
c/o Hillis Clark Martin & Peterson
999 Third Ave., Suite 4600
Seattle, WA 98104
Tel: (515) 267-3683
E-mail: RossWilham@JohnDeere.com
4. Dykman Electrical, Inc.
Attention: Jarred McKenzie
2323 Federal Way
Boise, ID 83705
Tel: (208) 336-3988
E-mail: jmckenzie@dykman.com
5. Two Rivers Terminal, LLC
P.O. Box 475
Rupert, ID 83350
Tel: (208) 531-4100
E-mail: mikem@lvf.com
6. Frank Bushman
723 E. Karcher Road
Nampa, ID 83687
Tel: (208) 465-3703
E-mail: frankb@ivi.us.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Easterday Ranches and Easterday Farms
Easterday Ranches, Inc. is a privately held company in the cattle
ranching and farming business.
Easterday Ranches sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Wash. Case No. 21-00141) on Feb. 1,
2021. Its affiliate, Easterday Farms, a Washington general
partnership, filed a Chapter 11 bankruptcy petition (Bankr. E.D.
Wash. Case No. 21-00176) on Feb. 8, 2021. The cases are jointly
administered under Case No. 21-00141.
At the time of the filing, the Debtors disclosed between $100
million and $500 million in both assets and liabilities.
Judge Whitman L. Holt oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP as their lead
bankruptcy counsel, Bush Kornfeld LLP as local counsel, and Davis
Wright Tremaine LLP as special counsel. T. Scott Avila and Peter
Richter of Paladin Management Group serve as restructuring
officers.
The U.S. Trustee for Region 18 appointed an official committee of
unsecured creditors in Easterday Ranches' case on Feb. 16, 2021.
ENKOGS1 LLC: Gets OK to Hire Bartolone Law as Legal Counsel
-----------------------------------------------------------
ENKOGS1, LLC received approval from the U.S. Bankruptcy Court for
the Middle District of Florida to hire Bartolone Law, PLLC, as its
legal counsel.
The firm's services include legal advice regarding the Debtor's
rights and duties in its Chapter 11 case and the preparation of a
plan of reorganization.
Bartolone Law will be paid at hourly rates ranging from $125 to
$375. The firm received a retainer fee of $16,738.
Bartolone Law does not represent any interest adverse to the Debtor
and its bankruptcy estate, according to court papers filed by the
firm.
The firm can be reached through:
Aldo G. Bartolone, Jr., Esq.
Bartolone Law, PLLC
1030 N. Orange Ave., Suite 300
Orlando, FL 32801
Tel: (407) 294-4440
Fax: (407) 287-5544
Email: aldo@bartolonelaw.com
About ENKOGS1 LLC
ENKOGS1, LLC is a Texas limited liability company, formed on July
31, 2018, which owns and operates a 79-room hotel in Fulton
(Rockport), Texas under the flag of Econo Lodge Inn & Suites.
The Debtor filed a voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 21-bk-00276) on
Jan. 22, 2021. Marco Kozlowski, managing member, signed the
petition. In the petition, the Debtor disclosed assets of between
$1 million and $10 million and liabilities of the same range.
Judge Karen S. Jennemann oversees the case.
Bartolone Law, PLLC and Gorzynski Uglow & Farrell, PC serve as the
Debtor's legal counsel and accountant, respectively.
ESTHER CORONA: Gets OK to Hire Fuller Law Firm as Counsel
---------------------------------------------------------
Esther Corona Inc. received approval from the U.S. Bankruptcy Court
for the Northern District of California to hire The Fuller Law
Firm, PC, as its legal counsel.
The firm's services include:
(a) advising the Debtor regarding its powers and duties;
(b) attending meetings and negotiating with representatives of
creditors and other parties in interest;
(c) advising and consulting the Debtor on the conduct of its
Chapter 11 case, including all of the legal and administrative
requirements of being in Chapter 11;
(d) taking all necessary actions to protect and preserve the
Debtor's estate;
(e) preparing legal papers;
(f) negotiating and preparing a plan of reorganization and all
related documents and taking any necessary action to obtain
confirmation of the plan;
(g) advising the Debtor in connection with the possible sale
or refinance of its assets;
(h) appearing before the court and the U.S. trustee; and
(i) other legal services necessary to administer the case.
The firm will be paid at these rates:
Lars T. Fuller $505 per hour
Saman Taherian $485 per hour
Joyce Lau $395 per hour
The Debtor paid the firm a retainer in the total amount of $11,262
and $1,738 for the filing fee.
As disclosed in court filings, the firm's attorneys are
"disinterested" within the meaning of Section 101(14) of the
Bankruptcy Code.
The Fuller Law Firm can be reached through:
Lars Fuller, Esq.
The Fuller Law Firm, PC
60 North Keeble Avenue
San Jose, CA 95126
Phone: (408) 465-4472
Fax: (408) 295-9852
About Esther Corona
Esther Corona, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Calif. Case No. 21-50088) on Jan. 25,
2021. At the time of the filing, the Debtor had estimated assets
of between $50,001 and $100,000 and liabilities of between $500,001
and $1 million. Judge M. Elaine Hammond oversees the Debtor's
Chapter 11 case. The Debtor is represented by The Fuller Law Firm,
PC in its case.
EXTERRAN ENERGY: Moody's Completes Review, Retains B1 CFR
---------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Exterran Energy Solutions, L.P. and other ratings that
are associated with the same analytical unit. The review was
conducted through a portfolio review discussion held on February
17, 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
Exterran Energy Solutions, L.P.'s B1 Corporate Family Rating is
characterized by increasing debt leverage and earnings weakness,
offset to an extent by the stability of its high margin,
contract-based natural gas compression and processing business
services. The coronavirus pandemic has softened global demand for
natural gas infrastructure and equipment, exposing Exterran to
reduced orders and backlog in new product sales Exterran is further
constrained by the cyclicality in the oil and gas markets as well
as the potential for execution risk in constructing large
projects.
The principal methodology used for this review was Global Oilfield
Services Industry Rating Methodology published in May 2017.
FERRELLGAS PARTNERS: March 5 Plan & Disclosure Hearing Set
----------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware has entered an order within which March 5, 2021, at
10:30 a.m. is the hearing date for final approval of the disclosure
statement and confirmation of the plan filed by Debtors Ferrellgas
Partners, L.P., and Ferrellgas Partners Finance Corp.
Counsel to the Debtors:
Stephen D. Lerner
SQUIRE PATTON BOGGS (US) LLP
201 E. Fourth Street, Suite 1900
Cincinnati, OH 45202
Telephone: 513-361-1200
Facsimile: 513-361-1201
E-mail: stephen.lerner@squirepb.com
- and -
Jeffrey N. Rothleder
Christopher J. Giaimo
2550 M Street, NW
Washington, DC 20037
Telephone: 202-457-6000
Facsimile: 202-451-6315
E-mail: jeffrey.rothleder@squirepb.com
christopher.giaimo@squirepb.com
- and -
Maura McIntyre
4900 Key Tower
127 Public Square
Cleveland, OH 44114
Telephone: 216-479-8500
Facsimile: 216-479-8780
E-mail: maura.mcintyre@squirepb.com
- and -
William E. Chipman, Jr.
Mark Desgrosseilliers
Robert Weber
CHIPMAN, BROWN, CICERO & COLE, LLP
Hercules Plaza
1313 N. Market Street
Suite 5400
Wilmington, DE 19801
Email: Chipman@chipmanbrown.com
Desgross@chipmanbrown.com
Weber@chipmanbrown.com
About Ferrellgas Partners
Ferrellgas Partners, L.P. ("HoldCo") is a publicly-traded Delaware
limited partnership formed in 1994 that has two direct
subsidiaries, Ferrellgas Partners Finance Corp. and Ferrellgas,
L.P. Partners Finance is a Delaware corporation formed in 1996 and
has nominal assets, no employees and does not conduct any
operations, but solely serves as co-issuer and co-obligor for the
2020 Notes. Ferrellgas, primarily through Ferrellgas, L.P., is a
distributor of propane and related equipment and supplies to
customers in the United States. Ferrellgas' market areas for
residential and agricultural customers are generally rural while
the market areas for industrial/commercial and portable tank
exchange customers are generally urban.
On Jan. 11, 2021, Ferrellgas Partners Finance Corp. and Ferrellgas
Partners, L.P., sought Chapter 11 protection (Bankr. D. Del. Case
No. 21-10020 to 21-10021). The operating company, Ferrellgas LP,
did not file a Chapter 11 petition.
Ferrellgas Partners, L.P., was estimated to have $100 million to
$500 million in assets and liabilities as of the bankruptcy
filing.
The Hon. Mary F. Walrath is the case judge.
The Debtors tapped SQUIRE PATTON BOGGS (US) LLP as primary
restructuring counsel; CHIPMAN, BROWN, CICERO & COLE, LLP, as
Delaware bankruptcy counsel; MOELIS & COMPANY LLC as investment
banker; and RYNIKER CONSULTANTS as financial advisor. PRIME CLERK
LLC is the claims agent.
FLAMINGO 1500: Gets OK to Hire Richard Siegmeister as Counsel
-------------------------------------------------------------
Flamingo 1500 Holdings LLC received approval from the U.S.
Bankruptcy Court for the Southern District of Florida to employ
Richard Siegmeister, PA as its legal counsel.
The firm's services include:
a. giving advice to the Debtor with respect to its powers and
duties and the continued management of its business operations;
b. advising the Debtor with respect to its responsibilities in
complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
c. preparing legal documents;
d. protecting the interest of the Debtor in all matters
pending before the court; and
e. representing the Debtor in negotiation with its creditors
in the preparation of a Chapter 11 plan.
The firm will be paid based upon its normal and usual hourly rates
and will be reimbursed for out-of-pocket expenses incurred.
Richard Siegmeister, Esq., a partner at Richard Siegmeister PA,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Richard Siegmeister can be reached at:
Richard Siegmeister
Richard Siegmeister, PA
3850 Bird Rd Floor 10
Miami, FL 33146-1501
Tel: (305) 859-7376
Email: rspa111@att.net
About Flamingo 1500 Holdings
Flamingo 1500 Holdings, LLC sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-10354) on Jan.
15, 2021. At the time of the filing, the Debtor had estimated
assets of between $100,001 and $500,000 and liabilities of between
$500,001 and $1 million.
Judge Robert A. Mark oversees the case. The Debtor is represented
by Richard Siegmeister, PA.
FLAMINGO 1500: U.S. Trustee Unable to Appoint Committee
-------------------------------------------------------
The U.S. Trustee for Region 21, until further notice, will not
appoint an official committee of unsecured creditors in the Chapter
11 case of Flamingo 1500 Holdings, LLC, according to court
dockets.
About Flamingo 1500 Holdings
Flamingo 1500 Holdings, LLC sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-10354) on Jan.
15, 2021. At the time of the filing, the Debtor had estimated
assets of between $100,001 and $500,000 and liabilities of between
$500,001 and $1 million.
Judge Robert A. Mark oversees the case. The Debtor is represented
by Richard Siegmeister, PA.
FLEURDELIS HOSPITALITY: Case Summary & 20 Top Unsecured Creditors
-----------------------------------------------------------------
Debtor: Fleurdelis Hospitality, Inc.
dba Hampton Inn Livingston
1510 US Highway 59 Loop South
Livingston, TX 77351
Business Description: Fleurdelis Hospitality, Inc. operates in the
traveler accommodation industry.
Chapter 11 Petition Date: February 24, 2021
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 21-90035
Judge: Hon. Bill Parker
Debtor's Counsel: Joyce Lindauer, Esq.
JOYCE W. LINDAUER ATTORNEY, PLLC
1412 Main Street, Suite 500
Dallas, TX 75202
Tel: (972) 503-4033
E-mail: joyce@joycelindauer.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Akbar Ahmed, president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/ZWFAGFQ/Fleurdelis_Hospitality_Inc__txebke-21-90035__0002.0.pdf?mcid=tGE4TAMA
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/ZLCLKMA/Fleurdelis_Hospitality_Inc__txebke-21-90035__0001.0.pdf?mcid=tGE4TAMA
FLOW SERVICES: Gets OK to Hire Girouard Melancon as Accountant
--------------------------------------------------------------
Flow Services & Consulting, Inc., received approval from the U.S.
Bankruptcy Court for the Western District of Louisiana to hire
Girouard, Melancon & Associates, LLC as its accountant.
The firm's services will include the preparation of tax forms and
various tax returns.
Girouard will receive a retainer of $4,200 for its anticipated
services:
Preparation of tax forms $1,800
Preparation of tax returns for 2019 $1,900
Preparation of sales tax returns
for December 2020 $500
The firm will also receive payment in the amount of $3,111.88 for
its pre-bankruptcy services.
Jonathon Melancon, an accountant at Girouard, disclosed in a court
filing that he and his firm do not represent any interest adverse
to the Debtor.
The firm can be reached through:
Jonathon J. Melancon,
Girouard, Melancon & Associates, LLC
1602 West Pinhook Road, Suite 202
Lafayette, LA, 70508
Phone: (337) 456-7876
Email: info@gmacpallc.com
About Flow Services and Consulting
Flow Services and Consulting Inc. filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. La.
Case No. 21-50005) on Jan. 5, 2021. Flow Services President Keith
J. Martin signed the petition. In the petition, the Debtor
disclosed assets of between $1 million and $10 million and
liabilities of the same range.
Judge John W. Kolwe oversees the case.
The Debtor tapped Gold, Weems, Bruser, Sues & Rundell APLC as its
legal counsel, Stout Risius Ross LLC as financial advisor, and
Girouard, Melancon & Associates, LLC as accountant.
FRANCHISE GROUP: Moody's Rates New Senior Secured Term Loans 'Ba3'
------------------------------------------------------------------
Moody's Investors Service assigned ratings to Franchise Group,
Inc.'s proposed senior secured term loans, with Franchise Group
Newco PSP, LLC as co-borrower, including a Ba3 rating on the
proposed $1 billion first lien senior secured term loan and a B3
rating on the proposed $300 million second lien senior secured term
loan. At the same time, Moody's affirmed Franchise Group's B1
corporate family rating and B1-PD probability of default rating.
Franchised Group's SGL-2 speculative grade liquidity rating is
unchanged. The outlook is stable.
Proceeds from the term loans will be used to acquire Pet Supplies
Plus ("PSP"), refinance existing Franchise Group indebtedness, and
pay transaction fees and expenses. The ratings are subject to
review of final documentation. Given this is as change from the
company's previously proposed capital structure, Moody's has
withdrawn the ratings on the company's previously proposed credit
facilities that consisted of a $750 million first out senior
secured term loan, $250 million last out senior secured term loan,
and $300 million unsecured term loan.
On February 22, 2021[1], Franchise Group announced a definitive
agreement to sell its Liberty Tax business to NextPoint Acquisition
Corp. for $243 million, consisting of $182 million in cash and at
least $61 million in stock. Per the terms of the proposed first
lien term loan, the company will be required to use the net cash
proceeds to pay down outstanding borrowings. When considering the
acquisition of PSP, sale of Liberty Tax and subsequent debt
reduction, pro forma leverage, as measured by estimated lease
adjusted debt/EBITDAR as of December 31, 2020, will be around 3.5x;
although EBITA/Interest is more modest at less than 1.75x. Moody's
expects the company to reduce leverage and improve coverage metrics
over the next 12-18 months through further debt reduction and
earnings growth, and that it will maintain moderate leverage levels
over the longer term.
Affirmations:
Issuer: Franchise Group, Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Assignments:
Issuer: Franchise Group, Inc.
Senior Secured 1st Lien Term Loan, Assigned Ba3 (LGD3)
Senior Secured 2nd Lien Term Loan, Assigned B3 (LGD5)
Outlook Actions:
Issuer: Franchise Group, Inc.
Outlook, Remains Stable
Withdrawals:
Issuer: Franchise Group, Inc.
Senior Secured Term Loan, Withdrawn , previously rated B2 (LGD4)
Senior Secured Term Loan, Withdrawn , previously rated Ba3 (LGD3)
Senior Unsecured Term Loan, Withdrawn , previously rated B3
(LGD5)
RATINGS RATIONALE
Franchise Group's B1 CFR reflects its moderate financial leverage,
with estimated lease-adjusted debt/EBITDAR of around 3.5 times, pro
forma for the full year effect of recent acquisitions, including
PSP, sale of Liberty Tax and use of proceeds to repay debt. Moody's
expects the company to reduce leverage over the next 12-18 months
through debt reduction and earnings growth, and that it will
maintain moderate leverage levels over the longer term. The rating
is supported by the company's industry and product diversification,
as the company will operate in four separate segments with
demonstrated economic resilience.
The rating is constrained by governance factors including the
company's policy to use a significant amount of free cash flow to
pay a growing dividend over time, and an acquisitive growth
strategy. However, this is balanced against a track record of
issuing equity to help fund acquisitions. While Moody's expects the
company to maintain moderate leverage over the longer term,
potential acquisitions could temporarily increase leverage above
current levels. Franchise Group's limited consolidated operating
history is also a key consideration. Given that the company has
rapidly grown through five successive acquisitions since being
formed in July 2019, it has yet to prove that its business
strategies and financial policies are sustainable over the longer
term.
The Ba3 rating on Franchise Group's proposed $1 billion first lien
senior secured term loan reflects first lien claim on substantially
all assets of the borrower and guarantors, other than receivables
and inventory, on which it will have a second lien position behind
the company's proposed $150 million ABL revolving credit facility
(not rated by Moody's). The B3 rating on the proposed $300 million
second lien senior secured term loan reflects its junior claim
position relative to both the first lien senior secured term loan
and ABL. The term loans will be guaranteed by each material
wholly-owned domestic subsidiary.
Franchise Group's SGL-2 Speculative Grade Liquidity Rating reflects
its good liquidity, supported by positive, yet seasonal, free cash
flow, pro forma balance sheet cash of around $170 million (as of
September 2020), full availability under its ABL revolving credit
facility, ample cushion under proposed financial covenants, and
access to alternate liquidity sources such as potential future
store franchising opportunities. Although the company is reducing
the size of its ABL revolver to $150 million from the previously
contemplated $250 million, it is still adequate for the expected
liquidity needs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that Franchise
Group will maintain moderate leverage and improve interest
coverage, while maintaining dividends and pursuing organic and
acquisitive growth over the next 12 months.
Ratings could be downgraded if operating performance or credit
metrics deteriorate through sales or profit declines or
encountering acquisition integration issues. More aggressive
financial policies, such as maintaining higher leverage through
significant debt funded shareholder returns or acquisitions, or a
deterioration in liquidity, could also lead to a downgrade.
Specific metrics include Debt/EBITDA maintained above 4x or
EBIT/interest below 2x.
Ratings could be upgraded over time if Franchise Group demonstrates
steady revenue and profit growth, successful acquisition
integration and synergy realization, and positive free cash flow.
An upgrade would also require a balanced financial policy that
allows the company to maintain debt/EBITDA below 3x and
EBIT/Interest above 2.5x.
Franchise Group, Inc. (NASDAQ: FRG), through its subsidiaries,
operates franchised and franchisable businesses including Liberty
Tax Service (tax-preparation services), American Freight (value
furniture and appliance retailer), Buddy's Home Furnishings
(rent-to-own retailer) and The Vitamin Shoppe (specialty health
supplement retailer). On a combined basis, Franchise Group
currently operates over 4,000 locations predominantly located in
the US and Canada that are either Company-run or operated pursuant
to franchising agreements. Pro-forma revenue, including PSP and
excluding Liberty Tax, is around $2.8 billion.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
FRONTIER COMMUNICATIONS: Has Until Oct. 14 to File Chapter 11 Plan
------------------------------------------------------------------
Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern
District of New York extended Frontier Communications Corporation
and its affiliated Debtors' exclusive periods to file a chapter 11
plan and solicit acceptances to the plan to October 14, 2021 and
December 14, 2021, respectively.
A full-text copy of the Order, dated February 23, 2021, is
available for free at https://tinyurl.com/3cm2232u from
primeclerk.com.
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 an investment banker.
GAMCO INVESTORS: Moody's Withdraws Ba1 Corp. Family Rating
----------------------------------------------------------
Moody's Investors Service has withdrawn all the ratings of GAMCO
Investors, Inc. including the Ba1 senior unsecured rating and the
Ba1 corporate family rating.
Withdrawals:
Issuer: GAMCO Investors, Inc.
Probability of Default Rating, Withdrawn , previously rated
Ba1-PD
Corporate Family Rating, Withdrawn , previously rated Ba1
Subordinate Shelf, Withdrawn , previously rated (P)Ba2
Preferred Shelf, Withdrawn , previously rated (P)Ba3
Jr Subordinate Shelf, Withdrawn , previously rated (P)Ba2
Senior Unsecured Shelf, Withdrawn , previously rated (P)Ba1
Senior Unsecured Regular Bond/Debenture, Withdrawn , previously
rated Ba1
Outlook Actions:
Issuer: GAMCO Investors, Inc.
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
GAMCO Investors, Inc. is a holding company that provides advisory
services to open-end and closed-end funds, as well as institutional
and private wealth management investors. The company distributes
its products under the GAMCO and Gabelli brands and, as of December
31, 2020, had $32.6 billion in assets under management.
GAMESTOP CORP: CFO Jim Bell to Resign in March
----------------------------------------------
Jim Bell, executive vice president and chief financial officer of
GameStop Corp., will be resigning from his roles on March 26, 2021.
The Company has initiated a search for a permanent chief financial
officer with the capabilities and qualifications to help accelerate
GameStop's transformation. A leading executive search firm has
been retained to support the process. Internal and external
candidates will be evaluated.
If a permanent replacement is not in place at the time of Mr.
Bell's departure, GameStop intends to appoint Diana Jajeh, who is
currently senior vice president and chief accounting officer, to
the role of interim chief financial officer. Ms. Jajeh has more
than two decades of experience operating as an auditor, comptroller
and corporate finance executive. After beginning her career at
PricewaterhouseCoopers, she subsequently held senior roles at
companies such as Visa (NYSE: V) and e.l.f. Cosmetics (NYSE: ELF).
About GameStop
GameStop Corp., a Fortune 500 company headquartered in Grapevine,
Texas, is a video game retailer, operating approximately 5,000
stores across 10 countries, and offering a selection of new and
pre-owned video gaming consoles, accessories and video game titles,
in both physical and digital formats. GameStop also offers fans a
wide variety of POP! vinyl figures, collectibles, board games and
more.
GameStop recorded a net loss of $470.9 million for fiscal year 2019
compared to a net loss of $673 million for fiscal year 2018. For
the 39 weeks ended Oct. 31, 2020, the Company reported a net loss
of $295.8 million. As of Oct. 31, 2020, the Company had $2.60
billion in total assets, $2.26 billion in total liabilities, and
$332.2 million in total stockholders' equity.
GO DADDY: Moody's Affirms Ba2 CFR & Rates New Unsecured Notes Ba3
-----------------------------------------------------------------
Moody's Investors Service affirmed Go Daddy Operating Company,
LLC's Ba2 corporate family rating, Ba2-PD probability of default
rating and Ba1 senior secured rating, upgraded the senior unsecured
rating to Ba3 from B1 and assigned a Ba3 rating to its proposed
senior unsecured notes due 2029. The speculative grade liquidity
rating is unchanged at SGL-1. The outlook remains stable.
RATINGS RATIONALE
"The material increase in financial leverage makes Go Daddy's note
offering a negative credit development, but the company will remain
within its publicly-stated financial leverage guidance range and
the rating already incorporated our expectation that incremental
debt proceeds could be used to fund acquisitions and investments,
leading to the affirmation of the Ba2 CFR," said Oleg Markin,
Moody's Assistant Vice President. "The upgrade of the senior
unsecured rating to Ba3 from B1 reflects the increased proportion
of unsecured debt relative to total debt following the issuance of
the proposed notes."
The Ba2 CFR reflects GoDaddy's high financial leverage, but also
very good free cash flow, steady earnings growth, strong brand in
the US with a growing international presence and market position as
the largest domain name registrar with a leading web-hosting
services offering. The rating is further supported by GoDaddy's
growing scale and recurring revenues derived from high customer
retention rates that have exceeded 85% over the last five years.
Moody's expects debt-to-EBITDA leverage (Moody's adjusted) of 7.4x
(5.6x when adjusted for deferred revenue growth) on a pro-forma
basis for the proposed note offering as of December 31, 2020 will
decline to the high 6.0x range by the end of 2022, which is
relatively weak for the Ba2 ratings category. That said, Moody's
also projects GoDaddy will generate annual free cash flow in excess
of $750 million in 2021 and maintain free cash flow-to-debt above
15%. Robust free cash flow from highly recurring subscription
payments made in advance is a key credit strength balancing the
high financial leverage.
Moody's expects GoDaddy will benefit from growth in ecommerce and
notes the company has been largely resilient to the negative
economic impacts of the COVID-19 pandemic. New customer growth and
demand is anticipated to remain strong while revenue and EBITDA are
expected to remain relatively stable over the next 12-18 months.
High single digit revenue growth is expected to be offset by
increased marketing investment and costs associated with
integrating the recently-announced acquisition of payment processor
Poynt. Profit rate expansion will remain slow as the company
increases its investments in marketing to drive revenue growth. The
rating also incorporates the mature and intensely competitive
web-services industry that features low barriers to entry.
Moody's notes GoDaddy maintains a long term net debt to cash EBITDA
target of 2.0-4.0x (as defined by the company); GoDaddy calculates
it was at 2.9x pro forma for the proposed note and Poynt
transactions as of December 31, 2020. Given GoDaddy is currently at
the midpoint of their leverage target range, the rating reflects
Moody's concern that financial strategies could become more
aggressive, including the use of cash for acquisitions or share
repurchases. The company repurchased over $500 million of its own
stock in 2020, and a large share repurchase authorization remains
available. Given the high levels of stock compensation, Moody's
expects GoDaddy to be an active buyer of its own stock to manage
share dilution.
Moody's expects GoDaddy to maintain a very good liquidity profile
over the next 12-15 months as reflected in the SGL rating of SGL-1.
The company's liquidity is supported by $1.2 billion in cash as of
December 31, 2020 and pro forma for the proposed note sale and
Poynt acquisition, as well as Moody's expectation for annual free
cash flow in excess of $750 million, along with full availability
under a $600 million revolving credit facility maturing in 2024.
The company's cash sources are well in excess of required term loan
amortization that is modest at approximately $32.5 million
annually, paid quarterly. There are no financial maintenance
covenants under the term loan but borrowings under the revolving
credit agreement are subject to a maximum net debt-to-EBITDA
leverage ratio of 5.75x if utilization exceeds 20% of the maximum
capacity. Moody's does not expect the company to utilize its
revolving credit facility over the next 12-18 months and there is
good cushion within the required leverage ratio if the covenant is
applicable.
The stable outlook reflects Moody's expectation of organic revenue
growth in the high-single digit percentages, annual free cash flow
in excess of $750 million over the next 12-15 months along with
maintenance of very good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the revenue growth rate
decelerates, market share weakens, subscriber churn increases, or
free cash flow declines below 10% of total debt for an extended
period of time from weakening operating performance or aggressive
financial policies.
GoDaddy's ratings could be upgraded if the company were able to
maintain strong organic topline and earnings growth, meaningfully
increase scale and diversification and management establishes a
more conservative financial policy.
Issuer: Go Daddy Operating Company, LLC
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Secured Bank Credit Facility, Affirmed Ba1 (LGD3)
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 from B1
(LGD5 from LGD6)
Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD5)
Outlook, is stable
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Go Daddy Operating Company, LLC, is an indirect subsidiary of
publicly-traded GoDaddy Inc. GoDaddy Inc., is a leading provider of
domain name registration, web hosting and other services to small
business. Moody's expects GoDaddy will generated revenues of over
$3.6 billion in 2021.
GOODYEAR TIRE: Fitch Affirms 'BB-' LongTerm IDRs
------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings of
The Goodyear Tire & Rubber Company (GT) and its Goodyear Europe
B.V. (GEBV) subsidiary at 'BB-' following the company's
announcement of its plans to acquire Cooper Tire & Rubber Company
(CTB) in a cash and stock transaction. Fitch has also affirmed the
ratings on GT's first lien revolving credit facility and second
lien term loan, and GEBV's revolving credit facility, all at
'BB+'/'RR1'; GEBV's senior unsecured notes at 'BB'/'RR2'; and GT's
senior unsecured notes at 'BB-'/'RR4'. The Rating Outlook remains
Negative.
For GT, Fitch's ratings apply to a $2.0 billion first lien secured
revolver, a $400 million second lien term loan and $3.55 billion in
senior unsecured notes. For GEBV, Fitch's ratings apply to a EUR800
million secured revolver and EUR250 million in senior unsecured
notes.
KEY RATING DRIVERS
Post-Acquisition Credit Profile: The affirmation of GT's ratings is
driven by Fitch's expectation that the company's credit profile
over the intermediate term will fall within Fitch's ratings
sensitivities, despite some near-term pressure due to the CTB
acquisition and continued external challenges related to the
coronavirus pandemic. Supporting GT's ratings is its decision to
fund the acquisition with a combination of cash on hand and stock,
in addition to some incremental borrowings. This funding plan,
along with CTB's somewhat stronger stand-alone credit profile,
results in a relatively modest incremental weakening of GT's
near-term credit profile (vs. Fitch's stand-alone expectations),
with the potential for an incrementally stronger credit profile in
a few years once synergies are achieved.
Fitch estimates that GT's pro forma gross EBITDA leverage
(according to Fitch's calculations) will be in the mid-4.0x range
at closing, which the company expects to take place in the latter
half of 2021, and will then decline over the subsequent 24 months
as market conditions improve and as the attainment of synergies
leads to increased EBITDA. The company also plans to use FCF to
reduce debt, which will further contribute to leverage reduction.
GT estimates that it will achieve about $165 million in run-rate
cost synergies within two years of the acquisition closing, mostly
related to overlapping corporate functions and operating
efficiencies. It estimates that it will incur costs of between $150
million and $175 million to achieve the synergies.
Negative Rating Outlook: The Negative Rating Outlook incorporates
Fitch's concerns that incremental borrowing associated with the
acquisition, as well as integration complexities, could complicate
GT's ability to strengthen its credit profile while external market
conditions remain challenging. GT's FCF is likely to be negative in
2021 as the company replenishes inventories and spends on the capex
deferred from 2020.
The Negative Rating Outlook also reflects continued uncertainty
with respect to the pace of recovery in the global tire market,
following the significant demand decline seen in 2020 as a result
of the coronavirus pandemic. Fitch expects global tire demand to
rebound significantly in 2021 but to remain below the level seen in
2019, as ongoing shelter-in-place orders in many global regions
continue to weigh on vehicle miles traveled. Fitch could downgrade
GT's ratings if it appears that the company's credit profile will
remain outside of its negative rating sensitivities beyond 2023. On
the other hand, Fitch could revise the Rating Outlook to Stable if
it appears that the company is on track to improve margins, FCF and
leverage.
Acquisition Benefits: The acquisition of CTB will enhance GT's
product offerings and potentially drive increased scale in its
business. It will increase GT's presence in the mid-tier
replacement tire market in North America, and it will almost double
GT's presence in the China original equipment tire market,
including a stronger position with Chinese auto manufacturers. It
will also provide opportunities for GT to sell CTB tires through
its company-owned retail outlets, as well as provide a broader
product offering to GT's third-party distributors and retailers.
Notably, the $165 million in synergies do not include any
manufacturing-related savings.
Fitch also believes that CTB has a somewhat stronger credit profile
overall than GT, which could ultimately serve to strengthen GT's
overall credit profile, although the effect will be limited, given
CTB's significantly smaller size than GT. In addition to the cost
synergies noted above, GT expects to generate a net present value
of at least $450 million by utilizing GT's available U.S. tax
attributes, which could enhance FCF over time.
Acquisition Risks: Although Fitch expects the CTB acquisition to
grow and diversify GT's business, there are also meaningful risks
associated with it, as there are with all acquisitions. Merging
both companies' operations could lead to potential integration
issues or higher-than-expected integration costs. It could also
delay the attainment of the expected synergies or reduce the
overall synergies derived from the transaction. In addition, the
complexity of integrating CTB while GT continues to work on
improving its stand-alone credit profile, heightens the risk of a
ratings downgrade.
Although pro forma leverage will likely be elevated at acquisition
close, both as a result of incremental debt used to fund the
transaction and ongoing demand challenges, Fitch expects leverage
to run below GT's negative rating sensitivities over the
intermediate term. However, following the acquisition, headroom
below Fitch's negative rating sensitivities will be reduced, and
any unexpected integration problems or other issues that lead to
EBITDA leverage running above 4.0x or FFO leverage running above
4.5x for a prolonged period following the acquisition closing could
lead to a negative rating action.
Acquisition Overview: GT's acquisition of CTB will create a larger
company with tire offerings covering a wide range of price points.
GT plans to fund the transaction with a combination of cash and
stock, with about 20% of the acquisition price covered by new GT
shares. The enterprise value (EV) for the transaction equates to
approximately $2.5 billion. GT and CTB expect to close the
transaction in the second half of 2021, and GT has secured
commitments for a bridge financing facility that could cover the
cash portion of the acquisition. Fitch calculates that the
transaction EV equates to about a 7.5x multiple on CTB's 2019
actual EBITDA.
Elevated Leverage: Fitch expects GT's pro forma gross EBITDA
leverage (debt/Fitch-calculated EBITDA) will be elevated, likely in
the mid-4.0x range, around the time of close, but Fitch expects it
to decline over the intermediate term to below 4.0x as market
conditions normalize and GT realizes synergies from the
acquisition. FFO leverage is likely to be more elevated in the near
term, in part due to lower FFO as a result of about $175 million in
rationalization payments in GT's stand-alone business and
additional cash costs associated with the acquisition. Fitch
expects FFO leverage to decline below the 4.5x negative rating
sensitivity, but this could take longer, depending on the pace of
improvement in GT's cash-generating capabilities.
Negative Near-Term FCF: Fitch expects GT's FCF will likely be
negative in 2021 as the company works to replenish its tire
inventories, which were depleted in 2020. Also, capex is likely to
be elevated as a result of spending deferred from 2020, and Fitch
expects there will be some incremental cash costs associated with
the CTB acquisition. Following 2021, Fitch expects GT's FCF to turn
positive as working capital and capex normalize, and as the company
begins to realize synergies from the acquisition. Fitch expects FCF
margins to run in the 1% to 3% range in 2022 and beyond.
GEBV Notes Rating: GEBV's EUR250 million 3.75% senior unsecured
notes due 2023 have a recovery rating of 'RR2', reflecting their
structural seniority to GT's senior unsecured notes, which have a
recovery rating of 'RR4'. GEBV's notes are guaranteed on a senior
unsecured basis by GT and the subsidiaries that also guarantee GT's
secured revolver and second lien term loan. Although GT's senior
unsecured notes are also guaranteed by the same subsidiaries, they
are not guaranteed by GEBV. The recovery prospects of GEBV's notes
are further strengthened relative to those of GT by the lower level
of secured debt at GEBV. GEBV's credit facility and its senior
unsecured notes are subject to cross-default provisions relating to
GT's material indebtedness.
DERIVATION SUMMARY
Following the CTB acquisition, GT will have a relatively strong
competitive position as the third largest global tire manufacturer,
with a highly recognized brand name and a focus on the
higher-margin high-value-added (HVA) tire category. However, the
shift in focus has led to lower tire unit volumes and revenue,
particularly in the mature North American and Western European
markets. The company's diversification is increasing as rising
incomes in emerging markets lead to higher demand for HVA tires,
particularly in the Asia-Pacific region.
GT's margins are roughly consistent with those of the other large
Fitch-rated tire manufacturers, Compagnie Generale des
Etablissements Michelin (A-/Stable) and Continental AG
(BBB/Stable), but GT's leverage is considerably higher, as the
other two companies generally maintain mid-cycle EBITDA leverage
below 1.0x. GT's leverage is roughly consistent with that of auto
suppliers in the 'BB' category, such as Meritor, Inc. (BB-/Stable).
GT's margins are relatively strong compared to typical
'BB'-category issuers, but this is tempered somewhat by heavier
seasonal working capital swings that lead to more variability in
FCF over the course of a year. FCF margins are also sensitive to
raw material prices and capex spending.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- GT closes on the CTB transaction 2H21.
-- About one-half of the $165 million in synergies are realized
in 2022, with the remainder in 2023.
-- Global auto production rises by 6% in 2021, including an 8%
increase in the U.S.
-- Global replacement tire demand largely recovers in 2021 but
still remains a little below the 2019 level.
-- Beyond 2021, GT's sales grow in the low-single digits,
excluding the effect of the CTB acquisition.
-- Capex is elevated in 2021, then runs near 5.5% over the next
several years.
-- Debt (including off-balance sheet factoring) increases to
about $8.7 billion in 2021, then declines toward $7.5 billion
over the next several years.
-- FCF is negative in 2021, but then runs in the 1% to 3% range
over the following years.
-- The company maintains a solid liquidity position, including
cash and credit facility availability.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Demonstrating continued growth in tire unit volumes, market
share and pricing.
-- Sustained FCF margins of 1.5%.
-- Sustained gross EBITDA leverage below 3.0x.
-- Sustained FFO leverage below 3.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Integration issues or unforeseen costs associated with the
acquisition that inhibit the company's ability to bring its
credit profile inside of its negative rating sensitivities
within two years.
-- A significant step-down in demand for the company's tires
without a commensurate decrease in costs.
-- An unexpected increase in costs, particularly related to raw
materials, that cannot be offset with higher pricing.
-- A decline in the company's consolidated cash below $700
million for several quarters.
-- Sustained break-even FCF margin.
-- Sustained gross EBITDA leverage above 4.0x.
-- Sustained FFO leverage above 4.5x.
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: Fitch expects GT's liquidity to remain
sufficient as the company navigates improving economic conditions
following the worst of the coronavirus pandemic. As of Dec. 31,
2020, the company had $1.5 billion in cash and cash equivalents
(excluding Fitch's adjustments for not readily available cash) and
$3.9 billion in availability on its various global credit
agreements, including $2.5 billion of availability on its primary
U.S. and European revolvers. The most significant near-term debt
maturities are two series of senior unsecured notes that come due
in 2023 with about $1.3 billion in principal outstanding.
According to its criteria, Fitch treats $600 million of GT's cash
as not readily available, based on Fitch's estimate of the amount
of cash needed to cover seasonality in the company's business.
Debt Structure: GT's consolidated debt structure primarily consists
of a mix of secured bank credit facilities and senior unsecured
notes. As of Dec. 31, 2020, GT had $400 million in second lien term
loan borrowings and $3.55 billion in senior unsecured notes
outstanding. There were no borrowings outstanding on GT's first
lien secured revolver. GEBV's debt structure consisted of $307
million in senior unsecured notes and $291 million of on-balance
sheet account receivable securitization borrowings.
GT also has various borrowings outstanding at certain non-U.S.
operations, including credit facilities in Mexico and China.
In addition to its on-balance sheet debt, Fitch treated $451
million of off-balance sheet factoring as debt at Dec. 31, 2020.
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.
GOODYEAR TIRE: Moody's Puts B1 CFR Under Review for Downgrade
-------------------------------------------------------------
Moody's Investors Service placed the ratings of The Goodyear Tire &
Rubber Company (Goodyear) on review for downgrade, including the B1
corporate family rating, B1-PD Probability of Default rating,
senior secured second-lien term loan rating of Ba2, senior
unsecured guaranteed notes rating of B2, senior unsecured
unguaranteed notes rating of B3 and Goodyear Europe B.V.'s senior
unsecured guaranteed notes rating of Ba3. The SGL-3 speculative
grade liquidity rating is unchanged.
Moody's also placed the ratings of Cooper Tire & Rubber Company
(Cooper Tire) on review for downgrade, including the Ba3 CFR,
Ba3-PD Probability of Default rating and senior unsecured notes
rating of B1.
These actions follow Goodyear's plan to acquire industry competitor
Cooper Tire in a cash-and-stock transaction valued at approximately
$2.8 billion. The acquisition is expected to close in the second
half of 2021.
In the event of a ratings downgrade, Moody's expects the rating
action for Goodyear to be limited to one notch. However, Goodyear's
plan for Cooper Tire's existing debt is still being determined. In
the event the debt is repaid at closing, Moody's would withdraw
Cooper Tire's ratings. To the extent Cooper Tire's debt is assumed
or remains intact, Cooper Tire's ratings would depend on the
outcome of Goodyear's ratings, the type of support provided by
Goodyear and/or the sufficiency of information for monitoring the
Cooper Tire rating.
