/raid1/www/Hosts/bankrupt/TCR_Public/210308.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, March 8, 2021, Vol. 25, No. 66
Headlines
1069 RESTAURANT: Golden Corral Operator Emerges from Chapter 11
2374 VILLAGE: Case Summary & Unsecured Creditor
4-S LLC: Rohdes Buying Property in Custer County for $824K
450 S. WESTERN: May 11 Philmont Action Status Conference Set
5 STAR PROPERTY: March 11 Hearing on $375K Sale of Property to Cody
5 STAR PROPERTY: March 11 Hearing on Sale of Winter Haven Property
5X5 CAPITAL: Gets Cash Collateral Access on Final Basis
ACCO BRANDS: Moody's Gives B1 Rating on New $650M Unsecured Notes
ACCO BRANDS: S&P Affirms 'BB-' ICR, Stays Negative Outlook
ADS TACTICAL: S&P Affirms 'B+' Rating on Smaller New Term Loan B
ADVANCE CASE: Allowed Cash Collateral Use on Final Basis
ADVAXIS INC: Amends By-Laws to Clarify Voting Standard
AIRPORT VAN RENTAL: Seeks to Use Cash Collateral Until April 23
ALAMO DRAFTHOUSE: Can Tap $7 Million in DIP Funds
ALAMO DRAFTHOUSE: Interim DIP Financing, Cash Collateral Use OK'd
ALAMO DRAFTHOUSE: Seeks Cash Collateral Access
ALAN M. BLACK: $45K Sale of Slidell Lot 51-A-1 to Girod Approved
ALGOMA STEEL: S&P Alters Outlook to Positive, Affirms 'CCC+' ICR
ALPHATEC HOLDINGS: Incurs $78.99 Million Net Loss in 2020
AMERICAN MILLENNIUM: A.M. Best Cuts Financial Strength Rating to C-
ANKURA HOLDINGS: S&P Assigns 'B-' ICR, Outlook Stable
ARCHROCK INC: S&P Affirms 'B+' Rating on Senior Unsecured Debt
ARIZONA INDUSTRIAL: S&P Lowers 2019B Revenue Bonds Rating to B(sf)
ASCENA RETAIL: Amended Joint Chapter 11 Plan Confirmed by Judge
AUGUSTA MOTORS: Selling Business Assets to Owner's Son for $225K
AULT GLOBAL: Amends Terms of 'At The Market' Equity Offering
AUSTIN HOTEL: Lender AG-L to Auction 100% of Tantallon on April 7
AVIANCA HOLDINGS: Won't Propose Dividend at March 26 Meeting
AVID BIOSERVICES: To Pay Quarterly Dividend on April 1
AVIENT CORP: S&P Alters Outlook to Stable, Affirms 'BB' ICR
AVON PRODUCTS: Moody's Hikes CFR to Ba3 & Alters Outlook to Stable
B2T2 FAMILY: Exclusive Period to File Plan Extended to April 14
BAUMANN & SONS: Asks Court to Extend Plan Exclusivity Thru March 29
BEAVER FALLS, PA: S&P Affirms 'BB+' on 2017B GO Bonds
BENTON ENTERPRISES: Singh Buying Madera County Property for $4M
BERLIN PACKAGING: S&P Rates New $500MM First-Lien Term Loan 'B-'
BESTWALL LLC: Court OKs Probe on Asbestos Claim in Bankruptcy Case
BETA MUSIC: Case Summary & 20 Largest Unsecured Creditors
BIBHU LLC: Trustee Gets OK to Hire Geron Legal Advisors as Counsel
BIOLASE INC: Signs Seventh Amendment to SWK Credit Agreement
BRAZOS ELECTRIC: S&P Lowers ICR to 'D' Due to Bankruptcy Filing
BRILLIANT INDUSTRIES: Hires Michael D. Kwasigroch as Legal Counsel
BROOKS BROTHERS: Court Confirms Chapter 11 Plan Without Opposition
C.R.M. OF SPARTA: Case Summary & 20 Largest Unsecured Creditors
C.R.M. OF WARRENTON: Case Summary & 20 Top Unsecured Creditors
CANYONS END: Seeks Cash Collateral Access
CAPITAL TRUST: S&P Places 'B+' 2018-B Bond Rating on Watch Neg.
CARDINAL BAY: S&P Places 'BB-' Rating on 2016C Bonds on Watch Neg.
CBL & ASSOCIATES: Deadline to File Claims Set for March 26
CBL & ASSOCIATES: Seeks Extension of Plan Exclusivity Until May 31
CE ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors
CENTURY 21: Gets OK to Hire Deloitte as Tax Advisor
CENTURY ALUMINUM: Incurs $123.3 Million Net Loss in 2020
CERIDIAN HCM: S&P Alters Outlook to Stable, Affirms 'B+' ICR
CHRISTOPHER & BANKS: Committee Hires FTI as Financial Advisor
CHRISTOPHER & BANKS: Committee Hires Kelley Drye as Co-Counsel
CHRISTOPHER & BANKS: Committee Hires Pachulski Stang as Counsel
CHURCHILL DOWNS: S&P Affirms BB Issuer Credit Rating, Outlook Neg.
CINEMARK USA: S&P Assigns 'B' Rating on $405MM Sr. Unsecured Notes
CLEARWAY ENERGY: S&P Assigns 'BB' Rating on $925MM Unsecured Notes
CMG CAPITAL: In Chapter 11 to Stop Foreclosure
COMPASS GROUP: S&P Assigns 'B+' Rating on Senior Unsecured Notes
CONSOLIDATED COMMUNICATIONS: S&P Rates Senior Secured Notes 'B+'
CONSTANT CONTACT: S&P Assigns 'B' ICR on Initial Adjusted Leverage
CORNERSTONE ONDEMAND: S&P Upgrades ICR to 'B+', Outlook Stable
COUNTRY FRESH: Auction of All U.S. & Canadian Assets on March 22
COWEN INC: S&P Assigns 'BB-' ICR and Senior Secured Debt Rating
CRC BROADCASTING: Has Cash Collateral Access Thru March 31
CRECHALE PROPERTIES: BYRD & Wiser Represents Two Banks
CRED INC: Examiner Seeks to Hire Ankura as Financial Advisor
CUPPA INC: Seeks to Hire Blanchard Law as Legal Counsel
D.W. TRIM: Seeks to Hire Fox Law Corp. as Legal Counsel
DANNYLAND LLC: AAKA Holdings Buying Paducah Property for $320K
DANNYLAND LLC: Objection Time on Property Sale Shortened to 10 Days
DANNYLAND LLC: Seeks to Shorten Objection Period on Property Sale
DEER CREEK: Property Sale or Refinance to Fund Plan Payments
DISPATCH ACQUISITION: S&P Assigns 'B-' ICR, Outlook Stable
DOWN TOWN ASSOCIATION: Cites Shrinking Membership for Woes
DOWN TOWN ASSOCIATION: Files for Chapter 11 Bankruptcy
EAGLE MANUFACTURING: Central Buying All Assets for $1.27M Cash
EASTMAN KODAK: S&P Alters Outlook to Stable, Affirms 'CCC+' ICR
ED'S BEANS: Unsecured Creditors to Recover 5% in Subchapter V Plan
EDISON INTERNATIONAL: S&P Rates Series A Preferred Stock 'BB+'
EDISON INT’L: Fitch Assigns BB Rating on Series A Preferred Stock
EKSO BIONICS: Board Appoves Bonus Payouts for Execs
ELK CITY: Seeks Cash Collateral Access
ENDO INT'L: Tries to Rework $3.3B Loan as Opioid Litigation Looms
ENDO INTERNATIONAL: S&P Assigns 'B+' Rating on New First-Lien Debt
EXTENDED STAY: S&P Alters Outlook to Stable, Affirms 'B+' ICR
FERRELLGAS PARTNERS: Court Approves Chapter 11 Plan
FERRO CORP: S&P Upgrades ICR to 'BB-' on Improved Metrics
FIELDWOOD ENERGY: Eni Petroleum Has Serious Concerns With Plan
FIT FOOD FRESH: Hits Chapter 11 Bankruptcy Protection
FLITWAYS TECHNOLOGY: Has Until May 14 to File Plan & Disclosures
FMT SJ: Case Summary & 20 Largest Unsecured Creditors
FMT SJ: Fairmont San Jose Files for Chapter 11 Bankruptcy
FOREST CITY: S&P Affirms 'B+' ICR on Planned Life Sciences Sale
FORT DEARBORN: S&P Affirms 'B-' Issuer Credit Rating, Outlook Neg.
FORUM ENERGY: David Baldwin Retires From Board
FRANKLIN AUTO BODY: Pascale Parisien's Bid to Stop Cash Use Denied
GARRETT MOTION: Reaches Deal With Shareholders on Plan
GARRETT MOTION: Wants April 18 Plan Filing Period Extension
GAUKHAR K. KUSSAINOVA: Judgment Creditors Buying McLean Property
GENESIS HEALTHCARE: Wants to Continue Using Cash Collateral
GET CREDIT: Case Summary & 20 Largest Unsecured Creditors
GREAT OUTDOORS: S&P Affirms 'B+' Term Loan Rating After Upsizing
HAUBERT HOMES: Roesch Buying Pleasant Unity Property for $30K
HENRY ANESTHESIA: Gets Cash Collateral Access Thru March 25
HERTZ GLOBAL: Unsecured Lenders Mull Alternate Plan, IPO
HITESHRI PATEL: Benjamin Smith Buying Hillboro Property for $435K
HOME COMBERATION: Hires Analytic Financial as Financial Advisor
HUDSON RIVER: S&P Assigns 'BB-' Rating on Senior Secured Term Loan
IMPRESA HOLDINGS: Unsecureds to Split $250K in Liquidating Plan
INFINERA CORP: Incurs $206.7 Million Net Loss in 2020
INVENERGY THERMAL: S&P Places 'BB' Term Loan Rating on Watch Neg.
JOHN PICCIRILLI: Gets Cash Collateral Access on a Continuing Basis
JSAA REALTY: Plan Says Enterprises to Hike Rental by $1K Per Year
JVA OPERATING: Case Summary & 20 Largest Unsecured Creditors
K3D PROPERTY: Unsecureds Will Get 20% in 72 Months Under Plan
KADMON HOLDINGS: Posts $111 Million Net Loss in 2020
KENAN ADVANTAGE: S&P Upgrades ICR to 'B-' on Good Performance
KONTOOR BRANDS: S&P Alters Outlook to Stable, Affirms 'B+' ICR
KOPIN CORP: Incurs $4.53 Million Net Loss in 2020
KOPIN CORP: Signs $50 Million Sales Agreement with Nicolaus & Co.
LANTHEUS HOLDINGS: S&P Alters Outlook to Neg., Affirms 'B+' ICR
LEARNING CARE: S&P Upgrades ICR to 'CCC+', Outlook Stable
LIGHTHOUSE RESOURCES: UST Says Plan Releases Go Too Far
LINDA M. ARMELLINO: Selling Three Alexandria Townhouses for $1.8M
LPL HOLDINGS: S&P Assigns 'BB+' Rating on Senior Secured Revolver
LUXURY OUTER: Case Summary & 7 Unsecured Creditors
MACY'S RETAIL: S&P Assigns 'B' Rating on New $500MM Unsec. Notes
MAGNOLIA OIL: S&P Alters Outlook to Stable, Affirms 'B+' ICR
MARTIN MIDSTREAM: Incurs $6.8 Million Net Loss in 2020
MATTEL INC: Fitch Raises LongTerm IDR to 'BB', Outlook Stable
MERCY HOSPITAL: Buyer Looks to Flint for Chicago Revival
MERITAGE COMPANIES: Wins April 26 Plan Exclusivity Extension
MGM RESORTS: S&P Lowers Issuer Credit Rating to 'B+', Outlook Neg.
MOBITV INC: Gets Cash Collateral Access on Interim Basis
MONOTYPE IMAGING: S&P Alters Outlook to Stable, Affirms 'B-' ICR
MTPC LLC: Granted Cash Collateral Access on Interim Basis
MURPHY OIL: S&P Rates $550MM Senior Unsecured Notes Due 2028 'BB'
NCL CORP: S&P Downgrades ICR to 'B' on Prolonged Deleveraging Path
NEELKANTH HOTELS: Seeks to Use Cash Collateral Through Sept. 30
NEUMEDICINES INC: Wants Plan Exclusivity Extended Thru July 14
NEWELL BRANDS: Fitch Alters Outlook on 'BB' LT IDR to Positive
NO RUST REBAR: Case Summary & 10 Unsecured Creditors
NORTH TAMPA ANESTHESIA: Cash Collateral Use OK'd on Final Basis
NORTHLAND CORP: Seeks to Extend Plan Exclusivity Until May 24
NRG ENERGY: S&P Affirms 'BB+' Issuer Credit Rating, Outlook Stable
OCEAN POWER: Incurs $3.15 Million Net Loss in Third Quarter
OMNIQ CORP: Gets $6.8M Purchase Orders from Specialty Retailer
ONPOINT OIL: Unsecured Creditors to Get 13.76% in 5 Years in Plan
ORIGINCLEAR INC: Files Series T Preferred Stock COD
ORYX MIDSTREAM: Fitch Alters Outlook on 'B' LT IDR to Positive
OWENS & MINOR: S&P Assigns 'B-' Rating on 500MM Unsecured Notes
PALM BEACH: Gets Access to Northern Trust's Cash Collateral
PAPER SOURCE: Gets Cash Collateral Access on Interim Basis
PAPER SOURCE: Sets Bid Procedures for Substantially All Assets
PAUL F. ROST: Allegheny Oppose Subordination of Real Estate Taxes
PAUL F. ROST: McKeesport Objects to Subordination of Tax Liens
PEARL 53: Unsecureds to Recover 25% to 50% in Settlement Plan
PEELED INC: Healthy Snacks Maker Files Subchapter V Case
PLAYTIKA HOLDING: S&P Alters Outlook to Positive, Affirms BB- ICR
PRECIPIO INC: Appoints Richard Sandberg as Board Chairman
PRECIPIO INC: Ron Andrews Joins Board of Directors
PUBLIC FINANCE AUTHORITY, WI: S&P Cuts Bond Rating to 'D (sf)'
QUAD/GRAPHICS INC: Moody's Alters Outlook on B1 CFR to Stable
R. INVESTMENTS: Seeks Authority to Use Cash Collateral
RAYBURN COUNTRY ELECTRIC: S&P Places 'CC' ICR on Watch Negative
RENTPATH HOLDINGS: Agrees to $52-Mil. Settlement From Costar
RENTPATH HOLDINGS: Seeks Plan Exclusivity Extension Thru June 30
REVERE POWER: S&P Affirms 'B+' Senior Debt Rating, Outlook Negative
ROBERT F. TAMBONE: Private Sale of Jupiter Property for $750K OK'd
ROMANS HOUSE: Unsecured Creditors Get 1.2% to 2.4% in Pender Plan
SABLE PERMIAN: Graves, Dougherty Represents Multiple Parties
SALEM MEDIA: Incurs $54.06 Million Net Loss in 2020
SALLY BEAUTY: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
SANG H. SHIN: Seeks to Hire Milledge Law as Legal Counsel
SCARISBRICK LAND: Allowed to Use Cash Collateral Until May 14
SCP EYE CARE: S&P Assigns B- Issuer Credit Rating, Outlook Stable
SDI PROPERTIES: Seeks to Hire Gabriel M. Wureh as Accountant
SEQUOIA INFRASTRUCTURE: S&P Assigns Prelim 'BB-' Rating on E Notes
SEVEN AND ROSE: Flexspace 360 Buying Charleston Property for $3M
SHD LLC: Plan and Disclosures Due March 8
SIGNIFY HEALTH: S&P Assigns 'B' ICR Following IPO, Outlook Positive
SINALOENCE FOOD: Seeks to Hire JMLIU CPA as Accountant
SIRIUS XM: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
SLIDEBELTS INC: Gets Cash Collateral Access Thru July 4
SLIM DOLLAR: Deadline for Amended Disclosures Moved to April 1
SMWS GROUP: Court Approves Disclosure Statement
SORENSON COMMUNICATIONS: S&P Rates New 1st-Lien Credit Facility B+
SOUTHLAND ROYALTY: Seeks April 19 Plan Exclusivity Extension
STA TRAVEL: Files for Chapter 11 to Wind Down Business
SUMMIT MIDSTREAM: Swings to $189.08 Million Net Income in 2020
SUNOPTA INC: Swings to US$77.5M Net Earnings for Year Ended Jan. 2
SUPERIOR INDUSTRIES: S&P Alters Outlook to Stable, Affirms 'B' ICR
SUPERIOR PLUS: Moody's Affirms 'Ba2' CFR & Rates New Notes 'Ba3'
SYNIVERSE HOLDINGS: S&P Places 'CCC+' ICR on CreditWatch Positive
TAILORED BRANDS: Men's Wearhouse Gets Fresh Funds After Ch.11 Exit
TED & STAN'S: Gets OK to Hire Martin Claire as Appraiser
TENNECO INC: Fitch Alters Outlook on 'B+' LongTerm IDR to Stable
TENNECO INC: S&P Assigns 'B' Rating on New $800MM Senior Sec. Notes
TEXAS SOUTH: Delays Filing of 2020 Annual Report
THOMAS ANTON: Wants to Use Cash Collateral
TIDEWATER ESTATES: $120K Sale of 30-Acre Hancock Property Withdrawn
TITAN INTERNATIONAL: Incurs $65.08 Million Net Loss in 2020
TOWER HEALTH: S&P Lowers Bond Rating to 'BB-', Outlook Neg.