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Moody's review will consider: 1) the anticipated debt capital
structure and leverage of the combined entity, with emphasis on the
ability and pace of deleveraging utilizing Moody's expectation for
earnings and free cash flow; 2) the level and cadence of the
sizable cost synergies, particularly reduced selling,
administrative and general expenses and procurement and logistics
savings; 3) synergies expected for the combined entity's
distribution network due to greater volume throughput and 4) the
financial policy going forward.
The largely debt-funded purchase could increase financial leverage
meaningfully - Moody's estimates that pro forma debt-to-EBITDA
(including Moody's standard adjustments) could approach 6x at
transaction close assuming a reasonable recovery in earnings for
both Goodyear and Cooper Tire in 2021. Favorably, the combination
solidifies Goodyear's position as the third largest tire
manufacturer in the world, provides a broader selection of products
across the entire value spectrum and should enable greater
utilization of Goodyear's extensive retail and distribution
network.
Moody's took the following actions:
Issuer: Goodyear Tire & Rubber Company (The)
Corporate Family Rating, Placed on Review for Downgrade, currently
B1
Probability of Default Rating, Placed on Review for Downgrade,
currently B1-PD
Senior Secured Bank Credit Facility, Placed on Review for
Downgrade, currently Ba2 (LGD2)
Gtd. Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently B2 (LGD4)
Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently B3 (LGD6)
Speculative Grade Liquidity rating of SGL-3 remains unchanged
Outlook, Changed to Rating Under Review from Negative
Issuer: Goodyear Europe B.V.
Gtd. Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently Ba3 (LGD3)
Outlook, Changed to Rating Under Review from Negative
Issuer: Cooper Tire & Rubber Company
Corporate Family Rating, Placed on Review for Downgrade, currently
Ba3
Probability of Default Rating, Placed on Review for Downgrade,
currently Ba3-PD
Senior Unsecured Regular Bond/Debenture, Placed on Review for
Downgrade, currently B1 (LGD5)
Outlook, Changed to Rating Under Review from Stable
The principal methodology used in rating Goodyear Tire & Rubber
Company (The) and Goodyear Europe B.V. was Automotive Supplier
Methodology published in January 2020.
The Goodyear Tire & Rubber Company is one of the largest tire
manufacturers in the world. Revenues for the year ended December
31, 2020 were approximately $12 billion.
Cooper Tire & Rubber Company is a leading tire manufacturer in
North America and is focused on the replacement market for
passenger cars and light and medium-duty trucks. Revenues for the
year ended December 31, 2020 were approximately $2.5 billion.
GPS HOSPITALITY: Moody's Alters Outlook on Caa1 CFR to Stable
-------------------------------------------------------------
Moody's Investors Service affirmed the Caa1 corporate family rating
and Caa1-PD probability of default rating of GPS Hospitality
Holding Company LLC. In addition, Moody's affirmed GPS's Caa1
senior secured bank facility ratings. The outlook was changed to
stable from negative.
"The affirmation and change in outlook to stable from negative
reflects that we expect the gradual improvement in same store sales
to continue which will help drive higher earnings and result in
lower leverage, improved coverage and stronger liquidity over time
despite ongoing government restrictions." stated Bill Fahy, Moody's
Senior Credit Officer. "However, the ratings and outlook also
consider the company's current high leverage and weak interest
coverage with an inability to cover interest expense on an EBIT
basis due in part to a material level of cash interest expense
related to the company's preferred stock." Fahy added.
Affirmations:
Issuer: GPS Hospitality Holding Company LLC
Probability of Default Rating, Affirmed Caa1-PD
Corporate Family Rating, Affirmed Caa1
Senior Secured Bank Credit Facility, Affirmed Caa1
Outlook Actions:
Issuer: GPS Hospitality Holding Company LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
GPS's credit profile is constrained by its high leverage and weak
interest coverage driven in part by government restrictions in
response to the coronavirus. Moody's estimates debt/EBITDA will be
6.5x and EBIT/interest will be 0.3x at the end of fiscal 2020. The
rating also considers the company's high level of capex required
for new unit growth and remodel initiatives which will constrain
free cash flow over time. GPS' restaurants are also geographically
concentrated in Georgia, Louisiana and Michigan resulting in its
operating performance being driven in large part by the economic
environment of these three states. GPS benefits from its top three
position as a franchisee in the Burger King system in terms of
units as well as its ownership of both Popeyes and Pizza Hut
restaurants which have both performed relatively well during the
pandemic. The company's well balanced day-part and adequate
liquidity are also credit positives.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
the restaurant sector from the current weak U.S. economic activity
and a gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around Moody's forecasts is unusually high. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety.
GPS' private ownership is a rating factor given the potential
implications from both a capital structure and operating
perspective. Financial policies are always a key concern of
privately-owned companies with regards to the potential for higher
leverage, extractions of cash flow via dividends, or more
aggressive growth strategies.
Restaurants are deeply entwined with sustainability, social and
environmental concerns given their operating model with regards to
sourcing food and packaging, as well as having an extensive labor
force and constant consumer interaction. While these may not
directly impact the credit, these factors could impact brand image
and change consumer perception of the brand overall.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in a higher rating include the sustained
improvement in operating performance, liquidity and credit metrics,
particularly after restrictions on in-restaurant dining begin to
subside. Specifically, an upgrade would require at least adequate
liquidity and debt to EBITDA sustained below 6.5x and EBIT to
interest expense sustained around 1.0x.
Factors that could result in a downgrade include an inability to
strengthen credit metric from current levels or a sustained
deterioration in liquidity for any reason.
GPS Hospitality Holding Company LLC, headquartered in Atlanta,
Georgia, owns and operates around 394 Burger King restaurants, 19
Popeyes and 67 Pizza Hut locations across 11 states. GPS
Hospitality is privately held and is majority owned by Tom Garrett,
the company's founder and CEO. Annual revenues are over $600
million.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
GULFPORT ENERGY: Company & CEO Settle SEC Charges Over Perks
------------------------------------------------------------
The Securities and Exchange Commission on Feb. 24, 2021, announced
settled charges against an Oklahoma-based gas exploration and
production company, Gulfport Energy Corporation, and its former
CEO, Michael G. Moore, for failing to properly disclose as
compensation certain perks provided to Moore, as well as failing to
disclose certain related person transactions.
The SEC's separate orders against Gulfport and Moore find that,
from 2014 to 2018, Gulfport failed to disclose approximately
$650,000 in executive compensation in the form of perquisites
received by Moore, and also failed to disclose certain related
person transactions involving Moore. According to the orders, the
undisclosed perquisites included the cost of Moore's use of
Gulfport's chartered aircraft for certain travel. The undisclosed
perquisites also included costs associated with Moore's use of a
Gulfport corporate credit card for personal expenses that he did
not repay on a timely basis, which resulted in Gulfport extending
Moore interest-free credit and carrying a related person account
receivable. The orders also find that Gulfport failed to disclose
that it paid Moore's son's landscaping company approximately
$152,000 in 2015 for its services. The order against Moore further
finds that Moore caused Gulfport's violations by failing to supply
required information that would have allowed Gulfport to identify
and disclose the perquisites and related person transactions.
The SEC's order as to Gulfport notes Gulfport's significant
cooperation with the SEC's investigation and its remedial efforts,
which included replacing key personnel, developing an internal
audit function, enhancing existing policies and procedures, and
instituting new review and tracking processes, and that this
cooperation and remediation was taken into account in the
determination to accept the company's settlement offer.
"Gulfport failed to provide accurate disclosure of executive
compensation to investors who rely on this information," said
Division of Enforcement Acting Director Melissa R. Hodgman. "But,
after discovering its disclosure failures, Gulfport's timely
remediation and cooperation in our investigation were key factors
in the Commission's decision not to impose a penalty against the
company."
The SEC's order as to Gulfport finds reporting, books and records,
internal accounting controls, and proxy violations. The SEC's
order as to Moore finds that he violated the antifraud and proxy
provisions of the federal securities laws, and caused Gulfport's
reporting and books and records violations. Gulfport and Moore
agreed, without admitting or denying the SEC's findings, to
cease-and-desist from further violations, and Moore agreed to pay a
civil penalty in the amount of $88,248.
The SEC's investigation was conducted by Jeffrey D. Felder, Tracy
W. Bowen, and Nicholas Heinke and supervised by Kimberly L.
Frederick and Jason J. Burt of the SEC's Denver Regional Office.
About Gulfport Energy
Gulfport Energy Corporation (NASDAQ: GPOR) --
http://www.gulfportenergy.com/-- is an independent natural gas and
oil company focused on the exploration and development of natural
gas and oil properties in North America and a producer of natural
gas in the contiguous United States. Headquartered in Oklahoma
City, Gulfport holds significant acreage positions in the Utica
Shale of Eastern Ohio and the SCOOP Woodford and SCOOP Springer
plays in Oklahoma. In addition, Gulfport holds non-core assets that
include an approximately 22% equity interest in Mammoth Energy
Services, Inc. (NASDAQ: TUSK) and has a position in the Alberta Oil
Sands in Canada through its 25% interest in Grizzly Oil Sands ULC.
As of Sept. 30, 2020, Gulfport had $2,375,559,000 in assets and
$2,520,336,000 in liabilities.
Gulfport and its subsidiaries sought Chapter 11 protection (Bankr.
S.D. Tex. Lead Case No. 20-35562) on Nov. 13, 2020.
The Hon. David R. Jones is the case judge.
The Debtors tapped Kirkland & Ellis LLP as their bankruptcy
counsel; Jackson Walker L.L.P. as local bankruptcy counsel; Alvarez
& Marsal North America, LLC as restructuring advisor; and Perella
Weinberg Partners L.P. and Tudor, Pickering, Holt & Co. as
financial advisor; and PricewaterhouseCoopers LLP as tax services
provider. Epiq Corporate Restructuring LLC is the claims agent.
Wachtell, Lipton, Rosen & Katz is counsel for the special committee
of Gulfport's Board of Directors while Chilmark Partners is the
financial advisor.
Katten Muchin Rosenman LLP is counsel for the special committee of
the governing body of each Debtor other than Gulfport while M III
Partners, LP is the financial advisor.
The Office of the U.S. Trustee formed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. The
Committee is represented by Norton Rose Fulbright US LLP and Kramer
Levin Naftalis & Frankel, LLP.
GULFPORT ENERGY: Court Gives Green Light to Seek Plan Votes
-----------------------------------------------------------
Daniel Gill of Bloomberg Law reports that bankrupt Gulfport Energy
Corp. and its subsidiaries got court approval to seek creditors'
votes for their Chapter 11 plan, centered on slashing operating
costs and funded debt by about half.
Judge David R. Jones of the U.S. Bankruptcy Court for the Southern
District of Texas Wednesday, Feb. 24, 2021, approved Gulfport's
disclosure statement, which describes a plan that would cut funded
debt of $2.4 billion by $1.25 billion.
The plan also would preserve hundreds of jobs and reduce operating
costs going forward, Gulfport said Tuesday in a separate court
filing.
About Gulfport Energy Corp.
Gulfport Energy Corporation (NASDAQ: GPOR) --
http://www.gulfportenergy.com/-- is an independent natural gas and
oil company focused on the exploration and development of natural
gas and oil properties in North America and a producer of natural
gas in the contiguous United States. Headquartered in Oklahoma
City, Gulfport holds significant acreage positions in the Utica
Shale of Eastern Ohio and the SCOOP Woodford and SCOOP Springer
plays in Oklahoma. In addition, Gulfport holds non-core assets
that include an approximately 22% equity interest in Mammoth Energy
Services, Inc. (NASDAQ: TUSK) and has a position in the Alberta Oil
Sands in Canada through its 25% interest in Grizzly Oil Sands ULC.
As of Sept. 30, 2020, Gulfport had $2,375,559,000 in assets and
$2,520,336,000 in liabilities.
Gulfport and its subsidiaries sought Chapter 11 protection (Bankr.
S.D. Tex. Lead Case No. 20-35562) on Nov. 13, 2020.
The Hon. David R. Jones is the case judge.
The Debtors tapped Kirkland & Ellis LLP as their bankruptcy
counsel; Jackson Walker L.L.P. as local bankruptcy counsel; Alvarez
& Marsal North America, LLC as restructuring advisor; and Perella
Weinberg Partners L.P. and Tudor, Pickering, Holt & Co. as
financial advisor; and PricewaterhouseCoopers LLP as tax services
provider. Epiq Corporate Restructuring LLC is the claims agent.
Wachtell, Lipton, Rosen & Katz is counsel for the special committee
of Gulfport's Board of Directors while Chilmark Partners is the
financial advisor.
Katten Muchin Rosenman LLP is counsel for the special committee of
the governing body of each Debtor other than Gulfport while M III
Partners, LP is the financial advisor.
The Office of the U.S. Trustee formed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. The
Committee is represented by Norton Rose Fulbright US LLP and Kramer
Levin Naftalis & Frankel, LLP.
HAYWARD INDUSTRIES: Moody's Puts B3 CFR Under Review for Upgrade
----------------------------------------------------------------
Moody's Investors Service placed the ratings of Hayward Industries,
Inc. on review for upgrade, including the B3 Corporate Family
Rating, the B3-PD Probability of Default Rating, the B3 senior
secured first lien rating, and Caa2 senior secured second lien
rating. This follows Hayward Holdings, Inc., parent company of
Hayward, announcement that it has filed for a proposed initial
public offering of shares of its common stock that Moody's views as
credit positive because the company plans to use proceeds to repay
outstanding debt.
The rating review will focus on Hayward's financial leverage
following the initial public offering transaction, financial
policies as a public company, debt mix, and operating strategy. The
planned IPO's ultimate impact on Hayward's financial profile
remains uncertain and will depend on the proceeds of the planned
equity offering and the allocation of proceeds. Governance
considerations include that the company will remain majority owned
and controlled by its existing private equity sponsors, the
anticipated lower financial leverage profile, and the company's
financial policies following the IPO including the potential for
acquisitions. Moody's expects to conclude the review process
shortly after the completion of the proposed IPO.
The following ratings/assessments are affected by the action:
On Review for Upgrade:
Issuer: Hayward Industries, Inc.
Corporate Family Rating, Placed on Review for Upgrade, currently
B3
Probability of Default Rating, Placed on Review for Upgrade,
currently B3-PD
Senior Secured 1st Lien Term Loan, Placed on Review for Upgrade,
currently B3 (LGD4)
Senior Secured 2nd Lien Term Loan, Placed on Review for Upgrade,
currently Caa2 (LGD6)
Outlook Actions:
Issuer: Hayward Industries, Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Notwithstanding the rating review, Hayward's B3 CFR broadly
reflects its relatively small scale with revenue of $875.4 million,
and its high financial leverage with debt/EBITDA at around 6.5x for
the fiscal year ending December 31, 2020. As a manufacturer of pool
equipment, Hayward is somewhat exposed to cyclical downturns, and
has highly seasonal cash flows, with most of its cash generated
during the second and third quarters. The company has high customer
concentration with its top customer, Pool Corporation, accounting
for approximately 30% of net sales in fiscal year 2020, and its top
5 customers accounting for 43%. Governance factors primarily
reflect the company's aggressive financial policies under private
equity ownership, including elevated financial leverage and
shareholder distributions partially funded with incremental debt.
Hayward's credit profile also reflects its strong market position
and good brand awareness in the North American pool equipment
industry, and its growing presence internationally. The company
benefits from the relatively stable revenue base from its repair
and replacement business, which represents about 75% of revenue,
and its good EBITDA margin supported by its large aftermarket sales
mix and pricing stability. Demand for the company's products was
very strong in 2020 as consumers are spending more time at home
resulting in increased pool utilization. Moody's expects good
consumer demand to continue into the first half of calendar 2021,
supported by a solid US housing market, and continued focus on
stay-at-home, social distancing, and outdoor activities. Hayward's
good liquidity reflects its relatively healthy cash balance of
approximately $115 million as of December 31, 2020, good free cash
flow generation on an annual basis, and access to an undrawn $250
million revolver expiring in August 2022.
The ratings could be upgraded if the company demonstrates
consistent organic revenue growth and operating margin expansion,
or if debt/EBITDA is sustained below 5.0x. A ratings upgrade would
also require the company to maintain at least good liquidity,
including good free cash flows and revolver availability, as well
as financial policies that support credit metrics at the above
levels.
The ratings could be downgraded if the company's operating results
weaken with material revenue declines and margin deterioration,
debt/EBITDA is sustained above 7.0x, or EBIT/interest is below
1.0x. Ratings could also be downgraded if liquidity weakens,
including weak or negative free cash flows on an annual basis, or
if the company completes a large debt-financed acquisition or
shareholder distribution that materially increases financial
leverage.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
Hayward Industries, Inc. is a manufacturer of swimming pool
equipment including pumps, heaters, sanitizers, filters, cleaners,
white goods and more. It also manufactures equipment that controls
the flow of fluids for various industrial end markets. Hayward's
largest market is the U.S. (over two thirds of sales). Revenue
approximates $875.4 million as of fiscal year ending December 31,
2020. Hayward is majority owned by private equity firms CCMP
Capital Advisors, L.P. and MSD Partners, L.P.
HIGHLAND CAPITAL: Court Confirms Asset Monetization Plan
--------------------------------------------------------
Highland Capital Management, L.P., has won confirmation of its
Plan.
The Court on Feb. 22, 2021, confirmed the Fifth Amended Plan of
Reorganization filed on Nov. 24, 2020, as modified on Jan. 22,
2021, and again on Feb. 1, 2021.
The parties have repeatedly referred to the Plan as an "asset
monetization plan" because it involves the orderly wind-down of the
Debtor's estate, including the sale of assets and certain of its
funds over time, with the Reorganized Debtor continuing to manage
certain other funds, subject to the oversight of the Claimant Trust
Oversight Board. The Plan provides for a Claimant Trust to, among
other things, manage and monetize the Claimant Trust Assets for the
benefit of the Debtor's economic stakeholders. The Claimant
Trustee is responsible for this process, among other duties
specified in the Plan's Claimant Trust Agreement. There is also
anticipated to be a Litigation Sub-trust established for the
purpose of pursuing certain avoidance or other causes of action for
the benefit of the Debtor's economic constituents.
The Plan treats claims and interests as follows:
* Class 2 Frontier Secured Claim. Each Holder of an Allowed
Class 2 Claim will receive cash in an amount equal to all accrued
but unpaid interest on the Frontier Claim and the New Frontier
Note. Class 2 is impaired.
* Class 7 Convenience Claims. Each Holder of an Allowed Class 7
Claim will receive the treatment provided to Allowed Holders of
Class 8 General Unsecured Claims if the Holder of such Class 7
Claim makes the GUC Election or an amount in Cash equal to the
lesser of (a) 85% of the Allowed amount of such Holder's Class 7
Claim or (b) such Holder's Pro Rata share of the Convenience Claims
Cash Pool. Class 7 is impaired.
* Class 8 General Unsecured Claims. Each Holder of an Allowed
Class 8 Claim shall receive (i) its Pro Rata share of the Claimant
Trust Interests, (ii) such other less favorable treatment as to
which such Holder and the Claimant Trustee shall have agreed upon
in writing, or (iii) the treatment provided to Allowed Holders of
Class 7 Convenience Claims if the Holder of such Class 8 General
Unsecured Claim is eligible and makes a valid Convenience Class
Election. Class 8 is impaired.
* Class 9 Subordinated Claims. On the Effective Date, Holders of
Subordinated Claims shall receive either (i) their Pro Rata share
of the Subordinated Claimant Trust Interests or, (ii) such other
less favorable treatment as to which such Holder and the Claimant
Trustee may agree upon in writing. Class 9 is impaired.
* Class 10 Class B/C Limited Partnership Interests. Each Holder
of an Allowed Class 10 Claim shall receive (i) its Pro Rata share
of the Contingent Claimant Trust Interests or (ii) such other less
favorable treatment as to which such Holder and the Claimant
Trustee shall have agreed upon in writing. Class 10 is impaired.
* Class 11 Class A Limited Partnership Interests. Each Holder of
an Allowed Class 11 Claim shall receive (i) its Pro Rata share of
the Contingent Claimant Trust Interests or (ii) such other less
favorable treatment as to which such Holder and the Claimant
Trustee shall have agreed upon in writing. Class 11 is impaired.
Counsel for the Debtor:
Jeffrey N. Pomerantz
Ira D. Kharasch
Gregory V. Demo
PACHULSKI STANG ZIEHL & JONES LLP
10100 Santa Monica Boulevard, 13th Floor
Los Angeles, CA 90067
Telephone: (310) 277-6910
Facsimile: (310) 201-0760
E-mail: jpomerantz@pszjlaw.com
ikharasch@pszjlaw.com
gdemo@pszjlaw.com
Melissa S. Hayward
Zachery Z. Annable
HAYWARD & ASSOCIATES PLLC
10501 N. Central Expy, Ste. 106
Dallas, TX 75231
Telephone: (972) 755-7100
Facsimile: (972) 755-7110
E-mail: MHayward@HaywardFirm.com
ZAnnable@HaywardFirm.com:
A copy of the Order is available at https://bit.ly/3bC7oMO from KCC
LLC, the claims agent.
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.
Development Specialists Inc. CEO Bradley Sharp is a financial
adviser and restructuring officer. Kurtzman Carson Consultants LLC
is the claims and noticing agent.
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.
HILLENBRAND INC: Moody's Affirms Ba1 CFR & Alters Outlook to Stable
-------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Hillenbrand,
Inc., including the corporate family rating of Ba1, the probability
of default rating of Ba1-PD and the senior unsecured debt rating of
Ba1. The SGL-2 speculative grade liquidity rating remains
unchanged. Moody's also changed the outlook to stable from
negative.
RATINGS RATIONALE
Hillenbrand's ratings benefit from the predictable Batesville
segment (about 20% of revenue), which --although experiencing
above-average demand from the effects of COVID-19 -- is on a
secular decline but has high margins and low capital spending needs
that result in solid free cash flow. The ratings also reflect the
increased scale, geographic and end-market diversification provided
by the industrial businesses, including the addition of Milacron
(now the Molding Technology Solutions segment, "MTS"), a leading
manufacturer of plastic technology and processing equipment.
At the same time, Hillenbrand faces the challenge of managing
through the shrinking Batesville business over time, given its
importance to Hillenbrand's cash flow and diversification. The
ongoing transformation to higher growth, industrial businesses
makes the company more susceptible to economic cycles. The Advanced
Process Solutions ("APS") segment likely will remain pressured by
delayed customer spending particularly for large capital equipment
into calendar 2022. MTS, which has doubled Hillenbrand's exposure
to the global plastics industry (over 60% of revenue), also
experienced weakness over the past year amid end market pressures
and the negative effects of COVID-19. However, with improving order
rates for its higher margin hot runner systems and signs of
stabilizing demand for injection molding equipment, this should
support a modest upward inflection in the company's top-line over
the next year.
Despite recent cost reduction efforts, Moody's anticipates
Hillenbrand will face rising margin pressures from commodity
inflation (including steel), labor-related costs and investments in
technology and research and development. As well, the increased
backlog of injection molding products will result in a lower margin
product mix.
The stable outlook recognizes Hillenbrand's accelerated debt
reduction, aided by the cash flow strength of Batesville and sale
proceeds from certain business divestitures. This has helped to
offset demand and earnings pressures in the industrial segments,
lowering adjusted debt/EBITDA to the low 3x range, which Moody's
expects to remain moderate. The outlook also reflects Moody's
expectation of good liquidity and for stabilizing to modest growth
in the industrial segments over the next year as economic
conditions recover, although likely to remain tenuous amid the
lingering uncertainty of the coronavirus.
The SGL-2 liquidity rating indicates good liquidity driven by
Moody's expectation for Hillenbrand to maintain meaningful revolver
availability and generate solid free cash flow over the next year,
with free cash flow to debt (including Moody's standard
adjustments) of over 10%. Cash balances of around $265 million (at
December 31, 2020) will moderate as business activity increases and
working capital investments ramp up to meet order rates. Moody's
notes that the variable timing of APS segment projects and demand
can lead to large swings in working capital. The $900 million
revolving credit facility expiring in August 2024 had roughly $829
million available as of December 31, 2020, net of borrowings and
letters of credit. Except for the aforementioned $500 million term
loan due 2024, there are no near-term debt maturities.
In terms of environmental risks, Hillenbrand faces the negative
perception of plastic as toxic and an environmental pollutant and
increasing regulation on the plastics industry, which could
negatively impact the company's results. However, the company's
equipment is less focused on the production of single use plastics
and Hillenbrand is increasing its focus on innovation in
biodegradable plastics and recycling.
From a governance perspective, Moody's expects Hillenbrand's
financial policy to remain focused on balance sheet prudence,
including maintaining financial flexibility. The company recently
announced it will resume share repurchase activity and focus on
growth through M&A (besides organic growth) after a period of
curtailed repurchases and acquisitions, following the Milacron
acquisition in late 2019.
Moody's took the following rating actions on Hillenbrand, Inc.:
Affirmations:
Corporate Family Rating, affirmed at Ba1
Probability of Default Rating affirmed at Ba1-PD
Senior Unsecured Notes, affirmed at Ba1 (LGD4)
Senior Unsecured Shelf, affirmed at (P)Ba1
Outlook Actions:
Outlook, changed to Stable from Negative
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if margins weaken, driven by
expectations for demand to worsen at Milacron and/or failure to
improve performance of the industrial segments. A sharp decline in
the Batesville business and/or material deterioration in free cash
flow would also pressure ratings. Expectations for debt-to-EBITDA
to exceed 4x with free cash flow-to-debt trending towards the
mid-single digit range could also result in a downgrade.
Prospects for upward ratings activity are limited over the
near-to-intermediate term. Over time, the ratings could be upgraded
with sustainable organic growth of the MTS business and outsized
margin expansion that leads to expected metrics and cash flow
consistent with higher rated peers. An increase in aftermarket
revenues that sustainably lessens the company's vulnerability to
capital equipment spending cycles would also be viewed favorably.
Hillenbrand, Inc. is a diversified industrial company consisting of
three segments: Advanced Process Solutions (previously the Process
Equipment Group), Molding Technology Solutions (previously
Milacron), and Batesville. APS manufactures process and material
handling equipment and systems used in a wide variety of
industries. MTS manufacturers and customizes equipment and supplies
used in plastic technology and processing. Batesville is a market
leader in the North American death care industry. Pro forma for
divestitures of Milacron's fluid business and certain flow control
businesses of Hillenbrand, revenues approximated $2.5 billion for
the last twelve months ended December 31, 2020.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
HOLTS TRUCKING: Files for Chapter 7 Bankruptcy Protection
---------------------------------------------------------
Andy Warfield of the Triad Business Journal reports that Dobson
trucking company, Holts Trucking, has filed for Chapter 7
bankruptcy with the United States Bankruptcy Court, Middle District
of North Carolina.
The company was founded in 2010 by Tim and Rekenna Holt and employs
19 drivers offering refrigerated, flatbed and van trailer service.
According to the Holts Trucking Web site, the company moved to a
new facility in 2015 at 10020 U.S. 601 in Dobson, where it
established in-house maintenance facilities, performing all heavy
engine and routine maintenance in a seven-bay shop. In 2018,
Rekenna Holt founded Holts Transportation, a Women???s Business
Enterprise, as a separate logistics arm of Holts Trucking. It
manages most forms of brokerage, third-party logistics,
fourth-party logistics and warehousing relationships.
Holts Transportation is not listed as a party to the bankruptcy
proceedings.
The trustee is James Lanik of Waldrep Wall Babcock & Bailey of
Winston-Salem. Holts Trucking is represented by Erik Mosby Harvey
of Bennett Guthrie of Winston-Salem. Calls to the attorney were not
returned by press time.
A meeting of creditors is scheduled for March 19, 2021, at 9 a.m.
About Holts Trucking
Holts Trucking is a licensed and bonded freight shipping and
trucking company running a freight hauling business from Dobson,
North Carolina.
According to PacerMonitor.com, Holts Trucking LLC filed a Chapter 7
petition (Bankr. M.D.N.C. Case No. 21-50102) on Feb. 17, 2021. The
Debtor estimated assets of between $500,000 and $1 million and
estimated liabilities of $1 million to $10 million.
The Debtor's counsel:
Erik Mosby Harvey
Bennett Guthrie PLLC
Tel: 336-765-3121
E-mail: eharvey@bennett-guthrie.com
HUDBAY MINERALS: Moody's Gives B3 Rating on $600MM Unsecured Notes
------------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Hudbay Minerals
Inc.'s proposed new $600 million of senior unsecured notes due
2026. Proceeds will be used to refinance the company's existing
$600 million 7.625% senior unsecured notes due 2025.
Assignments:
Issuer: Hudbay Minerals Inc.
Senior Unsecured Regular Bond/Debenture, Assigned B3 (LGD4)
RATINGS RATIONALE
Hudbay (B2 CFR) is constrained by 1) its modest scale, 2) mine
concentration, and 3) commodity price risk. Due to the temporary
suspension of operations at Hudbay's Constancia mine in Peru in the
second quarter of 2020, the mine recorded lower sales volumes and
higher production costs a major contributor to gross profit falling
65% year over year in 2020 compared to 2019, demonstrating the
company's concentration risk. Hudbay benefits from 1) its mine
locations in favorable mining jurisdictions (Canada and Peru), 2)
product diversity beyond copper (gold, silver, zinc and molybdenum)
which allows for competitive costs, net of by-product credits, 3)
leverage expected to be below 4x (about 3.5x in 2021, 5.1x Q4/20)
and 4) long reserve lives at its Constancia mine (17 years) and
Lalor/Snow Lake operations (18 years).
Hudbay's liquidity is good (SGL-2) with $725 million in sources
compared to about $70 million of uses over the next year. The
company's liquidity sources include about $440 million of cash at
Dec 31, 2020 and about $285 million of availability under its $400
million secured credit facility maturing July, 2022. Liquidity uses
include Moody's expectation of negative free cash flow of about $70
million over the next 12 months, and no debt maturities. In August
2020, Hudbay amended its credit facility which included revised
financial maintenance covenants that Moody's expect the company to
remain in compliance with.
The stable outlook reflects Moody's expectation that leverage will
be about 3.5x in 2021 and trend lower in 2022 once the company
delivers gold under its prepaid agreement and reduces that
liability ($123 million), which Moody's consider to be debt. It
also incorporates Moody's view that Hudbay will maintain consistent
production at its Constancia mine and execute on its Pampacancha
satellite and New Britannia mill projects.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be downgraded if Hudbay experiences operational
challenges resulting in a material drop in production, or the
company's adjusted debt/EBITDA is expected to be maintained above
4x (5.1x Q4/20) and (CFO- dividends)/ adjusted debt is sustained
below 5% (11.6% Q4/20).
Hudbay's ratings could be upgraded if its adjusted debt/EBITDA is
sustained under 3.0x (5.1x Q4/20) and (CFO- dividends)/ adjusted
debt is sustained above 15% (11.6% Q4/20)
The principal methodology used in this rating was Mining published
in September 2018.
Headquartered in Toronto, Ontario, Canada, Hudbay Minerals Inc. is
a mining company mainly focused on copper through its Lalor mine in
Manitoba, Canada and its Constancia mine in Peru. Revenues in 2020
totaled $1.1 billion.
JOHN PICIRILLI: Seeks to Hire Orville & McDonald Law as Counsel
---------------------------------------------------------------
John Picirilli, Inc., seeks approval from the U.S. Bankruptcy Court
for the Northern District of New York to hire Orville & McDonald
Law, P.C. as its legal counsel.
The firm's services will include:
a. advising the Debtor regarding its powers and duties in the
continued operation of its business and in the management of its
property;
b. taking necessary actions to avoid liens against the
Debtor's property and remove restraints against the property;
c. taking necessary actions to enjoin and stay until final
decree any attempts by secured creditors to enforce liens upon
property of the Debtor in which the Debtor has substantial equity;
d. representing the Debtor in any proceedings which may be
instituted in the bankruptcy court by creditors or other parties;
e. preparing legal papers; and
f. other legal services for the Debtor.
The firm will be paid at these rates:
Peter Orville $350 per hour
Zachary McDonald $250 per hour
Non-lawyer Staff $125 per hour
The retainer fee is $10,000.
Orville & McDonald does not represent any interest adverse to the
Debtor and its estate, according to court papers filed by the
firm.
The firm can be reached through:
Peter A. Orville, Esq.
Orville & McDonald Law, P.C.
30 Riverside Drive
Binghamton, NY 13905
Phone: (607) 770-1007
About John Piccirilli
John Piccirilli, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D.N.Y. Case No. 21-60057) on Jan. 28,
2021. At the time of the filing, the Debtor had estimated assets
of between $100,001 and $500,000 and liabilities of between
$500,001 and $1 million.
Judge Diane Davis oversees the Debtor's Chapter 11 case. The
Debtor is represented by Orville & McDonald Law, P.C. in its case.
JOYNER-BYRUM PROPERTIES: Gets OK to Hire J.C. White as Counsel
--------------------------------------------------------------
Joyner-Byrum Properties, LLC, received approval from the U.S.
Bankruptcy Court for the Eastern District of North Carolina to hire
J.C. White Law Group, PLLC as its legal counsel.
The firm's services include:
a. advising the Debtor with respect to its powers and duties
in the management of its property;
b. preparing legal papers;
c. taking necessary actions to avoid liens against the
Debtor's property obtained by creditors and to recover preferential
payments within 90 days of the Debtor's bankruptcy filing;
d. conducting a detailed search of the records of the Register
of Deed's Office and the Clerk of Superior Court's Office in
Halifax and Northamption County, N.C., to determine the validity of
all liens filed against the Debtor's property; and
e. other legal services necessary to administer the Debtor's
Chapter 11 case.
James White, Esq., is the principal attorney designated to
represent the Debtor. He will be paid at the hourly rate of $385,
to be applied against a retainer of $1,074.
Mr. White disclosed in a court filing that he is "disinterested"
within the meaning of Section 101(14) of the Bankruptcy Code.
J.C. White Law Group can be reached through:
James C. White, Esq.
J.C. White Law Group, PLLC
100 Europa Drive, Suite 401
Chapel Hill, NC 27517
Phone: (919) 246-4676
Fax: (919) 246-9113
E-mail: jwhite@jcwhitelaw.com
About Joyner-Byrum Properties
Joyner-Byrum Properties, LLC, sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. E.D.N.C. Case No. 21-00111) on Jan. 20,
2021. At the time of the filing, the Debtor had estimated assets
of between $100,001 and $500,000 and liabilities of between $50,001
and $100,000. Judge Joseph N. Callaway oversees the case. J.C.
White Law Group, PLLC is the Debtor's legal counsel.
JUMIO INC: Default Judgment Entered Against Mattes
--------------------------------------------------
Judge Brendan Linehan Shannon of the United States Bankruptcy Court
for the District of Delaware granted the Motion filed by JMO
Winddown Trust, which sought the entry of a default judgment
against Defendant Daniel Mattes.
The Trust alleged that Mr. Mattes had intentionally concealed or
destroyed evidence.
The adversary proceeding was filed by the Trust on September 1,
2017 and sought recovery against several former officers and
directors of the Debtor for alleged breaches of fiduciary duty and
related theories. The record reflects that all parties to the suit,
including Mr. Mattes, participated in a series of mediations in
2019. The third of these mediations resulted in a global
settlement among all parties in December of 2019, and the
litigation was consensually stayed while the parties worked to
document the settlement.
Mr. Mattes backed out of that settlement just a month later. The
Trust documented and consummated the settlement with all of the
remaining defendants, and Mr. Mattes filed his answer generally
denying the Trust's allegations on February 21, 2019. On June
2019, the Trust and Mr. Mattes re-engaged in settlement
discussions, and again, reached a comprehensive settlement. Mr.
Mattes again backed out of the settlement shortly thereafter.
Judge Shannon found that "the Trust spent well over a year
communicating with counsel for Mr. Mattes in an effort to obtain
responses to basic discovery requests clearly relevant to the
dispute. The end result of this effort is effectively no
meaningful production or responses from Mr. Mattes, and Mr. Mattes
has not produced a single document. Further, it is apparent that
Mr. Mattes destroyed or has concealed emails and information from
his personal computer that he was obliged to retain, preserve, and
ultimately produce."
Before the Debtor filed for bankruptcy, its Board of Directors
authorized a special committee of the Board to conduct an
investigation into alleged and suspected financial irregularities
and wrongdoing. The Board engaged Cooley LLP to conduct the
investigation. In 2015, Cooley delivered to Mr. Mattes and others
a comprehensive litigation hold directive that required the
preservation of specified documents.
After both of the settlement agreements that Mr. Mattes had
ostensibly entered into failed, the Trust spent over a year
endeavoring to obtain discovery from Mr. Mattes. Mr. Mattes
implausibly responded that he had no documents from his private
Gmail account, which he was under an obligation to preserve dating
back to at least 2015. The Trust spent months negotiating with Mr.
Mattes the terms for joint engagement of a discovery consultant to
search Mr. Mattes' Gmail account for responsive documents. The
consultant was engaged, at the Trust's expense, in May 2020. The
discovery consultant's report was brief, describing at least three
dozen search terms. No responsive emails were found, and the
discovery consultant concluded that the personal emails of Mr.
Mattes had been purged.
"Case law teaches that courts must undertake a two-step process to
determine whether spoliation sanctions are warranted... The first
inquiry is whether spoliation in fact occurred. 'Spoliation occurs
where: the evidence was in the party's control; the evidence is
relevant to the claims or defenses in the case; there has been
actual suppression or withholding of evidence; and the duty to
preserve the evidence was reasonably foreseeable to the party'...
After a finding of spoliation, the second prong concerns the
appropriate remedy. A well-developed body of law identifies three
factors for the Court to assess: (1) the degree of fault of the
party who altered or destroyed the evidence; (2) the degree of
prejudice suffered by the opposing party; and (3) whether there is
a lesser sanction that will avoid substantial unfairness to the
opposing party and, where the offending party is seriously at
fault, will serve to deter such conduct by others in the future...
As to the first prong, the record clearly supports a finding of
spoliation. The missing discovery is from Mr. Mattes' personal
Gmail account, indisputably within his control. Further, the causes
of action articulated in this litigation allege wrongdoing prior to
2015, and Mr. Mattes used his personal account for company business
extensively in this period. And yet, Mr. Mattes has not produced
any responsive information despite being under an obligation to
preserve and retain evidence dating back at least six years.
Instead, the record demonstrates that he has destroyed the
evidence. Turning to the appropriate remedy, the record is clear
that Mr. Mattes is solely and exclusively responsible for the loss
or destruction of the emails. It was Mr. Mattes who enjoyed
control of the Gmail account after receipt of the litigation hold
letter, and the only plausible conclusion is that he destroyed the
emails before proper discovery could take place. The Trust has
demonstrated that it is severely prejudiced by Mr. Mattes' conduct.
In this adversary proceeding the Trust seeks damages from Mr.
Mattes on account of his alleged breach of his fiduciary duties
while serving as an officer and director of the Debtor. Mr. Mattes
used the personal account to conduct company business, and he has
intentionally destroyed and suppressed pertinent evidence. The
Court is entitled to infer that the destroyed evidence is of value
and that the Trust's ability to fully and fairly litigate its case
has been irretrievably damaged," Judge Shannon held.
The case is In re: JMO Wind-Down, Inc., Chapter 11, Debtor. JMO
WIND DOWN LIQUIDATING TRUST, Plaintiff, v. DANIEL MATTES, THOMAS
KASTENHOFER, CHAD STARKEY, AMPALU INVESTMENT CMBH, and KTI
PRIVATSTIFTUNG, Case No. Case No. 16-10682 (BLS), Adv. Proc. No.
17-51042 (BLS) (Bankr. D. Del.). A full-text copy of the Opinion,
dated February 17, 2021, is available at
https://tinyurl.com/xns4aov3 from Leagle.com.
About JMO Wind Down
JMO Wind Down, also known as Jumio Inc., before selling its assets
in a bankruptcy court-sanctioned sale, JMO Wind Down Inc. was an
online and mobile identity management and credentials
authentication company. Headquartered in Palo Alto, California,
Jumio had operations in the United States, Europe and India. Its
customers include, among others, Airbnb, United Airlines,
WorldRemit, EasyJet, and Duolingo.
Jumio Inc. filed a Chapter 11 bankruptcy petition (Bankr. D. Del.
Case No. 16-10682) on March 21, 2016. The petition was signed by
Stephen Stuut, the CFO. The Debtor estimated assets of $1 million
to $10 million and debt of up to $50 million.
Judge Brendan Linehan Shannon is the case judge.
The Debtor tapped Landis Rath & Cobb LLP as bankruptcy counsel;
Ernst & Young, LLP, as financial advisor; Wilmer Hale, LLP ("WH")
as special corporate counsel; and Cooley LLP as special litigation
counsel. Rust Consulting/Omni Bankruptcy is the claims and noticing
agent.
The Official Committee of Equity Holders retained K&L Gates LLP as
general bankruptcy counsel, Pachulski Stang Ziehl & Jones LLP as
co-counsel, and EisnerAmper as financial advisor.
* * *
The Debtor filed a motion to sell the assets for $22.7 million to
Jumio Acquisition, LLC, absent higher and better offers. Jumio
Acquisition is an entity formed by Facebook co-founder Eduardo
Saverin, holder $15.8 million secured debt on account of
prepetition senior secured convertible promissory notes, and who
was invested at least $23 million in the preferred and common
equity of the Debtor.
Unable to resolve issues with Equity Holders, the stalking horse
withdrew the bid. On May 6, 2016, the Court entered an order
authorizing the Debtor to sell the assets to an entity formed by
Centana Growth Partners, Jumio Buyer Inc., for cash equal to
$850,000 less certain agreed cure costs totaling no more than
$300,000 and plus assumption all liabilities of operating the
business from and after May 9, 2016.
The Debtor changed its name to JMO Wind Down Inc., following the
sale.
On July 25, 2016, the Debtor announced a Global Settlement with Mr.
Saverin, and the Equity Committee. The Global Settlement forms the
foundation of the consensual Plan of Liquidation filed by the
Debtor.
In October 2016, a plan to wind down the estate of Jumio won final
approval from a bankruptcy judge, bringing the contentious chapter
11 case nearer to a close.
KEANE GROUP: Moody's Completes Review, Retains B2 CFR
-----------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Keane Group 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 17, 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.
Keane Group Holdings, LLC's (a subsidiary of NexTier Oilfield
Solutions Inc.) B2 Corporate Family Rating (CFR) reflects a solid
market position for hydraulic fracturing amid continued difficult
conditions in the highly cyclical industry as well as a large cash
balance. A continued focus on preservation of liquidity is critical
for NexTier. The company's cash supports liquidity and provides
buffer to contend with the reduced level of customer spending
(though improved from mid-2020). In response to the challenging
environment, NexTier took a number of steps including cutting its
capital spending, reducing its cost base and selling its Well
Support Services business. Keane completed an equity-funded merger
with C&J Energy Services in 2019 and the expanded company's
strength will depend on return of production activity and increased
fleet utilization. In the meantime, in addition to the sizable cash
balance, NexTier's term loan does not mature until 2025.
The principal methodology used for this review was Global Oilfield
Services Industry Rating Methodology published in May 2017.
KEIV HOSPITALITY: Mousavi to Contribute $50K; Unsec. to Get 100%
----------------------------------------------------------------
Debtor Keiv Hospitality, LLC, submitted a First Amended Plan of
Reorganization and a corresponding Disclosure Statement on Feb. 19,
2021.
Class 2 shall consist of the Allowed Secured Claim of Deutsche Bank
in the amount of $2,588,978 pursuant to the Loan Agreement with the
Debtor. This claim shall be amortized in full over 30 years at
5.205% with a single lump-sum balloon payment to be paid on July 1,
2023, in accordance with the Loan Agreement. A level payment of
such amount, plus Debtor's regular monthly payment of taxes and
insurance, shall be due on the first day of the month following the
Effective Date and every month thereafter until paid. The Bank Post
Petition Arrearage is estimated to be $78,890, and the Tax and
Insurance Escrow Arrearage is estimated to be $24,780. Within 15
days after the Effective Date, Ben Mousavi shall pay to Deutsche
Bank the Bank PostPetition Arrearage and the Tax and Insurance
Escrow Arrearage in full. Thereafter, any and all defaults pursuant
to the terms of the Loan Agreement shall be deemed cured. Following
the Effective Date, the Debtor shall make its regular monthly
payments to Deutsche Bank of taxes and insurance.
Class 3 consists of the allowed secured claim of the United States
Small Business Administration (the "SBA") in the amount of
$120,000.00. The SBA claim shall be amortized in full over 30 years
at 3.75% interest. Commencing on June 1, 2021, the SBA shall
receive payments in the amount of $555.74, with a like payment due
each month until principal and interest are paid in full. Class 3
is Impaired under the Plan. Holders of Class 3 Claims are entitled
to vote to accept or reject the Plan.
Class 4 consists of Allowed Rejection Claims. Rejection Claims
will be paid over 48 months commencing on the first day of the
month following the Effective Date with a like payment every month
thereafter for 48 months until paid.
Class 5 will consist of Allowed Unsecured Claims existing as of the
Petition Date. On or after the Effective Date, and except to the
extent that a Holder of an Allowed Unsecured Claim agrees to a less
favorable treatment, each Holder of an Allowed Unsecured Claim
shall receive payment of its claim in full over a period of 60
months.
Class 6 will consist of the Holders of prepetition equity interests
in the Debtor, namely, Ben Mousavi as 51% owner, Riba Mousavi as
24% owner, Kevin Mousavi as 23% owner and Mousavi Hospitality, Inc.
as 1% owner. On the Effective Date, all prepetition equity
interest claims in the Debtor will be retained. In exchange for
retention of equity interests, after the Effective Date the
majority owner of the Debtor, Ben Mousavi, shall provide new value
to the Debtor by paying the Bank Post-Petition Arrearage and Tax
and Insurance Escrow Arrearage, and funding an escrow account to be
owned and controlled by the Debtor in the amount of $50,000 that
will be utilized to ensure that all payments contemplated by this
Plan are fully and timely made.
The Debtor will continue to operate its business in order to
generate cash flows to service costs of doing business,
administrative expenses, mortgage payments and interest payments
under obligations created in the Plan.
Ben Mousavi shall pay to Deutsche Bank the Bank Post-Petition
Arrearage and the Tax and Insurance Escrow Arrearage in full within
15 days after the Effective Date. Further, Ben Mousavi shall fund
the Shortfall Escrow Account in the amount of $50,000. In any
month in which the Debtor has negative net income, the Debtor shall
utilize funds in the Shortfall Escrow Account to ensure that all
payments contemplated by the Plan are fully and timely made. The
Debtor shall be under no obligation to utilize the Shortfall Escrow
Account to make payments of any obligations other than as
described, or in any amount exceeding the negative net income in
any month. In the event the Shortfall Escrow Account falls below
$25,000, Ben Mousavi shall replenish the Shortfall Escrow Account
with additional funds in the amount of $25,000. The Debtor's and
Ben Mousavi's obligations to fund and maintain the Shortfall Escrow
Account will cease on July 1, 2023, at which time any funds
remaining in the Shortfall Escrow Account shall be remitted to the
Debtor.
A full-text copy of the First Amended Plan of Reorganization dated
Feb. 19, 2021, is available at https://bit.ly/3r7jIeN from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Timothy L. Wentworth, Esq.
Okin Adams LLP
1113 Vine St., Suite 240
Houston, TX 77002
Telephone: (713) 228-4100
Facsimile: (888) 865-2118
E-mail: twentworth@okinadams.com
About Keiv Hospitality LLC
Based in Katy, Texas, Keiv Hospitality, LLC, is primarily engaged
in providing short-term lodging in facilities known as hotels,
motor hotels, resort hotels, and motels. Keivans Hospitality, Inc.
operates in the traveler accommodation industry.
Keiv Hospitality and Keivans Hospitality sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-34408) on Sept. 1, 2020. Ben Mousavi, owner, signed the
petition.
At the time of the filing, Keiv Hospitality had estimated assets of
between $1 million and $10 million and liabilities of the same
range while Keivans Hospitality had estimated assets of between $10
million and $50 million and liabilities of between $1 million and
$10 million.
Judge Jeffrey P. Norman oversees the cases.
The Debtors tapped Okin Adams LLP as legal counsel and Moore Tax
Services, Inc. as accountant.
KEIVANS HOSPITALITY: Unsec. Creditors to Get 100% Without Interest
------------------------------------------------------------------
Debtor Keivans Hospitality, LLC, submitted a First Amended Plan of
Reorganization and a corresponding Disclosure Statement on Feb. 19,
2021.
Class 2 will consist of the Allowed Secured Claim of US Bank in the
amount of $7,843,034 pursuant to the Loan Agreement with the
Debtor. This claim shall be amortized in full over 30 years at
5.41% with a single lump-sum balloon payment to be paid on August
1, 2023, in accordance with the Loan Agreement. A level payment of
such amount, plus Debtor's regular monthly payment of taxes and
insurance, shall be due on the first day of the month following the
Effective Date and every month thereafter until paid. Further, as
of the Effective Date, the Bank Post Petition Arrearage is
estimated to be $99,791, and the Tax and Insurance Escrow Arrearage
is estimated to be $46,350. Within 15 days after the Effective
Date, Ben Mousavi shall pay to US Bank the Bank PostPetition
Arrearage and the Tax and Insurance Escrow Arrearage in full.
Thereafter, any and all defaults pursuant to the terms of the Loan
Agreement shall be deemed cured. Following the Effective Date, the
Debtor shall make its regular monthly payments to US Bank of taxes
and insurance.
Class 3 consists of the allowed secured claim of the United States
Small Business Administration (the "SBA") in the amount of
$120,000. The SBA claim shall be amortized in full over 30 years
at 3.75% interest. Commencing on June 1, 2021, the SBA shall
receive payments in the amount of $555.74, with a like payment due
each month until principal and interest are paid in full. Class 3
is Impaired under the Plan. Holders of Class 3 Claims are entitled
to vote to accept or reject the Plan.
Class 4 will consist of Allowed Rejection Claims. Rejection Claims
shall be paid over 48 months commencing on the first day of the
month following the Effective Date with a like payment every month
thereafter for 48 months until paid.
Class 5 will consist of Allowed Unsecured Claims existing as of the
Petition Date. On or after the Effective Date, and except to the
extent that a Holder of an Allowed Unsecured Claim agrees to a less
favorable treatment, each Holder of an Allowed Unsecured Claim
shall receive payment of its claim in full over a period of 60
months.
Class 6 will consist of the Holders of prepetition equity interests
in the Debtor, namely, Ben Mousavi as 100% owner. On the Effective
Date, all prepetition equity interest claims in the Debtor shall be
retained. In exchange for retention of equity interests, after the
Effective Date the majority owner of the Debtor, Ben Mousavi, shall
provide new value to the Debtor by paying the Bank Post-Petition
Arrearage and Tax and Insurance Escrow Arrearage, and funding an
escrow account to be owned and controlled by the Debtor in the
amount of $100,000 that will be utilized to ensure that all
payments contemplated by this Plan are fully and timely made.
The Debtor will continue to operate its business in order to
generate cash flows to service costs of doing business,
administrative expenses, mortgage payments and interest payments
under obligations created in the Plan.
Ben Mousavi shall pay to US Bank the Bank Post-Petition Arrearage
and the Tax and Insurance Escrow Arrearage in full within 15 days
after the Effective Date. Ben Mousavi will fund the Shortfall
Escrow Account in the amount of $100,000. In any month in which
the Debtor has negative net income, the Debtor shall utilize funds
in the Shortfall Escrow Account to ensure that all payments
contemplated by the Plan are fully and timely made. The Debtor
shall be under no obligation to utilize the Shortfall Escrow
Account to make payments of any obligations other than as described
herein, or in any amount exceeding the negative net income in any
month. In the event the Shortfall Escrow Account falls below
$25,000, Ben Mousavi shall replenish the Shortfall Escrow Account
with additional funds in the amount of $75,000. The Debtor's and
Ben Mousavi's obligations to fund and maintain the Shortfall Escrow
Account will cease on August 1, 2023, at which time any funds
remaining in the Shortfall Escrow Account shall be remitted to the
Debtor.
A full-text copy of the First Amended Plan of Reorganization dated
Feb. 19, 2021, is available at https://bit.ly/3uzPqU6 from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Timothy L. Wentworth, Esq.
Okin Adams LLP
1113 Vine St., Suite 240
Houston, TX 77002
Telephone: (713) 228-4100
Facsimile: (888) 865-2118
E-mail: twentworth@okinadams.com
About Keivans Hospitality
and Keiv Hospitality
Based in Katy, Texas, Keivans Hospitality, LLC, is a Texas limited
liability company formed on April 4, 2013 for the purpose of
developing, owning and operating a Hilton Garden Inn hotel located
at 2509 Texmati Drive, Katy, Harris County, Texas. It operates
under a franchise agreement with Hilton Worldwide and has 101 guest
rooms, 1663 square feet of meeting space and a 50 person capacity
restaurant. Keivans is owned by Ben Mousavi (100%).
Keiv Hospitality, LLC, is a Texas limited liability company formed
on April 4, 2013 for the purpose of developing, owning and
operating a Hampton Inn and Suites hotel located at 22055 Katy
Freeway, Katy, Harris County, Texas. It operates under a franchise
agreement with Hilton Worldwide and has 69 guest rooms and 1100
square feet of meeting space. Keiv is owned by Ben Mousavi (50%),
Riba Mousavi (25%), Kevin Mousavi (24%) and Mousavi Hospitality,
Inc. (1%).
Keiv Hospitality and Keivans Hospitality sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-34408) on Sept. 1, 2020. Ben Mousavi, owner, signed the
petitions.
At the time of the filing, Keiv Hospitality estimated assets of
between $1 million and $10 million and liabilities of the same
range while Keivans Hospitality estimated assets of between $10
million and $50 million and liabilities of between $1 million and
$10 million.
Judge Jeffrey P. Norman oversees the cases.
Okin Adams LLP is the Debtors' legal counsel.
KOSMOS ENERGY: Fitch Assigns B-(EXP) Rating on $400MM Notes
-----------------------------------------------------------
Fitch Ratings has assigned Kosmos Energy Ltd.'s upcoming USD400
million senior unsecured notes an expected rating of 'B-(EXP)'. The
Recovery Rating is 'RR5'.
The Recovery Rating of 'RR5' for the expected senior unsecured
notes is driven by Kosmos' (B/Rating Watch Negative (RWN))
increased debt post-issue. The assignment of the final rating is
contingent on the receipt of final documentation with terms and
conditions being substantially in line with the information already
provided. If the planned bond issue is successful, Fitch is likely
to downgrade the senior unsecured rating for the existing bonds
(B/RWN) to reflect 'RR5' based on an expected higher debt level.
The new USD400 million senior unsecured notes will benefit from the
same guaranty package from operating subsidiaries in the Gulf of
Mexico (GoM) as Kosmos' existing USD650 million 7.125% senior
unsecured notes due in 2026. The notes will rank pari passu with
the company's USD400 million corporate revolver and USD650 million
notes, and will be subordinated to the company's USD200 million
senior secured term loan. Proceeds will be used for debt repayment
and general-corporate purposes.
The planned notes will allow Kosmos to meet near-term debt
maturities but will not be sufficient to fund upcoming committed
capex. Sustainable improvement of its liquidity profile remains
subject to successful off-market transactions and an extension of
the reserve-based loan (RBL) amortisation beyond the near term.
Fitch also expects Kosmos to maintain a tight cushion under its net
debt-to-EBITDAX covenant governing its RBL and corporate revolver.
This is reflected in the RWN.
The 'B' Long-term Issuer Default Rating (IDR) reflects Kosmos'
small size, high leverage and limited liquidity that are balanced
by longer good reserve life than peers'.
KEY RATING DRIVERS
Off-Market Funding Plans: Kosmos has indefinitely postponed plans
to fund its around USD700 million of capex on Mauritania & Senegal
assets via farm-downs, due to the low valuations of oil & gas
assets following the pandemic. Its alternative funding plan of
off-market options, including sale & leaseback of infrastructure as
well as other structured transactions, is achievable but overall
less certain. This is partially mitigated by the recent signing of
a MoU with BP plc (A/Stable) on the sale & leaseback of a floating
production storage and offloading (FPSO) unit, and Fitch sees
continued sustainable positive trends in the LNG market as
potentially improving Kosmos' financial flexibility.
Liquidity Risks Postponed: The planned issue of the USD400 million
bonds allows Kosmos to pro-actively address impending 2022
maturities. Its RBL begins amortising in 2022, and its corporate
revolver will likewise fall due, which would otherwise make the
refinancing of existing debt and/or the bolstering of internal
liquidity more urgent. Fitch expects the bond issue to also help
manage higher capex after the postponement of farm-downs leads to
negative free cash flow (FCF) for 2021 under Fitch's base-case
assumptions.
Bond Issue Insufficient for Capex: The current bond issue, if
successful, will aid liquidity. However, Fitch expects that current
internal liquidity sources and headroom under its financial
covenants would be insufficient to fund capital commitments should
any of the major contemplated transactions fail to materialise,
which is the key credit constraint for Kosmos.
Limited Liquidity: Committed liquidity of USD569 million at
end-2020 is sufficient for Kosmos to comfortably weather 2021,
under Fitch's base-case macro assumptions including USD45/bbl Brent
prices for 2021 (versus current prices of USD60-USD65/bbl).
However, Fitch expects the company to maintain a tight cushion
under its net debt-to-EBITDAX covenant governing its RBL and
corporate revolver throughout 1H21. While Fitch does not assume a
breach of the covenant, minimal headroom will restrict financial
flexibility with regard to funding near-term capex.
Covenant Levels in Focus: Kosmos' net debt-to-EBITDAX reached 4.7x
in 4Q20, leaving minimal headroom under the 4.75x covenant
following a covenant relaxation earlier this year. Covenant
headroom using Fitch's base-case forecasts is expected to remain
tight until at least 1H21. An unremedied covenant breach will be an
event of default, limit access to the company's committed debt
facilities and potentially lead to the acceleration of outstanding
amounts under the RBL and corporate revolver, absent a waiver from
lenders.
Fitch's base case does not imply a covenant breach, the risk of
which has been reduced in the near term by the constructive
hydrocarbon price environment.
High Leverage: Following the downturn in oil and gas prices since
1Q20 and the postponement of Mauritania & Senegal farm-downs, cash
flows fell significantly lower in 2020, resulting in funds from
operations (FFO) net leverage of around 7.3x for the same year, up
from 2.5x in 2019. While Fitch expects a recovery in the market
during 2021, Fitch's FFO net leverage forecast will remain above
Fitch's negative rating sensitivity of 4.0x for the 'B' rating.
Fitch expects FFO net leverage to only normalise towards 4.0x
(assuming successful funding transactions) during 2022.
Financial Policy Actions Positive: Kosmos has responded to the low
hydrocarbon price environment by implementing a comprehensive set
of financial-policy measures, including the suspension of its
dividend and cuts to both capex and operating expenditure. This
alleviated cash flow pressure during 2020, with total savings from
these initiatives exceeding USD300 million. Fitch views the policy
package as credit-positive.
DERIVATION SUMMARY
Fitch rates Kosmos in line with Ithaca Energy Ltd (B/RWN), as the
latter's slightly higher production volumes of around 75kboepd,
lower capital intensity, lower leverage of around 2x, and stronger
cash flow generation resulting from more robust hedging are offset
by Kosmos' significantly higher proved reserve life of 11 years
(four years for Ithaca) and a more liquids-weighted production mix
leading to higher long-term margins. While Fitch expects adverse
impact on Kosmos' liquidity profile from potential covenant breach
and weaker credit metrics, Fitch sees potential pressure for Ithaca
due to liquidity issues experienced by its 100% parent, Delek
Group.
Compared with Seplat Petroleum Development Company Plc
(B-/Positive) Kosmos has a smaller reserve base, lower reserve life
(Seplat: 30 years on a 2P basis), and higher leverage, which is
offset by a more diversified asset base versus Seplat's high
exposure to areas characterised by geopolitical risk.
Kosmos is a small-size, full-cycle deep-water independent oil and
gas exploration and production company. Its production assets
include producing fields (primarily oil) offshore Ghana, Equatorial
Guinea and in the deep-water US GoM.
KEY ASSUMPTIONS
-- Brent crude price of USD45/bbl in 2021, USD50/bbl in 2022 and
USD53/bbl thereafter.
-- Henry Hub price of USD2.45/mcf in 2021 and thereafter.
-- Total net production of around 57kboepd in 2021, increasing to
around 61kboepd in 2022.
-- Tortue Ahmeyim project funded by the sale & leaseback of the
FPSO unit, National Oil Company financing and additional debt.
-- Capex as guided by the company.
-- No dividend payments until 2023.
Fitch's Key Assumptions for Recovery Analysis:
-- Fitch's recovery analysis assumes that Kosmos would be
reorganized as a going-concern in bankruptcy rather than
liquidated.
-- The going-concern EBITDA estimate reflects Fitch's view of a
sustainable, post-reorganisation EBITDA level upon which Fitch
bases the enterprise valuation (EV).
-- Kosmos' going-concern EBITDA reflects Fitch's view on EBITDA
generation from the company's GoM assets, assuming a sustained
period of USD30/bbl Brent prices, followed by one year of
moderate recovery, yielding a going-concern EBITDA of USD130
million. Fitch focuses Fitch's analysis on EBITDA attributable
to the GoM assets as the subsidiaries owning these assets
guarantee the senior unsecured notes.
-- A 4.5x multiple is used to calculate a post-reorganisation EV,
reflecting a mid-cycle multiple for the sector.
-- The senior unsecured notes rank pari passu with Kosmos' USD400
million revolver, but are subordinated to the company's USD200
million GoM term loan that is secured against the GoM assets.
The notes are also subordinated to the company's USD1.32
billion RBL with respect to the Ghana and Equatorial Guinea
assets. The notes and revolver benefit from joint and several
senior unsecured guarantees from restricted subsidiaries
owning the assets in GoM. They are guaranteed on a
subordinated unsecured basis by the restricted subsidiaries
that guarantee the RBL.
-- After deducting 10% for administrative claims, Fitch's
waterfall analysis generated a ranked recovery in the 'RR5'
band, indicating a 'B-(EXP)' instrument rating. The waterfall
analysis output percentage on current metrics and assumptions
was 23%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Unremedied covenant breach.
-- Failure to secure additional financing to cover contractual
capex needs.
-- A further lowering of the RBL's borrowing base that cannot be
covered by internal liquidity sources.
-- FFO net leverage above 4.0x on a sustained basis.
-- Placement of new bonds (with terms and conditions being
substantially in line with the information already provided)
would result in a downgrade of the senior unsecured rating for
the existing bonds
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- As the IDR is on RWN, a positive rating action is unlikely in
the short term. However, increasing internal liquidity sources
and/or improvement in financial performance such that covenant
headroom becomes ample, allowing for free usage of committed
liquidity sources as well as FFO net leverage falling below
4.0x may result in a rating affirmation and a Stable Outlook.
-- FFO net leverage declining below 3.0x on a sustained basis may
support a positive rating action.
-- Successful execution of contemplated off-market funding
options in 2021 and arrangement of a clear path to funding
capex commitments in 2022, such that at least 75% of the
expected Mauritania & Senegal capex is covered.
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
Limited Liquidity: At end-2020, Kosmos had around USD149 million of
cash and USD420 million of availability under its USD400 million
RCF, which matures in May 2022 and a USD1.5 billion RBL that
matures in 2025. However, limited covenant headroom through 2H21
restricts access to liquidity sources.
At end-2020, indebtedness stood at USD2.2 billion, including USD1.2
billion drawn under the RBL (after September's re-determination,
the borrowing base was reduced to USD1.32 billion), which starts
amortising in 2022, USD100 million drawn under the RCF, USD650
million of senior notes due April 2026 along with USD200 million of
GoM term loan due 2025 (starts amortising in 4Q21).
The upcoming USD400 million bond issue will primarily be used for
refinancing upcoming debt maturities, with the remainder for capex
and general-corporate purposes.
ESG CONSIDERATIONS
Unless otherwise stated in this section, the highest ESG Relevance
Score is '3'. This means ESG issues are credit neutral or have only
a minimal credit impact on the entity(ies), either due to their
nature or the way in which they are being managed by the
entity(ies).
KUSHNER COS.: Times Square Property Nearing Foreclosure
-------------------------------------------------------
Sophie Alexander and John Gittelsohn of Bloomberg News report that
a Times Square retail property owned by Kushner Cos., the family
company of former presidential adviser Jared Kushner, is a step
closer to foreclosure, according to loan documents.
"Legal counsel has been engaged and foreclosure actions have been
filed," according to Wells Fargo & Co., the trustee on the debt.
The building at 229 West 43rd Street, which used to house the New
York Times, is only about half occupied. It was reappraised at
$92.5 million in 2020.
Kushner Companies LLC is an American real estate developer in the
New York City metropolitan area.
LBD PLLC: Unsecured Creditors' Recovery Cut to 10% in Plan
----------------------------------------------------------
LBD, PLLC, submitted a Second Amended Chapter 11 Plan and a
corresponding Disclosure Statement on Feb. 22, 2021.
Under the Plan, Class 2(b) Allowed General Unsecured Claims will
receive distributions to holders of the Class 2(b) Claims in
amount(s) equivalent to 10 percent of their Allowed Claim(s).
Distributions will be made from funds on hand as of the Effective
Date and from income generated by the Debtor from operations over a
period not to exceed 72 months. Distributions shall be made
quarterly, in minimum amounts required to effect equal or "straight
line" payments for all allowed Class 2(b) claims over a 72
repayment term commencing 12 months after the Effective Date.
In the prior iteration of the Plan and Disclosure Statement,
Class 2(b) was to recover 12 percent within 5 years, with payments
to begin 12 months after the effective date.
Sources of funds for distributions to me made under the Plan
consist of funds on hand as of the Effective Date and income
generated by LBD from business operations during the life of the
Plan.
Counsel to the Debtor:
Jeffery T. Martin, Jr., VSB #71860
Tayman Lane Chaverri LLP
601 13th Street NW Suite 900 South
Washington, DC 20005
(202) 921-4070 DIRECT
(703) 474.3436 CELL
jmartin@tlclawfirm.com
A copy of the Second Amended Disclosure Statement is available at
https://bit.ly/37IsWGA from PacerMonitor.com.
About LBD PLLC
LBD, PLLC -- https://www.dipietropllc.com/ -- is a law firm
specializing in divorce, family law, estate planning and business
law. The firm has offices throughout Northern Virginia, Maryland
and the Washington, D.C. Metro areas.
LBD filed a voluntary petition under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Va. Case No. 20-10414) on Feb. 9, 2020. In the
petition signed by Joseph J. DiPietro, member and manager, the
Debtor estimated $50,000 to $100,000 in assets and $1 million to
$10 million in liabilities. Jeffery T. Martin, Jr., Esq. at Henry
& O'Donnell, P.C., is the Debtor's legal counsel.
LI GROUP: Moody's Affirms 'B2' CFR & Rates New $300M Term Loan 'B2'
-------------------------------------------------------------------
Moody's Investors Service affirmed LI Group Holdings, Inc.'s (dba
"Liaison") B2 corporate family rating, B2-PD probability of default
rating, and B2 instrument ratings on an existing first-lien
revolving credit facility. Moody's also assigned B2 instrument
ratings to the admissions-management-software provider's new, $300
million first-lien senior secured term loan. Proceeds from the new
term loan will be used to pay down an existing $273 million
first-lien term loan, add $23 million of cash to Liaison's balance
sheet, and pay transaction fees. The outlook remains stable.
Moody's expects to withdraw ratings on the existing $273 million
term loan upon closing of the proposed $300 million loan.
Assignments:
Issuer: LI Group Holdings, Inc.
Senior Secured First Lien Term Loan, Assigned B2 (LGD4)
Affirmations:
Issuer: LI Group Holdings, Inc.
Probability of Default Rating, Affirmed B2-PD
Corporate Family Rating, Affirmed B2
Senior Secured First Lien Revolving Credit Facility, Affirmed B2
(LGD4)
Senior Secured First Lien Term Loan, Affirmed B2 (LGD4)
Outlook Actions:
Issuer: LI Group Holdings, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The refinancing transaction will relever Liaison to a
Moody's-adjusted level of just above 6.0 times, or just above 7.0
times when expensing substantial capitalized software development
costs. Current favorable credit markets will allow the company to
refinance its existing debt at rates that make its absolute annual
interest expense a couple million dollars lower than the current
level, while adding $23 million of cash to its balance sheet.
The leverage measures from the proposed transaction are
approximately where they were in September 2020, when Liaison took
on incremental financing to acquire TargetX, and they are about a
half turn lower than when Moody's originally rated the credit in
late 2019. During the interim Liaison has grown its revenues at
slightly better than 10% and its cash position (as of year-end
2020) has tripled to over $71 million. Even during a challenging,
COVID-19-affected operating environment, Liaison has seen strong
volumes of application submissions from its centralized application
service ("CAS") customers. Liaison is, moreover, well along in
integrating TargetX, which has enabled it to diversify beyond
facilitating professional-graduate-school applications, and into
customer relationship management, including targeting prospective
students and improving retention of enrolled students. High
leverage and a small revenue base relative to issuers with a
similar rating continue to constrain Liaison's credit profile,
whose offsetting strengths include a clear market-leading position
as a provider of CASs for graduate education programs, strong cash
flow, good quality of earnings, and good growth prospects.
Moody's expects steady, growth- and profitability-driven
deleveraging, towards 6.5 times and toward 5.5 times with and
without the software-development-cost adjustments, respectively, by
the fiscal year ended March 31, 2022. Moody's also expects free
cash flow as a percentage of adjusted debt, an alternative leverage
measurement, of at least 10% by March 2022, quite strong for the B2
CFR. Moody's considers owner Meritage as an atypical private equity
investor that has no defined fund life. Meritage's and management's
equity contribution to Liaison's total capitalization, when
adjusting for the slightly dilutive effects of the TargetX
acquisition, is nearly 70%.
Moody's views Liaison's liquidity as very good, as revenue and
margin growth will produce steadily accumulating balance sheet cash
and annual free cash flows building from low-double-digit
percentages of adjusted debt. Opening cash of $71 million,
supplemented with $23 million of proceeds from the proposed term
loan, is strong, but Moody's notes the company's stated aim to
pursue tuck-in acquisitions using cash. The company collects
application fees quickly, through credit card payments, and working
capital has historically been a modest source of funds annually.
However, the seasonality of an academic year suggests there may be
the need to draw intermittently under the $15 million revolver,
whose size is modest relative to annual interest expense and
capital expenditures. Moody's considers the single financial
covenant, a springing first-lien net leverage test for the benefit
of revolver lenders only, applicable when at least 35% of the
facility is drawn and set at 8.5 times, to be so loose as to
provide little protection for lenders.
Liaison faces moderate Environmental, Social, and Governance
("ESG") issues, primarily regarding social risks related to higher
education institutions, which are under intense social and
potentially regulatory scrutiny because of their admissions
practices, high costs, and perceived utility. A distinct
socioeconomic shift over the past several decades towards a greater
share of employment opportunities becoming available only to
persons with a minimum level of higher education, is plainly in
Liaison's favor. Governance considerations include financial
strategy risks, such as the employment of high leverage, as well as
the potential for substantial dividends to be paid out in lieu of
deleveraging. The revised credit agreement allows for unlimited
restricted payments as long as total pro-forma net leverage does
not exceed 4.5 times, and allows for other restricted payments up
to the greater of $30 million and 50% of EBITDA.
The stable outlook reflects Moody's expectations for revenue growth
of about 5% over the next two years, driven by continued volume
growth in applications and embedded price increases. Moody's also
expects steadily building cash balances, and moderately declining
leverage. While the inclusion of the TargetX acquisition will cut
into margins initially, Moody's expects scale efficiencies and
synergy realization to keep margins very healthy.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider an upgrade to Liaison's ratings if the
company: can substantially and profitably grow its revenue base to
be more in line with issuers in the upper-B rating category;
expands successfully into non-healthcare-related universities;
maintains good customer retention; sustains debt-to-EBITDA (with
our capitalized software adjustment reducing EBITDA) below 5.0
times; and sustains free cash flow-to-debt in the teen percentages
(including Moody's standard adjustments).
The ratings could be downgraded if anticipated revenue growth
slows, liquidity weakens substantially, or if Moody's expects that
free cash flow as a percentage of debt will fall towards 5%.
Although unforeseen, any successful, disruptive competing
technology that threatens Liaison's market position will also put
pressure on the ratings.
LI Group Holdings, Inc., doing business as Liaison, is a
comprehensive SaaS-based marketplace technology, applications, and
analytics platform supporting the US higher education market. The
company was acquired in early December 2019 by private investor
Meritage and current management.
The principal methodology used in these ratings was Software
Industry published in August 2018.
LONE STAR HOTELS: Unsecured Creditors to Get 2.6% or 8% in Plan
---------------------------------------------------------------
Debtors Lone Star Hotels, LLC, d/b/a/ Comfort Suites and Caremore
Managers, Inc., filed the Second Amended Disclosure Statement for
Joint First Amended Plan of Reorganization on Feb. 19, 2021.
The Hotel is in compliance with requirements under the Franchise
Agreement, including the payment of Franchise Fees and the Property
Improvement Plan ("PIP"). The Debtors anticipate that these PIP
action items will cost $250,000 to $300,000 to complete. The
Debtors will use the monthly budget for repairs ($3,000 monthly).
In addition to the $3,000.00 budgeted for repairs, the Debtors'
four shareholders Harinder Singh, Kulwant K. Sandhu, Ramneek Singh
Aulakh and Sukhjoban Singh have each committed to contribute from
their own personal funds, a pro rata share of $7,500 per month
during the 84-month proposed term of the Plan, to ensure the PIP is
completed and that Plan payments are made.
The Plan pays 100% to Allowed Secured Claims and approximately 2.6%
return to Allowed Unsecured Claims. If Pacific Premier Bank elects
treatment under Section 1111(b), then it will not hold an unsecured
claim against the Debtors and the Plan would then pay approximately
8% to Unsecured Creditors.
Class 4 shall consist of the Allowed Secured Claim of Pacific
Premier Bank. Pacific Bank's Claim shall be bifurcated into a
Class 4 Secured Claim allowed in the amount of $2,591,537 and a
Class 6 Unsecured Claim for the remainder of $2,256,916. Pacific
Premier Bank's Class 4 Allowed Secured Claim shall be amortized
over a period of 30 years, bearing interest at the rate of 4.25%
per annum. The monthly payment amount of principal and interest is
$12,749, beginning on the Effective Date with monthly payments on
the 15th day of each month thereafter, and a balloon payment at the
end of 84 months in the estimated amount of $2,238,141.
In the event that Pacific Premier Bank elects to be paid pursuant
to Section 1111(b), the Debtors will pay the Allowed Secured Claim
which is in the amount $2,591,537 over a 360-month amortization at
an interest rate of 4.25% per annum as of the Confirmation Date
with a balloon payment at the end of 240 months in the amount of
1,788,741 (which is the greater of the payments made and applied
amount of $1,788,741 versus the amortized amount of $1,236,203.
The monthly payment amount of principal and interest is $12,748.80,
beginning on the Effective Date with monthly payments on the 15th
day of each month thereafter. The Class 4 Creditor shall be secured
for an Allowed 1111(b) Claim on the Debtor's real property
described in its loan documents and mortgage, in the amount of
$4,848,452.62 as of the Confirmation Date.
Class 6 shall consist of Allowed Unsecured Claims. The Reorganized
Debtors shall pay Class 6 Claims a total of $1,500 per month, to be
distributed pro rata among the Class 6 Claimants, payable in equal
monthly installments for sixty 60 months, beginning on the first
day of the first month following the Effective Date and continuing
on the first day of each month thereafter.
The funds necessary to fund the Plan will come from the ongoing
operations of the Hotel, the Shareholder contributions, and any
cash contributions resulting from the auction process. All causes
of action shall remain fully vested in the Reorganized Debtors.
The failure to identify a claim or cause of action is not
specifically a waiver of such claim or cause of action. To the
extent of any recovery on claims and causes of action that belong
to the Reorganized Debtors as disclosed herein, if any, such funds
will be contributed by the Reorganized Debtors (less costs and
expenses associated with any litigation) to pay the Class 6
creditors with allowed claims.
A full-text copy of the Second Amended Disclosure Statement dated
Feb. 19, 2021, is available at https://bit.ly/2ZSXmBD from
PacerMonitor.com at no charge.
Attorneys for the Debtors:
Joyce W. Lindauer
Kerry S. Alleyne-Simmons
Guy H. Holman
Joyce W. Lindauer Attorney, PLLC
1412 Main St., Suite 500
Dallas, TX 75202
Telephone: (972) 503-4033
E-mail: joyce@joycelindauer.com
kerry@joycelindauer.com
About Lone Star Hotels
d/b/a Comfort Suites
Based in Bay City, Texas, Lone Star Hotels LLC is a privately held
company in the traveler accommodation industry. It conducts
business under the name Comfort Suites.
Lone Star Hotels sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Tex. Case No. 20-32450) on May 4,
2020. The petition was signed by Kulwant Kaur Sandhu, the Debtor's
managing member. At the time of the filing, the Debtor disclosed
assets of between $1 million and $10 million and liabilities of the
same range. Judge Jeffrey P. Norman oversees the case. Joyce W.
Lindauer Attorney, PLLC is Debtor's legal counsel.
LOUISIANA-PACIFIC CORP: Moody's Alters Outlook on Ba1 CFR to Pos.
-----------------------------------------------------------------
Moody's Investors Service changed Louisiana-Pacific Corporation's
(LP) outlook to positive from stable and affirmed the company's Ba1
corporate family rating, Ba1-PD probability of default rating and
Ba2 senior unsecured bond rating. The speculative grade liquidity
rating remains unchanged at SGL-1.
"The positive outlook reflects LP's strong credit metrics and the
increasing proportion of cash flow from the more stable siding
business versus the more volatile oriented strand board segment"
said Ed Sustar, Senior Vice President with Moody's.
Affirmations:
Issuer: Louisiana-Pacific Corporation
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 to (LGD5)
from (LGD4)
Outlook Actions:
Issuer: Louisiana-Pacific Corporation
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
LP benefits from 1) its growing North American market position in
engineered wood siding (siding), which is the company's largest
business segment (on a normalized basis) and who's earnings
currently cover all of the company's sustaining capex, dividends
and interest costs; 2) good market positions in oriented strand
board (OSB) and engineered wood products (EWP); 3) strong liquidity
and 4) normalized leverage (adjusted debt to EBITDA) of about 1.1x
using 7 year average EBITDA and current debt levels. Moody's
expects the company's leverage will remain strong (below 1x) over
the next 12 to 18 months (from 0.8x in LTM Q3 2020) as average OSB
prices remain strong and LP's more stable siding business continues
to grow. LP is constrained by 1) the highly competitive nature of
the building solutions industry; 2) the volatility of its OSB
business (which represented about 39% of LTM September 2020
revenue); and 3) the company's almost exclusive focus on the home
construction and renovation / remodeling market. The pricing of
OSB, which is currently at record highs, remains among the most
volatile commodity grades in the paper and forest products
industry.
LP's $350 million senior unsecured notes due 2024 are rated Ba2,
one notch below the company's corporate family rating, reflecting
the priority of the notes behind the company's $550 million secured
revolving credit facility (unrated).
LP has strong liquidity (SGL-1) with about $1.4 billion of
liquidity and no current debt. LP had a cash balance of $535
million as of December 2020, full availability on a $550 million
committed revolving credit facility ($200 million matures in
September 2023 and the remaining matures in June 2024), and Moody's
estimates that LP will generate about $350 million of free cash
flow in the next four quarters. Moody's expects LP to remain in
compliance with its financial covenants and the company's next
significant funded debt maturity is not until the bonds mature in
2024.
The positive outlook is based on our view that LP will be able to
maintain strong liquidity and robust credit metrics as it increases
its position in the growing siding business with the conversion of
its Houlton, Maine facility to SmartSide and the restart of its
Peace Valley, British Columbia OSB mill. LP's credit metrics will
benefit from strong wood product demand and prices as housing
starts and renovation/remodeling activity remain solid. Based on
the robust start to the year, Moody's expects average OSB prices to
be 10% higher in 2021 compared to 2020 average prices.
All of LP's products are designed to last a long time and preserve
the carbon captured from growing trees, providing an environmental
benefit. However, as a manufacturing company, LP is moderately
exposed to environmental risks such as air and water emissions, and
social risks such as labor relations and health and safety issues.