TRIANGLE FLOWERS: Can Use Cash Collateral Until March 25
TRIPLE J PARKING: Case Summary & 8 Unsecured Creditors
TTK RE ENTERPRISE: Selling Egg Harbor Township Property for $272K
TWILIO INC: S&P Assigns 'BB' Rating on New Senior Unsecured Notes
TWIN PINES: Seeks Cash Collateral Access Thru June 30
UNITI GROUP: Swings to $718.8 Million Net Loss in 2020
US FARATHANE: Moody's Assigns B2 Rating to New First Lien Loan
US GLOVE: Seeks to Hire Vaughn CPA as Accountant
USF HOLDINGS: S&P Upgrades ICR to 'B' on Proposed Refinancing
VALARIS PLC: Exclusive Plan Filing Period Extended to April 16
VALLEY FARM: Court OKs Deal on Cash Collateral Access
VERTIV GROUP: S&P Assigns 'B+' Rating on New Sr. Secured Term Loan
VISION MACHINE: Seeks to Hire Darby Law as Legal Counsel
VS HOLDING: S&P Upgrades ICR to 'B' on Strong 2020 Performance
W&T OFFSHORE: Posts $37.8 Million Net Income in 2020
W. KENT GANSKE: Purchase Price of Monona Property Reduced to $275K
W. KENT GANSKE: Rasmussen Buying Monona Property for $275K
WALL010 LLC: Tamamoi & FDRE Oppose to Disclosure Statement
WATLOW ELECTRIC: S&P Assigns 'B' ICR, Outlook Stable
WC SOUTH CONGRESS: Lender Says Disclosure Inadequate
WEISS BUSH: Amends Contract on Sale of Assets to Oltman & Shea
WMG ACQUISITION: Term Loan Add-on No Impact on Moody's Ba3 CFR
YARBROUGH HOSPITALITY: To Seek Plan Confirmation on April 7
[*] Claims Trading Report - February 2021
[] Expiring Debt Cap Will Limit Small Firms' Fast Bankruptcy Filing
[^] BOND PRICING: For the Week from March 1 to 5, 2021
*********
1069 RESTAURANT: Golden Corral Operator Emerges from Chapter 11
---------------------------------------------------------------
Jack Witthaus of Orlando Business Journal reports that the largest
operator of all-you-can-eat buffet Golden Corral emerged on March
4, 2021, from Chapter 11 bankruptcy reorganization, which will
preserve over 1,500 jobs and nearly two dozen locations from
closing.
It's another sign the restaurant industry is coming back after a
terrible 2020 due to the pandemic. In fact, restaurant sales are
expected to grow by 10.2% year over year in 2021 after sales fell
by $240 billion in 2020, according to the Washington, D.C.-based
National Restaurant Association.
Chapter 11 Bankruptcy Backstory
The Chapter 11 case was wrapped up in roughly 5 months after Winter
Park-based 1069 Restaurant Group LLC -- which controls entities
related to roughly 33 Golden Corrals in Florida and Georgia --
voluntarily
filed for Chapter 11 bankruptcy on Oct. 5. Winter Park restaurant
giant Eric Holm's Holm & Holm Corp. Inc. owns 1069 Restaurant Group
LLC.
More than $65 million in debt was restructured to be paid over time
with all creditors voting in favor of the plan, said Scott Shuker
who along with Mariane Dorris, partners at Orlando-based Shuker &
Dorris PA, represented 1069 Restaurant Group LLC and its affiliates
in the bankruptcy proceedings.
Through the bankruptcy proceedings, the Golden Corral operator
rejected unprofitable locations and related leases, leaving the
company with 22 locations versus the 33 locations it entered the
Chapter 11 case with. Currently, 14 locations are owned and eight
are leased.
All of the locations are now open, which is a major increase as
only five were operational in October. Roughly 1,600 jobs will be
preserved as a result of the Chapter 11 case with most of those
jobs in Central Florida.
Restaurant sales
Holm told OBJ his comparable sales across all of his restaurants
are roughly 75% of last year's figures. That said, some locations
are at or above 100% of last year's sales.
"The buffet business is very relevant and strong and making a big
comeback," Holm said. "And the nice thing about is we're about the
only buffet. So if you like a buffet you'll love Golden Corral."
Meanwhile, 1069 Restaurant Group LLC owns and plans to sell its
7251 W. Colonial Drive and 2328 S. Semoran Blvd. locations over the
next few months, Shuker said. Those locations are not currently
open.
The multibillion-dollar U.S. buffet business was hurt immediately
in the wake of Covid-19, as the restaurants' shared spaces made it
challenging to reopen.
Several buffets have closed locations and filed bankruptcy,
including Sweet Tomatoes, which had several locations in Orlando.
Others have attempted to reopen with new rules to encourage safety.
For example, Golden Corral has made several changes including a "We
Serve You" buffet where employees deliver food upon request.
About 1069 Restaurant Group
1069 Restaurant Group, LLC is an operator of franchised buffet
restaurants. The group is the largest Golden Corral franchisee,
with 33 restaurants in Florida and Georgia.
1069 Restaurant Group and its affiliates concurrently filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. M.D. Fla. Lead Case No. 20-05582) on Oct. 5, 2020.
Eric A. Holm, manager, signed the petitions. The Hon. Lori V.
Vaughan is the case judge.
1069 Restaurant Group was estimated to have assets of $10 million
to $50 million and liabilities of $50 million to $100 million.
The Debtors tapped Shuker & Dorris, P.A., led by R. Scott Shuker,
as their counsel, and Rosenfield and Company, PLLC, as their
financial advisor.
The U.S. Trustee for Region 21 appointed a committee to represent
unsecured creditors in the Debtors' Chapter 11 cases on Nov. 3,
2020. The committee is represented by Brinkman Law Group PC.
2374 VILLAGE: Case Summary & Unsecured Creditor
-----------------------------------------------
Debtor: 2374 Village Common Drive LLC
2374 Village Common Drive
Erie, PA 16506
Business Description: 2374 Village Common Drive LLC is primarily
engaged in renting and leasing real estate
properties. The Company is the fee simple
owner of a property located at 2374 Village
Common Drive, Erie, Pennsylvania having an
appraised value of $5.9 million.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Western District of Pennsylvania
Case No.: 21-10118
Debtor's Counsel: Michael P. Kruszewski, Esq.
QUINN, BUSECK, LEEMHUIS, TOOHEY & KROTO, INC.
2222 West Grandview Boulevard
Erie, PA 16506
Tel: (814) 833-2222
Fax: (814) 833-6753
Email: mkruszewski@quinnfirm.com
Total Assets: $6,313,374
Total Liabilities: $6,615,623
The petition was signed by Joseph Martin Thomas, sole member.
The Debtor listed the United States of America Small Business
Administration as its sole unsecured creditor holding a claim of
$715,622.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/HJBNGGQ/2374_Village_Common_Drive_LLC__pawbke-21-10118__0001.0.pdf?mcid=tGE4TAMA
4-S LLC: Rohdes Buying Property in Custer County for $824K
----------------------------------------------------------
4-S, LLC, asks the U.S. Bankruptcy Court for the District of
Nebraska to authorize its private sale to August Shane Rohde and
Jill L. Rohde, husband and wife, for $823,824, pursuant to their
Agreement for Sale of Real Estate, of the real property legally
described as follows:
"That part of the Southeast Quarter (SE1/4) lying East of the
County Road #182 and #401 in Section Twenty-Two (22), Township
Sixteen (16) North, Range Seventeen (17) West of the 6th P.M.,
Custer County, Nebraska EXCEPT parcel deeded to the County of
Custer, State of Nebraska, in Book 186, Page 285 of the Register of
Deeds of Custer County, Nebraska."
Said real property will be sold after the objection time has run,
free and clear of any lien, claim or encumbrance of any party.
The Secured Creditor on the real estate, Citizens Bank & Trust, has
agreed to the sale of said real estate. It will retain its liens,
in the priority established under Nebraska or applicable law, upon
the proceeds of the sale less normal costs associated with a sale.
The Seller will pay the documentary stamp tax and the attorney fees
and expenses in preparation of the sales agreement.
The Buyers will pay the cost of recording of the warranty deed.
The closing/escrow fees and cost of owner's title insurance policy
will be paid 50/50 by the Seller and the Buyers. The Buyers will
pay cost of lenders” title insurance required by Buyers' lender,
if any. Real estate taxes for 2020 and prior will be paid by the
Seller. The Buyers to pay 2021 and subsequent years' taxes. The
proceeds to be paid to Citizens Bank & Trustee in accordance with
Nebraska law and bankruptcy law.
Pursuant to Rule 6004-1(B), the tax consequences of the sale are as
follows:
Estimated tax basis of the property: $1,159,456
Sale price of property: $ 823,824
Net capital loss: $ 336,632
Anticipated net taxable income from sale after adjustments: Unknown
until end of current crop year.
A copy of the Agreement is available at
https://tinyurl.com/3237tu7b from PacerMonitor.com free of charge.
About 4-S, LLC
4-S, LLC sought Chapter 11 protection (Bankr. D. Neb. Case No.
21-40024) on Jan. 12, 2021.
The Debtor estimated both assets and liabilities in the range of $0
to $50,000.
The Debtor tapped John C. Hahn, Esq., at Wolfe, Snowden, Hurd, Ahl,
Sitzmann, Tannehill & Hahn, LLP as counsel.,
Then petition was signed by Douglas Alan Stunkel, Managing Member.
450 S. WESTERN: May 11 Philmont Action Status Conference Set
------------------------------------------------------------
450 S. Western, LLC, a California limited liability company,
submitted a First Amended Chapter 11 Plan of Liquidation and a
Disclosure Statement on Feb. 26, 2021.
The Amended Disclosure Statement added this paragraph: "The Debtor
is currently a party to one adversary proceeding. On February 11,
2021, Philmont Management, Inc. filed a complaint to determine the
validity, priority and extent of its purported mechanic's lien as
asserted against the Sale Proceeds. The adversary proceeding is
styled as Philmont Management, Inc. v. 450 S. Western, LLC, Adv.
Case No. 2:21-ap-01030-ER (the "Philmont Action"). The initial
status conference is set for May 11, 2021."
At the auction and sale hearing held on Oct. 14, 2020, the Debtor's
California Marketplace property was sold to Jake Sharp Capital for
$57,500,000, with terms set forth in the Purchase and Sale
Agreement, executed October 15, 2020. The sale closed on Dec. 8,
2020.
On Nov. 30, 2020, the Debtor, the Official Committee of Unsecured
Creditors, and creditors G 450, Pontis, Five West, Evergreen, and
Philmont Management Inc. entered into a stipulation regarding the
distribution of proceeds, wherein the parties agreed on a schedule
setting out the order of distribution from the sale of the
Property. The first party to be paid was the Los Angeles County
Treasurer and Tax Collector, which would be paid in full for claims
based on taxes for the 2019-2020 and 2020-2021 tax years. Among
the secured creditors, G 450 would be paid in full first, with the
disputed $2 million of its total claim of $30,778,046 to be held in
a segregated trust account. To be paid in full second would be
Pontis, then Five West. Fourth in priority was New Creation
Engineering and Builders, Inc.'s secured claim for $706,425, the
entire amount of which is wholly disputed by the Debtor and is to
be held in a segregated trust account. New Creation was not a
party to the stipulation. Both parts of Evergreen's claim were
also to be paid in full. The last of the secured creditors was
Philmont, whose claim in the amount of $2,361,878 is wholly
disputed and to be held in a segregated trust account. As
acknowledged in the stipulation, Philmont and Evergreen dispute
which party has seniority. The split of the broker fees to be paid
to CBRE and the Jake Sharp Group as the Buyer's broker, is
disputed.
Finally, the remaining portion of the proceeds was transferred to a
segregated debtor-in-possession account pending a further
stipulation or Court order authorizing distributions for attorney's
fees, US Trustee fees, administrative claims, and all other
creditors.
Under the Plan, Class 3 General Unsecured Claims will recover 15%
to 30% of their claims. Each holder of an Allowed Class 3 Claim
shall receive its Pro Rata Share of the Net Available Cash from the
Liquidating Trust, after payment of other claims. Class 3 is
impaired.
A full-text copy of the Amended Disclosure Statement dated Feb. 26,
2021, is available at https://bit.ly/38cUqEA from PacerMonitor.com
at no charge.
General Bankruptcy of the Debtor:
Aram Ordubegian
M. Douglas Flahaut
Christopher K.S. Wong
ARENT FOX LLP
555 West Fifth Street, 48th Floor
Los Angeles, CA 90013-1065
Telephone: 213.629.7400
Facsimile: 213.629.7401
Emails: aram.ordubegian@arentfox.com
douglas.flahaut@arentfox.com
christopher.wong@arentfox.com
About 450 S. Western
450 S. Western, LLC, is the owner and operator of a three-story,
80,316 sq. ft. shopping center -- commonly known as California
Marketplace -- located at the intersection of South Western Avenue
and 5th Street in the heart of Koreatown. The shopping center has
been a staple in the Los Angeles Korean community and is home to 28
thriving and popular stores, restaurants, and retail shops.
450 S. Western sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. C.D. Cal. Case No. 20-10264) on Jan. 10, 2020. At the
time of the filing, the Debtor disclosed assets of between $50
million and $100 million and liabilities of the same range. The
Debtor is a single asset real estate debtor (as defined in 11
U.S.C. Section 101(51B)).
Judge Ernest M. Robles oversees the case.
The Debtor has tapped Arent Fox, LLP as legal counsel; the Law
Offices of Daniel M. Shapiro, as special litigation counsel; and
Wilshire Partners of CA, LLC as financial advisor.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors in the Debtor's case on Feb. 4, 2020. The
committee is represented by Lewis Brisbois Bisgaard & Smith, LLP.
5 STAR PROPERTY: March 11 Hearing on $375K Sale of Property to Cody
-------------------------------------------------------------------
Judge Catherine Peek McEwen the U.S. Bankruptcy Court for the
Middle District of Florida will convene a preliminary hearing on
March 11, 2021, at 1:30 p.m., to consider 5 Star Property Group,
Inc.'s sale of the real property located at 4130 Country Club Road
South, in Winter Haven, Florida, more particularly described as The
Lakes of Region PB 100 PGS 25 & 26 Lot 31, to Shanell Cody for
$375,000.
The Court may continue the matter upon announcement made in open
court without further noticed. Any party opposing the relief
sought at this hearing must appear at the hearing or any objections
or defenses may be deemed waived.
Effective March 16, 2020, and continuing until further notice,
Judges in all Divisions will conduct all hearings by telephone.
Parties should arrange to appear telephonically for this hearing
through Court Call (866-582-6878).
A copy of the Contract is available at https://tinyurl.com/vxsdkc3w
from PacerMonitor.com free of charge.
About 5 Star Property Group, Inc.
5 Star Property Group, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-07801) on Oct. 20, 2020, listing under $1 million in both
assets
and liabilities. Buddy D. Ford, Esq. at BUDDY D. FORD, P.A.
represents the Debtor as counsel.
5 STAR PROPERTY: March 11 Hearing on Sale of Winter Haven Property
------------------------------------------------------------------
Judge Catherine Peek McEwen the U.S. Bankruptcy Court for the
Middle District of Florida will convene a preliminary hearing on
March 11, 2021, at 1:30 p.m., to consider 5 Star Property Group,
Inc.'s sale of the real property located at 2625 Avenue S NW, in
Winter Haven, Florida, more particularly described as Inwood Unit 3
PB 9 PG 7A 7B 7C S13/ 24 T28 R25 Lots 544 & 545, to Joe Rivers for
$190,000.
The Court may continue the matter upon announcement made in open
court without further noticed. Any party opposing the relief
sought at this hearing must appear at the hearing or any objections
or defenses may be deemed waived.
Effective March 16, 2020, and continuing until further notice,
Judges in all Divisions will conduct all hearings by telephone.
Parties should arrange to appear telephonically for this hearing
through Court Call (866-582-6878).
A copy of the Contract is available at https://tinyurl.com/a9mxx42e
from PacerMonitor.com free of charge.
About 5 Star Property Group, Inc.