The company has established expertise in complying with these
risks, and has incorporated procedures to address them in their
operational planning and business models.
LP is a public company with transparent reporting and
well-established governance structures. The company's leverage is
currently strong for its rating; however, the company does not have
a publicly stated leverage target.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade
-- Conservative financial policies and an unsecured capital
structure, in-line with an investment grade rating
-- Continued growth and strong operating performance in the
company's engineered wood siding business
-- Maintaining strong leverage (RCF minus capex /TD) above 12% and
debt to EBITDA below 3x (64% and 0.8x at LTM September 2020,
adjusted per Moody's standard definitions) on a sustainable basis.
-- The company maintains strong liquidity (including sustaining
positive free cash flow generation)
Factors that could lead to a downgrade
-- The company's liquidity deteriorates; or
-- If Moody's expect debt to EBITDA to remain above 4x (0.8x as of
LTM September 2020) for a sustained period.
The principal methodology used in these ratings was Paper and
Forest Products Industry published in October 2018.
Headquartered in Nashville, Tennessee, Louisiana-Pacific
Corporation is a leading manufacturer and distributor of wood-based
building materials with operations in US, Canada, Chile and Brazil.
LSC COMMUNICATIONS: Chapter 11 Plan With Pension Deal Approved
--------------------------------------------------------------
Law360 reports that a New York bankruptcy judge on Wednesday,
February 24, 2021, approved a liquidation plan for bankrupt
commercial printing company LSC Communications that includes nearly
$8 million in payments from the company's former parent for its
retirees.
Following a virtual hearing, U.S. Bankruptcy Judge Sean Lane
approved the plan -- which also includes $7 million for general
unsecured claims -- despite the U.S. Trustee Office's objection to
former LSC parent RR Donnelley's agreement to pay the legal fees of
some of the pension plan participants. "The result for unsecured
creditors could not be better in this difficult situation," said
Gabriel Sasson, counsel for the unsecured creditors committee.
About LSC Communications
LSC Communications, Inc. -- http://www.lsccom.com/-- is a Delaware
corporation established in 2016 with its headquarters located in
Chicago, Illinois. The Company offers a broad range of traditional
and digital print products, print-related services, and office
products. The Company serves the needs of publishers,
merchandisers, and retailers worldwide, with a service offering
that includes e-services, logistics, warehousing and fulfillment
and supply chain management services. The Company prints
magazines, catalogs, directories, books, and some direct mail
products, and manufactures office products, including filing
products, envelopes, note-taking products, binder products, and
forms. The Company has offices, plants, and other facilities in 28
states, as well as operations in Mexico, Canada, and the United
Kingdom.
LSC Communications, Inc., based in Chicago, IL, and its
debtor-affiliates sought Chapter 11 protection (Bankr. S.D.N.Y.
Lead Case No. 20-10950) on April 13, 2020. In its petition, the
Debtor disclosed $1,649,000,000 in assets and $1,721,000,000 in
liabilities. The petition was signed by Andrew B. Coxhead, chief
financial officer.
The Debtors hire SULLIVAN & CROMWELL LLP as counsel; YOUNG CONAWAY
STARGATT & TAYLOR, LLP, as co-counsel; EVERCORE GROUP L.L.C., as
investment banker; ALIXPARTNERS LLP as restructuring advisor; PRIME
CLERK LLC as notice, claims and balloting agent.
LSC COMMUNICATIONS: Says Plan Accepted by Each Voting Class
-----------------------------------------------------------
LSC Communications, Inc., et al., have asked the Court to confirm
their Amended Joint Chapter 11 Plan of Liquidation.
The majority of claims asserted against the Debtors are classified
into the following categories: (a) Other Priority Claims, comprised
of Claims accorded priority in right of payment under Section
507(a) of the Bankruptcy Code, other than Administrative Claims or
Priority Tax Claims; (b) Junior Remaining Claims, comprised of all
remaining indebtedness under the Term Loan Facility and the Senior
Secured Notes minus the Credit Bid Amount; (c) General Unsecured
Claims, comprised of pension, trade and other unsecured claims; and
(d) SERP Claims, comprised of claims arising under the LSC Unfunded
Supplemental Pension Plan and the Supplemental Executive Retirement
Plan - B for Designated Executives of Moore Corporation Limited
and Subsidiary Companies.
Key components of the Plan include the following:
* Subject to the occurrence of the Effective Date, rejection of
all Executory Contracts and Unexpired Leases other than (a)
Executory Contracts or Unexpired Leases previously assumed or
rejected pursuant to an order of the Bankruptcy Court, (b)
Executory Contracts or Unexpired Leases that are the subject of a
motion to assume, or for which a notice of assumption has been
filed pursuant to the assumption and assignment procedures approved
by the Bankruptcy Court in connection with the Sale and (c) any
Executory Contract that is a D&O Policy.
* Satisfaction in full of Allowed Claims in Class 1 (Other
Priority Claims) and Class 2 (Other Secured Claims).
* Each Holder of an Allowed Junior Remaining Claim shall receive
its Pro Rata share of the Junior Remaining Claim Distribution Pool,
subject to the Unsecured Claim Pool.
* If the RRD Settlement Conditions are satisfied, each Holder of
an Allowed General Unsecured Claim shall receive its Pro Rata
share of the Unsecured Claim Pool, provided that all Distributions
to Holders of Allowed MEPP RRD Claims shall be made by the Plan
Administrator solely from the MEPP Distribution Account. If the
RRD Settlement Conditions are not satisfied, each Holder of an
Allowed General Unsecured Claim shall receive (i) its Pro Rata
share of the Unsecured Claim Pool and (ii) its Pro Rata share of
the Litigation Trust Interests.
* If the RRD Settlement Conditions are satisfied, each Holder
of an Allowed SERP Claim shall receive its Pro Rata share (i) of
the Unsecured Claim Pool and (ii) the SERP Settlement Payment. If
the RRD Settlement Conditions are not satisfied, each Holder of an
Allowed SERP Claim shall receive its Pro Rata share of (i) the
Unsecured Claim Pool and (ii) the Litigation Trust Interests.
* No Holder of an Intercompany Claim, Intercompany Interest,
Subordinated Claim or Equity Interest in LSC shall receive any
Distributions on account of its Claim or Interest.
The Plan, which is supported by the Consenting Junior Secured
Creditors, the Committee and RRD, was accepted by each creditor
Class entitled to vote on the Plan with overwhelming support.
The Debtors caused Prime Clerk LLC to distribute a Solicitation
Package to each Holder of a Claim in Class 3 (Junior Remaining
Claims), and a Solicitation Package and a copy of the Committee
Letter to each Holder of a Claim in Class 4A (General Unsecured
Claims) and Class 4B (SERP Claims) (collectively, the "Voting
Classes").
The Debtors believe that R.R. Donnelley & Sons Company is providing
a substantial contribution to the Plan in exchange for the SERP
Releases, including, among other things:
(a) funding the $4,955,127 SERP Settlement Payment on the
Effective Date, thereby directly and materially enhancing the
recovery of Holders of SERP Claims under the Plan;
(b) funding the $2.6 million MEPP Settlement Payment on the
Effective Date, thereby enhancing the recovery of all Holders of
General Unsecured Claims under the Plan, including Holders of SERP
Claims, by reducing the size of the overall General Unsecured
Claims pool;
(c) waiving and releasing any and all Claims RRD has asserted or
may assert against the Debtors' Estates, including all of the more
than $104 million in claims asserted against the Debtors in the RRD
proof of claim;
(d) providing the RRD Third Party Release; and
(e) resolving the issues underlying the RRD Settlement and
supporting Confirmation of the Plan, thereby (i) further enhancing
the recovery of all Holders of General Unsecured Claims under the
Plan by causing the Litigation Trust Funding Amount to be added to
the Unsecured Claim Pool; and (ii) reducing the Estates'
administrative costs by resolving potential Plan and claims
objections concerning RRD.
A copy of the Amended Plan filed Feb. 22, 2021, is available at
https://bit.ly/3pJVaXy from Prime Clerk, the claims agent.
Following discussions with the Office of the United States Trustee
for the Southern District of New York, the Debtors have revised the
Amended Plan to resolve the portion of the U.S. Trustee's objection
concerning the Release by Holders of SERP Claims. A copy of the
Revised Amended Plan filed Feb. 23, 2021, is available at
https://bit.ly/3pS5KMb
Counsel to the Debtors:
Andrew G. Dietderich
Brian D. Glueckstein
Alexa J. Kranzley
Christian P. Jensen
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004-2498
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
About LSC Communications
LSC Communications, Inc. -- http://www.lsccom.com/-- is a Delaware
corporation established in 2016 with its headquarters located in
Chicago, Illinois. The Company offers a broad range of traditional
and digital print products, print-related services, and office
products. The Company serves the needs of publishers,
merchandisers, and retailers worldwide, with a service offering
that includes e-services, logistics, warehousing and fulfillment
and supply chain management services. The Company prints
magazines, catalogs, directories, books, and some direct mail
products, and manufactures office products, including filing
products, envelopes, note-taking products, binder products, and
forms. The Company has offices, plants, and other facilities in 28
states, as well as operations in Mexico, Canada, and the United
Kingdom.
LSC Communications, Inc., based in Chicago, IL, and its
debtor-affiliates sought Chapter 11 protection (Bankr. S.D.N.Y.
Lead Case No. 20-10950) on April 13, 2020. In its petition, the
Debtor disclosed $1,649,000,000 in assets and $1,721,000,000 in
liabilities. The petition was signed by Andrew B. Coxhead, chief
financial officer.
The Debtors hire SULLIVAN & CROMWELL LLP as counsel; YOUNG CONAWAY
STARGATT & TAYLOR, LLP, as co-counsel; EVERCORE GROUP L.L.C., as
investment banker; ALIXPARTNERS LLP as restructuring advisor; PRIME
CLERK LLC as notice, claims and balloting agent.
MCELRATH LEGAL: Gets Court Approval to Hire Bankruptcy Attorney
---------------------------------------------------------------
McElrath Legal Holdings, LLC, received approval from the U.S.
Bankruptcy Court for the Western District of Pennsylvania to hire
Gary Short, Esq., an attorney practicing in Pittsburgh, Pa., to
handle its Chapter 11 case.
Mr. Short will be paid at the hourly rate of $310.
The attorney received a retainer in the amount of $10,000, of which
$4,665.50 was used to pay pre-bankruptcy legal services and
work-related costs while $1,738 was used to pay the filing fee.
Mr. Short disclosed in a court filing that he is "disinterested"
within the meaning of Section 101(14) of the Bankruptcy Code.
Mr. Short holds office at:
Gary W. Short, Esq.
212 Windgap Road
Pittsburgh, PA 15237
Tel: (412) 765-0100
Fax: (412) 536
Email: garyshortlegal@gmail.com
About McElrath Legal Holdings
McElrath Legal Holdings, LLC sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Pa. Case No. 21-20110) on Jan. 20,
2021. At the time of the filing, the Debtor disclosed assets of
between $100,001 and $500,000 and liabilities of the same range.
Judge Carlota M. Bohm oversees the case. Gary W. Short, Esq., is
the Debtor's bankruptcy attorney.
MD AUDIO: Car Stereo Manufacturer in Chapter 11
-----------------------------------------------
Ashley Portero of the South Florida Business Journal reports that
Miami-based MD Audio Engineering, a company that manufactures and
sells car stereo speakers, filed for Chapter 11 bankruptcy
protection on February 12, 2021.
A bulk of the company's assets consists of inventory and accounts
receivable.
The company is registered to owner and CEO Jose Telle. It made
$3.9 million in revenue in 2020, up from $2.6 million in 2020.
MD Audio Engineering owes $417,631 to small-business lender Par
Funding, its largest secured creditor. Last year, Par Funding
co-founder Joseph LaForte was accused of fraudulently raising
almost $500 million from investors through the sale of unregistered
securities.
The company also has a $150,000 secured claim from the U.S. Small
Business Administration.
MD Audio Engineering has dozens of unsecured creditors, including
multiple electronics manufacturers and vendors based in Taiwan and
China. Its largest unsecured claim is for more than $776,000 from
Deccon International in Taipei, Taiwan.
Andres Montejo, an attorney representing MD Audio Engineering, did
not respond to a request for comment. Aleida Martinez-Molina, a
bankruptcy trustee appointed by the court, also did not respond to
a request for comment.
About MD Audio Engineering
MD Audio Engineering, Inc., is an electronics manufacturer in
Florida.
The company filed for Chapter 11 bankruptcy protection (Bankr. S.D.
Fla.. Case No. 21-11394) on Feb. 12, 2021. The petition was signed
by Jose Telle, president. A bulk of the company's assets consists
of inventory and accounts receivable. It listed total assets of
$2,248,219 and total Liabilities of $2,677,971. The bankruptcy
case is handled by Judge Jay A. Cristol. Andres Montejo, Esq., in
Hialeah, Florida, serves as counsel.
MISSOURI JACK: Seeks to Hire Summers Compton as Local Counsel
-------------------------------------------------------------
Missouri Jack, LLC and its affiliates seek approval from the U.S.
Bankruptcy Court for the Eastern District of Missouri to hire
Summers Compton Wells LLC as their local restructuring counsel.
The firm's services include:
(a) advising the Debtors with respect to their duties and
powers in the administration of their Chapter 11 cases and in the
continued operation of their business and financial affairs;
(b) assisting the Debtors in obtaining approval of bankruptcy
loan and use of cash collateral;
(c) assisting the Debtors in obtaining approval of any
proposed sale of their assets;
(d) assisting the Debtors in obtaining approval of any plan of
reorganization and negotiation and formulating any modifications to
the plan;
(e) representing the Debtors at the meeting of creditors,
bankruptcy hearings and contested matters or adversary
proceedings;
(f) consulting with the U.S. trustee and any committee formed
in the Debtors' cases concerning matters arising in this
proceeding; and
(g) other legal services necessary to administer the cases.
The primary professionals anticipated to be handling the cases
are:
David A. Sosne, Principal $395 per hour
Brian J. LaFlamme, Principal $350 per hour
Seth A. Albin, Principal $350 per hour
Paralegals $120-$150 per hour
Law Clerks $100-$125 per hour
Summers Compton is a disinterested person within the meaning of
Section 101(14) of the Bankruptcy Code, according to court papers
filed by the firm.
The firm can be reached through:
David A. Sosne, Esq.
Summers Compton Wells LLC
8909 Ladue Road
St. Louis, MO 63124
Phone: 314-991-4999
Fax: 314-991-2413
About Missouri Jack LLC
Earth City, Missouri-based Missouri Jack LLC, Illinois Jack LLC and
Conquest Foods, LLC are owners of 70 Jack In The Box restaurants in
Missouri and Illinois.
Missouri Jack and its affiliates sought Chapter 11 protection
(Bankr. E.D. Mo. Case Nos. 21-40540 to 21-40542) on Feb. 16, 2021.
The petitions were signed by Navid Sharafatian of Victorville,
California, the manager of TNH Partners LLC.
Missouri Jack listed assets and liabilities of $10 million to $50
million while Illinois Jack and Conquest listed assets of $1
million to $10 million and liabilities of $10 million to $50
million.
Judge Barry S. Schermer oversees the cases.
Leech Tishman Fischaldo & Lampl, Inc. and Summers Compton Wells,
LLC serve as the Debtor's lead bankruptcy counsel and local
counsel, respectively.
MOSIER MANAGEMENT: Liquidating Plan Confirmed by Judge
------------------------------------------------------
Judge Robyn L. Moberly has entered findings of fact, conclusions of
law, and order confirming the Plan of Liquidation filed by Mosier
Management LLC.
The Debtor proposed the Plan in good faith and not by any means
forbidden by law. In determining that the Plan has been proposed
in good faith, the Bankruptcy Court examined the totality of the
circumstances surrounding the filing of the Chapter 11 Case, the
pleadings filed in the Chapter 11 Case and its related proceedings,
statement and arguments.
The Court finds that the Plan was proposed with the legitimate and
honest purpose of maximizing the value of the recovery to the
holders of Allowed Claims under the circumstances of the Chapter 11
Case.
The Plan satisfies Section 1129(a)(11) of the Bankruptcy Code.
Pursuant to the Plan and in compliance with the priorities of the
Bankruptcy Code, all the assets of the Estate have been liquidated
and will be distributed to creditors.
As reported in the Troubled Company Reporter, in June 2020, the
Debtor sold substantially all of its property to HIS German
Autoparts LLC, the identified stalking horse bidder. The sale
proceeds, along with cash and collected receivables will be
distributed to the holders of allowed claims pursuant to the Plan.
Under the Plan, holders of unsecured notes in Class 1 and unsecured
non-priority claims will receive a pro-rata distribution
of "distribution funds" equally.
Pursuant to the Plan, all of the Debtor's remaining assets will be
used to pay current administrative costs of the estate, including
closing the cost of dissolving the Debtor post-confirmation,
allowed administrative claims, and then pro rata to the allowed
claims in Classes 1 and 2. At this time, the Debtor estimates that
$190,000 will be available for payment of claims.
A full-text copy of the Plan Confirmation Order dated Feb. 19,
2021, is available at https://bit.ly/3aPQnzE from PacerMonitor.com
at no charge.
About Mosier Management
Mosier Management LLC, which operates under the name Adsit Company
-- https://www.adsitco.com/ -- specializes in parts exclusively for
Mercedes Benz automobiles.
Mosier Management sought protection under Chapter 11 of the
Bankruptcy Court (Bankr. S.D. Ind. Case No. 20-00640) on Feb. 3,
2020. In the petition signed by Josiah Mosier, sole member, the
Debtor was estimated to have $100,000 to $500,000 in assets and $1
million to $10 million in liabilities. Terry E. Hall, Esq., at
Terry Hall Law PC, represents the Debtor.
NEW HOME: Moody's Affirms B3 CFR on Proposed $35MM Add-on Notes
---------------------------------------------------------------
Moody's Investors Service affirmed The New Home Company, Inc.'s
(NYSE: NWHM) Corporate Family Rating at B3, Probability of Default
Rating at B3-PD and senior unsecured notes at B3. The outlook is
stable. The Speculative Grade Liquidity Rating remains at SGL-3.
The company announced a proposed $35 million tack-on to its senior
unsecured notes due 2025. The use of proceeds of the new notes will
be for general corporate purposes, including land acquisition,
investment in new markets and working capital, as well as to pay
for fees and expenses related to this offering. Moody's estimates
New Home's pro forma debt to book capitalization will increase to
58.9% from 55.7% at December 31, 2020 while EBIT/Interest Expense
will remain at around 1.0x.
The affirmation of the ratings reflects Moody's expectation that
New Home will maintain high debt leverage, between 55-60%, through
the end of 2022 coupled with meaningful geographic concentration in
California.
Affirmations:
Issuer: The New Home Company, Inc.
Corporate Family Rating at B3
Probability of Default Rating at B3-PD
Senior Unsecured Notes at B3 (LGD4)
Outlook Actions:
Issuer: The New Home Company, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The New Home Company's B3 CFR reflects Moody's expectation that the
company will modestly reduce debt-to-total capitalization to
approximately 57% and improve interest coverage to 1.8x within the
next 12-18 months. Moody's expectations incorporate margin
improvement and topline growth, which reflects the recent surge in
demand for single-family housing in response to the COVID-19
pandemic and New Home's ability to raise its average selling price
as a result. Moody's rating also considers the reliance on sales
from the state of California, which made up close to 90% of
homebuilding revenues in 2020. The rating is further supported by
New Home's shift to higher sales of entry-level homes, a product
that is experiencing strong growth, particularly in California
where affordability has been a challenge.
New Home's SGL-3 Speculative Grade Liquidity Rating reflects
Moody's expectation that the company will maintain adequate
liquidity, characterized by negative free cash flow over the next
12-18 months as a result of increased land investment to support
growth. In addition, Moody's expects the company to maintain full
availability on its $60 million unsecured revolver and modest
cushion on its maintenance covenants.
The stable outlook reflects Moody's expectation of strong tailwinds
in the homebuilding industry, including low interest rates and low
housing supply, leading to strong demand for New Home's products.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if New Home increases in scale with
growth occurring outside of California. In addition, an upgrade
would require improvement in tangible net worth to greater than
$500 million, debt leverage below 50%, and interest coverage above
3x together with maintenance of good liquidity.
The ratings could be downgraded should debt leverage rise above
65%, interest coverage drop below 1x or liquidity weakens.
Headquartered in Irvine, California and established in 2009, New
Home designs, builds, and sells homes in California and Arizona. It
also acts as a fee builder for third-part land owners. For 2020,
its revenue mix was 84% its own home sales and 16% fee build. Total
revenues for twelve months ended December 31, 2020 were $507
million.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
NORWEGIAN AIR RESOURCES: Files for Chapter 7 Bankruptcy
-------------------------------------------------------
Matthew Arrojas of South Florida Business Journal reports that a
Norwegian Air subsidiary, Norweigan Air Resources US Inc., filed
for Chapter 7 bankruptcy.
The filing is part of a larger reorganization strategy from parent
company Norwegian Air Shuttle, an international airline that
connected Fort Lauderdale-Hollywood International Airport to
international destinations including Amsterdam; Madrid; Oslo,
Norway; Stockholm; Barcelona, Spain; and Paris.
International travel, especially to Europe, has been close to
nonexistent because of the Covid-19 pandemic. Many countries have
placed regulations on travel to and from the U.S.
In its Statement of Financial Affairs, the Debtor disclosed that it
had zero gross revenue for Jan. 1, 2021, until the filing date.
Gross revenue was $5.558 million in 2020, compared with $28.67
million in 2019.
In addition to the bankruptcy filing, Norwegian Air Resources US
filed a Workers Adjustment and Retraining Notification Act notice
with the state Feb. 12, 2021. The company said it permanently laid
off 152 workers at FLL, effective Feb. 11, 2021.
Workers at Norwegian Air operations in Los Angeles International
Airport and John F. Kennedy International Airport in New York were
also laid off in connection with the parent company's financial
woes, according to the notice.
"Unfortunately, in late 2020, the Norwegian government
unforeseeably decided to cease providing financial assistance to
[the company]," the company wrote in the WARN notice. "Without
such funding, [Norwegian Air] determined that its only viable
course of action was to terminate its long-haul operation. As a
direct consequence of that decision, [Norwegian Air Resources US]
-- an employer of long-haul employees -- can no longer continue to
operate."
A statement from Norwegian Air says the Norway-based company is in
the midst of an overall reorganization plan. However, Chapter 7
bankruptcy declarations do not include a reorganization process
like Chapter 11 declarations, so the company's U.S. operations are
expected to cease permanently.
A Norwegian Air Resources US representative confirmed that the
airline's U.S. operations have ended, but the company's operations
overseas will continue at a limited capacity due to the Covid-19
pandemic.
Norwegian Air does not have any planned flights to or from any of
the U.S. airports it serviced.
Allen Pegg, a partner in the Miami office of Hogan Lovells,
represented Norwegian Air Resources US in the bankruptcy filing. He
did not respond to a request for comment.
About Norwegian Air Resources
Norwegian Air Resources US Inc., doing business as OSM Aviation,
Inc., is a Fort Lauderdale-based subsidiary of Norwegian Air
Shuttle ASA.
On Feb. 12, 2021, Norwegian Air Resources filed for Chapter 7
bankruptcy protection (Bankr. S.D. Fla. Case No. 21-11399). The
Company disclosed $921,000 in total assets and $5.3 million in
total liabilities as of the bankruptcy filing.
The bankruptcy filing is part of a larger reorganization strategy
from parent company Norwegian Air Shuttle.
Allen Pegg, a partner in the Miami office of Hogan Lovells, is
serving as counsel to the Debtor.
OPTIMIZED LEASING: Hearing on Disclosures Continued to April 8
--------------------------------------------------------------
Judge A. Jay Cristol has entered an order that the hearings on the
Amended Disclosure Statement of Optimized Leasing, Inc., Maloney
Application, BMO Harris Application, Huntington Application, Wells
Fargo Application, and the Limited Objections currently scheduled
for March 4, 2021 at 2:00 p.m. are continued and rescheduled to
April 8, 2021 at 2:00 p.m.
The Disclosure Objection Deadline is extended to April 1, 2021.
On Nov. 13, 2020, Debtor filed its Amended Disclosure Statement and
its Amended and Restated Plan of Reorganization under Chapter 11 of
the United States Bankruptcy Code.
In seeking a delay, the Debtor explained that through communication
with the mediator, dates beginning in early March are available for
mediation.
So as to not take unnecessary time on the Court's calendar and to
focus efforts on mediation, the Debtor requested the March 4
Disclosure Hearing be rescheduled to a date that is 45 days out
from the current hearing date of March 4.
About Optimized Leasing
Optimized Leasing, Inc., a company headquartered in Miami, Fla., is
in the trucking business. The company utilizes its various
semi-trucks and trailers (some equipped with ThermoKing
refrigeration units) to transport flowers, fruits, vegetables, and
other perishable items throughout the U.S.
Optimized Leasing sought Chapter 11 protection (Bankr. S.D. Fla.
Case No. 18-10746) on Jan. 21, 2018. In the petition signed by CFO
Ronen Koubi, the Debtor was estimated to have $10 million to $50
million in assets and liabilities.
Judge Jay A. Cristol oversees the case.
The Debtor tapped Stichter Riedel Blain & Postler, P.A., as its
bankruptcy counsel; and Bill Maloney Consulting as its financial
advisor.
OSUM OIL: Waterous Acquisition No Impact on Moody's B3 CFR
----------------------------------------------------------
Moody's Investors Service said that on February 18, 2021, Osum Oil
Sands Corp., the parent of Osum Production Corp. (Osum, B3
negative), announced it received an improved offer from Waterous
Energy Fund (WEF) (unrated) to acquire up to 57,000,000 of the
outstanding common shares not currently owned by WEF. The offer is
supported by Osum's independent board members and executive team.
If WEF acquired the maximum amount of shares contemplated in its
offer, it would own over 85% of outstanding common shares. The
acquisition would constitute a change of control under the Osum
term loan requiring that the outstanding balance be repaid, a
credit positive. Osum's B3 corporate family rating (CFR) is not
impacted by the offer from WEF, and Moody's will withdraw all
ratings if the debt is repaid.
Osum is a private Calgary, Alberta based exploration and production
company that produced 17,360 bbl/d in 2019 (all production and
reserves figures are net of royalties) of bitumen from its Orion
SAGD project in Cold Lake, Alberta. Osum Production Corp. is a
subsidiary of Osum Oil Sands Corp.
PACKERS HOLDINGS: Fitch Assigns B Rating on New First Lien Loans
----------------------------------------------------------------
Fitch Ratings has assigned 'B'/'RR3' long-term ratings to Packers
Holdings, LLC's (PKR) new first lien term loan and revolver.
Proceeds from the new credit facility will be used to refinance
outstanding borrowings under the existing facility. Fitch maintains
a 'B-' IDR on PKR, as well as 'B'/'RR3' long-term ratings on the
company's existing term loan and revolver. The Rating Outlook is
Stable.
PKR's Long-Term IDR is supported by its strong cash flow
generation, leading market position as the largest contract
sanitation company serving the food processing industry in North
America, and the high degree of regulation within the markets in
which it operates. The rating is further supported by the company's
consistent and expanding profit margins and long-established
blue-chip customer relationships. These positive factors are offset
by PKR's elevated leverage, aggressive financial policy and
customer concentration.
The Stable Rating Outlook reflects Fitch's expectations that the
company's leverage will likely remain elevated over the long term
as a result of relatively aggressive shareholder activities, such
as the debt-funded dividend distribution proposed in the current
transaction, as well as the one executed in May 2019. In the
absence of distributions, Fitch believes the company has the
capacity to de-lever either organically or through cash-funded
bolt-on acquisitions. Fitch views the company's cash flow
generation, market position and operating profile as favorable and
strong for the 'B-' rating. Customer concentration will likely
remain a concern over the next few years, although this risk is
mitigated somewhat as individual contracts are typically negotiated
on a facility-by-facility basis. Expansion into new end markets
could also broaden the company's exposure.
KEY RATING DRIVERS
Elevated Leverage: PKR's elevated leverage (gross debt/EBITDA)
remains a material factor when considering the company's rating.
Fitch expects leverage will remain elevated, potentially
temporarily outside of its rating sensitivities, but stable over
the rating horizon, as the sponsor monetizes its investment through
distributions. The company would outperform Fitch's expectations if
there were any material voluntary debt repayments, or if the
company shifts to a more conservative capital deployment strategy
and avoids further material shareholder-friendly leveraging
transactions, such as sponsor dividend recapitalizations. Fitch
does not expect a meaningful change in capital deployment strategy.
Fitch cites that the company's consistent profitability,
long-standing customer relationships and mission-critical nature as
mitigants to elevated leverage.
Strong Market Position: As the largest contract sanitation company
for the food processing industry in North America, PKR has a
limited set of competitors that can fully service large plants or
quickly relocate resources to address customer needs. The
industrial food preparation segment is highly fragmented across the
U.S. and Canada with a large concentration of closely held regional
players; however, PKR is approximately three times the size of its
closest competitor, The Vincent Group-QSI, based on facility
number.
Bolt-on Acquisitions Likely: Despite being the largest firm in the
industry, there are opportunities for expansion through further
penetration into additional plants of existing customers, or
through acquisitions. The firm completed several acquisitions in
the prior five years, typically with a size of less than $30
million and financed primarily through internally generated cash.
Fitch expects this will remain part of PKR's overall strategy,
particularly as the company aims to expand in geographies and end
markets where it has a smaller presence.
Strong Profitability and FCF: Fitch considers PKR's stable margins,
growing revenue base and strong FCF as more commensurate with a
rating higher than 'B-'. The company has generated positive FCF
over the past several years, and Fitch expects this to continue
through 2023. The company implemented and executed several
cost-cutting initiatives in the past three years, particularly
regarding training and employee retention. Fitch expects these
initiatives will result in EBITDA margins remaining steady over the
rating horizon.
Coronavirus Pandemic Impact: Fitch expects the impact of the
coronavirus pandemic on PKR's top and bottom lines to be minimal.
Although many of PKR's customers' plants experienced closures,
individual incidents have been brief. PKR is also heavily involved
in the additional sanitation required to reopen. Raw materials
sales in the company's chemicals segment also benefited from the
pandemic.
The pandemic also highlighted the importance of sanitation
regulations, and Fitch believes such standards are increasing,
further strengthening PKR's position and expanding the available
opportunities for the company. Fitch assesses PKR's function as
mission-critical for its customers, such as JBS S.A. or Cargill
Incorporated, as opposed to other plant production costs that may
be delayed, such as maintenance or capex for machinery. Sanitation
usually represents less than 5% of a customer's plant's cost
structure.
Necessity of Service: Fitch believes the company's rating is
supported by its clear position within the market. All U.S. protein
plants are USDA-inspected daily prior to opening. Protein plants
must pass these daily inspections or be subject to fines, citations
and production delays with costs running in the tens of thousands
of dollars per hour. In addition, non-protein plants are regularly
reviewed by the FDA with end customers such as Walmart, McDonalds
and Subway driving higher sanitation standards.
Positive Industry Trends: PKR's credit risk is somewhat reduced by
several current broad market trends that are likely to continue
over the medium term, even absent the coronavirus pandemic, which
likely is strengthening these trends. As the grocery segment
continues to see pricing pressure from online retailers, both
protein and non-protein producers will seek to further streamline
production by outsourcing additional functions such as human
resources and sanitation. Fitch believes effective staffing is a
core competency of PKR, as the company has approximately 17,000
full-time employees, no union representation and employee turnover
below industry average.
An additional source of demand is the increased regulatory
complexity across various food categories, coupled with
increasingly unannounced FDA audits. Finally, PKR's management
notes that the growing presence of automation in the food
processing arena has in many cases led to increased demand for
sanitation services, as a growing number of mechanical components
need to be disassembled, sanitized and reassembled by trained
staff.
Customer Concentration: Fitch considers PKR's customer
concentration to be one of its more material concerns. Fitch
estimates the company's top-five customers comprise approximately
one-half of the company's revenue. The loss of any of these top
customers would significantly affect the company's financial
performance and, subsequently, its credit profile. PKR's strong
market position offsets some of Fitch's concerns, while the
concentration is mitigated by the fact that these relationships are
spread out across dozens of unique plants that have discrete plant
managers, each responsible for plant performance and regulatory
compliance, who decide to employ PKR's services.
Additionally, contracts are typically negotiated on a
plant-by-plant basis, rather than on a corporate level, although
corporate relationships can affect broader wins, renewals and
losses. They typically have high renewal rates, which Fitch expects
to be in the 90%-95% range on average.
PKR has historically implemented relatively aggressive
shareholder-friendly actions, such as debt-funded sponsor
dividends, which Fitch expects to continue over the rating horizon.
Fitch believes the company will organically de-lever through debt
amortization and EBITDA growth, but will then issue incremental
debt to pay a special dividend and maintain elevated leverage.
These actions are incorporated in the company's 'B-' IDR and are
somewhat offset by the company's capacity to pay down debt using
internally generated cash flow in the event of meaningful changes
to its capital deployment strategy.
DERIVATION SUMMARY
PKR compares favorably to its industry peers in terms of cash flow
generation, strategy and profitability. In particular, Fitch
considers the company's stable FCF margins to be exceptional
compared with similarly rated companies. Fitch also considers PKR
to be differentiated from its other 'B-' rated peers due to its
strong market position within its segment. Many other companies in
the 'B' category operate in highly fragmented markets with minimal
competitive advantage. The company's rating is somewhat limited due
to its leverage, which is high, but relatively in line with that of
similarly rated companies. The propensity for shareholder-focused
leveraging transactions was also a rating consideration. There are
no parent/subsidiary, Country Ceiling or operating environment
influences or constraints on this rating.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Mid-single-digit annual organic growth over the rating
horizon, coupled with modest bolt-on acquisitions; minimal
top-line impact from the pandemic;
-- Modest annual bolt-on or supplemental acquisitions,
predominantly funded with internally generated cash;
-- Additional cash deployment is allocated toward reinvestment in
the company and sponsor dividends;
-- Minimal voluntary debt reduction, with intermittent leveraging
transactions, such as a dividend recapitalization, keeping
leverage around or above the positive sensitivity of 6.0x over
the long term;
-- EBITDA margins are stable throughout the forecast with
increased marketing and corporate expenses offset by effects
of improved employee training, employee retention and cost
saving initiatives;
-- Modest capex investment of less than 1% of total revenue.
Recovery Assumptions
The recovery analysis assumes PKR would be reorganized rather than
liquidated, and would be considered on a going concern (GC) basis.
Fitch has assumed a 10% administrative claim in the recovery
analysis.
In Fitch's recovery analysis, potential default is assumed to come
from a combination of one or more of the following: A prolonged
economic downturn leads to one or more major customers to close a
significant number of facilities; customers shifting to insource a
high percentage of currently outsourced contracts; or loss of more
than one of the company's major customers.
Fitch's GC EBITDA assumptions reflect the equivalent of PKR losing
one of its top two customers along with at least one of its
remaining top five customers, resulting in a revenue and EBITDA
decline of approximately 20% each, relative to Fitch's rating case,
as margins also decline modestly.
Fitch expects the EV multiple used in PKR's recovery analysis will
be approximately 6.5x. Fitch believes the company's business
profile and market position are strong, despite the highly
leveraged capital structure. PKR consistently generated positive
FCF and stable margins, while growing organically. Fitch's EV
multiple also considers the approximately 13x transaction multiple
when Leonard Green, the previous sponsor, purchased PKR in 2014.
The $60 million first lien senior secured revolving credit facility
is assumed to be fully drawn upon default. The revolver and first
lien senior secured term loan are senior to the senior unsecured
notes in the waterfall.
The 'RR3' on the first lien credit agreement in the recovery
waterfall reflects good recovery prospects given default, which has
historically resulted in recovery in the range of 51%-70%.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade --Shift to a consistently conservative
financial policy; --Leverage (gross debt/EBITDA) below 6.0x for a
sustained period; --FFO leverage below 6.0x for a sustained period.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade --FFO interest coverage sustained below
1.7x; --Multiple consecutive periods of negative FCF; --Leverage
and FFO leverage consistently above 7.5x; --Loss of a major
customer.
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: Fitch considers PKR's pro forma liquidity to be
adequate at approximately $83 million as of Nov. 30, 2020, composed
of $23 million of cash and equivalents and $60 million of revolver
availability. The company has a relatively nimble operating
structure and minimal annual maintenance capex. Its liquidity is
also supported by the company's positive FCF generation, which
Fitch expects to continue over the rating horizon. Fitch does not
consider any of the company's cash to be restricted, and Fitch does
not believe the company requires a material cash balance to sustain
operations, given its lean operating structure and minimal fixed
costs. Fitch considers the company's capital structure and maturity
schedule to be relatively favorable, particularly given the further
maturity date of the new term loan.
ESG CONSIDERATIONS
Packers Holdings, LLC: Governance Structure: 4
Packers Holdings, LLC has an ESG Relevance Score of '4' for
Governance Structure due to its exposure to board independence
risk, due to sponsor ownership and the potential for aggressive
shareholder distributions, which have 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.
PARK PLACE: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Park Place Commercial, SPE, LLC
A Delaware Limited Liability Company
25 E. Foothill Blvd.
Arcadia, CA 91006
Chapter 11 Petition Date: February 24, 2021
Court: United States Bankruptcy Court
Central District of California
Case No.: 21-11463
Judge: Hon. Julia W. Brand
Debtor's Counsel: Jeffrey B. Smith, Esq.
CURD, GALINDO & SMITH, LLP
301 E. Ocean Blvd., Suite 1700
Long Beach, CA 90802
Tel: 562-624-1177
E-mail: jsmith@cgsattys.com
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Kin Hui, manager of the General Partner
of the Managing Member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/VY6S7OQ/Park_Place_Commercial_SPE_LLC__cacbke-21-11463__0001.0.pdf?mcid=tGE4TAMA
PG&E CORP: Ex-Officers Sued by California Wildfire Victims
----------------------------------------------------------
Joel Rosenblatt of Bloomberg News reports that the victims of
California wildfires sued former officers and directors of PG&E
Corp., alleging their neglect caused the blazes sparked by the
utility's equipment that killed dozens of people and burned
hundreds of thousands of acres in the northern part of the state.
The Fire Victim Trust, which seeks compensation for damages caused
by the fires, retained the right to file such a suit as part of the
victims' 2020 settlement with PG&E valued at $13.5 billion in cash
and stock, according to lawyers for the group.
"Thus far, PG&E has been a faceless villain to fire victims," Frank
Pitre, a lawyer for the trustee of the Fire Victim Trust, said in
an emailed statement. "This lawsuit pulls back the curtain to
expose those who have previously escaped accountability."
The company said it's aware of the suit.
"PG&E has already contributed the vast majority of the agreed
$13.5B to compensate individual wildfire victims," a company
spokesperson said in an emailed statement.
Originally filed as shareholder suits, the litigation became the
property of PG&E's estate when the utility filed for bankruptcy,
according to the complaint filed Wednesday in San Francisco state
court. The claims cover a series of fires north of San Francisco in
2017 and the 2018 Camp Fire, for which PG&E pleaded guilty to 84
counts of involuntary manslaughter in the deadliest corporate crime
in U.S. history.
The defendants include Anthony F. Earley Jr., PG&E's president,
chief executive officer and chairman of the board from 2011 until
March 2017, and Geisha J. Williams, who served as chief executive
officer and president from 2017 to 2019. They are accused of
"independent breaches of fiduciary duty."
The case is Trotter v. Chew, CGC-18-572326, California Superior
Court, San Francisco County (San Francisco).
About PG&E Corp.
PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a
Fortune 200 energy-based holding company, headquartered in San
Francisco. It is the parent company of Pacific Gas and Electric
Company, an energy company that serves 16 million Californians
across a 70,000-square-mile service area in Northern and Central
California.
As of Sept. 30, 2018, the Debtors, on a consolidated basis, had
reported $71.4 billion in assets on a book value basis and $51.7
billion in liabilities on a book value basis.
PG&E Corp. and Pacific Gas employ approximately 24,000 regular
employees, approximately 20 of whom are employed by PG&E Corp. Of
Pacific Gas' regular employees, approximately 15,000 are covered by
collective bargaining agreements with local chapters of three labor
unions: (i) the International Brotherhood of Electrical Workers;
(ii) the Engineers and Scientists of California; and (iii) the
Service Employees International Union.
On Jan. 29, 2019, PG&E Corp. and its primary operating subsidiary,
Pacific Gas and Electric Company, filed voluntary Chapter 11
petitions (Bankr. N.D. Cal. Lead Case No. 19-30088).
PG&E Corporation and its regulated utility subsidiary, Pacific Gas
and Electric Company, said they are facing extraordinary challenges
relating to a series of catastrophic wildfires that occurred in
Northern California in 2017 and 2018. The utility said it faces an
estimated $30 billion in potential liability damages from
California's deadliest wildfires of 2017 and 2018.
Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP are
serving as PG&E's legal counsel, Lazard is serving as its
investment banker and AlixPartners, LLP is serving as the
restructuring advisor to PG&E. Prime Clerk LLC is the claims and
noticing agent.
In order to help support the Company through the reorganization
process, PG&E has appointed James A. Mesterharm, a managing
director at AlixPartners, LLP, and an authorized representative of
AP Services, LLC, to serve as Chief Restructuring Officer. In
addition, PG&E appointed John Boken also a Managing Director at
AlixPartners and an authorized representative of APS, to serve as
Deputy Chief Restructuring Officer. Mr. Mesterharm, Mr. Boken and
their colleagues at AlixPartners will continue to assist PG&E with
the reorganization process and related activities. Morrison &
Foerster LLP, as special regulatory counsel. Munger Tolles & Olson
LLP is special counsel.
The Office of the U.S. Trustee appointed an official committee of
creditors on Feb. 12, 2019. The Committee retained Milbank LLP as
counsel; FTI Consulting, Inc., as financial advisor; Centerview
Partners LLC as investment banker; and Epiq Corporate
Restructuring, LLC as claims and noticing agent.
On Feb. 15, 2019, the U.S. trustee appointed an official committee
of tort claimants. The tort claimants' committee is represented by
Baker & Hostetler LLP.
PG&E Corporation and Pacific Gas and Electric Company announced
July 1, 2020, that PG&E has emerged from Chapter 11, successfully
completing its restructuring process and implementing PG&E's Plan
of Reorganization that was confirmed by the Bankruptcy Court on
June 20, 2020.
PINNACLE REGIONAL: Trustee Given Leave To Amend Complaint
---------------------------------------------------------
Judge Dale L. Somers of the United States Bankruptcy Court for the
District of Kansas granted in part, Great Western Bank's Partial
Motion to Dismiss.
The Motion sought an order dismissing Counts VII and VIII of the
Complaint, attacking the extent of debts secured by deeds of trust
and mortgages executed by Debtors Joy's Majestic Paradise and
Rojana Realty Investments, Inc. The Motion also sought the
dismissal of Counts IX and X, seeking to avoid certain guarantor
obligations of Joy's and Rojana as fraudulent conveyances.
Beginning in 2017, Great Western Bank extended credit to various
members of an affiliated group of primarily health care providers
assembled by entrepreneur Douglas C. Palzer, including Debtors
Pinnacle Regional Hospital, Inc, and Blue Valley Surgical
Associates, LLC. On or about February 7, 2018, Great Western Bank
provided loans to Debtors Joy's and Rojana, non-health care
entities related to the health care entities through Mr. Palzer.
The loan to Joy's, in the amount of $3,866,200, and the loan to
Rojana, in the amount of $4,300,000, were secured by real property
located in Kansas and Missouri. The mortgages and deeds of trust
stated that the loan amounts of $3,866,200 and $4,300,000 were the
maximum principal amounts secured.
In the fall of 2018, Debtor Pinnacle Healthcare System, Inc. was
formed to acquire the sole member of what is now known as Pinnacle
Regional Hospital, LLC, also referred to as Boonville Hospital.
Great Western Bank agreed to loan $6,500,000 to finance the
purchase. The security for the Acquisition Loan included cross
guaranties by Joy's and Rojana. The mortgages and deeds of trust
previously granted in favor of Great Western Bank were not
amended.
The Chapter 11 petition filed by Rojana summarized its assets as
approximately $10,600,000 in real property and $2,262,000 in
personal property, mostly accounts receivable. Secured claims are
summarized as $6,433,000 and unsecured nonpriority claims as
$874,000. The proofs of claims filed before the case was converted
to Chapter 7 are in the aggregate amount of $17,191,000, of which
$11,081,000 is claimed to be secured. Great Western Bank's proof
of claim is for $14,360,000, of which $8,250,000 is claimed to be
secured. In the Rojana case, the James A. Overcash, Chapter 7
Trustee, gave notice of the claims bar date of April 25, 2021,
after the briefing of Great Western Bank's Motion was completed.
The Chapter 11 petition filed by Joy's summarized its assets as
approximately $9,591,000 in real property and approximately $8,000
of personal property. The summary of liabilities includes only
secured claims totaling $3,613,000. Two proofs of claim in the
aggregate amount of $14,549,000 were filed before the case was
converted to Chapter 7, of which $6,351,000 was claimed as secured.
Great Western Bank's proof of claim is for $14,360,000, of which
$6,162,000 is stated to be secured. Similar to Rojana's case, the
Chapter 7 Trustee gave notice of the claims bar date of April 25,
2021, after briefing of Great Western Bank's Motion was completed.
On April 23, 2020, an Agreed Order Granting Post-Petition Financing
was entered in the jointly administered cases. Among other things,
the Agreed Order granted the Chapter 11 Trustee and the Unsecured
Creditors' Committee of the jointly administered estates seventy
five days to "investigate the validity, perfection and
enforceability" of Great Western Bank's pre-petition liens and the
"amount and allowability" of the Bank's claims. The Agreed Order
expressly conferred standing on the Unsecured Creditors' Committee
to commence an adversary proceeding or contested matter challenging
the interests of Great Western Bank. When converting the cases to
Chapter 7, the Court, over Great Western Bank's objection,
expressly ordered that upon conversion all causes of action
asserted in the Complaint shall vest in the Chapter 7 Trustee.
Counts VII and VIII of the Complaint sought a declaratory judgment
that the debt secured by the mortgages and deeds of trust executed
by Joy's and Rojana is limited to the principal amount of the
February 7, 2018 loans, plus interest and attorney fees, and that
cross collateralization provisions in the deeds of trust and
mortgages are unenforceable. Counts IX and X sought to avoid the
guaranties of the Acquisition Loan by Joy's and Rojana as
fraudulent conveyances under 11 U.S.C. Section 548 and Section
542(b).
With regard to Counts VII and VIII, Judge Somers held that "there
is no question that the Trustee is entitled to have the Court
determine whether the guaranties of the Acquisition Loan are
secured by mortgages and deeds of trust Debtors previously granted
to Great Western Bank. The Trustee has standing by virtue of prior
orders in these cases... in the stipulated post-petition borrowing
order, Great Western Bank agreed that the Committee had the right
to investigate the Bank's pre-petition liens and standing to
initiate and prosecute an adversary proceeding challenging the
liens. In the order converting the cases to Chapter 7, the Court
ruled that upon conversion the claims asserted in this adversary
proceeding vested in the Chapter 7 Trustee. Great Western Bank's
challenge to Counts VII and VIII is not, however, really about
standing. It is a fact-based argument that the claims should be
dismissed because if the Trustee prevails, there will be no benefit
to unsecured creditors other than Great Western Bank, who is
alleged to be the only unsecured creditor. The Court rejects this
basis for dismissal as premature. The Chapter 7 claims bar date is
several months in the future. The identity and status of
creditors, including administrative claimants, is undetermined.
The value of Debtors' assets, the claims allegedly secured by those
assets, and the extent the claims are undersecured is not known.
Counts VII and VIII shall not be dismissed for lack of standing."
With regard to Counts IX and X, Judge Somers found that "Great
Western Bank contends that the Section 544(b) allegations of Counts
IX and X should be dismissed because triggering creditors are not
alleged. The Court agrees with the predicate of Great Western
Bank's argument, that a Trustee may avoid a transfer under Section
544(b) only if there was a triggering creditor in existence as of
the commencement of the case who could have avoided the transfer
under applicable law. Great Western Bank contends that the
allegations of Counts IX and X are deficient because they do
include this element of the claims... In this case the Complaint is
silent about the existence of unsecured creditors of Joy's and
Rojana having the right under applicable state law to avoid the
transfers. The Court therefore holds that the Section 544(b)
claims are deficient. However, the Court leaves for another day
the question of whether such a creditor must be identified by name
or less specifically."
Judge Somers gave the Trustee leave to file an amended Complaint,
after finding that Great Western Bank would not be prejudiced, as
the adversary proceeding was still in its early stages. The
Trustee was given 35 days after the entry of the Court's memorandum
opinion, or until March 24, 2021, to file an amended Complaint.
The case is In re: Pinnacle Regional Hospital, Inc., et al.,
Chapter 7, Debtors. Official Committee of Unsecured Creditors of
Pinnacle Regional Hospital, Inc., et al., Plaintiff, v. Great
Western Bank, Defendant, Case No. 20-20219, Jointly Administered,
Adv. No. 20-06025 (Bankr. D. Kan.).
A full-text copy of the Memorandum Opinion and Order Granting in
Part Great Western Bank's Partial Motion to Dismiss and Granting
the Trustee Leave to File an Amended Complaint, dated February 17,
2021, is available at https://tinyurl.com/3q5699gm from
Leagle.com.
About Pinnacle Regional Hospital
Pinnacle Regional Hospital, Inc. -- http://pinnacleregional.com/--
is an operator of general acute-care hospitals in Overland Park,
Kansas.
Pinnacle Regional Hospital and its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Kansas Lead Case
No. 20-20219) on Feb. 12, 2020. The affiliates are Pinnacle
Regional Hospital LLC, Pinnacle Healthcare System Inc., Blue Valley
Surgical Associates, Rojana Realty Investments Inc. and Joys'
Majestic Paradise, Inc.
At the time of the filing, Pinnacle Regional Hospital disclosed
assets of between $10 million and $50 million and liabilities of
the same range.
McDowell, Rice, Smith & Buchanan, PC is Debtors' legal counsel.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on March 31, 2020. The committee is represented by
Kilpatrick Townsend & Stockton, LLC.
On March 31, 2020, James A. Overcash, Esq., at Woods Aitken LLP,
was appointed as Chapter 11 trustee. The Trustee is represented by
Stinson LLP and Woods Aitken LLP.
PLANTRONICS INC: Moody's Affirms Ba3 CFR on Strong Market Position
------------------------------------------------------------------
Moody's Investors Service affirmed Plantronics, Inc.'s ratings
including the Ba3 Corporate Family Rating, Ba2 senior secured debt
ratings and B2 senior unsecured notes rating. Moody's also assigned
a B2 rating to the company's proposed senior unsecured note
offering. The outlook remains negative.
The affirmation of the ratings reflect strength of Plantronics's
market positions and favorable outlook for the overall market for
audio and video office communications devices. The negative outlook
continues to reflect the challenges and time required for the
company to reduce leverage to levels appropriate to the Ba3 rating
category.
Plantronics revenues rebounded significantly in the December 2020
quarter after numerous quarters of year over year declines. The
company appears to have addressed most of the product and supply
chain challenges that impaired performance during this time.
Plantronics still faces capacity constraints on high demand product
lines particularly in certain headsets. Next generation headsets
and video product demand has been boosted by the work and school
from home trends. While there remains some concern that the demand
may soften as the pandemic abates, the shift to remote work and the
broad acceptance of video communications as the standard for
business communications should support longer term growth. The
pandemic indirectly spurred a dramatic shift in corporate and
consumer acceptance of video as a, if not the, primary medium for
real time communication. Competitive pressures will likely remain
particularly on product pricing.
Although improving, debt to EBITDA for Plantronics remains very
high. Leverage as of December 31, 2020 was well over 10x but under
7x pro forma for certain one-time costs and run rate cost savings.
Leverage should trend towards 5x over the next 12-18 months driven
by profit growth and debt paydowns if the company can maintain
solid growth levels. However, leverage ratios may remain well above
the medians for a Ba3 rating if performance or cash flow do not
improve. Despite its challenges, Plantronics appears committed to
repaying debt to the extent they can generate cash flow.
RATINGS RATIONALE
Plantronics' Ba3 CFR reflects the company's leading position across
several audio, voice and video enterprise communications device
markets offset by a rapidly changing technology landscape and high
leverage. Although challenged in recent periods, Plantronics will
likely maintain a strong market position across its key product
lines. Moody's anticipates growth in several key lines including UC
headsets and next generation video products, which should offset
declines in Plantronics's legacy lines. The office communications
equipment market is evolving quickly to adapt to cloud hosted voice
and video communications systems as well as the growth in "soft"
phones -- trends that should benefit Plantronics. In particular,
the shift to a more remote workforce and rapid acceptance of video
as the preferred communications medium should drive growth in
certain product lines.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects the uncertainty over strength of the
recovery and the length of time required to reduce leverage to
below 5x. The ratings could be downgraded if Plantronics is not
able to sustain revenue, EBITDA and cash flow growth. In addition,
if Moody's anticipates that leverage will not decrease to below 5x
or free cash flow to debt will not improve to above 7.5% over the
next 12-18 months, then a downgrade could occur. Although unlikely
in the near term, the ratings could be upgraded if Plantronics
demonstrates sustained growth and a commitment to repaying debt,
leverage is sustained below 4x and free cash flow to debt exceeds
12%.
Liquidity is good as indicated by the Speculative Grade Liquidity
(SGL) rating of SGL-2, reflecting $245 million of cash and
short-term investments as of December 31, 2020 as well as Moody's
expectation of well over $100 million of annualized free cash flow
over the next 12-18 months. Plantronics suspended its dividend
program amid the coronavirus pandemic, which previously cost the
company approximately $25 million per year. The company also has an
undrawn $100 million revolver which is subject to financial
covenants which step down over the next year. Moody's expects that
Plantronics will focus on using excess cash for debt repayment over
the next several years.
Similar to other enterprise technology providers, Plantronics has
limited environmental and social risks. The company is publicly
held with an independent Board of Directors. Though the company has
been willing to use debt to finance large acquisitions (as
evidenced by the Polycom acquisition), Moody's expects Plantronics
will continue to target moderately conservative financial policies
including prioritizing debt repayment until leverage is
significantly lowered.
Affirmations:
Issuer: Plantronics, Inc.
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD3)
Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD5)
Assignments:
Issuer: Plantronics, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned B2 (LGD5)
Outlook Actions:
Issuer: Plantronics, Inc.
Outlook, Remains Negative
Plantronics, Inc., headquartered in Santa Cruz, California, is a
provider of audio communications headsets and accessories used by
businesses and consumers, voice endpoints (i.e. desktop phones and
conference room phones), video endpoints (equipment for video rooms
and desktops), and platform solutions for enterprise customers to
manage their communications systems. Plantronics acquired Polycom
in July 2018; the combined company does business under the Poly
logo. Plantronics had $1.7 billion of revenue for the LTM period
ended December 31, 2020.
The principal methodology used in these ratings was Diversified
Technology published in August 2018.
PLASKOLITE PPC: Moody's Hikes CFR to B2 & Alters Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service has upgraded Plaskolite PPC Intermediate
II LLC's Corporate Family Rating to B2 from B3. At the same time,
Moody's has upgraded Plaskolite's first-lien term loan and
revolving credit facility to B2 from B3, and Probability of Default
rating to B2-PD from B3-PD. The rating outlook is changed to stable
from positive.
Upgrades:
Issuer: Plaskolite PPC Intermediate II LLC
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Senior Secured 1st Lien Bank Credit Facility, Upgraded to B2
(LGD3) from B3 (LGD3)
Outlook Actions:
Issuer: Plaskolite PPC Intermediate II LLC
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
The rating upgrade reflects our expectation of Plaskolite's
continued earnings strength and free cash flow generation in the
next 12 to 18 months, primarily driven by its large orders backlog,
continued demand for thermoplastic safety sheets and pent-up demand
from construction and industrial customers. Moody's expect
Plaskolite's adjusted debt leverage will be in the range of mid to
high five times, which positions the company in the B2 rating
category.
The rating also reflects our expectation that Plaskolite's equity
sponsor will maintain its long-term investment focus and direct
free cash flow to reduce debt or fund bolt-on acquisitions at
reasonable multiples, instead of aggressive shareholder dividends.
Plaskolite benefited from the strong demand of thermoplastic
sheets, such as acrylic and polycarbonate sheets, used in the
production of personal protective equipment (PPE) in 2020. The
strong PPE orders more than offset the sales drop in its lighting
and signage businesses. Sales and earnings in 2020 surpassed prior
year levels by wide margins. Moody's adjusted debt leverage
decreased to 5.4x for the last twelve months ending September 2020
from close to 8x at the end of 2019.
Pent-up demand from its traditional customized thermoplastic
products such as signage, bath, spa and lighting applications will
support sales in 2021, while PPE orders will decline from last
year's unusually high level. Plaskolite's order backlog has come
down from its peak, but is still well above its historical levels.
Recent price increases have mitigated the impact of cost increases
in methyl methacrylate ("MMA") and polycarbonate ("PC") resins.
Plaskolite's rating is constrained by its business focus on
manufacturing acrylic sheets and polycarbonate sheets, reliance on
two major suppliers for MMA and PC resins, relatively concentrated
customers base, and competition against large backward integrated
producers. Moody's expect debt leverage will remain elevated given
potential business acquisitions and equity return targets by its
private equity owner, which is part of the governance
considerations reflected in the rating.
Plaskolite has an excellent liquidity profile. It had a large cash
balance of about $90 million and undrawn revolving credit facility
of $100 million as of December 31, 2020. Moody's expect the company
to generate strong free cash flow in the next 12 months.
Plaskolite's revolver has a springing maintenance covenant???first
lien net leverage ratio, which is set at 7.7x and will only be
tested once the outstanding principal amount exceeds 35% ($35
million) of the commitment. Moody's expect the company to remain
compliant with its financial covenant.
The stable outlook reflects our expectation of a normalized
business environment and that the company will keep its debt
leverage below 6.0x in the next 12 to 18 months.
Plaskolite's first-lien term loan and revolver are upgraded to B2,
in line with its CFR, reflecting their preponderance in the
company's debt capital and effective seniority to the second-lien
term loan. The second-lien term loan is not rated by Moody's.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the rating, if the company improves its
adjusted debt leverage below 5 times, retained cash flow to debt
above 10%, free cash flow to debt above 5% on a sustained basis.
Moody's could downgrade the rating with expectations for debt
leverage being sustained above 6.0 times, retained cash flow to
debt below 5%, failure to generate positive free cash flow or a
substantive deterioration in liquidity.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
Plaskolite PPC Intermediate II LLC manufactures transparent
thermoplastic sheets such as acrylic and polycarbonate for
construction, retail, and other industrial end markets. Products
include consumer displays, kitchen and bath, lighting, museum
glass, signs, and windows/ doors. The company operates
manufacturing facilities mainly in the US and has a distribution
center in the Netherlands. Plaskolite is headquartered in Columbus,
Ohio. The company was acquired by PPC Partners from Charlesbank in
December 2018.
PLUS THERAPEUTICS: Incurs $8.2 Million Net Loss in 2020
-------------------------------------------------------
Plus Therapeutics, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$8.24 million on $303,000 of development revenue for the year ended
Dec. 31, 2020, compared to a net loss of $10.89 million on $7
million of development revenue for the year ended Dec. 31, 2019.
"In the second quarter of 2020, we in-licensed a promising new
radiotherapeutic platform and portfolio of investigational drugs,
then made substantial clinical progress for the lead compound and
also moved additional opportunities closer to clinical phase," said
Marc Hedrick M.D., president and chief executive officer of Plus
Therapeutics. "In 2021, we intend to make even greater progress
advancing our CNS oncology portfolio through the development
process and bringing it closer to a potential registrational
clinical trial read out."
As of Dec. 31, 2020, the Company had $12.10 million in total
assets, $9.07 million in total liabilities, and $3.03 million in
total stockholders' equity.
As of Dec. 31, 2020, the Company's cash balance was $8.3 million,
compared to $17.6 million as of Dec. 31, 2019.
Net cash used in operating activities was $8.4 million for the year
ended Dec. 31, 2020, compared to net cash used in operating
activities of $5.9 million during the same period in 2019.
During the second quarter of 2020, $5.0 million of the Oxford debt
principal was paid down to a current principal balance of $4.3
million at Dec. 31, 2020.
BDO USA, LLP, in San Diego, Calif., the Company's auditor since
2016, issued a "going concern" qualification in its report dated
Feb. 22, 2021, citing that the Company has suffered recurring
losses and negative cash flows from operations that raise
substantial doubt about its ability to continue as a going
concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1095981/000156459021007165/pstv-10k_20201231.htm
About Plus Therapeutics
Headquartered in Austin, Texas, Plus Therapeutics, Inc. --
http://www.plustherapeutics.com-- is a clinical-stage
pharmaceutical company focused on the discovery, development, and
manufacturing scale up of complex and innovative treatments for
patients battling cancer and other life-threatening diseases.
PROFESSIONAL FINANCIAL: New Debtors Seek to Use Cash Collateral
---------------------------------------------------------------
Professional Financial Investors, Inc. and affiliates ask the U.S.
Bankruptcy Court for the Northern District of California, San
Francisco Division, for entry of an order authorizing:
-- the so-called New Debtors to use cash collateral; and
-- the existing Debtors' continued use of cash collateral.
The New Debtors are Professional Investors 31, LLC, a California
limited liability company; Professional Investors 38, LLC, a
California limited liability company; Professional Investors 39,
LLC, a California limited liability company; Professional Investors
42, LLC, a California limited liability company; Professional
Investors 43, LLC, a California limited liability company;
Professional Investors 44, LLC, a California limited liability
company; Professional Investors 45, LLC, a California limited
liability company; Professional Investors 47, LLC, a California
limited liability company; Professional Investors 48, LLC, a
California limited liability company; and Professional Investors
49, LLC, a California limited liability company.
Professional Financial Investors contends the relief requested is
necessary and appropriate to:
-- ensure a smooth transition of the New Debtors into their
respective chapter 11 cases,
-- maintain the operations of each New Debtor Property for the
benefit of its tenants,
-- maximize the value of the New Debtor Properties, each of
which is the key asset of one of the New Debtors, and
-- allow each of the Existing Debtors to do the same.
Each New Debtor either directly owns in fee simple or has an
interest as a tenant in common in a certain real property location
located in Marin or Sonoma County, California. Each New Debtor
either directly owns in fee simple or has an interest as a tenant
in common in a certain real property location located in Marin or
Sonoma County, California.
PFI serves as the property manager of the New Debtor Properties,
collecting rents from the tenants of each of the New Debtor
Properties and using the rents collected from each such property to
pay for mortgage costs, certain utilities, insurance coverage, and
other costs related to that property. In early July 2020 and again
in January 2021, PFI obtained broker opinions of value for each of
the New Debtor Properties, which gave an aggregate value to New
Debtor Properties of approximately $124 million.
All of the New Debtor Properties are subject to a first lien
mortgage in favor of a bank or investor. The Debtors estimate that,
as of June 30, 2020, the aggregate total of outstanding principal
secured by the First Lien Mortgages was approximately $57 million.
Each New Debtor Property is the primary asset of its respective LLC
owner. The only Cash Collateral at issue in these Bankruptcy Cases
are rent proceeds received from tenants at each New Debtor
Property. Each New Debtor has an immediate need for access to its
Cash Collateral.
The New Debtors, together with the Existing Debtors, also need to
use their respective Cash Collateral to enter into Intercompany
Transactions and Intercompany Claims to preserve and maximize the
values of their respective Real Properties and estates for the
benefit of their respective creditors. The New Debtors' proposed
use of Cash Collateral to enter into Intercompany Transactions and
incur Intercompany Claims is subject to protective oversight and
consent by the Committees and affected bank lenders, as well as a
cap of $3 million, with $500,000 on an interim basis, in the
aggregate, pending final approval of the Debtors' Motion to
continue using their cash management system.
Holders of a valid First Lien Mortgage will be adequately protected
by having an equity cushion. In addition, for the benefit of the
holders of a valid First Lien Mortgage or Second Lien Mortgage,
each New Debtor will keep insurance on its respective New Debtor
Property current and generally maintain its New Debtor Property in
good condition and keep taxes on such property current when
sufficient funds exist to do so and continue making regular debt
service payments to any banks with liens on its New Debtor
Property.
A copy of the Cash Collateral Motion is available at
https://bit.ly/3pYVxNY from Donlin, Recano & Company, the claims
agent.
About Professional Financial Investors, Inc.
Professional Financial Investors, Inc. and Professional Investors
Security Fund, Inc. are engaged in activities related to real
estate. PFI directly owns 28 real property locations in fee simple
and has an interest as a tenant in common at another real property
location, primarily consisting of apartment buildings and office
parks, located in Marin and Sonoma Counties, California, with an
aggregate value of approximately $108 million, according to an
early July 2020 valuation.
On July 16, 2020, a group of creditors filed an involuntary Chapter
11 petition (Bankr. N.D. Cal. Case No. 20-30579) against
Professional Investors Security Fund. On July 26, 2020,
Professional Financial Investors sought Chapter 11 protection
(Bankr. N.D. Cal. Case No. 20-30604). On Nov. 20, 2020,
Professional Financial Investors filed involuntary Chapter 11
petitions against Professional Investors Security Fund I, A
California Limited Partnership and 28 other affiliates. The cases
are jointly administered under Case No. 20-30604.
At the time of the filing, Professional Financial Investors
disclosed assets of between $100 million and $500 million and
liabilities of the same range.
Hannah L. Blumenstiel oversees the cases.
The Debtors tapped Sheppard, Mullin, Richter & Hampton, LLP, as
their legal counsel; Trodella & Lapping LLP as conflicts counsel;
Ragghianti Freitas LLP, Weinstein & Numbers LLP, Wilson Elser
Moskowitz Edelman & Dicker LLP, Nardell Chitsaz & Associates, and
Kimball Tirey & St. John, LLP as special counsel; and Donlin,
Recano & Company, Inc. as claims, noticing, and solicitation agent
and administrative advisor.
Michael Hogan of Armanino LLP was appointed as the Debtors' chief
restructuring officer. FTI Consulting, Inc. is the financial
advisor.
On Aug. 19, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. The committee is represented by
Pachulski Stang Ziehl & Jones.
PROJECT RUBY: Proposed Refinancing No Impact on Moody's B3 CFR
--------------------------------------------------------------
Moody's Investors Service said Project Ruby Ultimate Parent Corp.'s
B3 Corporate Family Rating and B2 senior secured rating will not be
affected by the recently announced refinancing of its existing
indebtedness. The transaction is leverage neutral and will extend
its first lien term loan maturity to 2028. Although Moody's
adjusted leverage remains high near 8x excluding certain one-time
costs for the year ended December 31, 2020 (9x including those
costs) following the acquisition of CarePort, Moody's expects
WellSky's strong organic growth to continue over the next year
driven by continued market growth and increased expansion of
solutions to existing customers. With CarePort supplementing
WellSky's existing product offering, incremental revenue
opportunity should help to decrease leverage toward the low 7x
level by the end of 2021.
WellSky is a provider of healthcare enterprise software and related
services. The company is headquartered in Overland Park, Kansas and
generated pro forma revenue of approximately $498 million for last
twelve months ending December 31, 2020. WellSky is controlled by
private equity firms TPG Capital and Leonard Green & Partners.
PSS INDUSTRIAL: Moody's Completes Review, Retains Caa2 CFR
----------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of PSS Industrial Group Corp. and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review discussion held on February 17, 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
PSS Industrial Group Corp.'s Caa2 Corporate Family Rating reflects
elevated leverage and weak debt service coverage. The company is
small and operates in challenging industry conditions. In November
2020, PSSI obtained financial covenant relief from lenders as it
would have otherwise likely been in violation of its credit
facilities' minimum debt service coverage ratio requirement for the
third quarter. The covenant was changed to a minimum liquidity
requirement through mid-2022. To contend with the challenging
operating environment, PSSI reduced expenses by closing and
consolidating facilities and reducing labor costs. To grow revenue,
the company needs to successfully execute on organic growth
initiatives, add new customers, increase customer wallet share and
for midstream projects to move forward. However, even with success,
operating performance is constrained by the difficult industry
environment which will leave credit metrics weak. The portion of
PSSI's revenue that is derived from customers' maintenance, repair
and operating activities provides some support (compared to new
projects with less certain timing). PSSI has a national footprint
and large product offering that enables it to serve a variety of
customer needs, although this requires sizable working capital
needs.
The principal methodology used for this review was Global Oilfield
Services Industry Rating Methodology published in May 2017.
PUERTO RICO: Says New Debt Deal Opens Path for Bankruptcy Exit
--------------------------------------------------------------
The Financial Oversight and Management Board for Puerto Rico
announced Feb. 23, 2021, the terms of a debt restructuring
agreement with certain bondholders, a major step towards an amended
Plan of Adjustment for the Commonwealth of Puerto Rico to resolve
$35 billion of debt and non-debt claims.
The terms of the agreement reflect negotiations with creditors who
were parties to the restructuring agreement the Oversight Board
reached last year, and follow months of court-supervised mediations
after the Oversight Board's assessment of the cumulative effect of
the COVID-19 pandemic, the ongoing recession, and a series of
natural disasters over the last several years on Puerto Rico and
its economy.
The new agreement with general obligation (GO) bondholders and
Public Building Authority (PBA) bondholders:
* reduces $18.8 billion of Commonwealth debt held by GO and PBA
bondholders by 61%, to $7.4 billion.
* reduces total debt service payments by 62%, from $90.4 billion
under the original contractual debt agreements before PROMESA to
$34.1 billion under the new debt restructuring agreement (including
principal and interest from the COFINA bonds).
* provides GO and PBA bondholders with $7.4 billion in bonds and
$7 billion in cash, lifting the weight of unsustainable debt from
future generations.
* includes a contingent value instrument (CVI) that gives GO and
PBA bondholders incremental value only if the Puerto Rico economy
grows more than projected in the 2020 Certified Fiscal
Plan for Puerto Rico.
"We achieved a fair, sustainable, and consensual agreement that
puts Puerto Rico on a path to recovery and is an important tool to
lift the weight of bankruptcy from the people and businesses of
Puerto Rico," said Oversight Board Chairman David Skeel. "I firmly
believe this is the best outcome we could achieve in today's
economic uncertainty, not only for the people of Puerto Rico but
also for creditors who have an interest in Puerto Rico's long-term
viability and creditworthiness."
"This new agreement puts Puerto Rico in a significantly better
fiscal position, both compared to the terms we were able to
negotiate before the severe pandemic and compared to U.S. states
with high levels of debt," Mr. Skeel said. "The Plan of Adjustment
we expect to present next month is based in part on this agreement
with creditors, together with the agreements already achieved with
the Official Committed of Retirees (COR) and certain unions, as
well as the outcome of further ongoing mediation with other
creditor groups. The Plan will ensure that Puerto Rico resolves
its insolvency once and for all. That is the goal the Oversight
Board set: once and done. We intend to achieve it."
"We reached the agreement filed today through good-faith efforts on
all sides and the leadership of our mediator. I would like to
thank Judge Barbara Houser, as well as Judge Roberta Colton and
their mediation team for their important role in this process," Mr.
Skeel said.
The agreement reduces the maximum annual debt service payments to
$1.15 billion for current interest bonds, compared to payments as
high as $4.2 billion without restructuring. The annual debt
service in the restructuring agreement reached before the pandemic
was $1.5 billion, and the new agreement would free up more than
$300 million per year for government services. The annual payments
add up to a total of $34.1 billion over the life of the debt under
the new agreement, a 62% reduction from the $90.4 billion Puerto
Rico would have to pay under the original contractual debt
agreements before PROMESA.
Without PROMESA, 30 cents of every dollar in taxes and fees the
government collects from the people of Puerto Rico would go to
creditors. This new agreement reduces the annual payments to less
than 8 cents of every dollar the government collects.
"The reduction in annual debt service payments is a significant
milestone on Puerto Rico's road to recovery," said the Oversight
Board's Executive Director Natalie Jaresko. "Taken together with
the debt policy legislated by the government last year that
restricts incremental debt issuance to avoid the mistakes of the
past, this agreement establishes sustainable debt levels, allows
Puerto Rico to focus on structural reforms and growth, and provides
the government the budgetary ability to provide the services people
need and deserve. All of this puts Puerto Rico on a path to renewed
market access."
The new agreement's cash and debt consideration to bondholders
provides a 27% average reduction for GO bondholders and a 21%
average reduction for PBA bondholders, in addition to reducing
their claims by many years' worth of interest payments.
Given the considerable uncertainty about Puerto Rico's long-term
economic growth after the hurricanes, earthquakes, and now the
pandemic, the new agreement includes a CVI that shares a portion of
outperformance with creditors if Puerto Rico's economy is growing
more than the projections in the 2020 Certified Fiscal Plan for
Puerto Rico. The CVI utilizes the 5.5% of Puerto Rico's Sales and
Use Tax (SUT) pledged to COFINA as the measure for outperformance.
Should the Puerto Rico Government collect more of the 5.5% SUT than
projected, the creditors who are parties to this agreement would
receive 45% of the increment above the amount projected, subject to
both annual and lifetime caps. If the economy performs as projected
or falls below expectations, creditors receive no incremental
compensation from the CVI.
"Adding the CVI to the agreement allowed us to lower Puerto Rico's
debt even further in this uncertain time," Jaresko said. "The
substantial reduction of debt and the increased upfront cash now
rather than higher debt service payments later provides stability
for Puerto Rico and lifts the burden of excessive debt payments off
the shoulders of future generations."
"Bankruptcy has been holding Puerto Rico back and this is an
important step towards resolution," Jaresko said.
The new agreement was unanimously approved by the members of the
Oversight Board. Holders of more than $11.7 billion of bonds
support the agreement, including traditional municipal investors
and monoline bond insurers Assured Guaranty Corp., Syncora
Guarantee Inc., and National Public Finance Guarantee Corp.
Mediation continues with holders of Employee Retirement System
bonds, general unsecured claims, monoline bond insurers with
clawback claims, and creditors holding other claims against the
government of Puerto Rico.
Additional information about the agreement is available at
https://oversightboard.pr.gov/documents/
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and chair of a committee to review professionals' fees.
QUIKRETE HOLDINGS: Forterra Deal No Impact on Moody's Ba3 Rating
----------------------------------------------------------------
Moody's Investors Service commented that the February 22, 2021
announcement that Quikrete Holdings, Inc. (Ba3 stable) entered into
a definitive agreement to acquire Forterra, Inc. has no immediate
impact on the rating of Quikrete. The proposed transaction is
credit negative for Quikrete as it will increase leverage and
present integration risk. Moody's expects that Forterra's debt will
be retired and the ratings withdrawn at the close of the
transaction.
Quikrete will acquire all outstanding shares of Forterra for $24.00
per share in an all cash transaction valued at approximately $2.74
billion, including outstanding debt. Although this transaction
improves Quikrete's business profile, it also increases the
company's financial risk. Assuming the transaction closes at
December 31, 2021 and is fully debt financed, Moody's expects
Quikrete's pro forma debt-to-EBITDA (inclusive of Moody's
adjustments) to be in the range of 4.0x to 4.5x (less than a turn
of EBITDA higher from current level on a stand alone basis) and
EBITA-to interest expense to be over 4.5x. The transaction provides
Quikrete with greater scale and improves the company's product and
geographic diversification.
Moody's will continue to evaluate details of the transaction as
they emerge, including additional information pertaining to the
ultimate financing structure, cash leakage, regulatory obstacles,
operating performance, potential synergies and deleveraging plans.
However, barring material changes to financial policies or
organizational structure in combining the companies and based on
Moody's current expectations of operating results for Quikrete and
Forterra, Quikrete's Ba3 rating could be maintained. Moody's
expects this transaction to close within 12 months.
About Forterra Finance LLC (B1 Stable)
Headquartered in Irving, Texas, Forterra, Inc. is the ultimate
parent of Forterra Finance, LLC (B1 stable). Forterra, Inc.
manufactures concrete and ductile iron water infrastructure
products in the US and eastern Canada. The company reports its
operating results in two segments: 1) Drainage Pipe & Products and
2) Water Pipe & Products. The company is publicly traded and is
53.6% controlled / owned by Lone Star Funds (a private equity
group). For the 12 months ended September 30, 2020, Forterra
generated revenues of approximately $1.6 billion.
About Quikrete Holdings, Inc.(Ba3 stable)
Headquartered in Atlanta, Georgia, Quikrete is a North American
manufacturer and distributor of packaged concrete, cement mixes,
segmental concrete and ceramic tile installation products. In
addition, Quikrete is a leading designer, manufacturer and
distributor of engineered water infrastructure solutions for
domestic construction. The company is privately owned by the
Winchester family.
RAMARAMA INC: CHM Opposes Plan's Treatment of Claims
----------------------------------------------------
Carolina Hard Money, LLC, objects to Ramarama, Inc.'s Disclosure
Statement and Amended Chapter 11 Plan of Reorganization.
CHM does not consent to Debtor's proposed treatment of its claims.
CHM objects to the treatment of its Class 4 Claim as partially
unsecured. Class 10 General Unsecured Claims makes no mention of
CHM and provides only for the payment in full of Credle Engineering
and the Internal Revenue Service within six months of the Plan's
Effective Date.
The Plan does not meet the requirements for confirmation under the
provisions of 11 U.S.C. Sec. 1129.
CHM also objects to the Disclosure Statement ("DS"). According to
the DS, 919 E. Ramseur sold on or about April 12, 2019, however,
the last sales date according to the Durham County Tax Assessor's
office took place on or about May 18, 2016.
CHM also objects to the DS in that it is not consistent with the
treatment of CHM's Class 10 claim as contained in the Plan.
Attorney for Carolina Hard Money:
JOSEPH J. VONNEGUT
HUTCHENS LAW FIRM LLP
4317 Ramsey Street
P.O. Box 2505
Fayetteville, North Carolina 28302
Tel: (910) 864-6888
Fax: (910) 864-6177
About Ramarama Inc.
Ramarama, Inc., was formed in January 2016. In the five years
since its inception, It has purchased four properties in Durham.
Ramarama sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. E.D.N.C. Case No. 20-03125) on Sept. 14, 2020. The
petition was signed by Mark Bullock, its president. At the time of
the filing, the Debtor disclosed $1 million to $10 million in both
assets and liabilities. Judge David M. Warren oversees the case.
Travis Sasser, Esq., at Sasser Law Firm serves as the Debtor's
counsel.
RAMARAMA INC: Grounfloor Says Plan Disclosures Inadequate
---------------------------------------------------------
Groundfloor Holdings GA LLC a/k/a Groundfloor Finance, Inc.,
responds and objects to the Disclosure Statement filed by Ramarama,
Inc., on Jan. 14, 2021.
Groundfloor is a secured creditor of the Debtor. As of the
Petition Date, the Debtor was indebted to Groundfloor in the
aggregate amounts of $353,819 and $352,717 pursuant to two loans as
more specifically described in Groundfloor's proofs of claim, filed
as Claim #3 and Claim #4. Both POCs were filed on Nov. 20, 2020.
Groundfloor points out that the Disclosure Statement fails to
provide an adequate description of the Debtor's pre- and
post-petition operations sufficient to allow creditors to make an
information judgment about the Amended Plan. It is wholly unclear
what income is being generated by the Debtor's post-petition
"operations", and whether the Debtor will rely on contributions
from non-Debtor parties to make the required payments.
Groundfloor further points out that the Amended Plan provides that
unsecured claims will be paid in full. The Disclosure Statement
does not provide sufficient information to support the Debtor's
asserted ability to make the required payments under the Amended
Plan, whether on secured claims or unsecured claims. There is no
information provided regarding the potential rental income from
Groundfloor's collateral, the ability of such rental income to
cover required plan payments to Groundfloor, or the Debtor's
efforts to list or sell the property.
Attorneys for Groundfloor Holdings GA:
Jason L. Hendren
Rebecca F. Redwine
Benjamin E.F.B. Waller
HENDREN, REDWINE & MALONE, PLLC
4600 Marriott Drive, Suite 150
Raleigh, NC 27612
Telephone: (919) 420-7867
Facsimile: (919) 420-0475
E-mail: jhendren@hendrenmalone.com
rredwine@hendrenmalone.com
bwaller@hendrenmalone.com
About Ramarama Inc.
Ramarama, Inc., was formed in January 2016. In the five years
since its inception, It has purchased four properties in Durham.
Ramarama sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. E.D.N.C. Case No. 20-03125) on Sept. 14, 2020. The
petition was signed by Mark Bullock, its president. At the time of
the filing, the Debtor disclosed $1 million to $10 million in both
assets and liabilities. Judge David M. Warren oversees the case.