5 Star Property Group, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-07801) on Oct. 20, 2020, listing under $1 million in both
assets
and liabilities. Buddy D. Ford, Esq. at BUDDY D. FORD, P.A.
represents the Debtor as counsel.
5X5 CAPITAL: Gets Cash Collateral Access on Final Basis
-------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado has
authorized 5X5 Capital LLC to use cash collateral on a final basis
to pay expenses of the estate as described in the approved budget.
5X5 Capital is prohibited, without further Court order, from using
cash collateral with respect to any single week in the Final Budget
in an amount in excess of the aggregate amount budgeted for that
week, however, there will be a permitted a variance of 15%, in the
aggregate, for any amounts listed in the Final Budget for a
particular week. Any amounts listed in the final budget that are
unused in any week may be carried over and used by 5X5 Capital in
any subsequent week and any unused amounts may be utilized for any
other line item within the week or a subsequent week or weeks. 5X5
Capital and secured lenders may extend the period covered by the
Final Budget, without further order of the Court, provided that a
Stipulation Extending Cash Collateral Order signed by counsel to
5X5 Capital and counsel to the Secured Lenders is filed together
with a copy of a budget if there are changes from the Final Budget.
The modified budget will become the Final Budget.
To the extent the secured creditors have valid properly perfected
liens on assets of 5X5 Capital, the secured creditors are granted
adequate protection of their interests in the prepetition cash
collateral in an amount equal to the aggregate post-petition
diminution in value of the pre-petition collateral, including
without limitation, any such diminution resulting from the sale,
lease or use by 5X5 Capital (or other decline in value) of the
prepetition collateral and the imposition of the automatic stay.
The Adequate Protection Obligations will commence February 15,
2021, and be due on the first of each month thereafter for the term
of the Order.
The court enumerated these events of default:
a. 5X5 Capital's failure to make any of the Adequate
Protection Obligations or otherwise cure such payments after 7 days
written notice;
b. the Court's appointment of a chapter 11 trustee or
examiner;
c. conversion of 5X5 Capital's chapter 11 case to a chapter 7
case;
d. failure to comply with the requirements set forth in the
Order;
e. a material adverse change in 5X5 Capital's financial
condition or business operations; or confirmation of a Chapter 11
Plan of Reorganization.
A copy of the final order is available for free at
https://bit.ly/3qknDmW from PacerMonitor.com.
About 5X5 Capital LLC
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.
ACCO BRANDS: Moody's Gives B1 Rating on New $650M Unsecured Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to ACCO Brands
Corporation's new $650 million senior unsecured notes. All other
ratings remain unchanged including the company's Ba3 Corporate
Family Rating and Ba3-PD Probability of Default Rating. The outlook
is stable. The Speculative Grade Liquidity rating is unchanged at
SGL-2.
Proceeds from the new notes will be used to refinance existing debt
including the repayment of the company's $375 million senior
unsecured notes due in 2024 and repayment of a portion of the
company's outstandings under its $600 million revolving credit
facility. To recall, during the fourth quarter of 2020 the company
utilized its revolver to partially finance the acquisition of
PowerA for $340 million. The issuance of the new notes is credit
positive as it extends the company's maturity profile and frees up
availability under the revolving credit facility, thus providing
the company with additional liquidity. Moody's plans to withdraw
the B1 rating of the existing 2024 notes upon their repayment.
Moody's expects that ACCO's operating performance will improve in
2021, benefiting from the acquisition of PowerA and from continued
demand for air purifiers and computer accessories. This growth will
partially be offset from the continued weaker school and office
supply businesses. The uncertainty brought on by the coronavirus
for school re-openings and the slow return of employees to offices
will continue to negatively impact purchases of school and office
supplies. Moody's expects ACCO's 2021 sales to increase by 18%,
including the PowerA acquisition, while Moody's adjusted EBITDA
margins will improve to around 15% from 13.5%. This improvement in
margins will be fueled by the higher profits in the gaming
controller business acquired from PowerA.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: ACCO Brands Corporation
Senior Unsecured Notes, Assigned B1 (LGD5)
RATINGS RATIONALE
ACCO's Ba3 CFR reflects its good scale, solid geographic
diversification and good diversification across office, school, and
electronic products. The rating also incorporates Moody's
expectation of near-term improvement in the company's operating
performance due to the acquisition of PowerA. Moody's expects Debt
to EBITDA will decline to below 4.5x over the next 12 to 18 months.
ACCO's stated leverage goal of 2.5x debt/EBITDA (company
calculated, vs. 4.3x as of 12/31/2020) gives Moody's comfort that
the company will continue to focus on debt repayment over the next
12 to 18 months. Moody's anticipates that ACCO will resume share
repurchases as permitted under its credit agreement only after it
reduces leverage to its target levels. The rating also incorporates
the cyclicality and the mature nature of the office and school
supplies industry. Moody's estimates that approximately 60% of
ACCO's sales are tied to discretionary consumer spending, which
would be negatively impacted by a contraction of the economy. The
remainder is driven more by business spending, which is also
subject to cyclicality. Mitigating these factors is ACCO's solid
market position within the office supply product categories, solid
free cash flow, and good liquidity. Moody's also considers ACCO's
high relevance to its largest customers as positive because it is
one of only a few global suppliers of office products.
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
ACCO from the current weak global 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.
The consumer durables industry is one of the sectors most
meaningfully affected by the coronavirus because of exposure to
discretionary spending.
ACCO is publicly traded and has a balanced financial policy
approach between shareholder distributions and leverage. ACCO has a
moderate dividend ($6 million per quarter) and engages in share
repurchases. Moody's expects share repurchases to be curtailed in
2021 as the company seeks to reduce financial leverage.
Acquisitions are an event risk and focused on higher growth
products and bolstering market share to improve growth since the
bulk of the product portfolio is mature with low growth prospects.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's view that ACCO will return to
growth by mid-2021 as schools and offices gradually reopen, and
that the company will generate free cash flow of approximately $130
million in 2021. Moody's also projects in the stable outlook that
the company will use its free cash towards debt repayment such that
debt to EBITDA falls below 4.5x over the next 12 to 18 months.
The rating could be downgraded if operating performance weakens
because of customer losses or volume reductions, pricing pressure,
or lower consumer spending, or if liquidity deteriorates.
Debt-funded acquisitions or shareholder distributions could also
result in a downgrade. Key credit metrics that could lead to a
downgrade include debt/EBITDA sustained above 4.5x.
The rating could be upgraded if the company maintains solid
reinvestment that sustains profitable growth with a stable to
higher EBITDA margin, generates strong free cash flow. and reduces
leverage. ACCOs financial policy would also need to be consistent
with debt/EBITDA sustained below 3.5x.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
Headquartered in Lake Zurich, IL publicly-traded ACCO Brands
Corporation ("ACCO") manufactures and supplies office, school,
calendar products and select computer and electronic accessories
sold primarily in the US, Europe, Brazil, Australia, Canada and
Mexico. Key brands include AT-A-GLANCE(R), Barrilito(R),
Derwent(R), Esselte(R), Five Star(R), Foroni(R), GBC(R), Hilroy(R),
Kensington(R), Leitz(R), Marbig(R), Mead(R), NOBO(R), Quartet(R),
Rapid(R), Rexel(R), Swingline(R), Tilibra(R) and Wilson Jones(R).
Annual revenues are approximately $1.7 billion as of December 30,
2021.
ACCO BRANDS: S&P Affirms 'BB-' ICR, Stays Negative Outlook
----------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' issuer credit rating on
U.S.-based ACCO Brands Corp. At the same time, S&P assigned a 'BB-'
rating to the proposed senior unsecured debt; the recovery rating
is '4', indicating its expectation for an average recovery
(30%-50%; rounded recovery: 30%).
S&P said, "We assigned a 'BB-' rating to the company's proposed
senior unsecured $650 million notes. The company will use proceeds
from the proposed $650 million senior unsecured notes due 2029 to
repay its current outstanding $375 million notes due 2024, $255
million of borrowings on the revolver that were used to fund the
acquisition of PowerA, and $20 million in fees and call premium.
The notes also push out the current maturity wall in 2024, when all
of the company's debt would have matured at once.
"The affirmation reflects our expectation that the company's
leverage will return to about 5x or below by the end of 2021. The
$340 million acquisition of PowerA was funded by revolver
borrowings and cash on hand and included a $55 million cash earnout
(treated as debt in our adjusted metrics). This led to pro forma
adjusted leverage rising to about 5.7x for the 12 months ended Dec.
31, 2020, from 3.8x for the 12 months ended Dec. 31, 2019. We
expect leverage to decline to about 5x for fiscal 2021 due to the
integration of PowerA, recovery in key markets, and forecasted
incremental debt repayment of at least $50 million. We expect
PowerA to generate at least $50 million of EBITDA in 2021, with
potential upside due to the launch of new generation gaming
consoles and geographic expansion opportunities. Demand trends for
office products will likely remain weak due to uncertainty about
the macroeconomic environment and office reopenings. Nevertheless,
we expect slight improvement over 2020 as the vaccine is
distributed and the company laps the sharp drop in second-quarter
2020 due to pandemic-related office and school closures. In
addition, we expect the company to halt share repurchases
temporarily, which we believe will result in discretionary cash
generation of at least $100 million in 2021. We also expect ACCO to
use cash flows to reduce its revolver debt by at least $50
million.
"The negative outlook reflects our belief that weak demand trends
could persist in 2021 and cause leverage to remain above 5x over
the longer term. For fiscal 2021, we expect revenues to grow in the
low-single-digit percentages (excluding the PowerA acquisition),
fueled by stronger demand trends as lockdowns ease. Despite this,
we believe there are still significant risks that could result in
an organic top-line decline. These include rising COVID-19 cases or
new virus strains leading to sustained lockdowns, a
slower-than-expected vaccine rollout, continued global
macroeconomic weakness resulting in lower white-collar employment,
and increased long-term adoption of remote work and schooling
trends. In addition, underperformance from PowerA due to parts
shortages, an unsuccessful integration, weakened discretionary
spending that causes consumers to trade down, or competition could
result in sales underperformance, leading to sustained leverage of
above 5x.
"We expect that a potential reopening of schools and offices in
North American and Latin America in 2021 would drive year-over-year
top-line improvement. Sales declined dramatically in regions where
schools and offices were closed in 2020. North American sales
declined by 15% due to office closures and weak back-to-school
sell-through, and international segment sales declined by 26.3% due
to school closures in Brazil and Mexico in 2020. In addition, weak
back-to-school sell-through has resulted in some elevated inventory
channels, which would hurt the sell-in for the 2021 season. In
EMEA, sales decreased at a lower rate (10%) in 2020 due to schools
and offices reopening in the back half of the year.
"We expect the company to continue pursuing acquisition
opportunities to diversify its portfolio into faster-growing
consumer durables sectors, offsetting the declines in certain
office product categories. Based on its recent acquisition of
PowerA, we believe the company will target growth companies that
are consumer-facing and can be integrated onto its own back-office
functions. The PowerA acquisition also demonstrated ACCO's
willingness to increase leverage for opportunistic acquisitions
amid weak performance. This could be a further risk to the credit
metrics if the acquisitions underperform or industry conditions for
the base business remain weak. However, the company continues to
generate solid cash flow and has prioritized its commitment to
deleveraging by temporarily pulling back on share repurchases and
repaying debt.
"The negative outlook reflects the risk we could lower the ratings
within the next year if ACCO is unable to reduce leverage to about
5x or below by the end of 2021."
Downside scenario
S&P would lower the ratings if leverage remains above 5x. This
could occur if performance deteriorates from a further weakening of
the macroeconomic environment or if the integration of PowerA is
unsuccessful due to one of more of these factors:
-- White-collar unemployment levels remain weak and take longer to
recover or there is a greater shift to online school learning,
resulting in a significant demand decline for ACCO's office
products;
-- Customers substantially trade down to private-label products,
resulting in market-share losses for ACCO;
-- The PowerA acquisition doesn't meet expectations; or
-- The company continues to demonstrate a more aggressive
financial policy by prioritizing shareholder returns or
acquisitions over debt reduction.
Upside scenario
S&P could revise the outlook to stable if the company deleverages
to below 5x by the end of 2021. It believes this could occur if:
-- Macroeconomic conditions stabilized such that white-collar
employment levels improve and
-- Organic revenue growth resumes.
ADS TACTICAL: S&P Affirms 'B+' Rating on Smaller New Term Loan B
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issue-level rating on ADS
Tactical Inc.'s smaller proposed term loan B. At the same time, S&P
revised the recovery rating to '3' from '4,' indicating its
expectation of meaningful (50%-70%; rounded estimate: 50%) recovery
in a payment default scenario.
Changes to the proposed term loan include a reduction in size to
$475 million from $700 million, likely higher pricing, an increase
in the amortization rate, the addition of a net leverage ratio
covenant, and the shortening of the maturity date to 2026 from
2028. The company is also reducing the size of the planned dividend
to $100 million from $266 million and will be repaying less ABL
borrowings. While the lower debt amount improves leverage ratios,
there is no change to its issuer credit rating or outlook. However,
the smaller term loan does reduce the amount of first-lien debt,
resulting in a higher recovery percentage.
Issue Ratings--Recovery Analysis
Key analytical factors:
-- The proposed capital structure includes a $475 million term
loan B and a $200 million asset-based lending (ABL) facility due
2026. The ABL facility is unrated and the balance at default is
considered a priority claim in our analysis.
-- S&P has valued the company on a going-concern basis using a
5.0x multiple of its projected emergence EBITDA.
-- Other key default assumptions include LIBOR of 2.5% and the ABL
is 60% drawn at default.
Simulated default assumptions:
-- Default year: 2025
-- EBITDA at emergence: $71 million
-- Multiple: 5x
Simplified waterfall:
-- Net enterprise value (after 5% administrative costs): $337
million
-- Priority claims (ABL facility): $123 million
-- Collateral value available to first-lien creditors: $209
million
-- Total first-lien debt: $396 million
--Recovery expectations: 50%-70% (rounded estimate: 50%)
ADVANCE CASE: Allowed Cash Collateral Use on Final Basis
--------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Laudedale Division, has authorized Advance Case Parts, Inc. to
use cash collateral on a final basis in accordance with the budget,
with a 10% variance.
The Debtor is authorized to use eash collateral to pay all ordinary
and necessary expenses in the ordinary course of its business for
the purposes contained in the budget.
As adequate protection for the Debtor's use of cash collateral, CDS
Business Services, Inc. d/b/a Newtek Business Credit, is granted a
post-petition security interest and lien in, to and against any and
all assets of the Debtor to the extent of the diminution resulting
from use of cash collateral, to the same extent and priority that
CDS held a properly perfected pre-petition security interest in
such assets.
The replacement liens and security interests are perfected and
enforceable against the Debtor and all other persons without the
filing of any financing statements or other compliance with
non-bankruptcy law.
As further adequate protection, the Debtor is also directed to pay
CDS payments of $5,000 per week.
The Debtor is also authorized to obtain post-petition Financing
from Paul Vail, in the form of an unsecured loan of $95,000 at 0%
interest, to be repaid upon the second anniversary of the effective
date of Debtor's confirmed plan. Upon delivery of the loan proceeds
to Debtor, the DIP Loan will constitute a valid, binding- and
unavoidable obligation of the Debtor, enforceable against the
Debtor in accordance with the Motion and the Order, and any other
documents executed in connection with the DIP Loan.
A copy of the Order is available at https://bit.ly/3kOkc7e from
PacerMonitor.com.
About Advance Case Parts, Inc.
Advance Case Parts, Inc. -- http://www.advancecaseparts.com--
specializes in products and services for the supermarket and food
industries. The Debtor provides service and replacement parts for
refrigeration units, refrigeration case units, and oven units in
commercial businesses.
Advance Case Parts, Inc. filed for Chapter 11 bankruptcy protection
(Bankr. S.D. Fla. Case No. 20-22320) on Nov. 10, 2020. The petition
was signed by Paul Podhurst, CEO/President. At the time of filing,
the Debtor estimated $1 million to $10 million on both assets and
liabilities.
Judge Peter D. Russin oversees the case.
Eyal Berger, Esq. at AKERMAN LLP represents the Debtor as counsel.
ADVAXIS INC: Amends By-Laws to Clarify Voting Standard
------------------------------------------------------
The Board of Directors of Advaxis, Inc. approved the Second Amended
and Restated By-Laws of the Company, which became effective
immediately.
The Company recently received a stockholder demand letter relating
to the Company's annual meeting of stockholders held on May 4,
2020, which alleged that, under the voting standard generally
applicable to questions brought before a meeting of stockholders,
as set forth in the Company's then current by-laws, broker
non-votes were required to be treated as a vote "against" any such
question. Although the Company does not believe that the
interpretation of the then-current by-laws were correct, the
Company determined that, in order to avoid any uncertainty and to
avoid the cost and expense of any disputes involving the issue, it
would be advisable and in the best interests of the Company and its
stockholders to adopt the Second Amended and Restated By-Laws of
the Company in order to clarify the voting standard.
Accordingly, the Board amended the voting standard generally
applicable to questions brought before any meeting of stockholders,
as set forth in the first sentence of Section 5 of the Second
Amended and Restated By-Laws. As amended, this sentence reads as
follows: "Unless otherwise required by law, the Certificate of
Incorporation or the By-Laws, in all matters other than the
election of directors, the affirmative vote of the majority of
shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the
stockholders." Because stock subject to a broker non-vote is not
entitled to vote on the questions with respect to which the broker
non-vote occurs, the Second Amended and Restated By-Laws make plain
that broker non-votes will have no effect on the outcome of such
questions.
The Board has also determined that it would be advisable and in the
best interests of the Company and its stockholders to re-submit to
the Company's stockholders for ratification a proposal previously
considered at the 2020 Annual Meeting to approve an amendment to
the Company's 2015 Incentive Plan to increase the total number of
shares of common stock authorized for issuance thereunder from
877,744 shares to 6,000,000 shares. The Company will file a
preliminary and definitive proxy statement on Schedule 14A in
connection with the solicitation of proxies for the Company's 2021
Annual Meeting of Stockholders, to be called for, among other
items, the purpose of considering the ratification and approval of
the 2020 Plan Amendment.
If the Plan Amendment Ratification Proposal is not approved by the
affirmative vote of the majority of shares present in person or
represented by proxy at the Company's 2021 Annual Meeting and
entitled to vote on the subject matter, the 2020 Plan Amendment
will be deemed to have not been approved by the Company's
stockholders at the 2020 Annual Meeting. In such case, the 2020
Plan Amendment will be considered void and the total number of
shares of common stock authorized for issuance under the 2015
Incentive Plan will revert back to 877,744 shares, thereby
requiring the Company to rescind any awards granted pursuant to the
2015 Incentive Plan that would cause the number of shares of common
stock issued under the 2015 Incentive Plan to exceed the 877,744
share limitation.
About Advaxis Inc.
Advaxis, Inc. -- http://www.advaxis.com-- is a clinical-stage
biotechnology company focused on the development and
commercialization of proprietary Lm-based antigen delivery
products. These immunotherapies are based on a platform technology
that utilizes live attenuated Listeria monocytogenes (Lm)
bioengineered to secrete antigen/adjuvant fusion proteins.
TheseLm-based strains are believed to be a significant advancement
in immunotherapy as they integrate multiple functions into a single
immunotherapy and are designed to access and direct antigen
presenting cells to stimulate anti-tumor T cell immunity, activate
the immune system with the equivalent of multiple adjuvants, and
simultaneously reduce tumor protection in the tumor
microenvironment to enable T cells to eliminate tumors.
Advaxis reported a net loss of $26.47 million for the year ended
Oct. 31, 2020, compared to a net loss of $16.61 million for the
year ended Oct. 31, 2019. As of Oct. 31, 2020, the Company had
$38.53 million in total assets, $8.35 million in total liabilities,
and $30.18 million in total stockholders' equity.
AIRPORT VAN RENTAL: Seeks to Use Cash Collateral Until April 23
---------------------------------------------------------------
Airport Van Rental, Inc., its affiliated Debtors, and the Official
Committee of Unsecured Creditors submit their Stipulation regarding
the Debtors' use of cash collateral to the U.S. Bankruptcy Court
for the Central District of California, Los Angeles Division.
The Stipulation contains these relevant terms:
(1) The final hearing on the Cash Collateral Motion is
continued from March 17, 2021 at 11:00 a.m., to April 21, 2021 at
11:00 a.m.
(2) The deadline for the Committee and any other parties to
file oppositions or other responses to the Cash Collateral Motion
is extended to April 7, 2021.
(3) The deadline for the Debtors and any other parties to file
replies to any such oppositions or other responses is extended to
April 14, 2021.
(4) The Debtors are authorized to continue to use cash
collateral on an interim basis on the same terms and conditions as
previously approved by the Court through April 23, 2021.
The Debtors were previously authorized to use cash collateral on an
interim basis through March 9, 2021. To provide the Committee with
additional time to evaluate and comment on the proposed budget,
among other things, the Committee has requested that the Debtors
agree to continue the final hearing on the Cash Collateral Motion
from March 17, 2021, at 11:00 a.m. to April 21, 2021, at 11:00
a.m., and to extend the opposition deadline. The Debtors did not
objection to the requested continuance. 1st Source Bank, AFC,
Selig Leasing, Sutton Leasing, United Leasing, and the U.S. Small
Business Administration advised that they have no objection to a
continuance of the hearing. No other party has expressed an
objection.
A full-text copy of the Stipulation, dated March 4, 2021, is
available for free at https://tinyurl.com/af48k9jb from
PacerMonitor.com.
About Airport Van Rental, Inc.
Airport Van Rental -- https://www.airportvanrental.com/ -- is a van
rental company offering short and long-term rentals for road trips,
weekend journeys, moving, and any other group outings. Airport Van
Rental and its affiliates filed their voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Lead Case
No. 20-20876) on Dec. 11, 2020. Yazdan Irani, its president and
chief executive officer, signed the petitions.
At the time of filing, Airport Van Rental disclosed between $10
million and $50 million in both assets and liabilities.
Judge Sheri Bluebond oversees the case.
The Debtors tapped Danning, Gill, Israel & Krasnoff, LLP as their
bankruptcy counsel, CSA Partners LLC as financial consultant, and
Joel Glaser, APC as litigation counsel. Kevin S. Tierney is the
Debtors' chief reorganization officer.
ALAMO DRAFTHOUSE: Can Tap $7 Million in DIP Funds
-------------------------------------------------
Bankrupt movie theater chain Alamo Drafthouse Cinemas on Thursday,
March 4, 2021, got permission from a Delaware bankruptcy court
judge to tap into the first $7 million of its Chapter 11 financing
as it starts on the road to an asset sale it plans to close in May
2021.
At a virtual hearing for Alamo's first-day motions, U.S. Bankruptcy
Judge Mary Walrath approved Alamo's preliminary
debtor-in-possession financing order that the company said it will
need to keep the lights on as it works toward a sale to a pair of
investment firms.
About Alamo Drafthouse Cinema
The Alamo Drafthouse Cinema -- https://drafthouse.com/ -- is an
American cinema chain founded in 1997 in Austin, Texas that is
famous for its strict policy of requiring its audiences to maintain
proper cinemagoing etiquette. Known for offering full meal and
alcohol service at its theaters, the company also operates a movie
merchandise store and an annual genre film festival, Fantastic
Fest. Alamo Drafthouse had 41 locations as of March 31, 2021, with
23 of those locations ran by franchisees.
On March 3, 2021, Alamo Drafthouse Cinemas Holdings, LLC and 33
affiliated companies filed Chapter 11 petitions (Bankr. D. Del.
Lead Case No. 21-10474).
Alamo Drafthouse 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 Company tapped Young Conaway Stargatt & Taylor LLP as
bankruptcy counsel, Portage Point Partners as its financial
adviser, and Houlihan Lokey Capital as its investment banker. Epiq
Corporate Restructuring, LLC, is the claims agent.
ALAMO DRAFTHOUSE: Interim DIP Financing, Cash Collateral Use OK'd
-----------------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware authorized Alamo Drafthouse Cinemas, LLC and its
affiliated Debtors to obtain postpetition financing and use cash
collateral on an interim basis.
As of the Petition Date, the Debtors were indebted and jointly and
severally liable for $104.5 million pursuant to a Credit Agreement,
dated June 13, 2018, among (a) Prepetition Borrower Alamo
Drafthouse Cinemas, LLC, (b) Prepetition Guarantors Alamo
Drafthouse Cinemas Holdings, LLC and Subsidiary Guarantors from
time to time party thereto, (c) Prepetition Agent Fortress Credit
Corp., as Administrative Agent, and (d) the term loan lenders party
thereto.
Prior to the Petition Date, the Prepetition Borrower and the
Prepetition Guarantors granted to the Prepetition Agent for the
benefit of the Prepetition Secured Parties, a security interest in
and continuing lien on all of its right, title and interest in
substantially all of the assets of the Prepetition Borrower and the
Prepetition Guarantors, other than with respect to liquor licenses
and the real property located in Westminster Colorado.
The Debtors had sought authorization to obtain and be obligated in
respect of senior secured postpetition financing on a superpriority
basis under a multi-draw term loan facility consisting of (a) $7
million upon entry of the Interim Order, (b) $13 million upon entry
of the Final Order, and (c) $40 million of Prepetition Obligations,
which shall roll up and convert on a cashless dollar-for-dollar
basis into loans under the DIP Facility upon entry of the Final
Order, pursuant to the terms and conditions of the Interim Order
and the Secured Superpriority Debtor-in-Possession Credit
Agreement, to be entered into by and among Alamo Drafthouse
Cinemas, LLC, as borrower, each other Debtor as guarantor, Fortress
Credit Corp., as agent, the lenders thereto from time to time.
Judge Walrath acknowledged that "the Debtors have an immediate and
critical need to obtain the financing pursuant to the DIP Facility
and to continue to use the Prepetition Collateral (including Cash
Collateral) in order to, among other things, (i) pay the fees,
costs and expenses incurred in connection with the Chapter 11
Cases, (ii) fund any obligations benefitting from the Carve-Out,
(iii) permit the orderly continuation of the operation of their
businesses and avoid the liquidation of these estates, (iv)
maintain business relationships with customers, vendors and
suppliers, (v) make payroll, and (vi) satisfy other working capital
and operational needs."
"The incurrence of new debt under the DIP Documents and use of Cash
Collateral is necessary and vital to the preservation and
maintenance of the going concern value of the Debtors. The
Debtors' use of Cash Collateral alone would be insufficient to meet
the Debtors' cash disbursement needs during the period of
effectiveness of this Interim Order. Immediate and irreparable
harm will be caused to the Debtors and their Estates if immediate
financing is not obtained and permission to use Cash Collateral is
not granted. The terms of the proposed financing under the DIP
Facility are fair and reasonable, reflect the Debtors' exercise of
prudent business judgment, and are supported by reasonably
equivalent value and fair consideration. The adequate protection
provided in this Interim Order and other benefits and privileges
contained herein are consistent with and authorized by the
Bankruptcy Code," Judge Walrath found.
In the Interim Order, the Debtors were, among other things,
authorized to:
(1) execute and deliver the DIP Documents, and to incur and to
perform the DIP Obligations in accordance with, and subject to, the
terms of this Interim Order and the DIP Documents, and to execute,
deliver and perform under all instruments, certificates,
agreements, and documents which may be required or necessary for
the performance by the Debtors under the DIP Documents and the
creation and perfection of the DIP Liens described in and provided
for by this Interim Order and the DIP Documents;
(2) borrow the Interim Amount, subject to any limitations on,
or conditions to, borrowing under the DIP Documents, which
borrowings shall be used solely for purposes permitted under the
DIP Documents, including, without limitation, to provide working
capital for the Debtors and to pay interest, fees, costs, charges
and expenses, in each case, in accordance with this Interim Order,
the DIP Documents and the Approved Budget; and
(3) use Cash Collateral until the Termination Date.
The DIP Agent (for the benefit of the DIP Lenders), was granted,
continuing, valid, binding, enforceable, non-avoidable, and
automatically and properly perfected postpetition security
interests in and liens on all assets, real and personal property,
whether now existing or hereafter arising and wherever located,
tangible and intangible, of each of the Debtors and their
respective Estates, of any kind or nature, existing or later
acquired, currently encumbered or unencumbered, arising or created,
and wherever located.
Subject to the Carve-Out, the DIP Lenders were granted, pursuant to
section 364(c)(1) of the Bankruptcy Code, allowed superpriority
administrative expense claims in each of the Chapter 11 Cases and
any Successor Cases.
As adequate protection for any Diminution of the Prepetition
Secured Parties' interest in the "collateral" resulting from the
subordination of the Prepetition Liens to the DIP Liens and the
Carve-Out, the Prepetition Agent will receive, for the benefit of
the Prepetition Secured Parties:
(a) continuing valid, binding, enforceable and perfected
postpetition replacement liens pursuant to sections 361, 363(e),
and 364(d)(l) of the Bankruptcy Code on the DIP Collateral, which
shall be subject and subordinated only to the Carve-Out, the DIP
Liens and Prepetition Permitted Liens and which (x) shall otherwise
be senior to all other security interests in, liens on, or claims
against the DIP Collateral, and (y) shall not be made subject to or
pari passu with any lien or security interest heretofore or
hereinafter granted in the Chapter 11 Cases or any Successor Cases
and shall be valid and enforceable against any trustee appointed in
any of the Chapter 11 Cases or any Successor Cases, and shall not
be subject to sections 510, 549 or 550 of the Bankruptcy Code;
(b) administrative superpriority expense claims in each of the
Chapter 11 Cases, junior and subordinate only to the Carve-Out and
the DIP Obligations, pursuant to section 507(b) with priority over
any and all other administrative expenses, administrative expense
claims and unsecured claims against the Debtors or their Estates,
now existing or hereafter arising, of any kind or nature whatsoever
as to and to the extent provided by sections 503(b) and 507(b) of
the Bankruptcy Code; and
(c) reimbursement of their respective reasonable fees and
expenses including any professional fees, in each case, without the
need for the filing of formal fee applications, including as to any
amounts arising before or after the Petition Date.
Until the DIP Obligations are indefeasibly paid in full and all
commitments thereunder are terminated, the occurrence of any of
these events, unless waived by the Required DIP Lenders in writing
and in accordance with the terms of the DIP Documents, shall
constitute an event of default:
(a) the failure of the Debtors to perform, in any respect, any
of the terms, provisions, conditions, covenants or obligations
under this Interim Order, including, without limitation, failure to
make any payment under the Interim Order when due or to comply with
any Milestones; or
(b) the occurrence and continuation of an "Event of Default"
under, and as defined in, the DIP Agreement or an event of default
under any other DIP Documents.
As a condition to the DIP Facility and the use of Cash Collateral,
the Debtors shall comply with these Milestones:
(1) On or before March 3, 2021, the Loan Parties shall have
commenced the Cases in the Bankruptcy Court and filed all "first
day" pleadings and "first day" orders;
(2) On or before March 3, 2021, the Debtors shall have filed
with the Bankruptcy Court the 363 Sale Motion and the Bidding
Procedures Motion;
(3) On or before March 5, 2021, the Debtors shall have
executed the Stalking Horse Acquisition Agreement;
(4) On or before March 5, 2021, the Interim DIP Order shall
have been entered by the Bankruptcy Court;
(5) On or before March 26, 2021, the Bidding Procedures Order
shall have been entered by the Bankruptcy Court;
(6) On or before March 26, 2021, the Final DIP Order shall
have been entered by the Bankruptcy Court;
(7) On or before May 3, 2021, the Debtors shall have held an
auction for the sale of the Loan Parties' assets pursuant to the
Bidding Procedures Order;
(8) On or before May 5, 2021, the Bankruptcy Court shall have
entered an order authorizing a 363 Sale Transaction; and
(9) On or before May 17, 2021, the Debtors shall have
consummated the 363 Sale Transaction.
The failure of the Debtors to comply with any of the Milestones
will constitute an immediate Event of Default under the DIP
Documents and the Interim Order.
The Carve-Out consists of:
(a) all fees required to be paid to the Clerk of the
Bankruptcy Court and to the Office of the U.S. Trustee under
section 1930(a) of title 28 of the United States Code plus interest
at the statutory rate;
(b) fees and expenses up to $50,000 incurred by a trustee
under section 726(b) of the Bankruptcy Code;
(c) subject to the Approved Budget, to the extent allowed at
any time, whether by interim or final compensation order,
procedural order or otherwise, all unpaid fees and expenses
incurred by persons or firms retained by the Debtors pursuant to
section 327, 328 or 363 of the Bankruptcy Code and any Committee
appointed in the Chapter 11 Cases pursuant to section 1103 of the
Bankruptcy Code at any time prior to the delivery by the DIP Agent
of a Carve-Out Trigger Notice, but excluding any success fees or
transaction fees other than a Transaction Fee to the extent not
paid and due as of the delivery of the Carve-Out Trigger Notice and
allowed by order of the Court as of such date; provided that such
Transaction Fee shall not exceed $1,500,000; and
(d) Professional Fees incurred after delivery by the DIP Agent
of the Carve-Out Trigger Notice, to the extent allowed at any time,
whether by interim order, procedural order or otherwise in an
aggregate amount not to exceed $300,000 for the Debtor
Professionals and $50,000 for Committee Professionals.
The Final Hearing on the Motion shall be held on March 25, 2021, at
2:00 p.m., prevailing Eastern Time. Any objections or responses to
entry of the Final Order are due March 18.
A full-text copy of the Interim Order, dated March 4, 2021, is
available for free at https://tinyurl.com/5cewjt7c from
PacerMonitor.com.