Travis Sasser, Esq., at Sasser Law Firm serves as the Debtor's
counsel.
RENOVATE AMERICA: Gets OK to Hire Armanino as Sales Consultant
--------------------------------------------------------------
Renovate America, Inc. and Personal Energy Finance, Inc. received
approval from the U.S. Bankruptcy Court for the District of
Delaware to hire Armanino LLP as sales consultant.
The Debtors need a consultant to provide strategic advice regarding
a potential sale of their assets and to market their assets for
sale.
The Debtors agreed to pay Armanino $100,000 for its services and
reimburse the firm for out-of-pocket expenses incurred.
Michael Hogan, a partner at Armanino, disclosed in court filings
that his firm is "disinterested" within the meaning of Section
101(14) of the Bankruptcy Code.
Armanino can be reached through:
Michael Hogan
Armanino LLP
12657 Alcosta Blvd., Suite 500
San Ramon, CA 94583
Tel: 925-790-2600
Fax: 925-790-2601
Email: info@armaninoLLP.com
About Renovate America
Renovate America provides home improvement financing through its
industry-leading home financing product, Benji. It offers a
proprietary technology platform that helps Americans improve their
homes while giving contractors the tools they need to grow their
business. In addition to offering intuitive financing options,
Renovate America offers education, training and mentoring to
contractor teams in the field. On the Web:
http://www.renovateamerica.com/
Renovate America and two affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-13173) on Dec. 21, 2020.
Renovate America was estimated to have $50 million to $100 million
in assets and $100 million to $500 million in liabilities as of the
bankruptcy filing.
The Debtors tapped Bryan Cave Leighton Paisner LLP and Culhane
Meadows, PLLC as their bankruptcy counsel, Armanino LLP as sales
advisory consultant, and GlassRatner Advisory & Capital Group, LLC
as restructuring advisor. Stretto is the claims agent.
On Jan. 4, 2021, the U.S. Trustee for Regions 3 and 9 appointed an
official committee of unsecured creditors. The committee tapped
Troutman Pepper Hamilton Sanders LLP as its legal counsel, Island
Capital Advisor LLC as investment banker and Dundon Advisers LLC as
financial advisor.
RENOVATE AMERICA: Gets OK to Hire Bryan Cave as Legal Counsel
-------------------------------------------------------------
Renovate America, Inc., and Personal Energy Finance, Inc., received
approval from the U.S. Bankruptcy Court for the District of
Delaware to hire Bryan Cave Leighton Paisner, LLP as their legal
counsel.
The firm's services include:
(a) advising the Debtors with respect to their powers and
duties in the continued management and operation of their business
and properties;
(b) advising and consulting the Debtors on the conduct of
their Chapter 11 cases, including all of the legal and
administrative requirements of operating in Chapter 11;
(c) attending meetings and negotiating with representatives of
the Debtors' creditors and other parties in interest;
(d) taking all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the Debtors'
behalf, defending any action commenced against the Debtors, and
representing the Debtors in negotiations concerning litigation in
which they are involved, including objections to claims filed
against the estates;
(e) preparing pleadings and other legal papers;
(f) advising the Debtors in connection with a proposed sale of
their assets;
(g) appearing before the bankruptcy court and any appellate
courts;
(h) advising the Debtors regarding tax matters;
(i) advising the Debtors regarding insurance and regulatory
matters;
(j) taking any necessary action to negotiate, prepare and
obtain approval of a disclosure statement and confirmation of a
Chapter 11 plan and all documents related thereto; and
(k) other necessary legal services, including: (i) analyzing
the Debtors' leases and contracts and the assumption and assignment
or rejection thereof; (ii) analyzing the validity of liens against
the Debtors; and (iii) advising the Debtors on corporate and
litigation matters.
The firm's standard hourly rates are:
2020 2021
---- ----
Partners and Counsel $475 - $1,290 $505 - $1,370
Associates $305 - $755 $340 - $795
Paraprofessionals $190 - $395 $210 - $400
Bryan Cave received a $150,000 retainer from the Debtors.
Sharon Weiss, Esq., a partner at Bryan Cave, disclosed in a court
filing that her firm is "disinterested" within the meaning of
Section 101(14) of the Bankruptcy Code.
Ms. Weiss also made the following disclosures in response to the
request for additional information set forth in Paragraph D.1 of
the Revised U.S. Trustee Guidelines:
Question: Did BCLP agree to any variations from, or
alternatives to, Bryan Cave's standard billing arrangements for
this engagement?
Answer: Yes. In light of the Debtors' capital constraints,
Bryan Cave agreed to provide the Debtors with a discount on each
invoice for this engagement.
Question: Do any of the Bryan Cave professionals in this
engagement vary their rate based on the geographic location of the
Debtors' Chapter 11 cases?
Answer: No. The hourly rates used by Bryan Cave in
representing the Debtors are consistent with the rates that the
firm charges other comparable Chapter 11 clients regardless of the
location of the Chapter 11 case.
Question: If Bryan Cave has represented the Debtors in the 12
months pre-petition, disclose the firm's billing rates and material
financial terms for the pre-petition engagement, including any
adjustments during the 12 months pre-petition. If
Bryan Cave's billing rates and material financial terms have
changed post-petition, explain the difference and the reasons for
the difference.
Answer: Prior to providing insolvency counseling, Bryan Cave
charged its standard rate to the Debtors for legal services. Once
the Debtors retained the firm for insolvency counseling, and in
light of their liquidity constraints, the firm agreed to discount
its standard rate for pre-bankruptcy services in order to evaluate
and assist the Debtors to determine their insolvency options. Also
during this time, Bryan Cave performed an array of services that
were used during the bankruptcy case and it discounted its
non-insolvency legal services as well. Once the bankruptcy case was
filed, Bryan Cave provided a smaller discount to the Debtors as
previously agreed.
Question: Have the Debtors approved Bryan Cave's budget and
staffing plan, and, if so, for what budget period?
Answer: Yes. Bryan Cave provided the Debtors with an estimated
budget for fees and expenses expected to be incurred in connection
with their Chapter 11 cases.
Bryan Cave can be reached through:
Sharon Z. Weiss, Esq.
Bryan Cave Leighton Paisner, LLP
120 Broadway, Suite 300
Santa Monica, CA 90401
Tel: (310) 576-2100
Fax: (310) 576-2200
E-mail: sharon.weiss@bclplaw.com
-- and --
Timothy R. Bow, Esq.
Bryan Cave Leighton Paisner, LLP
161 North Clark Street, Suite 4300
Chicago, IL 60601
Tel: (312) 602-5000
Fax: (312) 602-5050
E-mail: timothy.bow@bclplaw.com
About Renovate America
Renovate America provides home improvement financing through its
industry-leading home financing product, Benji. It offers a
proprietary technology platform that helps Americans improve their
homes while giving contractors the tools they need to grow their
business. In addition to offering intuitive financing options,
Renovate America offers education, training and mentoring to
contractor teams in the field. On the Web:
http://www.renovateamerica.com/
Renovate America and two affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-13173) on Dec. 21, 2020.
Renovate America was estimated to have $50 million to $100 million
in assets and $100 million to $500 million in liabilities as of the
bankruptcy filing.
The Debtors tapped Bryan Cave Leighton Paisner LLP and Culhane
Meadows, PLLC as their bankruptcy counsel, Armanino LLP as sales
advisory consultant, and GlassRatner Advisory & Capital Group, LLC,
as restructuring advisor. Stretto is the claims agent.
On Jan. 4, 2021, the U.S. Trustee for Regions 3 and 9 appointed an
official committee of unsecured creditors. The committee tapped
Troutman Pepper Hamilton Sanders LLP as its legal counsel, Island
Capital Advisor LLC as investment banker and Dundon Advisers LLC as
financial advisor.
RENOVATE AMERICA: Gets OK to Hire Culhane Meadows as Co-Counsel
---------------------------------------------------------------
Renovate America, Inc., and Personal Energy Finance, Inc., received
approval from the U.S. Bankruptcy Court for the District of
Delaware to hire Culhane Meadows, PLLC.
Culhane Meadows will serve as co-counsel with Bryan Cave Leighton
Paisner, LLP, the other firm handling the Debtors' Chapter 11
cases.
Mette Kurth, Esq., is the firm's principal attorney designated to
represent the Debtors, while Lynnette Warman, Esq., will provide
discrete assistance on projects on an as-needed basis.
Ms. Kurth has agreed to reduce her hourly rate to $580 from $735.
Ms. Warman's standard hourly rate is $450.
Both attorneys will be assisted by a paralegal who will be paid at
the rate of $175 per hour.
Ms. Kurth disclosed in a court filing that her firm is
"disinterested" within the meaning of Section 101(14) of the
Bankruptcy Code.
Ms. Kurth also made the following disclosures in response to the
request for additional information set forth in Paragraph D.1 of
the Revised U.S. Trustee Guidelines:
Question: Did Culhane Meadows agree to any variations from, or
alternatives to, its standard billing arrangements for this
engagement?
Answer: Yes. In light of the Debtors' capital constraints,
Culhane Meadows agreed to provide the Debtors with a discounted
hourly rate for Ms. Kurth's services.
Question: Do any of the Culhane Meadows' professionals in this
engagement vary their rate based on the geographic location of the
Debtors' Chapter 11 cases?
Answer: No. The hourly rates used by Culhane Meadows in
representing the Debtors are consistent with the rates that the
firm charges other comparable Chapter 11 clients, regardless of the
location of the Chapter 11 case.
Question: If Culhane Meadows has represented the Debtors in
the 12 months pre-petition, disclose the firm's billing rates and
material financial terms for the prepetition engagement, including
any adjustments during the 12 months prepetition. If Culhane
Meadows' billing rates and material financial terms have changed
post-petition, explain the difference and the reasons for the
difference.
Answer: Culhane Meadows has not adjusted the hourly rates of
its attorneys and paralegal designated to represent the Debtors
either during the 12 months prior to the Debtors' Chapter 11 filing
or after their bankruptcy filing.
Question: Have the Debtors approved Culhane Meadows' budget
and staffing plan, and, if so, for what budget period?
Answer: Yes. Culhane Meadows provided the Debtors with an
estimated budget for fees and expenses expected to be incurred in
connection with the cases.
Culhane Meadows can be reached through:
Mette H. Kurth, Esq.
Culhane Meadows, PLLC
4023 Kennett Pike #165
Wilmington, DE 19807
Tel: (302) 660-8331
Email: mkurth@cm.law
About Renovate America
Renovate America provides home improvement financing through its
industry-leading home financing product, Benji. It offers a
proprietary technology platform that helps Americans improve their
homes while giving contractors the tools they need to grow their
business. In addition to offering intuitive financing options,
Renovate America offers education, training and mentoring to
contractor teams in the field. On the Web:
http://www.renovateamerica.com/
Renovate America and two affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-13173) on Dec. 21, 2020.
Renovate America was estimated to have $50 million to $100 million
in assets and $100 million to $500 million in liabilities as of the
bankruptcy filing.
The Debtors tapped Bryan Cave Leighton Paisner LLP and Culhane
Meadows, PLLC as their bankruptcy counsel, Armanino LLP as sales
advisory consultant, and GlassRatner Advisory & Capital Group, LLC
as restructuring advisor. Stretto is the claims agent.
On Jan. 4, 2021, the U.S. Trustee for Regions 3 and 9 appointed an
official committee of unsecured creditors. The committee tapped
Troutman Pepper Hamilton Sanders LLP as its legal counsel, Island
Capital Advisor LLC as investment banker and Dundon Advisers LLC as
financial advisor.
REXNORD CORP: Regal Transactions No Impact on Moody's Ba3 CFR
-------------------------------------------------------------
Moody's Investors Service said the transactions planned between
Rexnord Corporation and Regal Beloit Corporation whereby Rexnord
will be focused on its core water management business is a credit
positive development for Rexnord. However, Rexnord's ratings and
outlook are unaffected at this time, including the Ba3 corporate
family rating and stable outlook, as well as the ratings on the
company's debt issued by RBS Global, Inc., including a Ba1 senior
secured rating and a B1 senior unsecured rating. Regal Beloit debt
is unrated. The post-transaction capital structure of Rexnord has
yet to be disclosed but Moody's believes that, based on
management's public comments, financial leverage will be about the
same level as now, although on a smaller enterprise.
Rexnord Corporation, headquartered in Milwaukee, WI, is the
publicly traded holding company of RBS Global, Inc. and Rexnord
LLC, and operates in two business segments: Process and Motion
Control (about 60% of revenues) and Water Management (about 40% of
revenues). Rexnord Corporation had revenues approximating $2
billion for the last twelve month period ending December 31, 2020.
RUBY TUESDAY: Emerges From Chapter 11 Bankruptcy
------------------------------------------------
On February 24, 2021, Ruby Tuesday announced its successful
emergence from bankruptcy.
A Delaware bankruptcy judge confirmed the casual dining restaurant
chain's Chapter 11 plan of reorganization on February 17, 2021. The
company had sought bankruptcy protection on October 7, 2020. The
bankruptcy allowed Ruby Tuesday to shed liabilities, including
leases from closed locations that were significantly impacted by
COVID-19, and to strengthen its core business of 209
corporate-owned and operated locations. The successful emergence
from Chapter 11 will allow Ruby Tuesday to reinforce the brand's
commitment to its existing guests, while continuing to develop
virtual "delivery-only" brands to capitalize on its core strengths
and increased off-premise business as part of the company's
long-term growth plan.
"Ruby Tuesday is a healthier company now and is positioned to be
more efficient, competitive and stable for the future," said Shawn
Lederman, CEO of Ruby Tuesday. "We want to thank our employees,
partners and creditors for helping to ensure our plan of
reorganization was successful and we look forward to continuing
quality service for our guests and communities for many years to
come."
Ruby Tuesday was advised through its reorganization by Pachulski
Stang Ziehl & Jones LLP as legal counsel, CR3 Partners, LLC, as
financial advisor, FocalPoint Securities, LLC, as investment
banker, and Hilco Real Estate, LLC, as lease restructuring advisor
and consultant.
The company's prepetition secured lenders, affiliates of Goldman
Sachs and TCW, were represented by Cleary Gottlieb Steen & Hamilton
LLP and Paul Hastings LLP, respectively, as legal counsel. Grant
Thornton LLP served as the lenders' financial advisor.
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 Oct. 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.
SCOTTS MIRACLE-GRO: Moody's Completes Review, Retains Ba2 CFR
-------------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Scotts Miracle-Gro Company (The) and other ratings that
are associated with the same analytical unit. The review was
conducted through a portfolio review discussion held on February 9,
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
Scotts Miracle-Gro's (Scotts) CFR (Ba2) reflects its leading market
position within the fragmented lawn and garden industry. The
company's growth strategy in hydroponics supports the company's
credit profile, although it comes with risks as the cannabis
industry is in its early stages. The company's commitment to brand
support and product development also benefit its credit profile.
Moody's views most of its products in the Consumer segment as
staples, which will provide earnings resilience during an economic
downtown. The credit profile is also constrained by the seasonality
of earnings and cash flows, weather dependency and a highly
concentrated customer base. The credit profile also reflects the
negative environmental and health risk associated with the weed
killer Roundup.
The company's lawn and gardening products have fared well so far
during the current coronavirus pandemic. Scotts' top customers are
considered essential businesses, and most have remained open during
the pandemic. Gardening in particular has benefitted strongly from
the current stay-at-home environment where homeowners are spending
more on their gardens and yards. Nevertheless, there is the
possibility of volatility in results over the next year due to
changing consumer shopping patterns and the risk of disruption in
the supply chain.
The principal methodology used for this review was Consumer
Packaged Goods Methodology published in February 2020.
SHARPE CONTRACTORS: Hires Simmons & Jamieson as Accountant
----------------------------------------------------------
Sharpe Contractors, LLC, seeks approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to employ Simmons &
Jamieson, CPA as its tax accountant.
The firm will prepare the Debtor's 2019 federal and state tax
returns and its 2017 amended federal and state tax returns.
The firm will be compensated at the rate of $185 per hour for Mr.
Jim Murphy, CPA and $85 per hour for Ms. Cindy Lombardo as
bookkeeper.
Simmons & Jamieson does not represent any interest adverse to the
Debtor and its bankruptcy estate, according to court filings.
The firm can be reached through:
Jim Murphy, CPA
Simmons & Jamieson, CPA
6525 The Corners Pkwy NW #116
Norcross, GA 300920
Phone: +1 770-448-2525
About Sharpe Contractors
Sharpe Contractors, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. N.D. Ga. Case No. Case 20-72638) on Dec. 14, 2020. At the
time of filing, the Debtor estimated 100,001 to $500,000 in assets
and $1,000,001 to $10 million in liabilities. The Debtor hired
Wiggam & Greer, LLC, as attorney and Simmons & Jamieson, CPA as
accountant.
SHILO INN: Wins Cash Collateral Access Thru April 30
----------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
has authorized Shilo Inn, Idaho Falls, LLC to use cash collateral
on an interim basis through April 30, 2021, in accordance with the
budget, with a 10% variance.
RSS CGCMT 2017P7-ID SIIF, LLC's predecessor in interest extended
pre-petition credit facilities to the Debtor, evidenced, in part,
by a note in the original principal amount of $5,300,575, dated
November 2, 2015, executed by the Debtor in favor of NATIXIS REAL
ESTATE CAPITAL LLC, a Deed of Trust, Assignment of Leases and
Rents, Security Agreement executed by the Debtor in favor of
Chicago Title Company, and a UCC-1 financing statement filed with
the Oregon Secretary of State as Lien No. 90626581.
The Secured Creditor succeeded by assignment to all of the
interests of the Original Lender in the Loan Documents; and as a
result, the Secured Creditor is the current holder of the Note and
the Loan Documents.
The Debtor is in the process of reviewing and analyzing the
obligations under the Loan Documents and the validity, extent and
priority of Secured Creditor's interests in and to the Debtor's
assets.
The Debtor acknowledges the Secured Creditor is entitled to
adequate protection of its interest in the Prepetition Collateral
securing the Prepetition Obligations for and equal in amount to the
amount of Cash Collateral used from and after the Petition Date,
and, subject to a motion and hearing, the aggregate diminution in
the value of the Secured Creditor's interests in the Prepetition
Collateral from and after the Petition Date.
Although the Debtor contends that Secured Creditor is adequately
protected by, among other things, substantial equity cushion, the
Secured Creditor disputes this and contends the Debtor cannot offer
adequate protection for its use of Cash Collateral. The Secured
Creditor has, however, consented to the Debtor's use of Cash
Collateral, subject to and expressly conditioned upon the granting
of protections as provided for in the Order.
The Debtor grants, in favor of the Secured Creditor a first
priority post-petition security interest and lien in, to and
against all of the Debtor's assets, to the same priority, validity
and extent that the Secured Creditor held a properly perfected
pre-petition security interest in such assets.
According to the Court, the liens and security interests granted in
the Order are deemed perfected without the necessity for filing or
execution of documents which might otherwise be required under
non-bankruptcy law for the perfection of said security interests.
The Court says the provisions of the Order are without prejudice to
the Secured Creditor's right to seek the allowance of a
superpriority administrative expense claim under section 507(b) of
the Bankruptcy Code with respect to the Adequate Protection
Obligations.
A fourth interim hearing on the Debtor's continued use of Cash
Collateral will be conducted by the Court on April 21 at 9 a.m.
A copy of the order and the Debtor's budget through April 2021 is
available at https://bit.ly/2NBtXJt from PacerMonitor.com.
About Shilo Inn, Idaho Falls, LLC
Shilo Inn, Idaho Falls, LLC filed a Chapter 11 petition (Bankr.
W.D. Wash. Case No. 20-42489) on Nov. 2, 2020. At the time of
filing, the Debtor disclosed up to $50 million in assets and up to
$10 million in liabilities.
Judge Brian D. Lynch oversees the case.
Levene, Neale, Bender, Yoo & Brill LLP and Stoel Rives LLP serve as
the Debtor's bankruptcy counsel and local counsel, respectively.
RSS CGCMT 2017P7-ID SIIF, LLC, as lender, is represented by Lane
Powell PC.
SHILOH INDUSTRIES: Unsecureds' Recovery "TBD" in Liquidating Plan
-----------------------------------------------------------------
Shiloh Industries, Inc. and its Debtor Affiliates filed with the
U.S. Bankruptcy Court for the District of Delaware a Joint Plan of
Liquidation and a Disclosure Statement on Feb. 19, 2021.
The Plan contemplates a liquidation of the Debtors and their
Estates. The primary objective of the Plan is to maximize the
value of recoveries to Holders of Allowed Claims and to distribute
all property of the Debtors' Estates that is or becomes available
for distribution in accordance with the priorities established by
the Bankruptcy Code.
The Debtors' Estates will be consolidated for administrative
purposes related to the Plan, including for purposes of
implementing the Plan, voting, assessing whether the standards for
Confirmation have been met and calculating and making Distributions
under the Plan.
On the Effective Date all of the Debtors' assets and liabilities
will be merged; all guarantees or responsibility of one Debtor of
the obligations of any Other Debtor will be eliminated, and all
guarantees or responsibility executed by multiple Debtors of the
obligations of any other Entity will be consolidated into a single
obligation; each and every Claim Filed or to be Filed in the
Chapter 11 Case of any Debtor will be Filed against, and will be a
single obligation of, the Debtors; Intercompany Claims between
Debtors will be eliminated and extinguished; and Interests of one
Debtor in another Debtor will be cancelled.
Class 2 consists of Other Secured Claims and are unimpaired. Each
Holder of an Allowed Other Secured Claim will receive, from the
Debtor Liquidating Trust and at the sole and exclusive option of
the Debtor Liquidating Trustee, Cash equal to the amount of such
Claim; the collateral securing such Claim; to the extent
applicable, the same treatment as Priority Tax Claims receive; or
satisfaction of such Claim pursuant to such other terms and
conditions as may be agreed upon by the Debtor Liquidating Trustee
and the Holder of such Claim.
Class 3 consists of Prepetition Credit Agreement Claims and are
impaired. Unless otherwise agreed by any Holder of an Allowed
Prepetition Credit Agreement Claim and the Debtors or the Debtor
Liquidating Trustee, each Holder of an Allowed Prepetition Credit
Agreement Claim will receive, on account of its Class 3 Claim, its
Pro Rata share of the Class 3 Distributable Funds.
Class 4 consists of General Unsecured Claims are impaired. Each
Holder of an Allowed Claim in Class 4 will receive its: Pro Rata
share of the Unencumbered Cash, unless the Holder of an Allowed
Class 4 claim is a Prepetition Lender, as the Prepetition Lenders
have waived their right to receive any Distributions from the
Unencumbered Cash; and share of the proceeds of any Shared Assets
based upon any Contribution Split. Each holder of an Allowed
General Unsecured Claim still has [TBD] recovery in Plan.
Class 5 consists of Stock Interests of any of the Debtors and are
impaired. On the Effective Date, all outstanding Stock Interests
of the Debtors will be cancelled. Upon such cancellation, no
property will be distributed to, or retained by, Holders of such
Stock Interests of the Debtors.
The Debtors, together with their advisors, continued to engage with
the parties that had submitted the strongest indications of
interest as those parties conducted additional diligence and
further developed their bids during July and August. Three parties
decided to move forward with the sale process and provided the
Debtors with letters of intent and draft asset purchase agreements.
The Debtors selected the bid submitted by Grouper Holdings, LLC
("Grouper" or the "Stalking Horse"), an affiliate of MiddleGround
Capital LLC, as the stalking horse bid for the sale of the Debtors'
assets in these chapter 11 cases. On Nov. 10, 2020, the Bankruptcy
Court conducted the sale hearing and entered an order approving the
sale of the Debtors' assets to Grouper. This sale closed on
November 30, 2020.
In connection with the going concern sale, the Debtors and the
Buyer entered into a transition services agreement (the "TSA"),
which provides the Debtors, and after the Effective Date of the
Plan the Debtor Liquidating Trustee, with access to information
necessary to wind down the Debtors' estates (collectively, the
"Transition Services").
Attorneys for Debtors:
DANIEL J. DEFRANCESCHI
PAUL N. HEATH
ZACHARY I. SHAPIRO
DAVID T. QUEROLI
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square
920 N. King Street
Wilmington, Delaware 19801
About Shiloh Industries
Shiloh Industries, Inc., and its subsidiaries are global innovative
solutions providers focusing on lightweighting technologies that
provide environmental and safety benefits to the mobility markets.
On Aug. 30, 2020, Shiloh Industries and its subsidiaries sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-12024). The petitions were signed by Lillian
Etzkorn, authorized person.
The Debtors reported total consolidated assets of $664,170,000 and
total consolidated debt of $563,360,000 as of April 30, 2020.
The Debtors have tapped Jones Day and Richards, Layton & Finger
P.A. as their legal counsel; Houlihan Lokey Capital Inc. as
financial advisor, Ernst & Young LLP as restructuring advisor, and
Prime Clerk LLC as claims and noticing agent.
On Sept. 15, 2020, the United States Trustee appointed the five
member official committee of unsecured creditors. The committee
selected Foley & Lardner LLP as its lead counsel, and Morris James
as Delaware counsel.
SOUTHERN ROCK: Case Summary & Unsecured Creditor
------------------------------------------------
Debtor: Southern Rock & Lime, Inc.
19073 NE State Road 69
Blountstown, FL 32424
Business Description: Southern Rock & Lime, Inc.
Chapter 11 Petition Date: February 24, 2021
Court: United States Bankruptcy Court
Northern District of Florida
Case No.: 21-50021
Debtor's Counsel: Robert C. Bruner, Esq.
BRUNER WRIGHT, P.A.
2810 Remington Green Circle
Tallahassee, FL 32308
Tel: (850) 385-0342
Fax: (850) 270-2441
E-mail: rbruner@brunerwright.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by James E. Clemons, Jr., president.
The Debtor listed John Deere Financial as its sole unsecured
creditor holding an unknown amount of claim.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/NAMV6KI/Southern_Rock__Lime_Inc__flnbke-21-50021__0001.0.pdf?mcid=tGE4TAMA
SOUTHMINSTER INC: Fitch Affirms BB Rating on $86.2MM Mortgage Bonds
-------------------------------------------------------------------
Fitch Ratings has affirmed the 'BB' rating on the following Public
Finance Authority bonds issued on behalf of Southminster, Inc.
(SM):
-- $86,200,000 retirement facilities first mortgage revenue bonds
(Southminster) series 2018.
The Rating Outlook is Stable.
SECURITY
A gross revenue pledge, mortgage on the facility and a debt service
reserve fund for the 2018 tax-exempt bonds.
KEY RATING DRIVERS
CAMPUS REPOSITIONING FINISHED: SM completed its $140 million
multi-phase campus repositioning capital plan. The finished
projects included a two phase, 66-unit independent living (IL)
expansion, the Terraces 1 and 2, which are fully occupied, and a
new skilled nursing building, which opened in mid-November and SM
is in the process of rebuilding its census to historical levels.
ADDITIONAL IL EXPANSION: SM is likely to move forward on a 20-unit
IL expansion in the legacy skilled nursing space. The cost of the
expansion is anticipated to be between $20 to $25 million. Project
funding has not been finalized, but some additional debt is
expected to be issued, a portion of which will be paid back with
the entrance fee pool. Fitch believes SM has the financial
flexibility at the current rating level to build and fill this
latest expansion. SM opened and filled the 36-unit Terraces 2 in
the midst of the pandemic, and similar to that project, pre-sales
are expected to come from SM's waitlist, which has approximately
650 people.
ELEVATED LONG-TERM LIABILITY PROFILE: SM's long-term liabilities
show maximum annual debt service (MADS) of $9 million, equating to
an elevated 27.5% of fiscal 2020 (September 30 year-end) revenues.
Debt to net available was also elevated at 18.9x at year end fiscal
2020. Those figures are expected to moderate, as revenue from the
IL expansion positively affects performance. Coverage of actual
debt service ($4.5 million) was adequate at 1.8x in fiscal 2020. SM
will not be tested on the $9 million MADS figure until fiscal
2022.
IL DEMAND REMAINS STRONG: IL occupancy at Dec. 30, 2020 was at 98%,
which includes occupancy in the Terraces 1 and 2. SM's IL and AL
occupancies have averaged 99% and 89%, respectively, over the last
four audited years. Occupancy in its skilled nursing facility has
been lower averaging 64% over this time. SNF occupancy was 52% at
Dec. 30, 2020. The lower SNF census reflects the effects of the
pandemic.
Fitch views SM's lower skilled occupancy as less of a concern given
SM's good budgeting, steady operating performance and limited
exposure to short-term rehabilitation stays. SM does not take
Medicare or Medicaid, and generally only a handful of private pay
outside admits are in the skilled nursing center at any given time.
Fitch expects the SNF occupancy to improve in the next year as the
new skilled nursing center fills up and the effects of the
coronavirus pandemic moderate.
STEADY OPERATIONS IN Fiscal 2020: SM produced a largely stable year
of performance in fiscal 2020, despite the pandemic. In response to
the pandemic, SM incurred extra testing, labor, and personal
protection equipment costs, and experienced reduced revenue,
especially in skilled nursing. SM did not receive any offsetting
federal stimulus funding. As such, the operating ratio rose to
100.2%, up from 98.7% in fiscal 2019. The net operating
margin-adjusted was 23.1%, compared to 26.4% in fiscal 2019.
However, these results remained good for the rating and reflected a
strong first six months of fiscal 2020 and the sustained levels of
IL occupancy in the second half of the fiscal year as SM operated
under the pandemic.
ASYMMETRIC RISK FACTORS: There are no asymmetric risk factors
affecting this rating determination.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- After completion of the upcoming IL expansion, coverage
consistently at or above 1.6x and an improvement in cash to
debt such that it is on trajectory to reach and exceed 30%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A drop in liquidity or borrowing such that cash to debt falls
below 15%;
-- Reduced cash flow such that MADS coverage is consistently
below 1.4x.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure 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 three 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.
CREDIT PROFILE
SM is a North Carolina nonprofit corporation organized in 1984 that
owns and operates Southminster, a single site, Type 'B' contract,
senior living community. SM is the only member of the obligated
group. At Dec. 31, 2019, SM had 265 IL units, 25 AL units, 60
skilled nursing beds. Total operating revenues in fiscal 2020 was
$32.3 million.
SM residents are offered type 'B' modified residency agreements
with three options. Over 80% of residents are on the standard plan,
which amortizes the entrance fee paid at 5% per month for 20 months
and offers no refund. The other residents are divided between a 50%
refundable plan, which amortizes the entrance fee paid at 5% per
month for the first 10 months of occupancy, and a 90% refundable
plan where the plan is amortized at 5% per month for two months
following occupancy.
The recent outbreak of coronavirus and related government
containment measures worldwide has created an uncertain environment
for the entire healthcare system in the near term. While SM's
financial performance through the most recently available data has
not indicated any impairment, material changes in revenue and cost
profiles will occur across the sector, and will likely worsen in
the coming weeks and months as economic activity suffers and as
government restrictions are maintained or expanded. Fitch's ratings
are forward-looking in nature, and Fitch will monitor developments
in the sector as a result of the virus outbreak as it relates to
severity and duration, and incorporate revised expectations for
future performance and assessment of key risks.
GOOD FINANCIAL PROFILE
SM maintains a good financial profile for the rating level.
Operations have been steady over the last four audited years, even
as SM has managed through a major campus repositioning project and
the pandemic. Over the last four fiscal years, SM has averaged a
96.1% operating ratio and 26.6% NOM-adjusted, both of which are
very good for the rating level. Cash flow remained consistent with
historical levels, with net entrance fee receipts of $5.4 million.
The first quarter of fiscal 2021 showed a continuation of the
performance in fiscal 2020, as the operating ratio remained above
100%, IL occupancy remained strong, and good net entrance fee
receipts supported stable coverage. As SM benefits from the first
full year of stabilized occupancy in the two phase Terraces
expansion and as SNF occupancy is rebuilt (the new SNF opened in
1Q21), Fitch expects operations to begin to return to more
normalized levels as the year progresses. SM received approximately
$600,000 in bequests in 1Q fiscal 2021 and CARES Act funding in 2Q
fiscal 2021. Both of these will aid the financial performance.
As Dec. 31, 2020, SM had $27.1 million in unrestricted cash and
investments, which equated to 315 days cash on hand DCOH, and 17.8%
cash to debt. The DCOH is very good for the rating level, while
cash to debt is adequate. Fitch expects cash to debt to remain
between 15% and 20% in the next few years as SM moves forward on
the 20-unit IL expansion. However, once that project is completed,
Fitch would expect cash to debt to begin to improve.
DEBT PROFILE
At Dec. 31, 2020, SM had approximately $152.7 million of long term
debt and that includes the series 2018 bonds, the series 2016
bonds, and drawn down construction loan funds from the
repositioning project. SM has no swaps.
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.
STREAM TV: Files for Chapter 11 Bankruptcy Protection
-----------------------------------------------------
Katherine Doherty of Bloomberg News reports that Stream TV Networks
Inc. filed for Chapter 11 bankruptcy protection Feb. 24, 2021,
following a lawsuit over a plan to restructure the company and
transfer its assets. Stream TV was hit with a court order in
December 2020 blocking its ability to transfer assets until the
conclusion of a lawsuit over the validity of an agreement.
About Stream TV Networks
Philadelphia, Pennsylvania-based Stream TV Networks, Inc., develops
technology intended to display three-dimensional content without
the use of 3D glasses.
On Feb. 24, 2021, Stream TV Networks filed a Chapter 11 petition
(Bankr. D. Del. Case No. 21-10433). The petition was signed by CEO
Mathu Rajan, and the bankruptcy case is handled by Honorable Judge
Karen B. Owens.
The Company listed assets of about $100 million to $500 million and
liabilities of $100 million to $500 million.
DILWORTH PAXSON LLP, led by Martin J. Weis, is the Debtor's
counsel.
SUGARHOUSE HSP: Moody's Confirms B3 CFR, Outlook Negative
---------------------------------------------------------
Moody's Investors Service confirmed Sugarhouse HSP Gaming Prop.
Mezz, L.P.'s B3 Corporate Family Rating, B3-PD Probability of
Default Rating, Ba3 senior secured priority revolver rating, and
Caa1 senior secured first lien notes' rating. The rating outlook is
negative. This action completes the review for downgrade that was
initiated on November 19, 2020.
Sugarhouse was placed on review following an order by the City of
Philadelphia that casinos and other indoor dining and gathering
venues within the city limits close through January 1, 2021. The
order was in response to a rise in coronavirus cases in the area
and became effective November 20, 2020. This was the second time
Sugarhouse, which derives all its revenue and earnings from Rivers
Philadelphia, was closed due to coronavirus concerns.
The primary reason for placing Sugarhouse on review included the
possibility that Sugarhouse, could have been closed well beyond
1-Jan. An extended closing past January 1 would have absorbed
liquidity, increased leverage, which was already high, at 8.0x
debt-to-EBITDA for the 12-month period ended September 30, 2020,
and possibly created a covenant compliance challenge.
"The confirmation of Sugarhouse's B3 Corporate Family Rating
considers that Rivers PA re-opened 4-Jan, and despite this second
closing, Sugarhouse will generate EBITDA at or near $60 million and
free cash flow between $20 to $25 million after interest, capital
expenditures and dividends for the full fiscal year ended December
31, 2021. This would result in Sugarhouse reducing debt/EBITDA to a
level at or below 6.0x," stated Keith Foley, a Senior Vice
President at Moody's.
"The confirmation also considers that since being placed on review
for downgrade, Sugarhouse obtained favorable amendments to its
covenants on 20-Nov-2020 and repaid a significant portion of its
revolver, which expires on May 2022. Amounts outstanding were
reduced from about $60 million to $35 million," added Foley.
The negative outlook considers that the revolver expires in a
little over a year. And while Moody's expects the company will
likely be able repay the remaining $35 million well in advance of
its expiration, without an longer-term external source of liquidity
in place, Sugarhouse, which is only a single asset borrower,
exposes itself to what Moody's continues to characterize as an
uncertain operating environment. The negative rating outlook also
considers that a new competitor Live! Casinos Hotel Philadelphia,
opened this past December in Sugarhouse's primary market area and
could weaken visitation and revenue at River Philadelphia.
The outlook could be revised to stable once the company obtains a
longer-term source of external liquidity and assuming EBITDA and
free cash flow expectations for fiscal 2021 remain on track with
Moody's projections in the face of new competition.
The following ratings/assessments are affected by the action:
Rating Confirmations:
Issuer: Sugarhouse HSP Gaming Prop. Mezz, L.P.
Corporate Family Rating, Confirmed at B3
Probability of Default Rating, Confirmed at B3-PD
Senior Secured Priority Revolving Credit Facility, Confirmed at
Ba3 (LGD1)
Senior Secured 1st Lien Notes, Confirmed at Caa1 (LGD4)
Outlook Actions:
Issuer: Sugarhouse HSP Gaming Prop. Mezz, L.P.
Outlook, Changed To Negative From Rating Under Review
RATINGS RATIONALE
The B3 CFR reflects Sugarhouse's high leverage, relatively small
revenue base, single asset profile, and direct competition from
three casinos within a 25-mile driving distance and from Atlantic
City. Also considered a credit weakness is that the company's
revolver expires in May 2022. Positive rating consideration is
given to Sugarhouse's well-established market position in the
densely populated Philadelphia metro area and limited capital
spending needs, which benefits the company's free cash flow profile
and financial flexibility.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
Sugarhouse from the current weak US economic activity and a gradual
recovery for the coming year. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, the degree of uncertainty
around Moody's forecasts is unusually high. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The gaming sector has been one of the sectors most significantly
affected by the shock given its sensitivity to consumer demand and
sentiment. More specifically, the weaknesses in Sugarhouse's credit
profile, including its exposure to travel disruptions and
discretionary consumer spending have left it vulnerable to shifts
in market sentiment in these unprecedented operating conditions and
Sugarhouse remains vulnerable to the outbreak continuing to
spread.
Financial policies are considered conservative considering
Sugarhouse's willingness and ability to maintain a relatively
moderate level of leverage prior to the coronavirus outbreak, and
recent repayment of a significant portion of its revolver well in
advance of its expiration. In Moody's view, this shows a strong
commitment on Sugarhouse's part to manage its leverage in a
relatively conservative manner. The company owners also have a long
history of successfully operating numerous gaming properties.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade is unlikely given the weak operating environment
and continuing uncertainty related to the coronavirus. An upgrade
would require a high degree of confidence on Moody's part that the
gaming sector has returned to a period of long-term stability, and
that Sugarhouse demonstrate the ability to continue to generate
positive free cash flow and operate at a debt/EBITDA level at 6.0x
or lower. Ratings could be downgraded if Moody's anticipates any
renewed weakness in Sugarhouse's earnings or cash flow generation
because of competition, actions to contain the spread of the virus,
or reductions in discretionary consumer spending. A deterioration
in liquidity could also lead to a downgrade.
The principal methodology used in these ratings was Gaming
Methodology published in October 2020.
Sugarhouse owns Rivers Philadelphia, one of four casinos operating
in the Philadelphia area. The company is majority-owned and
controlled by Neil Bluhm, his family, and Greg Carlin. Sugarhouse
generated net revenue of $280 million for the last 12-month period
ended September 30, 2020.
TELEPHONE AND DATA: Fitch Assigns BB- Rating on Preferred Stock
---------------------------------------------------------------
Fitch Ratings has assigned a 'BB-'/'RR6' rating to Telephone and
Data Systems, Inc.'s (TDS) proposed preferred stock issuance. The
preferred stock has no maturity date but may be redeemed in whole
but not in part, at any time prior to March 31, 2026, upon
occurrence of a defined ratings event; and in whole or in part
after March 31, 2026, in each case, in cash.
The preferred notes will rank junior to the company's entire
existing and future senior debt. The dividends are payable
quarterly when declared, and if unpaid are cumulative. Fitch has
assigned a 50% equity credit since the coupon deferral is
cumulative.
Fitch has also affirmed TDS's and and its subsidiary, United States
Cellular Corp.'s (USM) Long-Term Issuer Default Ratings (IDR) at
'BB+'. In addition, Fitch has affirmed the 'BB+'/'RR4' senior
unsecured debt ratings for both companies. USM's ratings consider
the consolidated ratings at TDS. The Rating Outlook remains
Stable.