About Alamo Drafthouse
The Alamo Drafthouse Cinema -- https://drafthouse.com -- is an
American cinema chain founded in 1997 in Austin, Texas that is
famous for its strict policy of requiring its audiences to maintain
proper cinemagoing etiquette. Known for offering full meal and
alcohol service at its theaters, the company also operates a movie
merchandise store and an annual genre film festival, Fantastic
Fest. Alamo Drafthouse had 41 locations as of March 31, 2021, with
23 of those locations ran by franchisees.
On March 3, 2021, Alamo Drafthouse Cinemas Holdings, LLC and 33
affiliated companies filed Chapter 11 petitions (Bankr. D. Del.
Lead Case No. 21-10474). The petitions were signed by Matthew
Vonderahe, chief financial
officer.
Alamo Drafthouse 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 Company tapped Young Conaway Stargatt & Taylor LLP as
bankruptcy counsel, Portage Point Partners as its financial
adviser, and Houlihan Lokey Capital as its investment banker. Epiq
Corporate Restructuring, LLC, is the claims agent.
ALAMO DRAFTHOUSE: Seeks Cash Collateral Access
----------------------------------------------
Alamo Drafthouse Cinemas Holdings, LLC and its affiliated Debtors
ask the U.S. Bankruptcy Court for the District of Delaware for
authority to, among other things, use cash collateral and incur
postpetition debt on an emergency basis.
The Debtors require immediate access to additional liquidity to
both fund the Chapter 11 Cases and preserve the Debtors'
going-concern value during the Sale Process. It is also critically
important that the Debtors communicate to the market that these
Chapter 11 Cases are sufficiently funded to address any concerns
raised by the Debtors' customers, employees, landlords and vendors.
The immediate access to the DIP Facility and the continued use of
Cash Collateral is necessary to avoid immediate and irreparable
harm to the Debtors and is crucial to the Debtors' efforts to
maximize and preserve value for their stakeholders during the
Chapter 11 Cases.
Prior to the filing of the Chapter 11 Cases, the Debtors entered
into the Company RSA, the central pillars of which are an orderly,
fair, and fulsome sale process for all or substantially all of the
Debtors' assets and a $60 million DIP Facility. The Sale Process
and DIP Facility provide a strong foundation for thee Chapter 11
Cases and a viable path forward for the Debtors that will maximize
the value of the Debtors' assets for the benefit of all creditors
(including employees and franchisees), and ensure sufficient funds
remain to pay all administrative expenses of the Chapter 11 Cases
and fund a responsible wind-down process after the proposed sale
closes.
The DIP Facility allows the Debtors to secure postpetition
financing with priming liens and utilize Cash Collateral on a fully
consensual basis, avoiding expensive and potentially value
destructive litigation.
Alamo Drafthouse Cinemas, LLC seek authority to obtain and the
other Debtors, together with the Borrower, to guarantee, in each
case, superpriority secured debtor in possession financing as
evidenced by a Secured Superpriority Debtor-in-Possession Credit
Agreement, dated as of the closing date among the Borrower, the
Guarantors, Fortress Credit Corp. as the administrative agent, and
the lenders party thereto with such DIP Facility consisting of (a)
a multiple draw new money term loan in the aggregate principal
amount of up to $20 million, of which up to $7 million of the DIP
Term Loan will be made available upon entry of the Interim Order,
and the remainder of the DIP Term Loan being made available upon
entry of the Final Order approving the DIP Facility and (b) upon
entry of the Final Order a deemed term loan "roll up" of up to $40
million of Prepetition Loans on a pro rata basis according to their
term loan holdings under the DIP Facility, to be deemed incurred as
of the date of entry of the Final Order.
On June 13, 2018, the Company entered into a Credit Agreement with
Bank of America, N.A., Truist Bank, Texas Capital Bank, and Keybank
National Association, secured by substantially all of the Company's
assets, for an aggregate of $105 million, of which $70 million is a
term loan, $30 million is a development loan, and $5 million is a
revolving line of credit.
Despite the Company's years of success and continued growth,
operations ground to a halt in Spring 2020, with state and local
authorities mandating the closure of movie theaters and indoor
dining businesses. As the national and local effects of the
COVID-19 pandemic became the "new normal," revenue growth became
impossible, and the Company's liquidity became seriously
compromised by summer 2020. During the fall and winter of 2020,
the Company engaged with the Prepetition Lenders to negotiate a
possible debt refinancing and additional liquidity, but those
discussions ultimately were unsuccessful.
In light of the Company's liquidity crisis and inability to reach
an agreement with the Prepetition Lenders on a refinancing or
additional liquidity, beginning in December 2020, ACP Alamo
Finance, Inc., an affiliate of Altamont, CF Almo UB LLC,
Thunderbird Brothers LLC and League Holdings LLC, commenced
negotiations with the Prepetition Lenders to acquire all existing
indebtedness of the Company under the Prepetition Credit Agreement.
The debt under the Prepetition Credit Agreement was sold and
assigned to the Purchasers as of January 6, 2021. In connection
with the purchase of the debt under the Prepetition Credit
Agreement, the Purchasers and the Company negotiated an amendment
to the Prepetition Credit Agreement. Under the Fourth Amendment,
among other things, the Purchasers, in their capacity as lenders
under the Prepetition Credit Agreement, agreed to provide liquidity
to the Company and increased the amount of the term loans under the
Prepetition Credit Agreement by $4 million. Additionally, under
the Fourth Amendment, an affiliate of CF Almo, Fortress Credit
Corp., replaced BofA as the administrative agent under the
Prepetition Credit Agreement.
In February 2021, the Purchasers again agreed to increase the term
loan by $2 million under a fifth amendment to the Prepetition
Credit Agreement. As of the Petition Date, $78.1 million was
outstanding on the term loan, and $29.6 million of the development
loan and $5.0 million of the revolving line of credit has been
drawn.
In April 2020, the Debtors applied for and received a $10.0 million
loan under the Paycheck Protection Program, administered by the
Small Business Administration under the Coronavirus Aid, Relief,
and Economic Security (CARES) Act, pursuant to that certain
unsecured loan agreement by and among Holdings, as borrower, and
Texas Capital Bank, N.A., as lender As of the Petition Date, $10.0
million principal amount remains outstanding under the PPP Loan
Agreement. Shortly after the Petition Date, the Debtors intend to
submit a request for approximately 94.4% loan forgiveness based on
the satisfaction of these requirements and metrics.
As adequate protection for any Diminution of the Prepetition
Secured Parties' interest in the "collateral" resulting from the
subordination of the Prepetition Liens to the DIP Liens and the
Carve-Out, the Debtors propose to grant Prepetition Agent, for the
benefit of the Prepetition Secured Parties, a continuing valid,
binding, enforceable and perfected postpetition replacement liens,
administrative superpriority expense claims in each of the Chapter
11 Cases, and reimbursement of their respective reasonable fees and
expenses including any professional fees.
A copy of the Motion is available at https://bit.ly/3bi9X7N from
PacerMonitor.com.
About Alamo Drafthouse Cinemas Holdings, LLC
Alamo Drafthouse Cinemas Holdings, LLC sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No.
21-10474) on March 3, 2021. In the petition signed by Matthew
Vonderahe, chief financial officer, the Debtor disclosed up to $500
million in both assets and liabilities.
Judge Mary F. Walrath oversees the case.
Matthew B. Lunn represents the Debtor as counsel.
ALAN M. BLACK: $45K Sale of Slidell Lot 51-A-1 to Girod Approved
----------------------------------------------------------------
Judge Meredith S. Grabill of the U.S. Bankruptcy Court for the
Eastern District of Louisiana authorized Alan M. Black and Deni T.
Black to sell their property described as Lot 51-A-1, 158 Blue
Crane Drive, Slidell, Louisiana to Girod REO, LLC in exchange for a
reduction of their indebtedness to Girod in the amount of $45,000,
pursuant to a Partial Dation En Paiement.
The Sale to Girod will be "as is" without any warranty whatsoever.
Girod will be responsible for payment of taxes for the year 2020
and future years. It will be responsible for closing costs and
title insurance costs associated with the Sale.
The Sale of Lot 51-A-1 to Girod is free and clear of all liens,
claims, encumbrances, and other interests of third parties, except
those expressly accepted by Girod. The Clerk of Court for the
Parish of St. Tammany is hereby authorized and directed to cancel
any inferior liens, claim, encumbrances, and other interests of
third parties insofar as Lot 51-A-1 only.
The Order constitutes a final order within the meaning of 28 U.S.C.
Section 158(a). Notwithstanding Bankruptcy Rules 6004(h) and
6006(d), and to any extent necessary under Bankruptcy Rule 9014 and
Rule 54(b) of the Federal Rules of Civil Procedure, as made
applicable by Bankruptcy Rule 7054, the Court expressly finds that
there is no just reason for delay in the implementation of the Sale
Order, and expressly directs that the Order be effective
immediately upon entry.
The Movant will serve a copy of the Order on the required parties
who will not receive notice through the ECF System pursuant to the
Federal Rules of Bankruptcy Procedure and the Local Bankruptcy
Rules and file a certificate of service to that effect within three
days.
Alan M. Black and Deni T. Black sought Chapter 11 protection
(Bankr. E.D. La. Case No. 20-11249) on July 14, 2020. The Debtors
tapped Leo Congeni, Esq., as counsel.
ALGOMA STEEL: S&P Alters Outlook to Positive, Affirms 'CCC+' ICR
----------------------------------------------------------------
On March 2, 2021, S&P Global Ratings revised the outlook on Algoma
Steel to positive from negative and affirmed its 'CCC+' ratings on
the company.
The 'CCC+' ratings reflect S&P's view that Algoma faces refinancing
risk over the longer term due to reliance on favorable market
conditions to maintain capital market access.
The positive outlook indicates that S&P could raise the ratings on
Algoma if strong steel market conditions persist over a protracted
period, mitigating refinancing risk.
The outlook revision primarily reflects improved prospects for
Algoma's liquidity and credit measures over the next two years. S&P
said, "We believe stronger steel market conditions will support
earnings and cash flow generation above our previous expectations,
significantly mitigating the risk of a near-term liquidity
shortfall or debt restructuring. The improvement was mainly spurred
by the dramatic increase in steel prices from depressed levels in
August 2020, which recently reached a historical high. The increase
in prevailing steel prices and corresponding improvement in the
company's cash flow generation has reduced downside risk to
Algoma's liquidity position. We now estimate the company will
generate positive free operating cash flow (FOCF) over the next two
years, which should mitigate the financial risks associated with
future steel price volatility. In addition, we expect credit
metrics will improve compared with our previous estimates,
including adjusted debt to EBITDA in the mid-5x area in fiscal 2021
and below 5x in fiscal 2022."
Strong steel prices are the primary driver of our improved earnings
and cash flow estimates. The hot-rolled coil (HRC) benchmark is
currently trading above US$1,300 per metric ton (/mt), or about
180% higher compared with trough levels in the high-US$400/mt area
in the summer of 2020. The price rally was initiated by a pickup in
end-market demand as economies emerged from lockdowns, further
fueled by supply constraints and thin inventory levels at service
dealers. Producer shutdowns were steep in the early stages of the
COVID-19 pandemic, and supply has been slow to return. S&P said,
"We do not expect prices to be sustained near current levels, and
this mainly reflects our expectation for steel-making capacity to
increase this year. That said, we believe our strong macroeconomic
outlook is supportive of prices above 2020 levels, bolstered by a
steady pipeline of infrastructure projects. We also acknowledge the
degree of near-term stability afforded by Algoma's recent raw
material contracts. As a result, downside risk to our cash flow
estimates relative to our previous expectations has meaningfully
declined and we believe the risk of a liquidity shortfall over the
next 12 months is limited."
S&P said, "We now assume an average HRC price for unsettled future
shipments approaching US$700/mt for the rest of fiscal year 2021
and in fiscal year 2022. Given Algoma's high operating leverage to
higher prices, we expect cash flow to increase substantially in the
last quarter of fiscal 2021 (ending March 31, 2021), offsetting
outflows in the preceding nine months and resulting in slightly
positive FOCF for the full fiscal year. We estimate FOCF will
improve to C$200 million in fiscal 2022. Our forecast incorporates
annual pension contributions of about C$35 million and capital
spending of about C$100 million. In our view, the increase in cash
generation should improve financial flexibility to fund
reinvestments in Algoma's business and reduce reliance on its
revolving credit facility.
"The affirmation reflects our view that Algoma relies on favorable
market conditions to access capital markets, and the inherent
volatility of steel prices. We expect the company to remain in a
much improved financial position over the next two years, but the
rebound in steel prices is a recent development. The steel industry
has proven to be highly volatile, and the long-term sustainability
of Algoma's capital structure remains uncertain. Based on our
estimates, Algoma requires a minimum HRC price in the low US$600/mt
area to generate positive FOCF, which is very close to the
five-year historical average of US$635/mt (as of Feb. 26, 2021). In
our view, a period of weaker-than-expected steel prices could limit
Algoma's ability to reinvest meaningful incremental capital into
its business through the cycle. In particular, we expect the
company will require a blast furnace reline within the next few
years, which is a costly undertaking. In addition, Algoma's debt
levels remain high, and we believe its access to capital markets in
order to refinance future maturities is largely dependent on
continued strength in steel market conditions."
The rating also incorporates the high sensitivity of Algoma's
earnings and cash flows to volatility in steel prices and input
costs. Algoma's scale is small relative to rated steel producers in
the U.S. The company has comparably lower output and a single
production facility that predominantly produces commoditized steel
products. In our view, these factors contribute to higher
volatility of earnings and cash flow. In addition, S&P believes
there are greater risks associated with production outages given
Algoma's reliance on one operational blast furnace. The company's
earnings and margins have significantly fluctuated historically,
typically driven by volatile steel prices and raw material costs
(namely iron ore and metallurgical coal). By way of example,
average HRC prices fell 30% year over year in fiscal 2020,
resulting in slightly negative adjusted EBITDA relative to about
US$360 million in the previous year.
The company's profitability as measured by EBITDA margins is below
average relative to that of global rated peers, particularly
electric arc furnace steelmakers, which have a lower cost profile
than blast furnace operators such as Algoma. The company has
undertaken several initiatives to improve its earnings and cost
structure. To mitigate the risk of rising input costs, Algoma
recently entered an iron ore contract with U.S. Steel Corp. that
locks in 60% of its supply requirements through 2024. The contract
pricing mechanism is indexed to the price of steel, which should
support greater stability of margins. In addition, Algoma's
investments in a new ladle metallurgy furnace and upcoming plate
mill modernization project are collectively expected to contribute
US$60 million to earnings annually (as per the company's estimates)
by broadening the production profile to include more value-added
grades, increasing steelmaking capacity by about 4%, and enhancing
flexibility to vary the product mix based on prevailing market
prices. S&P cannot rule out the possibility of an improvement in
margins, but it believes further sizable capital investments are
required to structurally reduce the cost structure and materially
increase profitability through the downcycle.
The positive outlook reflects improved liquidity and refinancing
prospects amid stronger steel market conditions. Steel prices have
rebounded sharply from lows in mid-2020. The prospect of favorable
market conditions persisting to an extent that supports material
FOCF generation and lower leverage, thereby improving visibility on
capital market access, has increased the likelihood of an upgrade.
S&P said, "We could raise the ratings over the next 12 months if
the company exhibited good long-term prospects for refinancing. We
would expect this to be accompanied by leverage improving below 5x
and substantial positive FOCF over the next two years. This could
occur if HRC prices are sustained above our assumptions for a
protracted period.
"We could consider a negative rating action over the next 12 months
if we envisioned a specific default scenario for Algoma. Such a
scenario would likely include a material deterioration in the
company's liquidity position or increased likelihood of a debt
restructuring. This could follow a sustained decrease in HRC prices
to the low-US$600/mt area or below, given we estimate the company
requires prices to be above this level to generate positive FOCF."
ALPHATEC HOLDINGS: Incurs $78.99 Million Net Loss in 2020
---------------------------------------------------------
Alphatec Holdings, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$78.99 million on $144.86 million of total revenues for the year
ended Dec. 31, 2020, compared to a net loss of $57 million on
$113.43 million of total revenues for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $261.22 million in total
assets, $58.31 million in total current liabilities, $38.03 million
in long-term debt (less current portion), $41,000 in operating
lease liability (less current portion), $11.35 million in other
long-term liabilities, $23.60 million in redeemable preferred
stock, and $129.88 million in stockholders' equity.
"It's no accident that ATEC has averaged nearly 30% revenue growth
over the past eight quarters," said Pat Miles, chairman and chief
executive officer. "We are committed to the intentional,
methodical task of compelling surgeon adoption through clinical
distinction and to evolving our increasingly exclusive sales
footprint. We will continue expanding market share by remaining
focused on the priorities that got us here. I am confident that
the clinical prowess and relentless determination of our team,
coupled with our expanding information-based technology platform,
will allow us to continue to lead the industry in advancing spine
surgery."