TDS' ratings are driven by the company's conservative balance sheet
and good liquidity with adequate cash balances and high
availability under the revolving facilities. After adjusting for
financial services (FS) activity, the core telecom leverage as of
Dec. 31, 2020, is 2.1x, including distributions from
non-controlling interests. The $3.5 billion of total debt has a
substantial majority in bonds with far-dated maturities. Low
leverage and good liquidity compensate for the company's weaker
market position in wireless and negative free cash flows expected
over the next few years on account of increased capital
investments.
KEY RATING DRIVERS
Wireless Market Position: Fitch's ratings incorporate the smaller
size of TDS's main operating unit, USM, in a market that is now
dominated by three national wireless operators, after Sprint
combined with T-Mobile on April 1 2020. This concern is mitigated
by TDS's financial flexibility, arising from its low leverage and
comfortable liquidity position. During 2020, USM posted 25,000 net
adds of postpaid subscribers versus 89,000 net loss in 2019,
largely due to decline in churn during the pandemic, and a higher
demand for connected devices offsetting declines in handset gross
adds. As of Dec. 31, 2020, the total postpaid subscriber base is
approximately 4.44 million.
Leverage Well within Fitch's Expectations: Fitch estimates TDS's
gross leverage at 2.1x as of Dec. 31, 2020, including partnership
distributions received from non-controlling entities (2.4x
without). In calculating gross leverage, Fitch has assumed
deconsolidation of FS activity related to USM's EIP receivables,
making adjustments for FS assets and corresponding debt. Fitch
assumes a capital structure for FS operations, which is strong
enough to indicate that FS activities are unlikely to be a cash
drain on industrial operations over the rating horizon. The FS
entity's target capital structure considers the relative quality of
EIP receivables and its funding and liquidity.
Fitch believes TDS's low debt leverage provides the company with
sufficient room within its current rating sensitivities to incur
additional debt over the next few years, required to fund its
aggressive projected investment plan. Fitch believes these
investments, including spectrum, are critical to maintain and
enhance the network infrastructure, including investment in 5G
network, in order to remain competitive in the longer run. Fitch
expects core leverage to increase to approximately 2.6x by FYE
2023.
Adequate Liquidity Profile: TDS and USM's ratings reflect
sufficient financial flexibility over the forecast, owing to
adequate cash balances, undrawn revolving credit facilities, low
leverage and long-dated debt maturities, compensating for negative
FCFs that Fitch expects over the rating horizon, due to increased
capital spending and spectrum purchases. As of Dec. 31, 2020, TDS
has a cash balance of $1,429 million and a combined revolver
availability of $700 million, excluding outstanding letters of
credit. TDS prefunded its anticipated 2021 C-band spectrum spending
in 2020, which reflects in its year-end cash position.
During 2020, USM issued $1 billion in combined notes offerings,
increased the size of each of its securitization facility and term
loan facility to $300 million. TDS entered into a new $200 million
term loan credit facility in March 2020 to fund spectrum spending
and fiber investments on the TDS telecom side. With these, Fitch
believes the company is fully funded for its 2021 capital needs.
Spectrum Acquisitions: USM is participating in the ongoing C-band
auction, which concluded the clock phase on Jan. 15, 2021, and
assignment phase on Feb. 17, 2021. The company committed to
purchase wireless spectrum licenses for approximately $1,460
million inclusive of associated costs. The FCC is yet to make an
announcement on the final assignments and winning bidders. This
acquisition, if granted, builds on its spectrum inventory, which
includes millimeter wave spectrum licenses in 37, 39 and 47 GHz
obtained in June 2020; the 24 GHz and 28 GHz spectrum licenses
acquired in 2019; and the 600 MHz spectrum acquired in 2017, all of
which form the basis for the company's 5G network.
Noncore Assets Provide Flexibility: While Fitch believes TDS
considers USM's 5.5% stake in the Los Angeles partnership and its
tower portfolio as core assets. Fitch also recognizes that these
assets provide the company with financial flexibility should the
need arise as it pursues growth in the cable industry.
DERIVATION SUMMARY
TDS's ratings reflect USM's weaker competitive position in the U.S.
wireless industry, which is dominated by three national players:
AT&T Inc. (A-/Stable), Verizon Communications Inc. (A-/Stable) and
T-Mobile USA, Inc. (BB+/Stable), based on scale and number of
subscribers. However, this rating concern is largely mitigated by
TDS's adequate liquidity profile and sufficient financial
flexibility, supported by adequate cash balances and approximately
$700 million in combined (TDS and USM) revolver over the forecast
and its generally longer dated maturity profile.
Additionally, the EIP receivables securitizations provide an
additional funding opportunity. Fitch expects FCF to be negative
for the next several years, due to the elevated capital
investments. However, the company has the ability to roll back
capex if needed, as a significant part of the capex is
success-based.
On the wireline side, TDS is comparable with rural focused
incumbent wireline providers such as Windstream Services, LLC (NR)
and Frontier Communications, Inc. (BB-[EXP]/Stable). However,
compared with these companies, TDS has a conservative balance sheet
with a lower leverage profile, a comparable liquidity position,
long-dated maturities and greater financial flexibility.
No country-ceiling, parent/subsidiary or operating environment
aspects affect the ratings.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Fitch expects 2021 revenue to grow in low single digit, driven
by continued strength in ARPU partially offset by moderately
lower gross adds and a higher churn. Fitch expects churn to
increase to pre-pandemic levels of 1.2% to 1.3% over the
forecast, as 2020 saw lower switching activity during the
pandemic. Fitch expects roaming revenue to remain pressured
due to the Sprint-T-Mobile merger and the migration of Sprint
roaming traffic to T-Mobile's network.
-- EBITDA for 2021 is expected to be moderately lower than 2020.
Fitch expects overall EBITDAR margins to average near 26.5%
during the rating horizon.
-- Capex intensity in 2021 is assumed to be elevated in low to
mid 20s as the company continues spending on modernization of
networks, deployment of 5G and fiber expansion in TDS Telecom
within and outside its footprint. Fitch has assumed a
significant incremental spending related to spectrum
acquisition in 2021.
-- Share repurchases of $25 million each year are assumed over
the forecast.
-- Fitch has assumed [$200 million] of preferred stock issuance
in 2021. Fitch has provided a 50% equity credit to preferred
stock.
-- To determine core telecom leverage, Fitch has applied a 1:1
debt-to-equity ratio to the company's handset receivables.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch believes that competitive factors coupled with TDS's
relative position in the wireless industry would not likely
allow a positive rating action in the near term.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- In the longer term, Fitch believes TDS's and USM's ability to
grow revenues and cashflows while competing effectively
against much larger national operators will be key to
maintaining their 'BB+' IDRs. In addition, if core telecom
leverage (total debt/EBITDA) calculated including credit for
material wireless partnership distributions in EBITDA
approaches 3.5x, or if FFO net leverage approaches 3.0x, a
negative rating action could be contemplated.
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 Profile: TDS has a cash balance of $1,429
million as of Dec. 31, 2020. Of this, USM holds approximately
$1,271 million. The company prefunded its anticipated 2021 C-band
spectrum spending in 2020, which reflects in its year-end cash
position. In addition, the company has a substantial combined
availability of approximately $697 million, net of LCs, on the
revolvers at TDS and USM. USM also has a $300 million EIP
receivables securitization facility, which has an unused capacity
of $275 million, subject to borrowing base as of Dec. 31, 2020.
In addition, the USM term loan credit facility amended in June 2020
to increase the borrowing commitment to $300 million, has a
borrowing capacity of $217 million ($83 million outstanding) as of
Dec. 31, 2020. The amounts undrawn by June 2021 will cease to be
available. The $200 million TDS term loan is currently fully drawn
with $125 million outstanding as of YE 2020 and a subsequent $75
million of borrowings in January 2021.
TDS's and USM's ratings reflect the current adequate liquidity
position and financial flexibility owing to comfortable cash
balances, availability under revolving credit facilities, and
generally long-dated maturities, offsetting pressures from expected
negative free cash flows over the forecast.
Debt Structure Updates: In January 2020, TDS entered into a $200
million term loan credit facility with Co-bank and TDS. The main
financial covenants on the term loan facility require total
consolidated interest coverage to be no less than 3.0x and the
total consolidated leverage ratio no more than 3.25x.
TDS also entered into new revolving facilities and terminated the
previous revolving facilities at TDS and USM. The new revolvers
retained the original commitments of $400 million and $300 million
at TDS and USM, respectively and effectively extended maturities
two years out from 2023 to 2025. As of Dec. 31, 2020, TDS and USM
had a borrowing capacity $399 million and $298 million under their
respective revolving facilities. The main financial covenants in
the TDS revolving facility and USM's revolving and term loan
facilities require total consolidated interest coverage to be no
less than 3.0x and the total consolidated leverage ratio to be no
more than 3.25x.
In August and December 2020, USM issued $500 million each of 6.25%
senior notes due in 2069 and 5.5% senior notes due in 2070. The
proceeds from both issuances will be used for general corporate
purposes, including repayment of other debt, spectrum purchases,
capex, including in connection with 5G buildout projects. The
earliest notes maturity at TDS is in 2045 ($116 million) and at USM
is in 2033 ($544 million face value).
SUMMARY OF FINANCIAL ADJUSTMENTS
Adjustments for outstanding EIP receivables related to financial
services operations (assessed using a 1.0x debt-to-equity ratio)
resulted in a reduced level of debt used in calculating Fitch's
leverage metrics by approximately $500 million (as of YE 2020).
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.
TELEPHONE AND DATA: Moody's Rates New Preferred Stock 'Ba3'
-----------------------------------------------------------
Moody's Investors Service has assigned a Ba3 rating to Telephone
and Data Systems, Inc.'s proposed cumulative redeemable perpetual
preferred stock. Net proceeds will be used for general corporate
purposes. Moody's has also affirmed TDS's Ba1 corporate family
rating, Ba1-PD probability of default rating, Ba2 rating on TDS's
unsecured debt and Ba1 rating on the unsecured debt of United
States Cellular Corporation (US Cellular), TDS's 82%-owned
subsidiary. TDS's speculative grade liquidity rating is maintained
at SGL-1, reflecting its very strong liquidity. The company's
outlook remains stable.
Affirmations:
Issuer: Telephone and Data Systems, Inc.
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 (LGD6)
Issuer: United States Cellular Corporation
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Assignments:
Issuer: Telephone and Data Systems, Inc.
Preferred Stock, Assigned Ba3 (LGD6)
Outlook Actions:
Issuer: Telephone and Data Systems, Inc.
Outlook, Remains Stable
Issuer: United States Cellular Corporation
Outlook, Remains Stable
RATINGS RATIONALE
The Ba1 corporate family rating benefits from TDS's modest
leverage, very good liquidity, a fairly conservative controlling
shareholder and several valuable non-core investments, including
the US's fifth largest wireless tower portfolio and a 5.5% minority
stake in a wireless partnership with Verizon Communications Inc.
(Baa1 positive) in the Los Angeles market. Moody's believes US
Cellular's tower portfolio and wireless partnership stake could be
effectively monetized either partly or fully in order to provide
additional financial flexibility if necessary. TDS's rating is
constrained by its limited scale and the intense competitive
challenges that it faces as a relatively small regional wireless
and broadband operator in largely mature and competitive end
markets.
TDS's wireline operations are broadband focused and the company
seeks to prudently deploy fiber and build infrastructure in both
new and existing markets to grow and defend market share and
harness broadband demand trends. The bulk of TDS's consolidated
revenue and EBITDA are derived from its 82%-owned subsidiary, US
Cellular, which is currently operating in a significant buildout
phase as it steps up execution of the commercial launch of 5G
wireless services in 2021. US Cellular is investing in network,
equipment and spectrum licenses critical to maintaining its
competitive positioning and retaining and attracting customers.
US Cellular's service revenue was up 2.6% in Q4 2020 compared to
the same period in the prior year and ARPU grew 2.0% over that same
period highlighting service upgrade activity to unlimited plans.
Positive postpaid net additions of 11,000 represented the third
consecutive quarter of positive adds, reflecting solid traction
from connected devices. US Cellular posted low total postpaid churn
of 1.21% which was up sequentially but still lower than the 1.38%
level of Q4 2019. Primarily comprised of postpaid subscribers, US
Cellular's 4.9 million total retail postpaid and prepaid
connections at the end of Q4 2020 increased 1% compared with the
same period in the prior year, but was relatively flat on a
sequential basis. US Cellular's company-defined adjusted EBITDA
margin of 20.7% decreased slightly from 21.1% in the prior year's
comparable quarter due mainly to higher costs associated with
equipment revenue. Moody's believes US Cellular's lack of scale
will limit its ability to significantly improve margins and cash
flow over the next two years until its 5G strategy is more fully
implemented and provides evidence supporting new revenue growth.
TDS's SGL-1 speculative grade liquidity rating indicates Moody's
expectations that the company will sustain very good liquidity
through the next 12 to 18 months. TDS maintains a strong liquidity
profile characterized by large cash balances and no material debt
maturities until 2033, except for TDS's $200 million term loan due
2027 and US Cellular's $82 million term loan due 2027. As of
December 31, 2020, TDS had aggregate cash, cash-equivalents and
short-term investments of $1.4 billion and a $400 million committed
bank credit facility. US Cellular also maintains its own revolving
credit facility of $300 million. Both companies' lines of credit
were effectively unutilized as of December 31, 2020 (except for $1
million of outstanding letters of credit on TDS's facility and $2
million of outstanding letters of credit on US Cellular's
facility); both facilities expire in March 2025. US Cellular also
has a $300 million receivables securitization agreement to permit
secured borrowings under an equipment installment receivables plan;
the unused capacity under this agreement was $275 million as of
December 31, 2020. Subsequent to December 31, 2020 US Cellular
committed to purchase wireless spectrum licenses inclusive of
relocation and other costs for approximately $1.46 billion, an
obligation that can be adequately met with existing year-end 2020
cash balances and liquidity availability.
For year-end 2021, Moody's expects TDS's capital spending to be
almost $1.3 billion and dividends and capital distributions to
minority partners to be about $80 million, resulting in about $220
million of negative free cash flow. Existing cash balances and
external liquidity sources are more than ample to fund negative
free cash flow. Moody's expects negative free cash flow to begin
declining in 2023 largely due to moderating capital investing
activity in US Cellular's 5G-related network modernization plans.
Moody's expects continued but prudent capital investment intensity
at TDS's wireline subsidiary under its targeted fiber overbuild
strategy. Moody's expects these buildouts will be met with internal
and external sources of liquidity sufficient to fund any cash
shortfalls.
TDS is a controlled company because over 50% of the voting power
for the election of directors of TDS is held by the trustees of the
TDS Voting Trust. The company's financial policies are
conservative, including maintaining a strong balance sheet with
ample liquidity allowing optionality and flexibility, including a
focused use of long dated repayment obligations. The company's
moderate leverage is necessary in light of the competitive nature
of its end markets and the high capital investing requirements
which may result in periods of negative free cash flow. TDS has a
$250 million share repurchase authorization that does not have an
expiration date. Moody's believes repurchases of stock will remain
measured, as in the past. TDS purchases US Cellular stock to
maintain an 80% ownership stake. Based on Moody's expectations of
the company's cash needs, Moody's expects both companies' revolving
credit facilities to remain undrawn over the next 12 months.
The instrument ratings reflect both the probability of default of
TDS, as reflected in the Ba1-PD probability of default rating, an
average expected family recovery rate of 50% at default and the
loss given default (LGD) assessment of the debt instruments in the
capital structure based on a priority of claims. The Ba2 (LGD6)
rating of TDS's senior unsecured debt reflects a junior position in
the capital structure and the relatively significant amount of
senior unsecured debt that is likely to remain outstanding at US
Cellular. The senior unsecured debt of US Cellular, TDS's 82%-owned
operating subsidiary, is rated Ba1 (LGD4) based on structural
seniority and good asset coverage. TDS and US Cellular's senior
unsecured revolvers and senior unsecured term loans (all unrated)
are ranked ahead of US Cellular's senior unsecured notes to reflect
the unconditional guarantees provided to both companies by certain
TDS and US Cellular subsidiaries. The Ba3 (LGD6) rating of TDS's
proposed cumulative redeemable perpetual preferred stock reflects
its junior position in the capital structure and is one notch below
the Ba2 rating on TDS's senior unsecured debt.
The stable outlook reflects Moody's view that TDS and its US
Cellular subsidiary will demonstrate stable to growing revenue in
2021 and 2022 and that TDS's consolidated leverage (Moody's
adjusted) will remain below 3.5x for the next two years.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:
Moody's would consider an upgrade if TDS's leverage (Moody's
adjusted) were sustained below 2.5x and free cash flow as a
percentage of debt grew to the mid-to-high single-digits
accompanied by consistent revenue and profitability growth.
Moody's could downgrade TDS's ratings if leverage is likely to be
above 3.5x (Moody's adjusted) for an extended period and free cash
flow remains negative or if revenue and profitability trends weaken
and persist. Also, a decision by US Cellular or TDS Telecom to sell
a material amount of assets (such as spectrum, towers or wireline
properties) and distribute proceeds to shareholders could also lead
to a ratings downgrade
The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.
Headquartered in Chicago, Illinois, Telephone and Data Systems,
Inc. (TDS) is a diversified telecommunications company with
approximately 4.9 million wireless customers and 1.2 million
wireline and cable connections in 31 states within the US. TDS
provides wireless operations through its 82% owned subsidiary, US
Cellular, and conducts its wireline and cable operations through
its wholly owned subsidiary, TDS Telecommunications Corporation.
THERMASTEEL INC: Trustee Gets OK to Hire Hicok Brown as Accountant
------------------------------------------------------------------
William Callahan, Jr., Chapter 11 trustee for Thermasteel, Inc.,
received approval from the U.S. Bankruptcy Court for the Western
District of Virginia to hire Hicok, Brown & Company CPAs as his
accountant.
The firm will assist the trustee in the preparation of federal and
state income tax returns and related tasks.
Hicok Brown will be compensated at its standard hourly rates of
$100 to $150 for certified public accountants and $50 for
paraprofessionals. The firm will also receive reimbursement for
out-of-pocket expenses.
Juan Garcia, a partner at Hicok Brown, disclosed in a court filing
that the firm neither holds nor represents any interest adverse to
the interest of the Debtor's bankruptcy estate or the trustee.
The firm can be reached through:
Juan J. Garcia, CPA
Hicok, Brown & Company CPAs
155 East Valley Street
Abingdon, VA 24210
Phone: (276)-628-1123
Fax: (276) 676-3000
About Thermasteel Inc.
Thermasteel, Inc. -- http://www.thermasteelinc.com/-- is a
provider of panelized composite building systems, manufacturing
composite foundation, floor, wall, roof and ceiling panels for
residential, commercial and industrial applications. Its
pre-insulated steel framing has been used in large military housing
projects in the USA, Germany and Guantanamo Bay, Cuba. Production
facilities are presently located in USA (Virginia, Alaska), and
Russia, with products being shipped via container to many other
countries.
Thermasteel sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Va. Case No. 18-71461) on Oct. 26, 2018. At the
time of the filing, the Debtor estimated assets of $1 million to
$10 million and liabilities of the same range. The case is
assigned to Judge Paul M. Black.
The Debtor tapped the Law Office of Richard D. Scott as its legal
counsel.
William E. Callahan, Jr. is the Chapter 11 trustee appointed in the
Debtor's case. The trustee tapped Gentry Locke Rakes & Moore, LLP
as his legal counsel and Hicok, Brown & Company CPAs as his
accountant.
THERMON HOLDING: Moody's Completes Review, Retains B2 CFR
---------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Thermon Holding Corp. and other ratings that are
associated with the same analytical unit. The review was conducted
through a portfolio review discussion held on February 17, 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
Thermon Holding Corp.'s B2 Corporate Family Rating reflects the
company's established market position for industrial process
heating solutions offset by small size and exposure to cyclical end
markets including oil and gas. In dealing with lower demand and
decreased customer spending, Thermon reduced costs and lowered
capital spending. The company's backlog provides some revenue
visibility and products for customer maintenance, repair and
operations are a source of recurring revenue. Customer spending
tends to fluctuate more for new projects and upgrade and expansion
work. Thermon benefits from diversification across geographic
regions, end markets and customers.
The principal methodology used for this review was Global Oilfield
Services Industry Rating Methodology published in May 2017.
TOP THAT COMMERCIAL: Seeks to Hire Borenstein as Special Counsel
----------------------------------------------------------------
Top That Commercial Roofing Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Colorado to hire Borenstein &
Associates, LLC as its special counsel.
The firm will represent the Debtor in the state court litigation
filed by 4240 Kipling LLC against the Debtor, asserting claims for
fraud, misrepresentation, unjust enrichment, and breach of
contract, among other things.
Irvin Borenstein, Esq., the firm's attorney who will be providing
the services, will be paid at the rate of $400 per hour. His firm
will bill for paralegal services at the rate of $125 per hour.
Mr. Borenstein assured the court that the firm does not represent
or hold any interest adverse to Debtor or to the estate with
respect to the matter on which it is to be employed.
The firm can be reached through:
Irvin Borenstein, Esq.
Borenstein & Associates, LLC
7200 S Alton Way b180
Centennial, CO 80112
Phone: +1 303-768-0200
About Top That Commercial Roofing
Top That Commercial Roofing Inc. is a locally owned roofing and
construction company based in the Denver Metro area. Visit
http://topthatroofing.comfor more information.
Top That Commercial Roofing sought Chapter 11 protection (Bankr. D.
Colo. Case No. 20-17282) on Nov. 6, 2020. In the petition signed
by Phil Theriault, president and sole shareholder, the Debtor was
estimated to have assets of up to $50,000 and debt of $1 million to
$10 million.
The Hon. Thomas B. Mcnamara is the case judge.
Wadsworth Garber Warner Conrardy, P.C. and Borenstein & Associates,
LLC serve as the Debtor's bankruptcy counsel and special counsel,
respectively.
TRIANGLE FLOWERS: Unsecureds' Recovery Cut to 13% in Amended Plan
-----------------------------------------------------------------
Triangle Flowers of Distinction, Inc., submitted a Second Amended
Plan of Reorganization, on Feb. 22, 2021.
The Debtor's financial projections show that the Debtor will have
projected disposable income for the three-year period described in
Sec. 1191(c)(2), of $156,851. The Plan anticipates that 60 monthly
payments will be made beginning on the date that the first
distribution is due under the plan.
The sum of approximately $160,000 will be distributed as follows:
* $38,864 to administrative claims,
* $72,167 to the secured claim of FNB,
* $3,829 to the secured claim of Ally Financial, and
* The balance, or $46,004, to unsecured claims.
The Debtor will make all payments from cash flow from operations as
called for by the Plan.
Non-priority unsecured creditors are divided into three classes --
(i) a class for Debtor's PPP loan with Pinnacle Bank, (ii) a
convenience class that will receive payment in full with the first
disbursement under the Plan; and (iii) all other holders of
asserted or scheduled allowed general unsecured claims.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 13 cents on the dollar. The prior iteration of
the Plan projected a recovery of 16 cents on the dollar for
unsecured claims.
A copy of the Plan is available at https://bit.ly/3up7KPw from
PacerMonitor.com.
About Triangle Flowers
Based in Raleigh, North Carolina, Triangle Flowers of Distinction,
Inc. sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. E.D.N.C. Case No. 20-02098) on May 29, 2020, listing under
$1 million in both assets and liabilities. The Debtor is
represented by James C. White, Esq. at J.C. White Law Group, PLLC.
Rich Commercial Realty, LLC, is the broker.
TRINET GROUP: Moody's Assigns Ba2 CFR & Rates Unsecured Notes Ba3
-----------------------------------------------------------------
Moody's Investors Service assigned new ratings to TriNet Group,
Inc. ("TriNet") with a corporate family rating of Ba2, a
probability of default rating of Ba2-PD, and a speculative grade
liquidity rating ("SGL") of SGL-1. Concurrently, Moody's assigned a
Ba3 rating to TriNet's new senior unsecured notes that will be used
to add cash to the company's balance sheet and repay $370 million
in outstanding term loan debt of TriNet USA, Inc. ("TriNet USA"), a
subsidiary of the corporate parent[1]. TriNet USA will also obtain
a new $500 million secured revolving credit facility (unrated),
replacing its existing bank facility. All ratings of TriNet USA
will be withdrawn upon the completion of the refinancing
transaction. The ratings outlook is stable.
Assignments:
Issuer: Trinet Group, Inc.
Probability of Default Rating, Assigned Ba2-PD
Speculative Grade Liquidity Rating, Assigned SGL-1
Corporate Family Rating, Assigned Ba2
Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD5)
Outlook Actions:
Issuer: Trinet Group, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
The Ba2 CFR is supported by TriNet's modest pro forma LTM debt
leverage of 1.2x and relatively good business visibility provided
by a recurring sales model which contributed to net service revenue
growth of 14% in 2020. Additionally, the company's healthy long
term revenue growth prospects, coupled with modest capital
expenditures, support TriNet's healthy free cash flow ("FCF")
production (before worksite employee ("WSE") working capital
fluctuations) which should approach 40% of total debt (Moody's
adjusted) over the next year. The company's credit quality is
principally negatively impacted by TriNet's exposure to economic
cyclicality as periods of high unemployment typically weigh on
operating performance trends due to prospective declines in the
company's base of worksite employees. Additionally, periods of
volatility in TriNet's insurance services segment in the event of
elevated medical insurance claims expenses presents uncertainty.
While the company's business model demonstrated healthy resiliency
throughout 2020 despite the macroeconomic and social challenges
presented by the coronavirus outbreak, ongoing uncertainties with
respect to the pandemic and its continued impact on business
conditions present ongoing credit risk. TriNet's credit quality is
further negatively impacted by corporate governance concerns,
particularly with respect to more aggressive financial strategies
as TriNet seeks to expand its limited scale in the highly
competitive Professional Employer Organization ("PEO") sector.
Moody's believes TriNet's liquidity will be very good over the next
year, as indicated by the SGL-1 rating. Liquidity is supported by
approximately $430 million of pro forma cash on TriNet's balance
sheet (excluding restricted cash) as of December 31, 2020,
approximately $500 million of revolver availability (pro forma for
refinancing), and Moody's expectation of FCF in excess of $200
million over the next year. Borrowings under the proposed new
credit facility are expected to be subject to a financial covenant
based on a maximum net leverage ratio test of 4x. Moody's expects
TriNet to remain comfortably in compliance with this covenant over
the next 12-18 months.
The stable outlook reflects Moody's expectation that TriNet's net
services sales will contract moderately over the next 12 months
driven by declining net insurance revenues that will likely fall
from elevated 2020 levels. The negative impact of this revenue
decline on the company's profitability is expected to fuel a more
pronounced drop in EBITDA, fueling a moderate increase in debt to
EBITDA (Moody's adjusted) to the mid 1x range during this period.
The Ba3 rating for the proposed senior unsecured bonds reflects
TriNet's Ba2-PD PDR and a loss given default ("LGD") assessment of
LGD5. The Ba3 rating is one notch below the CFR given the senior
ranking and priority in the collateral of TriNet USA's proposed
secured revolving credit facility (unrated) in the capital
structure relative to the unsecured bonds.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if TriNet meaningfully increases
scale and profit margins while concurrently maintaining
conservative credit metrics and disciplined financial policies.
The ratings could be downgraded if TriNet's revenues and profit
margins decline, evidencing a loss of market share or increasing
client attrition. The rating could also be downgraded if TriNet
engages in shareholder-friendly actions prior to meaningful
deleveraging, or if Moody's expects that debt to EBITDA (Moody's
adjusted) will be sustained above 2.5x and FCF/debt could fall
below 15%.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
TriNet is a PEO which provides outsourced human resource functions,
including payroll, benefits acquisition, and regulatory compliance
management to small and mid-sized businesses. Moody's expects
TriNet to generate net service revenues (net of insurance costs) of
nearly $1 billion in 2021.
TRONOX FINANCE: Moody's Rates New Sec. Bank Credit Facilities 'Ba2'
-------------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to the amended and
restated $1,300 million 7 year senior secured term loan facility
and 5 year $350 million revolving credit facility issued by Tronox
Finance LLC (Tronox). The proceeds of the amended and restated term
facility will be used to repay, together with balance sheet cash,
the outstanding amount under the existing term loan credit
agreement. The rating is subject to the transaction closing as
proposed and receipt and review of the final documentation. The
outlook on the ratings is stable.
"The term loan and revolver refinancing will extend the company's
maturity profile and lower its average interest rate," according to
Joseph Princiotta, SVP at Moody's and the lead analyst covering
Tronox. "The refinancing is expected to be roughly neutral to the
net debt amount and net debt leverage," Princiotta added.
Assignments:
Issuer: Tronox Finance LLC
Gtd. Senior Secured Term Loan, Assigned Ba3 (LGD3)
Gtd. Senior Secured Revolving Credit Facility, Assigned Ba3
(LGD3)
RATINGS RATIONALE
Tronox Holdings Plc's credit profile and current ratings (B1 CFR)
reflect the benefits from the company's market position as one of
the world's largest titanium dioxide producers, industry leading
vertical integration and co-product production, actual and
prospective benefits from Cristal acquisition synergies, and good
liquidity. The credit profile also reflects heavy exposure to the
cyclical titanium dioxide industry, which Moody's believes is in
the early stages of a volume and pricing upcycle. The credit
profile and ratings also anticipate significant weakening in credit
metrics outside the normal boundaries for the rating category
during cyclical trough periods and concerns about free cash flow in
the trough.
Moody's has a favorable outlook for TiO2 markets over the next two
years and expects strong demand growth against the backdrop of
modest global supply additions to underpin favorable fundamentals,
at least through 2021, allowing price increases through the year
and in all major regions. However, the pace and timing of the
recovery is unclear and might be choppy due to pandemic-related
restrictions and certain supply chain disruptions.
Prices are already up in recent months across all regions,
especially in Asia, which experienced weak spot prices through most
of 2020. Margins should also benefit from better overhead
absorption in 2021, which was a headwind last year due to weaker
production volumes. Coatings demand across all major regions and
end markets is likely to be favorable for the year, while most
markets for plastics and other end markets should also be firm or
robust.
As proposed, the new credit facility is expected to provide a
substantially similar covenant package compared to the existing
credit facilities, but does provide incremental facility capacity
not to exceed the sum of (i) the greater of $700 million and 100%
of adjusted EBITDA, plus (ii) the amount of certain voluntary
prepayments of indebtedness, plus (iii) an unlimited amount,
subject to a maximum first lien net leverage ratio of 3.50 to 1.00
in the case of pari passu incremental facilities, a maximum secured
net leverage ratio of 4.50 to 1.00 in the case of junior secured
incremental facilities, and either a maximum total net leverage
ratio of 5.00 to 1.00 or minimum 2.00 to 1.00 cash interest
coverage ratio in the case of unsecured incremental facilities, in
each case on a pro forma basis.
The new credit facility is expected to require 100% of net cash
proceeds from assets sales and insurance awards (in excess of a
threshold of the greater of $35 million and 5.00% of Consolidated
EBITDA) to be used to repay the term loans, if not reinvested
within 18 months, with step-downs to 50% and 0% on the prepayment
requirement, based on first lien net leverage ratios of less than
or equal to 3.00:1.00 and 2.75:1.00, respectively.
The new credit facility is expected to require prepayments of term
loans using excess cash flow in an amount equal to 50% of excess
cash flow in excess of a threshold of the greater of $35 million
and 5.00% of Consolidated EBITDA), with step-downs to 25% and 0%
upon achievement of first lien net leverage ratios less than or
equal to 3.00:1.00 and 2.75:1.00 respectively. The new credit
facility is expected to have substantially the same guarantors and
collateral package as the existing credit facilities.
The SGL-2 rating reflects good liquidity including $619 million
cash balances and $422 million available under the revolving credit
agreements as of December 31, 2020. In March 2019, the company,
through its South African subsidiaries -- Tronox KZN Sands
Proprietary Limited and Tronox Mineral Sands Proprietary Limited --
established R1 billion (approximately $68 million at December 31,
2020 exchange rate) revolver due March 2022 and R2.6 billion term
loan (approximately $177 million at December 31, 2020 exchange
rate) facility due March 2024. The new cash flow revolver will
contain a springing maximum first lien leverage ratio of 4.75:1.00
which will trigger if utilization exceeds 35% (less undrawn LCs and
cash collateralized LCs). The new term loan will not have a
financial covenant. The South African revolver contains net
leverage and coverage tests, which would not trigger events of
default and allow for cure periods. We expect Tronox to generate
free cash flow in 2021.
The stable outlook assumes TiO2 prices and volumes continue to
recover allowing at least modest improvement in EBITDA and metric
trends and positive free cash flow for the year. The stable outlook
also assumes that the Cristal transaction continues to generate
target synergies and good liquidity is maintained through the
medium term.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require the company to maintain its commitment to
deleveraging and reducing balance sheet debt to $2.5 billion or
less ahead of the next trough and on a sustainable basis. An
upgrade would also require the favorable trends and realization in
acquisition synergies continue, and confidence that the company
will maintain at least $300 million of available liquidity.
Moody's would consider a downgrade if expectations or actual
results show substantive fundamental weakening resulting in
negative free cash flow anytime over the next two years. Moody's
would also consider a downgrade if the cycle in TiO2 turns down
before the company is able to meaningfully reduce debt, or if the
company fails to realize a meaningful portion of anticipated
operating synergies, or if adjusted financial leverage remains
above 5.0x, or if available liquidity falls below $250 million.
ESG CONSIDERATIONS
ESG risks and exposures are not a factor in the rating action and
are not a significant factor in the company's ratings at this time.
Environmental exposure and costs for commodity companies can be
meaningful, and even more so for TiO2 players. Approximately 87% of
Tronox's TiO2 production use the chloride process, which is a
continuous process, has lower energy requirements, produces less
waste and is less environmentally harmful than the sulfate-based
process. Tronox assumed additional environmental exposure and costs
as part of the Cristal acquisition and has booked a $56 million
provision for environmental costs related to the remediation of
residual waste mud and sulfuric waste deposited in a former TiO2
manufacturing site operated by Cristal from 1954 to 2011. The
provision is significant but related expenditures are likely to
spread over many years.
Social risks are moderate but potentially increasing as the ongoing
hearings between the EU Commission and the industry may result in
tighter regulation for TiO2, the scope of which is not yet clear as
there is still debate over the carcinogenicity of TiO2. As a public
company, governance issues are viewed as modest and supported by
what has thus far been communication of reasonable financial
policies for the ratings category.
Tronox Holdings Plc (Tronox), re-domiciled in United Kingdom in
March, 2019. Including the acquisition of Cristal, Tronox is the
world's second largest producer of titanium dioxide (TiO2) and is
the most backward integrated among the leading western pigment
producers into the production of titanium ore feedstocks. It also
co-produces zircon, pig iron and other products. The company
operates nine pigment plants and eight mineral sands facilities
globally. Exxaro Resources Limited ("Exxaro") continues to own
about 10.3% shares of Tronox as of December 31, 2020. Pursuant to
the terms of the share repurchase agreement, Exxaro has the right
to sell its ownership in Tronox at any time. Tronox's revenues were
$2.8 billion for the twelve months ended December 31, 2020.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
TRONOX INC: NAACP Bid to Reopen Case Junked
-------------------------------------------
Judge Michael E. Wiles of the United States Bankruptcy Court for
the Southern District of New York, denied the motion filed by the
National Association for the Advancement of Colored People
("NAACP") to reopen adversary proceeding number 09-01198 and to
also reopen the chapter 11 cases of Tronox Incorporated and its
affiliates, and to intervene as an interested party.
Tronox Incorporated and its affiliated Debtors filed voluntary
chapter 11 petitions on January 12, 2009. The Court confirmed the
first amended joint plan of reorganization for the Debtors on
November 30, 2010. The confirmation order and the Plan incorporated
the terms of an Environmental Claims Settlement Agreement that had
been filed in November 2010. The Environmental Claims Settlement
Agreement had been negotiated by the Debtors with various United
States agencies, the Navajo Nation, 22 states and a number of
municipalities. The final versions of the Environmental Claims
Settlement Agreement and of the Trust documents were approved on
February 14, 2011.
The Plan and the Environmental Claims Settlement Agreement created
five separate trusts which the parties have referred to,
collectively, as the "Environmental Response Trusts." The Trusts
received funding in the amount of $270 million at the time of
confirmation. They were also entitled to receive 88 percent of the
proceeds of a separate adversary proceeding that had been commenced
against Kerr-McGee Corporation, Anadarko Petroleum Corporation and
other defendants. The Anadarko Litigation challenged some
corporate transactions that pre-dated the Tronox bankruptcy case,
and alleged that Tronox and its predecessors had transferred assets
in ways that turned out to be fraudulent as to creditors. The Plan
also established a litigation trust that was responsible for
pursuing the fraudulent transfer claims in the Anadarko
Litigation.
Each of the Environmental Response Trusts took title to some
contaminated or potentially contaminated properties. Each
governing Trust document, and the Environmental Claims Settlement
Agreement as well, designated a particular government authority to
act as the lead agency with respect to each separate Trust. In
some instances the Trust documents also designated an additional
non-lead agency. The Trust documents state quite clearly that the
governmental entities are the sole beneficiaries of the Trusts.
Oversight of the Trusts was vested with the governmental entities
who were the creditors in the bankruptcy case and for whose benefit
the Trusts were established. The Environmental Claims Settlement
Agreement explicitly stated that it does not create rights in or
grant causes of action to any person who is not a party to the
agreement.
The NCAAP expressed concerns about the operations of the Trusts,
and explained that the purpose of its intervention is to ensure
that the settlement funds "reach the communities of color damaged
by Kerr-McGee and to assure the funds are spent for their intended
purposes."
"The NAACP seeks to reopen the adversary proceeding against
Kerr-McGee and Anadarko. However, that proceeding has nothing to
do with the actions by the Trusts that the NAACP has criticized.
The Anadarko litigation was just a funding vehicle for the Trusts,
and the settlement for the Anadarko litigation was approved long
ago. There is no reason at all why that adversary proceeding
either could or should be reopened. There is no challenge to the
settlement terms, nor has any ground been identified that would
enable the NAACP, as a nonparty, to reopen that long closed
litigation. As to the bankruptcy case itself: cases may be
reopened to administer assets of an estate, but the Trusts here are
not assets of the estate. The estates have no interest in the
assets that were transferred to the trusts and the estates are not
beneficiaries of the trust. The administration of estate assets is
therefore not a ground for reopening the bankruptcy case. The
NAACP wants discovery, but as a general matter, parties have
discovery rights only in connection with an actual claim or
proceeding... There are circumstances under 2004 of the Federal
Rules of Bankruptcy Procedure under which I may authorize discovery
as to the acts and conduct of a debtor or as to matters that affect
the administration of the estate... But the requested discovery
here involves acts of the Trusts and the Trust beneficiaries, not
acts of the debtors. The requested discovery also involves the
Trusts' use of assets that ceased to be parts of the estates when
they were transferred to the Trusts and in which the estates
retained no interest. Rule 2004 therefore would not support the
requested discovery," Judge Wiles explained.
"The NAACP's real complaint is about the ways the Trusts are using
funds. It is not even clear if that is a criticism of the Trusts
themselves or whether it is a criticism of the various federal and
state agencies who are the beneficiaries of the Trusts. However,
there is nothing in the Bankruptcy Code or the terms of the
confirmed Plan or the Trust documents that puts any of that under
my control or supervision... In this case, the use of money by the
Trusts does not involve the estates and does not affect the
estates. Nor are the Trusts' uses of funds matters over which the
Court reserved any jurisdiction. How governments or any other
creditors use the funds that they receive in distributions from
bankruptcy cases is up to those creditors and is not subject to a
bankruptcy court's control or oversight. Private citizens and
private organizations may have rights under environmental laws or
other non-bankruptcy laws to challenge the conduct of governmental
agencies, or perhaps the conduct of Trusts that are effectively
under the control of the government agencies as their sole
beneficiaries. If a private citizen or organization thinks that
the government agency or the relevant trust is acting wrongfully
and in violation of some other legal duty (whether under the
federal constitution, other federal statute, state law or common
law), a citizen or organization may pursue whatever remedies they
have under non-bankruptcy laws. But those complaints are not
bankruptcy issues, and they are not made bankruptcy issues just
because some of the underlying money originally came from
distributions in a bankruptcy case. The issues raised here do not
relate to the administration of the bankruptcy estate and I have no
jurisdiction over them," Judge Wiles further explained.
The case is In re TRONOX INCORPORATED, et al., Chapter 11, Debtor.