Financial Outlook for the Full Year 2021
The Company continues to expect total revenue for the fiscal year
ended Dec. 31, 2021, to approximate $178 million, which includes
U.S. revenue of approximately $176 million. Revenue guidance
reflects expected U.S. revenue growth of approximately 25% compared
to 2020, driven by continued launches of novel procedures and
products and growing traction of the procedures and products
released in 2020. Total revenue guidance contemplates the
anticipated wind-down of the Company's international supply
agreement by August 2021. The Company expects to update guidance
to reflect the positive impact of EOS imaging when that transaction
closes, which is anticipated in second quarter 2021.
The Company said it remains subject to the potential and uncertain
impact of the ongoing COVID-19 pandemic. If hospitals experience a
surge in COVID-19 cases and defer elective procedures to preserve
capacity, the Company's ability to achieve these financial
objectives may be adversely affected.
EOS Tender Offer
On or before March 5, 2021, ATEC expects to file a draft offer
document with the French financial market authority, Autorite des
marches financiers, relating to its Tender Offer Agreement with EOS
to purchase all of the issued and outstanding ordinary shares and
outstanding convertible bonds, of EOS.
Subject to clearance by the French Ministry of the Economy and
Finance and AMF, the Offer will consist of a cash tender offer
price of EUR2.45 (or approximately $2.99) per EOS Share and EUR7.01
(or approximately $8.55) per OCEANE, respectively, for a total
purchase price of approximately $117 million. Once approved, the
Offer will be open for tender during an initial acceptance period
of 25 Euronext Paris trading days. The obligation of ATEC or its
affiliates to purchase EOS Shares and OCEANEs pursuant to the Offer
is subject to the satisfaction or waiver of the condition that a
number of EOS Shares and OCEANE have been validly tendered that
would allow ATEC to acquire at least two-thirds of the share
capital and voting rights of EOS on a fully diluted basis at the
end of the acceptance period of the Offer. The settlement and
delivery of the EOS Shares and OCEANEs tendered into the Offer will
occur shortly after the end of the initial acceptance period of the
Offer. The Offer will then reopen for a subsequent acceptance
period of 10 Euronext Paris trading days.
If ATEC and/or its affiliates own 90% or more of EOS' share capital
and voting rights upon closing of the initial or subsequent offer
acceptance period, ATEC shall implement a mandatory squeeze out on
any remaining non-tendered EOS Shares pursuant to applicable French
laws and regulations. A squeeze-out of the OCEANEs may also be
implemented if ATEC and/or its affiliates own 90% or more of EOS
Shares on an as-converted basis.
The transaction is expected to close in the second quarter of
2021.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1350653/000156459021011278/atec-10k_20201231.htm
About Alphatec Holdings
Alphatec Holdings, Inc. (ATEC) (www.atecspine.com), through its
wholly-owned subsidiaries, Alphatec Spine, Inc. and SafeOp
Surgical, Inc., is a medical device company dedicated to
revolutionizing the approach to spine surgery through clinical
distinction. ATEC architects and commercializes approach-based
technology that integrates seamlessly with the SafeOp Neural
InformatiX System to provide real-time, objective nerve information
that can enhance the safety and reproducibility of spine surgery.
AMERICAN MILLENNIUM: A.M. Best Cuts Financial Strength Rating to C-
-------------------------------------------------------------------
AM Best has downgraded the Financial Strength Rating (FSR) to C-
(Weak) from C++ (Marginal) and the Long-Term Issuer Credit Rating
(Long-Term ICR) to "cc" from "b+" of American Millennium Insurance
Company (AMIC) (Bridgewater, NJ), a wholly-owned subsidiary of
Citadel Reinsurance Company Limited(Hamilton, Bermuda).
Additionally, AM Best has downgraded the FSR to B (Fair) from B++
(Good) and the Long-Term ICR to "bb" from "bbb+" of Citadel Re. AM
Best has maintained the under review with negative implications
status on these Credit Ratings.
The ratings of AMIC reflect its balance sheet strength, which AM
Best assesses as very weak, as well as its weak operating
performance, limited business profile, and marginal enterprise risk
management (ERM).
The ratings of Citadel Re reflect its balance sheet strength, which
AM Best assesses as adequate, as well as its marginal operating
performance, neutral business profile, and marginal ERM.
These rating actions result from persistent net underwriting losses
that continued into the second half of 2020 and negatively impacted
AMIC's risk-adjusted capitalization. These unanticipated losses
relate to higher-than-expected loss costs and adverse loss reserve
development related to two commercial auto programs – both
discontinued and placed into run-off in 2018. As a consequence, the
impact of these unanticipated losses (net of reinsurance) has
resulted in a significant deterioration of surplus and notably,
risk-based capital (RBC) levels that are likely to prompt state
regulatory action.
AMIC's ratings also contemplate the willingness of its parent,
Citadel Re, to support AMIC. However, Citadel Re's ability to
support AMIC in the near term has diminished and hence the
reduction in parental lift. Given Citadel Re's direct ownership in
AMIC, AM Best takes a consolidated view of Citadel Re and its
subsidiary. As such, the deterioration in surplus at AMIC also has
negatively impacted the balance sheet strength of its parent,
Citadel Re. As a result, AM Best has revised its balance sheet
strength assessment level of Citadel Re to adequate from strong.
The potential for further adverse reserve development at AMIC also
is embedded in the balance sheet strength assessment of Citadel Re.
Additionally, AM Best has revised downward Citadel Re's ERM
assessment to marginal to be in sync with its subsidiary AMIC. This
revision also considers the role of leadership at the enterprise
level and concerns related to governance, risk awareness, and risk
management oversight at AMIC. This also considers leadership's
inability to control and stem losses in a timely fashion.
In addition to providing additional capital support and retroactive
reinsurance earlier in the year, Citadel Re's management is in the
process of developing initiatives to recapitalize AMIC's balance
sheet and has taken steps to reorganize its legacy run-off
operations in a more effective manner. These actions include the
appointment of a former executive to oversee and direct the
reorganization, and a review of the reserves by an external actuary
in the latter part of 2020. While the internal reorganization could
take time, AM Best anticipates the external capital solution to be
completed in the near term. Management expects that its capital
raise will significantly improve AMIC's risk–adjusted
capitalization.
The maintaining of the under review with negative implications
status reflects the execution risk related to the strategic
alternatives to be undertaken by management to recapitalize AMIC's
surplus levels and to stem future loss reserve development and any
related impact to Citadel Re.
The ratings will remain under review pending further discussions
between AM Best and Citadel Re's management regarding its strategic
alternatives and its need to recapitalize AMIC's balance sheet to a
level more commensurate with historical levels and to the minimum
required regulatory level prescribed by RBC guidelines. Management
expects this to be implemented, resolved, and executed within the
next 60 days. The ratings of Citadel Re will remain under review
pending receipt and review of the company's year-end 2020 financial
statements and the pending capital raise. The negative implications
status suggests that if these initiatives do not materialize, or if
the timing of these initiatives is delayed and/or further adverse
reserve development emerges, AMIC and Citadel Re's ratings could be
lowered further. The negative implications for AMIC consider the
pending regulatory pressures and the uncertainty related to AMIC as
a going concern.
ANKURA HOLDINGS: S&P Assigns 'B-' ICR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
consulting services provider Ankura Holdings L.P. S&P also assigned
its 'B-' issue-level rating to the first-lien credit facility and
our 'CCC' issue-level rating to the second-lien term loan.
S&P said, "Our stable outlook reflects our expectation that Ankura
will generate positive organic revenue growth over the next two
years and expand its EBITDA margins through cost efficiencies and
acquisition integration. We expect the company's FOCF to debt to
improve to around 3% in 2022.
"We expect the company to benefit from the secular growth of the
business consulting services sector. Our rating reflects our
expectation that Ankura will continue growing its platform of niche
business consulting services in line with the greater consulting
industry. We believe the industry is benefiting from greater need
for consulting services as a result of increased litigation, more
restructurings and bankruptcies because of the COVID-19-related
economic downturn, and greater demand from clients for operational
improvement advisory. Often these factors lead to favorable bill
rates for consulting services and more comprehensive or longer
consulting projects. We believe Ankura's portfolio of consulting
services focused on disputes and economics, data and technology,
construction advisory, turnaround and restructuring, and similar
niche consulting services will allow it to capitalize on these
industry trends and continue its brief track record of substantial
organic and inorganic growth. In addition, its revenue mix includes
both noncyclical and countercyclical businesses, which may provide
revenue stability, in our view.
"We expect competitive pressures will remain intense for Ankura due
to its small scale and nascent consulting platform. Despite
positive industry tailwinds, we believe Ankura will continue to
experience intense competition in its various consulting end
markets. In our view, the business is still relatively new. Founded
in 2015, the company does not have significant brand recognition
compared with its consulting industry peers. In terms of revenue,
the company is geographically concentrated in the U.S. and is
smaller than larger consulting industry and key rated peers such as
FTI Consulting and AlixPartners. We believe its smaller size is
less favorable for the business as it competes to attract and
retain highly experienced professionals with specialized expertise
and clients on a global scale against firms with more robust
service offerings. Moreover, substantially all revenues are
project-based, with projects ranging from two to 24 months. We
believe this increases potential revenue volatility and contributes
to a lack of long-term revenue visibility. Specifically, we believe
the company's revenue is less predictable than its peers', many of
whom have more retainer-based revenue sources. Consequently, we
expect future revenue stability will greatly depend on its ability
to maintain current client relationships, attract new clients, and
increase the value of its product offerings with future client
engagements. These revenue limitations are slightly offset the
company's low dependence on any one client, its diverse client
industry exposure, and its ability to utilize multiple business
groups for most client engagements.
"As a result of its nascent business and these competitive factors,
the business has EBITDA margins below industry peers. This also
reflects operational inefficiencies such as lower-than-average
utilization of its consulting staff. In our forecast, we expect
that business operations will improve and one-time transaction
costs will roll off from 2020 to 2021, improving adjusted EBITDA
margins to around 13% in 2021 from around 7% in 2020. However, this
level of profitability is still well below some industry peers with
adjusted EBITDA margins near 20%."
The proposed capital structure represents a substantial debt burden
and high leverage. The company's proposed financing comprises an
undrawn $75 million first-lien revolver, a $465 million first-lien
term loan, and a $150 million second-lien term loan. Proceeds from
the transaction will be used to repay existing debt, pay
transaction costs, and place roughly $145 million on the balance
sheet. S&P said, "We expect a substantial portion of the pro forma
cash will be used to pay accrued employee bonuses and the remainder
may be used to fund future acquisitions. Pro forma for the
transaction, we expect S&P Global Ratings-adjusted leverage to be
in the high-8x area in 2021 before declining to the high-7x area in
2022. We expect free operating cash flow (FOCF) to debt to improve
to about 3% over this same period. Driving our expectation for high
leverage is the company's high gross debt burden and low, albeit
improving, EBTIDA margins. We believe the substantial debt and
associated cash interest costs will limit the company's organic
cash generation and financial flexibility in the long term.
However, we highlight that the company's pro forma cash balance and
revolver availability provide adequate liquidity over the next 12
months. In addition, consulting businesses benefit from favorable
free cash flow conversion dynamics due to lower capital expenditure
needs than other industries."
S&P said, "We believe the company's sponsor has an aggressive
financial policy and view additional acquisitions as likely. We
expect the company's leverage to remain high, despite improving
EBITDA generation and mandatory debt repayment, because of the
aggressive financial policy of its sponsor, Madison Dearborn
Partners, which has actively grown the business over the past
several years through acquisitions, sometimes through debt
financing. In our view, while the company has benefited from the
additional scale and business diversity from these acquisitions,
this activity shows a high tolerance for debt leverage and an
aggressive growth agenda by the sponsor. While we do not forecast
any additional acquisitions in 2022 and beyond in our base-case
scenario, we expect the company will continue this acquisitive
growth strategy, which includes using the proceeds from this
proposed debt financing and may include future debt financings.
"Our stable outlook reflects our expectations that Ankura will
generate positive organic revenue growth over the next two years
and expand its EBITDA margins through cost efficiencies and
acquisition integration. We expect the company's FOCF to debt to
improve to in around 3% in 2022.
"We could lower the rating on Ankura over the next 12 months if it
cannot generate consistent positive free cash flow, leading us to
believe the capital structure is unsustainable." This could occur
under a combination of the following factors:
-- Organic revenue declines due to increased competition and loss
of business from clients.
-- An inability to materially expand its EBITDA margins due to
operational inefficiencies and unsuccessful acquisition
integration.
-- Poor working capital management leading to volatile cash
outflows.
-- Aggressive financial policy decisions such as poorly timed,
large debt-financed acquisitions or substantial debt-funded
distributions to its sponsor.
Although unlikely over the next two years, S&P could raise the
rating on Ankura if it lowers and maintains leverage below 6x
through a combination of the following factors:
-- Strong organic revenue growth leading to increased client
retention and consulting services expansion through its various end
markets.
-- Strong expansion of its EBITDA margin due to increased
economies of scale and prudent cost management.
-- Substantially improved positive cash flow generation and the
use of excess cash flow to materially lower leverage through
voluntary debt reduction.
ARCHROCK INC: S&P Affirms 'B+' Rating on Senior Unsecured Debt
--------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' rating on Archrock Inc.'s
senior unsecured debt following a recent amendment to the company's
credit agreement.
The amendment reduces the commitment under Archrock's asset-based
loan facility to $750 million from $1.25 billion. S&P said, "In our
recovery analysis, this downsizing of the ABL facility reduces the
amount of priority claims in our assumed default waterfall, leaving
more value and improving the recovery prospects of unsecured debt
holders. As a result, we've revised the recovery rating to '3' from
'4', indicating our expectation of meaningful (50%-70%; rounded
estimate: 65%) recovery of principal in the event of a payment
default." The borrower of the senior unsecured debt is Archrock
Partners L.P.
S&P said, "Our 'B+' issuer credit rating on Archrock is unchanged
and reflects our assessments of its business risk profile as weak
and its financial risk profile as aggressive. The stable outlook
reflects our expectation for S&P Global Ratings-adjusted debt to
EBITDA of 4x-5x over the next two years."
Issue Ratings--Recovery Analysis
Key analytical factors:
-- S&P's simulated default scenario contemplates a default in 2025
that arises from prolonged poor demand, resulting in reduced
revenue as customers fail to meet their contractual agreements and
do not renew existing contracts. This could result from extended
weak demand for natural gas, exacerbated by excess equipment
capacity in the market.
-- S&P's analysis also assumes a standard 60% draw on the
partnership's $750 million asset-based credit facility.
Simulated default assumptions:
-- Estimated emergence EBITDA: $204 million
-- Multiple: 7x
-- Gross enterprise value: $1.42 billion
Simplified waterfall:
-- Net enterprise value (after 5% administrative costs): $1.35
billion
-- Secured first-lien debt claims: $462 million
-- Total value available to unsecured claims: $891 million
-- Senior unsecured debt: $1.34 billion
--Recovery rating: '3' (rounded estimate: 65%)
All debt amounts include six months' prepetition interest.
ARIZONA INDUSTRIAL: S&P Lowers 2019B Revenue Bonds Rating to B(sf)
------------------------------------------------------------------
S&P Global Ratings lowered its long-term ratings on Arizona
Industrial Development Authority's series 2019A, 2019B, and 2019C
senior living revenue bonds (Great Lakes Senior Living Communities
LLC Project) from 'BB+(sf)', 'BB(sf)', and 'BB-(sf)' to 'B+(sf)',
'B(sf)', and 'B-(sf)'. At the same time, S&P placed the ratings on
CreditWatch with negative implications.
"The downgrades and CreditWatch placements follow rapid and
material deterioration in the project's financial and operating
performance as indicated by the fiscal 2020 fourth quarter
financial reporting package, posted to the Electronic Municipal
Market Access on Feb. 16, 2021," said S&P Global Ratings credit
analyst Daniel Pulter.
ASCENA RETAIL: Amended Joint Chapter 11 Plan Confirmed by Judge
---------------------------------------------------------------
Judge Kevin R. Huennekens has entered an order confirming the
Amended Joint Chapter 11 Plan of Mahwah Bergen Retail, Inc. (f/k/a
Ascena Retail Group, Inc.) and its Debtor Affiliates.
The Plan incorporates an integrated compromise and global
settlement of numerous Claims, issues and disputes, including
creation of a GUC Trust, implemented to achieve a beneficial and
efficient resolution of the Chapter 11 Cases for all parties in
interest.
The Global Settlement is fair, equitable and reasonable, and in the
best interests of the Debtors, their Estates, the Reorganized
Debtors, their respective Estates and property, creditors, and
other parties in interest, and will maximize the value of the
Estates by preserving and protecting the ability of the Reorganized
Debtors to continue operating outside of bankruptcy in the ordinary
course of business and is further essential to the successful
implementation of the Plan.
The Plan is the product of good faith, arm's-length negotiations by
and among the Debtors, the Debtors' directors, officers and
managers, and the other constituencies involved in the Chapter 11
Cases.
Co-Counsel to the Debtors:
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
Attn.: Steven N. Serajeddini
- and -
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
Attn.: John R. Luze, Jeff Michalik
- and -
Cooley LLP
1299 Pennsylvania Avenue, NW, Suite 700
Washington, DC 20004-2400
Attn.: Cullen D. Speckhart, Olya Antle
About Ascena Retail
Ascena Retail Group, Inc. (Nasdaq: ASNA) is a national specialty
retailer offering apparel, shoes, and accessories for women under
the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey), Plus
Fashion (Lane Bryant, Catherines and Cacique), and Value Fashion
(Dressbarn) segments, and for tween girls under the Kids Fashion
segment (Justice). Ascena, through its retail brands, operates
ecommerce websites and approximately 2,800 stores throughout the
United States, Canada, and Puerto Rico. Visit
http://www.ascenaretail.com/for more information.
Ascena Retail reported a net loss of $661.4 million for the fiscal
year ended Aug. 3, 2019, a net loss of $39.7 million for the year
ended Aug. 4, 2018, and a net loss of $1.06 billion for the year
ended July 29, 2017.
On July 23, 2020, Ascena Retail Group and its affiliates sought
Chapter 11 protection (Bankr. E.D. Va. Case No. 20-33113). As of
Feb. 1, 2020, Ascena Retail had $13,690,710,379 in assets and
$12,516,261,149 in total liabilities.
The Hon. Kevin R. Huennekens is the case judge.
The Debtors tapped Kirkland & Ellis LLP and Cooley LLP as
bankruptcy counsel, Guggenheim Securities, LLC, as financial
Advisor, and Alvarez and Marsal North America, LLC as restructuring
advisor. Prime Clerk, LLC, is the claims agent.
* * *
In September 2020, FullBeauty Brands Operations, LLC, won an
auction to acquire Ascena's Catherines intellectual property assets
for a base purchase price of $40.8 million and potential upward
adjustment for certain inventory.
In November 2020, Ascena won approval to sell the intellectual
property of its Justice Brand and other Justice brand assets to
Justice Brand Holdings LLC, an entity formed by Bluestar Alliance
LLC (a leading brand management company), for $90 million.
The Company continues to operate its Ann Taylor, LOFT, Lane Bryant,
and Lou & Grey brands as normal through a reduced number of retail
stores and online.
AUGUSTA MOTORS: Selling Business Assets to Owner's Son for $225K
----------------------------------------------------------------
Augusta Motors, Inc., and Westlane Financing, Inc., ask the U.S.
Bankruptcy Court for the Southern District of Indiana to authorize
the sale of all of their right, title and interest in and to all
furniture, fixtures, equipment, vehicles, inventory, rolling stock,
leases, contracts, accounts, intangibles, and goodwill they used in
their respective businesses to an entity to be formed by the son of
James Lowry, the owner of the Debtors, for $225,000.
Augusta is in the business of a buy/here and pay/here automotive
sales and leasing operation with a principal place of business
located at 3333 West 75th Street, in Indianapolis, Indiana.
Westlane is in the business of financing lessees of Augusta leases
who elect to purchase the vehicle at the conclusion of their lease
terms and has a principal place of business located at the Real
Estate.
The Debtors' records reflect that BMO Harris Bank, N.A. asserts a
security interest in the assets of Augusta.
On March 1, 2021, the Debtors entered into an Asset Purchase
Agreement to sell the Sale Assets to the Purchaser. James Lowry
will not have an interest in the purchaser. The purchase price
payable by the Purchaser will be $225,000. The Purchase Price will
be allocated $150,000 to Augusta and $75,000 to Westlane.
By the Sale Motion, the Debtors ask authority to sell the Sale
Assets to the Purchaser free and clear of all liens, claims,
interests and encumbrances, including, but not limited to the
pending lawsuits, Malone v. Nerz, Lowry, Nerz, et al.,
49D05-1708-CT-030047, and Westlane Financing, Inc. v. Inza Doumbia,
49D02-1512-PL-040299.
The Debtor is obligated to BMO under a secured loan with a petition
date balance of $192,315.88 Under the BMO loan documents, the
Debtor granted BMO a "blanket lien" in its assets, including
"general intangibles." BMO, or its predecessor, has filed UCC-1
financing statements against which provide notice that BMO has a
lien on the Debtors' assets. The Debtor will distribute the net
sale proceeds pursuant to further Court order.
The Debtors have not formally marketed the Assets. However, they
generally know the other entities in the scope of their businesses.
There is only one other entity that directly overlaps the nature
of their operations. Further, given the high risk of their assets,
the Purchaser's knowledge of the Debtors' operations maximizes the
value to this prospective purchaser.
The Debtors will serve its creditors with notice of opportunity to
object to the Sale Motion. Absent any objection to the Sale
Motion, any parties holding liens, claims, interests or
encumbrances on the Assets will be deemed to have consented to the
sale thereby satisfying Section 363(f)(2).
The Debtors also request that if no objections are filed or pending
at the time of hearing on the Sale Motion, that the Court waives
the 14-day stay imposed by Rule 6004(h) of the Federal Rules of
Bankruptcy Procedure.
They ask that the Court schedules a hearing on the Sale Motion.
They propose to distribute the net sale proceeds in accordance with
further Court order.
About Augusta Motors
Augusta Motors, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. S.D. Ind. Case No. 20-05414) on September 28, 2020,
disclosing under $1 million in both assets and liabilities. The
Debtor is represented by Hester Baker Krebs LLC.
AULT GLOBAL: Amends Terms of 'At The Market' Equity Offering
------------------------------------------------------------
Ault Global Holdings, Inc. has amended the terms of its previously
announced "at-the-market" equity offering program under which it
may sell, from time to time, shares of its common stock for
aggregate gross proceeds of up to $200,000,000, inclusive of the
previously authorized $125,000,000. The shares of common stock
will continue to be offered through Ascendiant Capital Markets,
LLC, acting in its capacity as sales agent.
Pursuant to an amended sales agreement with the Agent, sales of
shares of the Company's common stock may be made in transactions
that are deemed to be "at-the-market" offerings, including sales
made by means of ordinary brokers' transactions on the NYSE
American or otherwise at market prices prevailing at the time of
sale or as agreed to with the Agent.
The Company intends to use the net proceeds from the
"at-the-market" equity offering, if any, for the financing of
possible acquisitions of companies and technologies, financing of
our emerging electric vehicle charger and energy storage
businesses, expansion of our data center business or other business
expansions and investments and for working capital and general
corporate purposes, which may include the repayment, refinancing,
redemption or repurchase of future indebtedness or capital stock.
The Company does not have agreements or commitments for any
specific acquisitions at this time.
About Ault Global Holdings, Inc.
Ault Global Holdings, Inc. is a diversified holding company
pursuing growth by acquiring undervalued businesses and disruptive
technologies with a global impact. Through its wholly and
majority-owned subsidiaries and strategic investments, the Company
provides mission-critical products that support a diverse range of
industries, including defense/aerospace, industrial,
telecommunications, medical, and textiles. In addition, the
Company extends credit to select entrepreneurial businesses through
a licensed lending subsidiary.
DPW Holdings recorded a net loss available to common stockholders
of $32.93 million for the year ended Dec. 31, 2019, compared to a
net loss available to common stockholders of $32.34 million for the
year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had
$43.64 million in total assets, $39.12 million in total
liabilities, and $4.52 million in total stockholders' equity.
Ziv Haft., Certified Public Accountants (Isr.) BDO Member Firm, the
Company's auditor since 2012, issued a "going concern"
qualification in its report dated May 29, 2020 citing that the
Company has a working capital deficiency, has incurred significant
losses and needs to raise additional funds to meet its obligations
and sustain its operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
AUSTIN HOTEL: Lender AG-L to Auction 100% of Tantallon on April 7
-----------------------------------------------------------------
AG-L Austin Downtown Mezz LLC will offer for sale at public auction
all right, title and interest of debtor Austin Hotel Mezz Borrower
LLC, as such terms is defined in a certain mezzanine loan agreement
dated March 1, 2017, by and between Austin Hotel and AG-L Austin,
as lender and that certain pledge and security agreement dated
March 1, 2017, by and between the Debtor and secured party, as such
agreements may have been further amended or modified from time to
time, including all of the Debtor's limited liability company
membership interests in Tantallon Austin Hotel LLC.
The public auction will take place on April 7, 2021, at 10:00 a.m.
Eastern Daylight Time (New York) at the offices of Paul Hastings
LLP at 200 Park Avenue, New York, New York 10166.
All interested prospective purchasers are invited to become
qualified bidders. Only qualified bidders and their duly appointed
agents and representatives may participate at the public auction.
The terms of the sale may be obtained by accessing
http://www.austinhoteluccsale.comor contacting:
Brett Rosenberg
JLL Capital Markets
Tel: +1 212 812 5926
Cel: +1 646 413 4861
Email: Brett.Rosenberg@am.jll.com
Attorneys for secured party:
Paul Hastings LLP
Attn: Harvey A. Strickon, Esq.
200 Park Avenue
New York, NY 10166
Tel: (212) 318-6380
Fax: (212) 230-7689
E-mail: harveystickon@paulhastings.com
AVIANCA HOLDINGS: Won't Propose Dividend at March 26 Meeting
------------------------------------------------------------
Avianca Holdings S.A. (OTCUS: AVHOQ, BVC: PFAVH) said in a U.S.
regulatory filing that it will propose no profit distribution
during its March 26, 2021 meeting.
Avianca informs that the next ordinary General Shareholders'
Meeting will take place on March 26, 2021. Ordinary Shareholders
will vote on the company's proposal to not distribute any dividends
for the fiscal year 2020, as the Company does not expect to report
positive earnings for the fiscal year 2020. Additionally, on May
10, 2020 the Company and several of itssubsidiaries voluntarily
filed for protection under Chapter 11 of the United States
Bankruptcy Code in the Bankruptcy Court of the Southern District of
New York, and in general, the Process does not allow for the
distribution of any value or property of Avianca to its
shareholders.
About Avianca Holdings
Avianca -- https://aviancaholdings.com/ -- is the commercial brand
for the collection of passenger airlines and cargo airlines under
the umbrella company Avianca Holdings S.A. Avianca has been flying
uninterrupted for 100 years. With a fleet of 158 aircraft, Avianca
serves 76 destinations in 27 countries within the Americas and
Europe.
Avianca Holdings S.A. and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-11133) on May 10, 2020. At the time of the filing, Debtors
disclosed $7,273,900,000 in assets and $7,268,700,000 in
liabilities.
Judge Martin Glenn oversees the cases.
The Debtors tapped Milbank LLP as general bankruptcy counsel;
Urdaneta, Velez, Pearl & Abdallah Abogados and Gomez-Pinzon
Abogados S.A.S. as restructuring counsel; Smith Gambrell and
Russell, LLP as aviation counsel; Seabury Securities LLC as
financial restructuring advisor and investment banker; FTI
Consulting, Inc. as financial restructuring advisor; and Kurtzman
Carson Consultants LLC as claims and noticing agent.
The U.S. Trustee for Region 2 appointed a committee of unsecured
creditors in Debtor's bankruptcy cases on May 22, 2020.
AVID BIOSERVICES: To Pay Quarterly Dividend on April 1
------------------------------------------------------
Avid Bioservices, Inc.'s Board of Directors has declared a
quarterly cash dividend payment on the Company's 10.50% Series E
Convertible Preferred Stock.
The quarterly dividend on the Series E Preferred Stock is payable
on April 1, 2021 to holders of record at the close of business on
March 15, 2021.
The quarterly dividend payment on the Series E Preferred Stock will
be $0.65625 per share, which is equivalent to an annualized 10.50%
per share, based on the $25.00 per share stated liquidation
preference, accruing from Jan. 1, 2021 through March 31, 2021. The
Series E Preferred Stock is listed on the NASDAQ Capital Market and
trades under the ticker symbol "CDMOP".
About Avid Bioservices
Avid Bioservices -- http://www.avidbio.com-- is a dedicated
contract development and manufacturing organization (CDMO) focused
on development and CGMP manufacturing of biopharmaceutical drug
substances derived from mammalian cell culture. The company
provides a comprehensive range of process development, CGMP
clinical and commercial manufacturing services for the
biotechnology and biopharmaceutical industries. With over 27 years
of experience producing monoclonal antibodies and recombinant
proteins, Avid's services include CGMP clinical and commercial drug
substance manufacturing, bulk packaging, release and stability
testing and regulatory submissions support. For early-stage
programs, the company provides a variety of process development
activities, including upstream and downstream development and
optimization, analytical methods development, testing and
characterization. The scope of its services ranges from standalone
process development projects to full development and manufacturing
programs through commercialization.
Avid Bioservires reported a net loss of $10.47 million for the year
ended April 30, 2020, a net losses of $4.21 million for the year
ended April 30, 2019, and a net loss of $21.81 million for the year
ended April 30, 2018. As of Oct. 31, 2020, the Company had $113.59
million in total assets, $64.21 million in total liabilities, and
$49.38 million in total stockholders' equity.
AVIENT CORP: S&P Alters Outlook to Stable, Affirms 'BB' ICR
-----------------------------------------------------------
S&P Global Ratings revised their outlook on Avon Lake, Ohio-based
Avient Corp. to stable from negative and affirmed their 'BB' issuer
credit rating on the company.
S&P said, "The stable outlook reflects our belief that the nascent
economic recovery will benefit Avient's cyclical end-markets, such
as transportation and industrial, and that the company's more
resilient segments will continue to benefit from strong demand and
secular growth trends.
"The outlook revision to stable reflects our expectations for an
ongoing global macroeconomic recovery, as well as opportunities for
GDP plus growth in certain of the company's business segments,
including composites, health care, and sustainable solutions, all
of which benefit from structural demand trends. We now expect 2021
GDP to increase by 4.2% and 4.8% in the U.S. and eurozone,
respectively, and by 6.1 % in Asia-Pacific (APAC). While Avient
still generates about half of its revenue from North America, the
company also has exposure to both Europe (26%) and Asia (16%). The
Color, Additives and Inks segment has the greatest geographic
diversity, with 40% and 22%, respectively, of sales coming from
these two regions. In 2021 and 2022, we project GDP level growth
across Avient's cyclical businesses; however, the company benefits
from sectors that we believe are poised to grow in excess of GDP
over the coming years. These include composites that benefit from
the 5G infrastructure buildout and sustainable solutions and
formulations that can be used to increase the recycled content of
products, improve their recyclability, and enhance efficiency
through light-weighting. We believe customer environment, social,
and government (ESG) concerns and the transition to 5G will lead to
significant growth in these businesses over the medium term.
Despite the improvement in economic conditions, and some favorable
demand trends, the company remains exposed to economic and industry
cycles; volatile raw material input costs such as TIO2,
polyethylene, and polypropylene; and intense competition from
larger companies with broader product portfolios, which limits
overall pricing power and thus EBITDA margins."
Avient has improved its overall profitability, and increased
earnings stability, by focusing on its specialty chemical
portfolio, as well as improving its exposure to less-cyclical,
higher-growth end markets through acquisitions and divestitures.
Over the past decade, the company has increased the percentage of
EBITDA earned by specialty and less-cyclical end markets,
culminating with the sale of its lower-margin Performance Products
and Solutions (PP&S) segment in 2019 and the subsequent acquisition
of Clariant's Masterbatch business in 2020. The actions were
accretive to margins and increased the company's exposure to
recession-resilient sectors. Avient now generates about 87% of its
EBITDA from higher-margin specialty applications and about 60% of
revenue from consumer, packaging, and health care end markets (pro
forma for the Clariant acquisition). These end markets only
accounted for 22% of overall revenue before the 2008 recession,
whereas transportation, industrial, and construction accounted for
60% (they make up just over 30%). This more stable mix was key to
the company's performance in 2020, when new vehicle builds declined
substantially and industrial production contracted while health
care, packaging, and consumer plastics demand remained robust. This
led to only modest revenue contraction (5% decrease) and slightly
higher EBITDA (both metrics measured on a pro forma basis). The
recent transactions also support margin expansion in coming years,
which S&P projects to be in the range of 100-200 basis points.
While legacy Clariant Masterbatch's margins are lower than those
realized by Avient's legacy Color, Additives, and Inks (CAI)
segment, the company has opportunities to capture up to $75 million
in cost synergies. While this was the largest acquisition in the
company's history and presented moderate integration risk, to date
the company has been on track with its integration efforts and
achieving the targeted synergies. Overall, Avient's profitability
is depressed by the company's distribution segment, which makes up
about 30% of revenue; however, S&P believes the segment remains a
core part of the company's portfolio, providing relatively stable
EBITDA margins of 6% and generating cash throughout the cycle.