TRONOX INCORPORATED, TRONOX WORLDWIDE LLC f/k/a Kerr-McGee Chemical
Worldwide LLC, and TRONOX LLC f/k/a Kerr-McGee Chemical, LLC,
Plaintiffs, v. KERR-McGEE CORPORATION, et al., Defendants (Bankr.
S.D.N.Y. Case No. 19-10156 (MEW), Confirmed Cases Adv. Pro. 09-1198
(MEW)).
A full-text copy of the Bench Decision Denying Motion to Reopen
Chapter 11 Case and Adversary Proceeding, dated February 17, 2021,
is available at https://tinyurl.com/1fs9yysn from Leagle.com.
The National Association for the Advancement of Colored People
(NAACP) is represented by:
Norma Ortiz, Esq.
ORTIZ & ORTIZ, LLP
35-10 Broadway, 2nd Floor
Astoria, NY 11106
Tel: (718) 522-1117
- and -
Wilbur Colom, Esq.
WILBUR COLOM, ESQ.
200 6th St N Ste 700
Columbus, MS, 39701-4561
Tel: (662) 327-0903
Tronox Incorporated Tort Claims Trust is represented by:
Robert G. Sanker, Esq.
Bethany P. Recht, Esq.
KEATING MUETHING & KLEKAMP PLL
One East Fourth Street
Suite 1400
Cincinnati, OH 45202
Tel: (513) 579-6400
Email:rsanker@kmklaw.com
brecht@kmklaw.com
Plaintiff-Intervenor United States of America is represented by:
Alan S. Tenenbaum, Esq.
UNITED STATES DEPARTMENT OF JUSTICE
P.O. Box 7611
Ben Franklin Station
Washington, DC 20044-7611
Tel: (202) 514-5409
Email: alan.tenenbaum@usdoj.gov
- and -
Robert Yalen, Esq.
Peter Aronoff, Esq.
Lawrence Fogelman, Esq.
UNITED STATES DEPARTMENT OF JUSTICE
86 Chambers Street
3rd Floor
New York, NY 10007
Tel: (212) 637-2800
Email: robert.yalen@usdoj.gov
peter.aronoff@usdoj.gov
lawrence.fogelman@usdoj.gov
Anadarko and Kerr-McGee Entities are represented by:
Thomas R. Lotterman, Esq.
Duke McCall, III, Esq.
MORGAN, LEWIS & BOCKIUS LLP
1111 Pennsylvania Ave. NW
Washington, DC 20004-2541
Tel: (202) 373-6607
Email: thomas.lotterman@morganlewis.com
duke.mccall@morganlewis.com
The Trustee is represented by:
Philip Karmel, Esq.
David Unseth, Esq.
Khaled Tarazi, Esq.
BRYAN CAVE LEIGHTON PAISNER LLP
1290 Avenue of the Americas
New York, NY 10104-3300
Tel: (212) 541-2000
Email: pekarmel@bclplaw.com
dmunseth@bclplaw.com
Cynthia Brooks, President of Greenfield Environmental Trust Group
Boston, Massachusetts is represented by:
Nicholas Nesgos, Esq.
ARENT FOX LLP
800 Boylston Street, 32nd Floor
Boston , MA 02199
Tel: (617) 973-6100
Email:Nicholas.Nesgos@arentfox.com
The Georgia Attorney General is represented by:
Whitney Groff, Esq.
GEORGIA OFFICE/ATTORNEY GENERAL
40 Capitol Square, SW
Atlanta, GA 30334
Tel: (404) 458-3600
About Tronox Inc.
Tronox Inc., a/k/a New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-10156)
on Jan. 13, 2009, before Hon. Allan L. Gropper. Richard M. Cieri,
Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at
Kirkland & Ellis LLP in New York, represented the Debtors. The
Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel;
Rothschild Inc. as investment bankers; Alvarez & Marsal North
America LLC, as restructuring consultants; and Kurtzman Carson
Consultants served as notice and claims agent.
An official committee of unsecured creditors and an official
committee of equity security holders were appointed in the cases.
The Creditors Committee retained Paul, Weiss, Rifkind, Wharton &
Garrison LLP as counsel.
Until Sept. 30, 2008, Tronox was publicly traded on the New York
Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox
has traded on the Over the Counter Bulletin Board under the symbols
TROX.A.PK and TROX.B.PK. As of Dec. 31, 2008, Tronox had
19,107,367 outstanding shares of class A common stock and
22,889,431 outstanding shares of class B common stock.
On Nov. 17, 2010, the Bankruptcy Court confirmed the Debtors' First
Amended Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, dated Nov. 5, 2010. Under the Plan, Tronox
reorganized around its existing operating businesses, including its
facilities at Oklahoma City, Oklahoma; Hamilton, Mississippi;
Henderson, Nevada; Botlek, The Netherlands and Kwinana, Australia.
TTM TECHNOLOGIES: Fitch Gives BB Rating on $500MM Unsecured Notes
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB'/'RR4' rating to TTM Technologies,
Inc.'s (TTM) newly issued $500 million senior unsecured notes.
TTM's existing ratings are unchanged by this action.
Proceeds from the issuance will be used to repay the existing $375
million 5.625% senior unsecured notes as well as the $40 million
balance on the US ABL facility with the balance used for general
corporate purposes. Fitch's actions affect approximately $1.5
billion of committed and outstanding debt.
KEY RATING DRIVERS
Improved End-Market Mix: TTM has continued to pursue its strategy
to reduce operating volatility by seeking an increased mix of sales
into end markets with advantageous characteristics. The company
eliminated its exposure to deeply cyclical consumer electronic
device markets following the 2020 sale of four Chinese
manufacturing plants that comprised its mobility business for $550
million plus the retention of certain accounts receivable.
In place of these sales, TTM has increased its exposure to
favorable end markets, such as automotive and aerospace and defense
(A&D), which have longer product cycles, deeper customer
engagement, lower threat of competitive displacement and decreased
order volatility. In 2015, TTM's acquisition of Viasystems Inc.
materially increased exposure to automotive end markets to 20% of
revenue from 2% in the prior year, and the 2018 acquisition of
Anaren increased exposure to A&D markets to 20% on a pro forma
basis from 16% in the prior year.
Fitch believes the improved end-market mix contributes to lower
revenue volatility through economic and product cycles, introduces
new sources of secular growth, and presents opportunities for
margin enhancement through deeper customer engagement, increased
advanced product sales, longer product cycles and increased returns
on capital investment.
Reduced Customer Concentration: The divestiture of TTM's Mobility
business significantly reduces customer concentration by nearly
eliminating sales to the company's largest handset original
equipment manufacturer (OEM) customer that represented 15%-20% of
revenues during 2016-2019. While TTM's remaining OEM clients also
operate in concentrated markets, such as A&D, wireless
infrastructure and autos, the company's revenue exposure to its top
five clients has been reduced to 29% in 2020 from 32%-37% during
2016-2019.
Fitch believes the remaining large customers improve revenue
stability and visibility through favorable secular trends, longer
product cycles and deeper design engagement..
Commitment to Leverage Target: TTM management has expressly
committed to a long-term net leverage target of 2.0x EBITDA. The
company has demonstrated willingness to exceed the target for M&A
opportunities, but management historically prioritized debt
repayment to return to the long-term target in two to three years
following an acquisition. The 2015 Viasystems acquisition took pro
forma net leverage (excluding synergies) to 4.1x and was followed
by $220 million in voluntary debt prepayment, reducing net leverage
to 2.1x by YE 2016. The 2018 Anaren acquisition was similarly
followed by an initial $144 million in voluntary term loan
prepayments.
While demand challenges in the company's consumer electronics and
automotive end-markets resulted in gross leverage remaining
stubbornly above Fitch's 3.5x negative sensitivity, TTM underscored
its commitment to reduced leverage through a $400 million
prepayment of the term loan and repayment of the $250 million
convertible notes, funded by proceeds from the sale of the Mobility
segment and FCF, returning gross leverage to 3.1x. Pro forma for
the current transaction, Fitch estimates a moderate increase in
gross leverage to 3.4x, consistent with Fitch's sensitivities range
for the rating.
Product Necessity: TTM produces printed circuit boards (PCBs),
which are used to connect the underlying circuitry in nearly all
electronic and computing products. Given the product's necessity,
long-term demand for PCBs is secure, despite short-term economic
cyclicality. Fitch believes the ubiquitous nature of and
sustainable demand for PCBs is supportive of the company's credit
profile.
Reliable FCF Generation: TTM generated FCF margins averaging 6.6%
over the most recent four years and has demonstrated strong cash
flow resiliency during adverse environments, with a 2018 trough
margin that still exceeded 4.0%. Fitch believes the acquisition of
the higher margin Anaren and sale of the Mobility segment,
increased sales of advanced technologies, opportunities to engage
clients in complex design and engineering work, accelerated demand
growth in attractive end markets such as A&D and automotive, longer
product runs and lower upfront capital investment, may drive
improved FCF margins over the long term.
Fragmented Industry: The PCB industry contains nearly 2,600
manufacturers, with the top five, including TTM, accounting for
4%-5% market share each. Fitch believes the high fragmentation
results in ongoing pricing pressure, low margins and revenue
volatility. TTM has improved its competitive positioning through
development of advanced technologies and with the acquisition of
Anaren, which provides competitive advantages in A&D markets, as
well as with its large-scale, global manufacturing footprint
capable of fulfilling the high-volume needs of large OEMs.
Weak Position in Value Chain: TTM often experiences low revenue
visibility given its status as subcontractor, limited backlog of
approximately 90 days, lack of volume commitments in contracts and
short lead times for purchase orders that are typically subject to
cancellation without penalty. Fitch believes the company's position
reduces forecasting ability and contributes to revenue and EBITDA
margin volatility.
DERIVATION SUMMARY
TTM continues to pursue the strategic goal of reducing operating
volatility while increasing exposure to markets with favorable
characteristics. Following the Anaren acquisition in 2018, which
increased exposure to A&D markets, during 2020 TTM completed the
sale of its Mobility business unit a Chinese consortium,
AKMMeadville Electronics (Xiamen) Co., Ltd., for $550 million plus
the collection of certain outstanding accounts receivable. The
transaction eliminated remaining exposure to consumer electronics
markets, which have frequently experienced acute swings in
production volumes due to short lead times, high customer
concentration and elevated seasonality, while also presenting
minimal further growth opportunity due to handset saturation.
TTM's increasing focus on attractive markets, such as A&D,
automotive, medical/industrial and wireless infrastructure enable
the company to benefit from the secular tailwinds driving these
markets including, increased defense spending and strategic focus
on radar and other advanced technology, rising electronic content
in autos, 5G buildout, development of medical instrumentation and
internet of things. Increased exposure to these end markets
provides stronger long-term growth prospects, reduced economic
sensitivity, improved predictability, deeper customer engineering
engagement and longer product cycles.
Fitch views the impacts of the sale and exit from the handset
market positively, as it eliminates many of the adverse dynamics
and risks TTM experienced in recent years, while increasing focus
on stronger end markets and allowing the company to move up the
value chain with more highly engineered products, resulting in a
healthier operating profile.
TTM is well positioned comparably among industry competitors given
its top-five position in the PCB industry, global manufacturing
scale, end-market diversification, focus on leading advanced
technology PCBs, deep engineering engagement with customers and
sole position as a U.S.-domiciled PCB manufacturer with the
necessary capabilities to serve sensitive product areas in A&D and
other technology markets. TTM has experienced similar operating
volatility compared with credit peers Jabil Inc. (BBB-/Stable) and
Flex Ltd. (BBB-/Stable), but has generated favorable FCF margins in
the mid to high single digits with few periods of cash burn
throughout cycles.
TTM also maintains similar end-market exposures, with significantly
smaller scale, but has pursued a differentiated strategy by exiting
consumer electronics markets with the sale of the Mobility segment,
likely resulting in reduced future volatility. TTM has also
demonstrated greater willingness to absorb higher leverage for M&A
transactions that fulfil strategic priorities, such as the Anaren
acquisition, that along with deterioration in end markets
contributed leverage elevated above Fitch and management targets
for an extended period. However, the collection of proceeds from
the disposition and subsequent repayments of $400 million on the
term loan and $250 million on the convertible notes reduced gross
leverage back to within Fitch's 3.5x negative sensitivity
threshold. Pro forma for the current transaction, Fitch estimates a
moderate increase in gross leverage to 3.4x, remaining consistent
with Fitch's sensitivities range for the rating.
The ratings reflect the company's improved end-market mix, reduced
customer concentration, gradual progress up the value chain,
demonstrated commitment to prepaying debt to achieve leverage
targets, reliable FCF and expectation for reduced operating
volatility. No Country Ceiling or operating environment aspects
affect the rating. Fitch applied its parent/subsidiary criteria and
determined the IDRs of the parent and subsidiaries should be
equalized due to strong legal, operational and strategic ties.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Transaction: issuance of $500m of senior unsecured notes with
proceeds used to repay existing $375 million 5.625% senior
unsecured notes and the $40 million balance on the US ABL
facility.
-- Revenue: neutral growth in 2021 due to sale of the Mobility
unit, closure of the E-MS plants, pressures in commercial
aerospace end-markets, slowing 5G infrastructure spend in
China and declines in medical instrumentation following
elevated demand during the pandemic; growth of 4%-6% per annum
thereafter due to strength in strategic Defense platforms,
increasing electronic content in Automotive end-markets, 5G
infrastructure buildout, continued Data center expansion, and
commercial Aerospace upgrade cycles;
-- EBITDA margin of 13% in 2021 followed by expansion of 50 bps
per annum due to increased engineering engagement with
customers, growth in advanced technology sales, increased mix
from higher-margin Anaren revenues and operating leverage;
-- Capex: capital intensity of 5%, consistent with recent history
and at the high end of management's 4%-5% target;
-- Shareholder returns: stock repurchases of $50 million per
annum.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Expectation for total debt with equity credit/operating EBITDA
to be sustained below 3.0x;
-- Expectation for gross debt/FCF to be sustained below 6.0x;
-- Improved diversification and increased exposure to more stable
end markets results in reduced cyclicality and improved
visibility.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Expectation for total debt with equity credit/operating EBITDA
to be sustained above 3.5x due to a change in financial
policies and/or deterioration of growth and margin expansion
opportunities;
-- Expectation for gross debt/FCF to be sustained above 7.0x.
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
Robust Liquidity Position: The company's liquidity position has
grown substantially, consisting of over $450 million of readily
available cash and available borrowing capacity under the U.S. ABL
and the Asia ABL facilities of $138 million and $107 million,
respectively, pro forma for the transaction. Strong FCF in fiscal
2019 and 2020, along with the sale of the Mobility unit, has led to
significant growth in cash from $256 million at YE fiscal 2018.
Liquidity is further supported by TTM's reliably consistent FCF
that Fitch forecasts will total nearly $175 million over the
ratings horizon. The transaction along with the repayment of the
$250 million subordinated convertible notes during 2020, improves
the company's maturity schedule with the outstanding term loan due
in 2024 and the new notes due in 2029.
Total committed and outstanding debt, pro forma for the
transaction, consists of:
-- $150 million U.S. ABL facility due 2024, undrawn;
-- $30 million outstanding on the $150 million Asian ABL facility
due 2024;
-- $406 million outstanding principal on the senior secured term
loan due 2024;
-- $500 million outstanding principal on the senior unsecured
notes due 2029.
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.
TTM TECHNOLOGIES: Moody's Rates New $500M Unsecured Notes 'Ba3'
---------------------------------------------------------------
Moody's Investors Service has assigned a Ba3 senior unsecured
rating to TTM Technologies, Inc. proposed offering of $500 million
of new senior unsecured notes. Existing ratings including the Ba2
corporate family rating, Ba1 senior secured credit facility rating,
SGL-1 Speculative Grade Liquidity rating, and the stable outlook
are unchanged. The net proceeds from the offering will be used to
redeem the existing $375 million senior unsecured notes, to repay
$40 million of outstanding balances under the revolving credit
facility, and for general corporate purposes.
Assignments:
Issuer: TTM Technologies, Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD5)
RATINGS RATIONALE
TTM's credit profile benefits from differentiated PCB and RF
product capabilities and market positions, and broad
diversification across end markets. These characteristics have
supported financial performance during the 2020 recession, with
both revenues and EBITDA growing slightly (pro forma for
divestitures) despite declines in some end markets. In 2020, TTM
divested its Mobility business unit for total proceeds of $652
million (including retained accounts receivable), and discontinued
its EMS operations. These actions have resulted in a meaningful mix
shift toward markets with relatively high stability in which TTM
has differentiated positions, notably A&D which accounts for 37% of
pro forma revenues in 2020. However, the company remains exposed to
cyclical end markets and to operating decisions of large OEM and
EMS customers. Profitability is solid with pro forma 2020 EBITDA
margin of 13%, and the business model is strongly cash flow
generative with estimated pro forma free cash flow of $115 million
in 2020.
TTM used Mobility sale proceeds to prepay $400 million of term loan
and used internally generated funds to repay the $250 million
convertible notes that matured in December 2020. As a result,
Moody's-adjusted total leverage pro forma for the Mobility
divestiture and EMS exit declined to 3.3x at the end of 2020. Cash
balances remained very strong at $452 million at the end of 2020
after the repayment of convertible notes, collection of Mobility
receivables, payment of taxes on the Mobility sale and the majority
of EMS restructuring costs. Net of the cash balances, pro forma
Moody's-adjusted net leverage at the end of 2020 was 1.6x. TTM
targeted deleveraging to net leverage of less than 2x following the
acquisition of Anaren in 2018 and this target has been achieved.
The proposed senior unsecured notes issuance and repayment of
existing notes and outstanding revolver balances results in a
slight increase in pro forma Moody's-adjusted total leverage to
3.6x and net leverage to 1.7x as of December 2020. TTM will
continue to evaluate acquisitions over time and has ample financial
flexibility. If the company pursues a larger debt-financed
acquisition, Moody's expects it to direct free cash flow toward
debt repayment to promptly reduce leverage to the company's stated
target net leverage level of less than 2x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation of modest revenue
growth in 2021 and Moody's adjusted total leverage remaining around
3.5x. The ratings could be upgraded if TTM increases its business
scale meaningfully and continues to diversify, generates consistent
revenue growth and expands EBITDA margins, and maintains Moody's
adjusted total leverage below 2.5x. The ratings could be downgraded
if TTM experiences a sustained revenue or margin decline, or if
Moody's adjusted total leverage is sustained above 4.0x and
liquidity meaningfully weakens.
The principal methodology used in this rating was Manufacturing
Methodology published in March 2020.
With revenues of $2 billion in 2020 pro forma for divestitures, TTM
is a global leader in manufacturing of printed circuit boards and
radio frequency components across a broad suite of end market
applications.
TWM RACING: Unsecureds Owed $75K to Get At Least $750 Per Year
--------------------------------------------------------------
TWM Racing Products, Inc., submitted an Amended and Restated
Subchapter V Plan.
The Debtor will continue business operations under the Plan. The
debtor only owns the movable assets of the business. It does not
own the building and land where the business is and has been
operated for many years.
Class 1 consists of Administrative Expenses allowed under Section
503(b) of the Bankruptcy Code. The court entered an order
approving the compensation of the Sub-Chapter V Trustee in the
amount of $6,370.00, by order dated November 16, 2020. That amount
and, any subsequent amount approved by the court, will be paid by
the Debtor in 60 monthly payments beginning one month after the
Effective Date.
Class 4 consists of Unsecured claims. These will be paid from such
funds as are available after payment of Classes 1-2, operating
expenses, including taxes, in three annual installments beginning
one year after the Effective Date. The amount of these
installments will be no less than $750. Unsecured claims total
$74,759.
Class 5 consists of the interests of the equity security holders.
These will retain their interests in the Debtor and maintain its
operations as a going concern.
The funds necessary for the satisfaction of the creditors' claims
shall be derived from net operating profits of the Debtor as well
accounts receivable collected after the filing of the case. In
addition, the Debtor will enter into a combination of loans and new
equity to pay the claims.
Attorney for the Debtor:
THOMAS R. WILLSON
1330 JACKSON STREET
ALEXANDRIA, LOUISIANA 71309
Tel: (318) 442-8658
Fax: (318) 442-9637
E-mail: rocky@rockywillson@law.com
A copy of the Amended and Restated Plan is available at
https://bit.ly/2NSQJwu from PacerMonitor.com.
About TWM Racing Products
TWM Racing Products, Inc., is a closely held corporation formed and
operating under the laws of the State of Louisiana. It is owned by
Kenneth A. Taylor and his brother, John R. Taylor. Their wives
Barbara Frazier Taylor (wife of Kenneth Taylor) and Nancy Taylor
(wife of John R. Taylor) have a community property interest in the
Debtor.
TWM Racing Products, Inc., sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. La. Case No. 20-80142) on March 3,
2020, listing under $1 million on both assets and liabilities. The
Debtor is represented by Thomas R. Willson, Esq.
U.S. GLOVE: Has Cash Collateral Access Thru April 28
----------------------------------------------------
The U.S. Bankruptcy Court for the District of New Mexico has
authorized U.S. Glove, Inc. to use cash collateral on an interim
basis through April 28, 2021 in accordance with the budget and to
provide adequate protection.
As of the Petition Date, the Debtor may be indebted to Michael
Jacobs pursuant to certain loan documents. Pursuant to the Loan
Documents, the Debtor may have granted Jacobs security interests in
property of the Debtor that includes accounts or other cash
collateral.
The Debtor is authorized to use cash collateral for only the
specific items as listed in the budget, or to which additional
expenses Jacobs and the Debtor mutually agree in their respective
sole discretion. Cash Collateral will be used only for the payments
of the budgeted expenses, which may vary by 10% of the aggregate
weekly amounts stated, provided that the variable expenses related
to direct costs for manufacturing will not be subject to this
limitation if such increase is directly related to an unanticipated
customer order, emergency expenses necessary to preserve the estate
may be made up to $5,000 total during the Cash Collateral Period,
and the budget may be modified by any supplemental budget that is
mutually agreeable to Jacobs and the Subchapter V Trustee, or
otherwise approved by the Court.
As adequate protection to Jacobs, the Debtor grants Jacobs and the
Small Business Administration replacement liens in an amount equal
to and in the same priority as they had as of the Petition Date to
the extent that each had a properly perfected security interest in
cash collateral as of the Petition Date. The Debtor is also
authorized to make monthly cash payments to Jacobs in the amount of
$5,000. The Debtor will pay immediately when due all real and/or
personal taxes that accrue post-petition and will also maintain
general property and liability coverage and will continue to
maintain and protect all Prepetition Collateral consistent with the
Prepetition Loan Documents.
A copy of the Order and the Debtor's budget through the week of May
1, 2021 is available at https://bit.ly/3pN976X from
PacerMonitor.com.
About U.S. Glove, Inc.
U.S. Glove, Inc. is a a New Mexico Corporation with its
headquarters located at 6801 Washington Street NE, Albuquerque, New
Mexico 87109. It manufactures hand and wrist support products for
gymnastics and cheerleading, as well as a variety of other
ancillary products, including wristbands, chalk, athletic tape, and
grip brushes designed to enhance athletic performance.
U.S. Glove sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.N.M. Case No. 21-10172) on February 14,
2021. In the petition signed by Randolph Chalker, authorized
person, the Debtor disclosed up to $500,000 in assets and up to $10
million in liabilities.
The Debtor is represented by Thomas D. Walker, Esq., and Chris W.
Pierce, Esq., at Walker & Associates PC; and Justin M. Mertz, Esq.,
and Reza Hajisanei, Esq., at Michael Best & Friedrich LLP, as
counsel.
Michael Jacobs, as Creditor, is represented by Dennis A. Banning,
Esq., and Don F. Harris, Esq., at NM Financial Law, P.C., as
counsel.
US1 CORPORATION: Gets OK to Hire Nicholas B. Bangos as Counsel
--------------------------------------------------------------
US1 Corporation received approval from the U.S. Bankruptcy Court
for the Southern District of Florida to hire Nicholas B. Bangos,
P.A. as its legal counsel.
The firm's services include:
(a) advising the Debtor with respect to its powers and duties
in the continued management and operation of its business and
property;
(b) attending meetings and negotiating with representatives of
creditors and other parties in interest;
(c) advising and consulting the Debtor on the conduct of its
Chapter 11 case, including all of the legal and administrative
requirements of operating in Chapter 11;
(d) advising the Debtor in connection with any contemplated
sales of assets or business combinations;
(e) advising the Debtor in connection with obtaining
post-petition financing and making cash collateral arrangements;
(f) analyzing the Debtor's leases and contracts and the
assumption, rejection or assignment thereof, and analyzing the
validity of liens against the Debtor's assets;
(g) advising the Debtor on legal issues arising in or relating
to its ordinary course of business;
(h) consulting with the Debtor on Florida real estate and land
use issues and performing related-tasks;
(i) taking all necessary actions to protect and preserve the
Debtor's estate, including prosecuting actions on the Debtor's
behalf, defending any actions commenced against the Debtor or its
estate, and representing its interests in negotiations concerning
all litigation in which it is or may be involved;
(j) preparing pleadings;
(k) negotiating and preparing a Chapter 11 plan of
reorganization or liquidation, disclosure statement and all related
documents, and taking any necessary actions to obtain confirmation
of the plan;
(l) attending meetings with third parties and participating in
negotiations;
(m) appearing before the bankruptcy court, any appellate
courts, and the U.S. trustee; and
(n) other services necessary to administer the Debtor's
Chapter 11 case.
The firm will be paid at these rates:
Partners $600 per hour
Associates $175 - $350 per hour
Paraprofessionals $125 per hour
Nicholas B. Bangos is "disinterested" within the meaning of Section
101(14) of the Bankruptcy Code, according to court papers filed by
the firm.
The firm can be reached through:
Nicholas B. Bangos, Esq.
Nicholas B. Bangos, P.A.
2560 RCA Blvd., Suite 114
Palm Beach Gardens, FL 33410
Tel: (561) 781-0202
E-mail: nick@nbbpa.com
About US1 Corporation
US1 Corporation sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-10025) on Jan. 4,
2021. At the time of the filing, Debtor had estimated assets of
less than $50,000 and liabilities of between $1 million and $10
million. Judge Laurel M. Isicoff oversees the case. Nicholas B.
Bangos, P.A. is the Debtor's legal counsel.
W3 TOPCO: Moody's Completes Review, Retains B3 CFR
--------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of W3 Topco LLC and other ratings that are associated with
the same analytical unit. The review was conducted through a
portfolio review discussion held on February 17, 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
W3 Topco LLC's (Total Safety) B3 Corporate Family Rating reflects
its modest size and scale, and some exposure to the volatile
upstream oil and gas market, and moderate level of customer
concentration. The company's rating benefits from geographic
diversification, good liquidity, and exposure to the downstream
energy market. Total Safety has been able to grow its business
through acquisitions while maintaining moderate leverage. However,
if the coronavirus pandemic continues to impact the US economic
outlook and refining industry utilization weakens further, the
company may be faced with some concerns about underachieving the
projected revenues and margins.
The principal methodology used for this review was Global Oilfield
Services Industry Rating Methodology published in May 2017.
WAVE COMPUTING: Delaware Fee Demands Endangers Bankruptcy Sale
--------------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that Delaware's
last-minute demand for franchise tax fees is threatening to upend
bankrupt Wave Computing Inc.'s $61 million sale and its Chapter 11
plan, according to court filings.
The processor technology company filed an emergency motion Tuesday,
Feb. 23, 2021, asking the bankruptcy court to compel the Delaware
secretary of state to issue Good Standing Certificates that it
needs to close the sale to Tallwood Technology Partners LLC. The
sale is the cornerstone of Wave's recently confirmed plan.
Delaware won't issue the certificates unless the franchise tax fees
are paid, Wave said.
There's a "significant possibility" that Tallwood will walk away
from the deal.
The Delaware Secretary of State (the "DSOS"), however, is demanding
that the Debtors remit franchise taxes incurred prior to the
Petition Date, or that have not yet become due and owing or
subject to a validly-asserted administrative claim, for Debtors
Wave, Caustic Graphics, Inc., Imagination Technologies, Inc. and
MIPS Tech, Inc., respectively (the "Franchise Fees"). The 2019
Franchise Fees, which became due and owing March 1, 2020,
represent dischargeable prepetition claims owing to the State of
Delaware. The 2020 Franchise Fees, which the Debtors reserve the
right to contest, will be paid in the ordinary course or per the
Plan's treatment of Administrative Expense Claims.
"The DSOS had an opportunity to object to the Debtors' Plan, file a
proof of claim or otherwise confer with the Debtors during the
pendency of these Chapter 11 Cases to resolve any prepetition
liability of which the DSOS claims it is owed. However, the DSOS
took no such action. This Court should not allow the DSOS to
untimely assert rights it no longer has and eradicate months' of
effort xpended by the Debtors, Tallwood and the Committee to
confirm the Plan, satisfy timely-filed claims, and ensure the
successful exit of the reorganized Debtors as viable companies once
again," Wave Computing said in court filings.
About Wave Computing
Wave Computing, Inc. -- https://wavecomp.ai -- is a Santa Clara,
Calif.-based company that revolutionizes artificial intelligence
(AI) with its dataflow-based solutions.
Wave Computing and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Cal. Lead Case No. 20 50682)
on April 27, 2020. At the time of the filing, Debtors had estimated
assets of between $1 million and $10 million and liabilities of
between $50 million and $100 million.
Judge Elaine M. Hammond oversees the cases.
The Debtors have tapped Sidley Austin, LLP as their bankruptcy
counsel, Affeld Grivakes LLP as conflict counsel, Paul Weiss
Rifkind Wharton & Garrison LLP as special counsel. Lawrence
Perkins, chief executive officer of SierraConstellation Partners
LLC, is the Debtors' chief restructuring officer.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 18, 2020. The committee is represented by Hogan
Lovells US, LLP.
On Nov. 20, 2020, the Court approved the Fifth Amended Disclosure
Statement for the Joint Chapter 11 Plan of Reorganization for Wave
Computing, Inc. and its Debtor Affiliates.
WILLCO XII: FirstBank Agrees to Cash Collateral Use Thru March 31
-----------------------------------------------------------------
Willco XII Development, LLLP and FirstBank, a Colorado banking
corporation, have advised the U.S. Bankruptcy Court for the
District of Colorado that they have reached an agreement regarding
the extension of Willco's use of cash collateral through March 31,
2021, and now desire to memorialize the terms of this agreement
into an Agreed Order.
Between January 29, 2021 and February 22, 2021, there has been no
agreement between the parties for the Debtor's use of FirstBank's
cash collateral. FirstBank reserves any and all of its rights and
remedies with regard to the Debtor's use of cash collateral, if
any, during this time period.
The parties have agreed to further extend and modify the Interim
Order Authorizing Use of Cash Collateral and Providing Adequate
Protection from February 22, 2021 through March 31, 2021 in
accordance with the Amended Budget.
A copy of the Stipulation is available at https://bit.ly/3buOEyO
from PacerMonitor.com.
About Willco XII Development, LLLP
Willco XII Development, LLLP, owns the hotel property at 4851
Thompson Parkway, in Johnstown Colorado, currently identified as
the Comfort Inn & Suites in Johnstown. The company is a unit of
William G. Albrecht's Spirit Hospitality, LLC.
Willco XII Development sought Chapter 11 protection (Bankr. D.
Colo. Case No. 20-16307) on Sept. 23, 2020, to stop its lender from
foreclosing on the property.
The Debtor disclosed $14.2 million in assets and $10.274 million in
liabilities as of the bankruptcy filing. The Debtor's property is
valued at $13 million and secures a $6.4 million first mortgage to
the FirstBank of Colorado and a $3.46 million second mortgage to
Wells Fargo.
Lance J. Goff represents the Debtor as the counsel.
FirstBank, as lender, is represented by:
Chad Caby, Esq.
LEWIS ROCA ROTGHERBER CHRISTIE LLP
1200 Seventeenth St., Ste. 3000
Denver, CO 80202
Tel: 303-628-9583
Email: CCaby@lrrc.com
WINSTEAD'S COMPANY: Unsecured Creditors Will Get 80% in Plan
------------------------------------------------------------
Winstead's Company, a small business case, filed a First Amended
Combined Plan and Disclosure Statement on Feb. 22, 2021.
The Plan is filed under chapter 11 of the Bankruptcy Code with an
election under Subchapter V and proposes to pay creditors of the
Debtor from cash flow from operations. Unsecured creditors holding
allowed claims will receive distributions, which the proponent of
the Plan has valued at approximately 80 cents on the dollar.
With respect to Class 1 Priority Claims, the Debtor will pay all
priority claims totaling $274,179 over 4 years with 4% interest
with monthly payments of $6,191 commencing on June 1, 2021. US
Foods/Andrew O'Hare has filed a secured and priority claim, but
shall be paid as a secured claim only, and not as a priority
claim.
Class 4 All Unsecured Claims Allowed Under Code 502 will be paid
$6,000 a month beginning June 1, 2021, until April 1, 2025, when
the Debtor's payments will increase to $12,000 a month until April
1, 2026, when Debtor's payments will increase to $26,000 a month
until March 2028 for a total of $1,044,000 paid pro-rata to the
unsecured creditors.
Class 5 equity security holders, David Haddad, Nabil Haddad, Peggy
Haddad, and Samia Haddad, will retain their ownership interest in
the Debtor, but will otherwise not receive a distribution under the
Chapter 11 Plan.
Payments and distributions under the Plan will be funded by ongoing
business operations.
A copy of the Combined Plan and Disclosure Statement is available
at https://bit.ly/2NZOAij from PacerMonitor.com.
About Winstead's Company
Winstead's Company operates three Winstead's Restaurant located at
(i)101 Emanuel Cleaver II Blvd., Kansas City, Mo.; (ii) 10711 Roe,
Overland Park, Kansas; and (iii) 4971 W. 135th St., Leawood,
Kansas.
Winstead's Company filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No.
20-20288) on Feb. 24, 2020, listing under $1 million in both assets
and liabilities. Judge Robert D. Berger oversees the case. Colin
Gotham, Esq., at Evans & Mullinix, P.A., is the Debtor's legal
counsel.
Citizens Bank & Trust Company, as lender, is represented by:
Eric L. Johnson, Esq.
SPENCER FANE LLP
1000 Walnut, Suite 1400
Kansas City, MO 64106-2140
Telephone: 816-474-8100
Facsimile: 816-474-3216
E-mail: ejohnson@spencerfane.com
ZEP INC: Moody's Completes Review, Retains Caa1 CFR
---------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of Zep Inc. and other ratings that are associated with the
same analytical unit. The review was conducted through a portfolio
review discussion held on February 9, 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
Zep Inc.'s CFR (Caa1) reflects its high debt-to-EBITDA, small scale
and exposure to volatile raw material costs. The company's private
equity ownership and aggressive financial policies also constrain
its credit profile. The rating is supported by increased product
demand driven by the coronavirus pandemic that will improve Zep's
operating metrics for at least the next 12 months. Once the
coronavirus pandemic subsides, product demand could remain elevated
as some customers may continue to maintain higher standards of
cleaning, sanitation and maintenance in their facilities. The
rating also reflects Zep's good product and end market diversity as
well as its long-term relationships with its top customers.
The principal methodology used for this review was Consumer
Packaged Goods Methodology published in February 2020.
ZOHAR FUNDS: Chancery Doubtful of Tilton Mistake in Fee Settlement
------------------------------------------------------------------
Law360 reports that a Delaware vice chancellor rejected suggestions
Tuesday, February 23, 2021, that distressed-business turnaround
figure Lynn Tilton made a "simple mistake" last 2020 in failing to
notify bankrupt noteholder funds about her unilateral, $6.5 million
legal fee settlement with insurers despite a court order to
maintain the status quo.
Vice Chancellor Joseph R. Slights III made the point during a
videoconference argument on sanctions prompted by a contempt of
court finding against Tilton in August 2020. In that ruling, the
court found that Zohar II Ltd. and affiliates were denied an
opportunity and voice in the insurance settlement, which also
secured releases for the insurer.
About Patriarch Partners
Patriarch Partners, LLC, is a family office/private investment firm
founded by diva of distress Lynn Tilton. Since 2000, through
affiliated investment funds, Tilton has had ownership in and
restructured more than 240 companies with combined revenues in
excess of $100 billion, representing more than 675,000 jobs.
Zohar III, Corp., and its affiliates are investment funds
structured as collateralized loan obligations. Tilton formed
collateralized loan funds -- Zohar I, Zohar II, and Zohar III -- in
2003 to borrow $2.5 billion to buy distressed companies.
Tilton has faced an avalanche of lawsuits, including allegations
from the SEC that her Patriarch Partners improperly valued assets
in its Zohar debt funds and extracted about $200 million in excess
fees from investors.
Zohar CDO 2003-1, Zohar CDO 2003-1 Corp., Zohar II 2005-1, Limited,
Zohar II 2005-1 Corp., Zohar III, Limited, and Zohar III, Corp.
(collectively, the "Zohar Funds"), sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Del. Case Nos. 18-10512 to
18-10517) on March 11, 2018. In the petition signed by Lynn
Tilton, director, the Debtors were estimated to have $1 billion to
$10 billion in assets and $500 million to $1 billion in
liabilities.
Young Conaway Stargatt & Taylor, LLP, is the Debtors' bankruptcy
counsel.
[^] BOOK REVIEW: Macy's for Sale
--------------------------------
Author: Isadore Barmash
Paperback: 180 pages
List price: $34.95
Review by Henry Berry
Order your personal copy today at
http://www.beardbooks.com/beardbooks/macys_for_sale.html
Isadore Barmash writes in his Prologue, "This book tells the story
of Macy's managers and their leveraged buyout, the newest and most
controversial device in the modern financial armament" when it took
place in the 1980s. At the center of Barmash's story is Edward S.
Finkelstein, Macy's chairman of the board and chief executive
office. Sixty years old at the time, Finkelstein had worked for
Macy's for 35 years. Looking back over his long career dedicated
to the department store as he neared retirement, Finkelstein was
dismayed when he realized that even with his generous stock
options, he owned less than one percent of Macy's stock. In the
years leading up to his unexpected, bold takeover, Finkelstein had
made over Macy's from a run-of-the-mill clothing retailer into a
highly profitable business in the lead of the lucrative and growing
fashion and "lifestyle" field.
To aid him in accomplishing the takeover and share the rewards with
him, Finkelstein had brought together more than three hundred of
Macy's top executives. To gain his support for his planned
takeover, Finkelstein told them, "The ones who have done the job at
Macy's are the ones who ought to own Macy's." Opposing Finkelstein
and his group were the Straus family who owned the lion's share of
Macy's and employees and shareholders who had an emotional
attachment to Macy's as it had been for generations, "Mother
Macy's" as it was known. But the opponents were no match for
Finkelstein's carefully laid plans and carefully cultivated
alliances with the executives. At the 1985 meeting, the
shareholders voted in favor of the takeover by roughly 80%, with
less than 2% opposing it.
The takeover is dealt with largely in the opening chapter. For the
most part, Barmash follows the decision making by Finkelstein, the
reorganization of the national company with a number of branches,
the activities of key individuals besides Finkelstein, Macy's moves
in the competitive field of clothing retailing, and attempts by the
new Macy's owners led by Finkelstein to build on their successful
takeover by making other acquisitions. Barmash allows at the
beginning that it is an "unauthorized book, written without the
cooperation of the buying group." But as he quickly adds, his
coverage of Macy's as a business journalist and his independent
research for over a year gave him enough knowledge to write a
relevant and substantive book. The reader will have no doubt of
this. Barmash's narrative, profiles of individuals, and analysis
of events, intentions, and consequences ring true, and have not
been contradicted by individuals he writes about, subsequent
events, or exposure of material not public at the time the book was
written.
First published in 1989, the author places the Macy's buyout in the
context of the business environment at the time: the aggressive,
largely laissez-faire, Reagan era. Without being judgmental, the
author describes how numerous corporations were awakened from their
longtime inertia, while many individuals were feeling betrayed,
losing jobs, and facing uncertain futures.
Isadore Barmash, a veteran business journalist and author, was
associated with the New York Times for more than a quarter-century
as business-financial writer and editor. He also contributed many
articles for national media, Reuters America, and the Nihon Kenzai
Shimbun of Japan. He has published 13 books, including a novel and
is listed in the 57th edition of Who's Who in America.
*********
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
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public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
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the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
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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
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Each Friday's edition of the TCR includes a review about a book of
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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
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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
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*** End of Transmission ***