S&P said, "While we do not expect Avient to repay a significant
amount of debt over our forecast period, we believe the company's
financial and capital allocation policies remain supportive of the
'BB' rating. Due to Avient's asset-light structure, with relatively
low capital spending requirements, we expect it to generate about
$200 million in free cash flow during 2021 (this includes a
one-time capital expenditure outlay of $20 million for synergy
capture). The company's products (excluding distribution) are
generally formulated, customized, and smaller in scale, thus
reducing the need for large-scale capital projects. We believe the
company will generate significant free operating cash flow, using
the cash to fund its dividend, pursue smaller bolt-on acquisitions,
and repurchase shares opportunistically. While we do not forecast a
transformative acquisition, we believe that one is possible over
the next few years. However, we believe that in such a scenario
management would exercise prudence, as evidenced by the Clariant
acquisition funding, where the purchase price was financed using
60% equity and cash on hand. In our base case forecast, we expect
Avient's pro forma weighted-average funds from operations (FFO) to
debt to remain solidly in the 20%-30% range and debt to EBITDA to
fall below 3x.
"The stable outlook reflects S&P Global Ratings' expectation that
the continuing economic recovery will benefit the company's more
cyclical end markets while the company's less cyclically exposed
specialty businesses, serving the consumer, packaging, and health
care sectors, which performed relatively well throughout the
pandemic, will continue to benefit from robust demand. We expect
moderate volume growth, driven by a demand rebound in
transportation and industrial, along with above GDP level growth
from segments benefiting from structural demand trends such as
sustainable solutions and health care. In addition, we expect
modest margin improvement over the next few years as the Clariant
Masterbatch integration proceeds as planned, and cost synergies are
realized.
"The outlook also reflects our expectation that management will
maintain a prudent approach to funding growth and shareholder
rewards consistent with its policy to maintain leverage below 3.5x
net debt to EBITDA throughout the cycle. Although the company's FFO
to debt dropped to the low 20% area in 2020, we expect Avient will
sustain pro forma weighted average FFO to debt in the mid-20%-30%
range, in line with our 'BB' rating.
"We could lower our issuer credit rating within the next 12 months
if we expected weighted-average FFO to debt to fall below 20% (pro
forma for potential acquisitions), without any indication of
near-term improvement. This could occur if the current economic
recovery faltered, with growth materially weaker than forecast. In
this scenario, we would expect EBITDA margins to decline by at
least 200 basis points, along with modestly weaker-than-projected
revenue growth. We could also lower the rating if the company were
to undertake any large debt-funded acquisitions, resulting in
credit measures that no longer support the current rating.
"We could raise our rating within the next 12 months if
stronger-than-expected EBITDA led to an improvement in
weighted-average FFO to debt above 30% (pro forma for potential
acquisitions). This could occur if EBITDA margins improved over 300
basis points and revenue growth was moderately stronger than our
current projections. Under this scenario, we would expect to see
higher-than-forecast global GDP growth, as well as margin
improvement in the company's Color, Additives and Inks business
closer to the 20% area. We would also expect the company to have
made substantial progress on the integration of its Clariant
Masterbatch acquisition, including the realization of $75 million
in cost synergies associated with the transaction. Before
considering an upgrade, we would need to be certain of management's
commitment to improved metrics and would need to believe the risk
of future leveraging, debt-funded acquisitions was minimal."
AVON PRODUCTS: Moody's Hikes CFR to Ba3 & Alters Outlook to Stable
------------------------------------------------------------------
Moody's Investors Service has upgraded Avon Products, Inc.'s
corporate family rating and the ratings of the senior unsecured
notes issued by Avon to Ba3 from B1. The outlook for the ratings
was changed to stable from negative.
Ratings upgraded:
Issuer: Avon Products, Inc.
Corporate Family Rating, Upgraded to Ba3 from B1
5.000% Senior Unsecured Notes due 2023, Upgraded to Ba3 from B1
6.950% Senior Unsecured Notes due 2043, Upgraded to Ba3 from B1
Outlook:
Outlook, changed to stable from negative
RATINGS RATIONALE
The upgrade of Avon's ratings to Ba3 from B1 follows several pieces
of evidence over the past few months of stronger support from the
parent Natura & Co Holding S.A. (Natura) to Avon. As an example,
Natura has provided intercompany loans to Avon including a $960
million to pay Avon's outstanding notes due 2022. The consent
solicitation to include Natura as a guarantor of Avon's outstanding
notes due 2023 granted in January 2021 that will become valid in
the future, and a more centralized debt and cash management within
the group are also practical examples of Natura supporting Avon.
Accordingly, Avon's ratings should map closer to Natura's credit
quality assuming that Natura will continue to provide support to
Avon in case of need.
Avon's Ba3 ratings reflect primarily the close ties between the two
companies and the expected support from Natura to Avon, given the
company's relevance to the group. Natura has a stronger credit
profile than Avon on a standalone basis and a proven track record
of financial discipline. Natura's operating performance has been
much stronger and more resilient than Avon's because of Natura's
know-how in managing the direct selling network model and the
group's strong digital capabilities and online presence. Natura has
also shown a conservative approach to leverage and liquidity
overtime, with a reported total debt/EBITDA of about 4.0x and BRL8
billion in cash at the end of September 2020, sufficient to cover
debt amortizations through 2022 (all figures pro forma to the
capital increase and debt payment concluded in November 2020).
Avon's ratings also reflect Natura's size and scale as the fourth
largest pure cosmetics group globally, its leading market position
in several markets where it operates and good geographic
diversification, although with a high concentration of operations
in growing, but potentially volatile, developing markets.
The ratings are constrained mainly by the execution risk stemming
from Avon's ongoing turnaround process, and its potential impact on
Natura's consolidated credit metrics and liquidity. Avon's sales
and earnings in the first nine months of 2020 were hurt by the
coronavirus outbreak because of social distancing measures that
have impaired the company's ability to recruit its sales force and
hampered the ability of its representatives to meet customers and
collect orders. Moody's forecast that Avon's operating performance
will recover in 2021-22, supported by the benefits from its
integration with Natura, with leverage approaching 6.0x by the end
of this period (3.0x excluding the intercompany loan with Natura),
after peaking at 15.4x in the twelve months ended September 2020
(7.6x excluding the intercompany loan). However, execution risks
remain high.
Avon contributed 52% of Natura's consolidated revenue in the twelve
months ended September 2020. The company will become a significant
source of cash generation to the group in the future as Natura
collects top line and cost synergies, which it currently estimates
at about $300-400 million through 2024. Avon's operating
performance was weak even prior to the pandemic outbreak, hurt by a
continued decline in the number of sales representatives. In the
twelve months ended September 2020, Avon's revenue declined nearly
20% from 2019, reflecting the pandemic's impact. Profitability was
also impaired, which led to a material increase in Avon's
standalone leverage to 15.4x in the twelve months ended September
2020 from 6.7x in 2019. Natura on the other hand posted relatively
stable results in constant currency in the twelve months ended
September 2020 in all its preexisting businesses (Natura, The Body
Shop and Aesop), leveraging on the group's omnichannel strategy,
brand strength and leading market positions.
Natura was also able to reduce reported gross leverage to a pro
forma 4x in Q3 2020 from 6.7x in the first quarter of the year and
net leverage to a pro forma 1.5x from 3.9x in the same period,
mainly because of a $1 billion capital increase concluded in
October 2020 that was used to fund the call option for Avon's $900
million secured notes due 2022. Going forward, Moody's expect
Natura to maintain a conservative approach to leverage and
liquidity, reporting net leverage between 1.5-2.0x and maintaining
a solid liquidity profile to mitigate execution and liquidity risks
for Avon.
LIQUIDITY
Avon's liquidity is adequate, although it deteriorated following a
cash burn of approximately $124 million in the twelve months ended
September 2020. Liquidity comprises available cash of $321 million
as of September 2020 and a $60 million availability under a
revolving credit facility maturing in 2022 provided by Natura's
financing entity. The $960 million intercompany loan and the
revolving credit facility to Avon reduced the risks associated with
cash burn at Avon. Avon has around $1 billion in debt maturing in
2021, predominantly the intercompany loan provided by Natura, which
Moody's expects the company could roll-over partly or fully.
Natura's liquidity is currently strong, backed by BRL8.0 billion
($1.4 billion) in available cash at the end of September 2020,
enough to cover debt amortizations through 2022 and investments
required to integrate Avon's business. Moody's believe refinancing
risks are low for Natura given the company's longstanding
relationship with Brazilian and international banks and access to
both the international and local capital markets. Moody's also
expect Natura to pursue liability management initiatives to
lengthen its debt amortization schedule and equalize the group's
capital structure in the next months, and to reduce cash needs
during the execution of the turnaround process of Avon.
RATING OUTLOOK
The stable outlook reflects our view that despite the high
execution risks on Avon's turnaround process, Natura would provide
financial support to the company, thus eliminating immediate
liquidity and leverage risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Additional positive pressure on the ratings could develop in case
there is a successful execution of Avon's turnaround initiatives
leading to material operating performance improvement, with EBITA
margin approaching 10%, Moody's-adjusted gross Debt/EBITDA
improving to below 4.0x (from 15.4x in the twelve months ended
September 2020) on a sustained basis, and materially positive free
cash flow on a sustained basis. A sustained improvement in Natura's
credit metrics or credit profile could also translate into
additional positive rating actions for Avon.
The ratings could be downgraded in case of weaker perceived support
from Natura to Avon, or if Natura fails to restore Avon's operating
performance, such that Natura's credit metrics or credit worthiness
deteriorate. Natura adopting financial policies that are
detrimental to Avon's creditors, such as large cash upstreaming,
would also lead to negative rating actions for Avon.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
Avon is a global beauty product company and one of the largest
direct sellers with around five million active representatives.
Avon's products are available in over 70 countries and are
categorized as color cosmetics, skin care, fragrance, fashion and
home. Following the completion of the acquisition in January 2020,
Avon is now a fully owned subsidiary of Natura. Avon generated
about $3.8 billion in revenue and $121 million in EBITDA
(Moody's-adjusted) in the twelve months ended September 2020.
Natura & Co is the fourth largest pure cosmetics group globally,
with presence across 100 countries and in the skincare, haircare,
body care, men care, fragrancies, color, fashion and home segments.
The company has a leading market position in several markets, with
a particular focus on emerging markets such as Brazil, other Latin
American countries and Russia, and operates through a multi-channel
strategy through its four brands Avon, Natura, The Body Shop and
Aesop. In the twelve months ended September 2020, Natura &Co
reported $7.2 billion in revenues and EBITDA margin of 9.5%.
B2T2 FAMILY: Exclusive Period to File Plan Extended to April 14
---------------------------------------------------------------
Judge Harlin DeWayne Hale of the U.S. Bankruptcy Court for the
Northern District of Texas, Dallas Division, extended B2T2 Family
Entertainment, LLC's exclusive period within which it may file and
obtain acceptance of a plan through April 14, 2021 and June 14,
2021, respectively.
A full-text copy of the Order, dated March 4, 2021, is available
for free at https://tinyurl.com/ykkaj8z5 from PacerMonitor.com.
About B2T2 Family Entertainment, LLC
B2T2 Family Entertainment, LLC filed a voluntary petition for
relief under chapter 11 of the US Bankruptcy Code (Bankr. N.D. Tex.
Case No. 20-32602) on Oct. 16, 2020. At the time of filing, the
Debtor estimated $1,000,001 to $10 million in both assets and
liabilities. Frances Anne Smith at Ross & Smith, PC represents the
Debtor as counsel.
BAUMANN & SONS: Asks Court to Extend Plan Exclusivity Thru March 29
-------------------------------------------------------------------
Baumann & Sons Buses, Inc. and its affiliates request the U.S.
Bankruptcy Court for the Eastern District of New York to extend by
30 days the exclusive periods during which the Debtors may file a
plan of reorganization and to solicit acceptances, through and
including March 29, 2021, and May 27, 2021, respectively.
The Debtors submit that "cause" exists for the Court to extend the
Exclusive Periods requested in this Motion. Specifically, the
following factors all weigh in favor of granting the requested
extensions:
i. only seven months have passed since the Conversion Date;
ii. the first few months of these Chapter 11 Cases were dominated
by the Debtors' efforts to sell their transportation assets,
including a fleet of approximately 1,400 school buses and vans;
iii. while the general bar date and governmental bar date have
passed, the Debtors and their professionals are still reviewing and
analyzing the filed claims. Extension of the Exclusive Periods will
enable the Debtors to analyze the full universe of claims against
the Debtors prior to proposing a chapter 11 plan;
iv. the Committee and certain insiders and affiliates of the
Debtors have recently reached an understanding concerning the
settlement of potential estate claims that the Committee has
investigated and informally asserted against the insiders and
affiliates. Extension of the Exclusive Periods will enable the
parties to incorporate the terms of the settlement into the chapter
11 plan;
v. this request for an extension of the Debtors' Exclusive Periods
is the Debtors' second such request. The Debtors expect to file a
chapter 11 plan within the time provided by this second requested
extension of their Exclusive Periods;
vi. the Debtors are not seeking an extension of their Exclusive
Periods to exert pressure on any party; and
vii. the Debtors are proceeding diligently toward completion of the
Chapter 11 Cases and will propose a plan as soon as practicable.
The Debtors believe that the requested extensions will provide
sufficient additional time to allow them to file a confirmable
Chapter 11 plan.
As the Debtors' time to file a chapter 11 plan will expire prior to
the March 24, 2021 hearing on the instant Motion, the Debtors are
also seeking the entry of a bridge order by a separate application
which will provide that the Exclusive Periods shall be continued up
to and including the hearing to consider the instant Motion and the
Court's adjudication.
A copy of the Debtors' Motion to extend is available at
https://bit.ly/30jAFqi 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 August 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. The Debtors tapped
Klestadt Winters Jurellersouthard & Stevens, LLP serves as their
legal counsel; Smith & Downey, PA as their special counsel; and
Boris Benic and Associates LLP as their auditor.
On July 27, 2020, the U.S. Trustee appointed a committee of
unsecured creditors.
The Committee selected Silverman Acampora LLP as its bankruptcy
counsel and Ryniker Consultants LLC as its financial advisors.
BEAVER FALLS, PA: S&P Affirms 'BB+' on 2017B GO Bonds
-----------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative on
Beaver Falls, Pa.'s series 2017A general obligation (GO) notes and
2017B GO bonds. At the same time, S&P affirmed its 'BB+' rating on
the bonds.
"The stable outlook reflects the improvement in Beaver Falls'
liquidity position and narrowing of its structural imbalance," said
S&P Global Ratings credit analyst Cora Bruemmer. Despite declines
in revenue stemming from the COVID-19 pandemic and ensuing
recession, management reports that fiscal 2020 closed with a
$73,000 deficit. S&P said, "We still view the 2020 results as
structurally imbalanced, which caps the rating, but at 1% of
budget, the deficit was much smaller than in prior years,
preserving the city's very strong liquidity. We still view its 2019
GO note ($551,150 par outstanding), which was issued to fund its
2019 and 2020 budget gaps, as a contingent liability risk because
the note contains permissive events of default and acceleration
provisions, which also is a limitation on the rating."
The 2017A notes and 2017B bonds are GOs of the city, secured by its
full faith, credit, and taxing power, which benefits from an
unlimited ad valorem property tax.
"Despite its improved financial position, the city still has
long-term challenges due to limited revenue-raising flexibility and
high fixed costs," said Ms. Bruemmer. As a third-class city in
Pennsylvania, Beaver Falls is limited in its ability to raise
property taxes and Act 205 revenues. Notably, in May 2020, voters
approved (65% in favor) the creation of a Home Rule Charter
committee, which would begin the process of writing a home-rule
charter and changing the city's form of government to allow for
greater revenue flexibility. To complete the process, the final
home-rule charter must be approved by voters. Officials believe it
would likely be placed on the November 2021 ballot. If approved,
our view of the city's financial flexibility would likely improve."
Favorably, its debt service levy remains unlimited, and it also has
a dedicated 0.5% earned income tax for pensions, which has been
generating amounts above the city's annual required contributions,
so these costs have not been a source of pressure. Management also
tells us that it is in the process of selling its wastewater
treatment plant. If sold, the city could receive a windfall
payment, which could substantially improve its financial position;
however, it is not budgeting for any such revenue at this time.
The rating action incorporates our view regarding the health and
safety risk posed by the COVID-19 pandemic, which will pressure the
city's budget in the short term through reductions in income tax
and other economically sensitive revenue. S&P said, "We view Beaver
Falls' low wealth and income levels as a social risk that could
inhibit the city's ability to raise or collect revenue. Should the
city receive home-rule charter status, subject to approval by
voters, we would view that to be a governance opportunity that
could potentially increase its ability to raise revenue and improve
its overall financial flexibility. We also analyzed its
environmental risks relative to its economy, budgetary outcomes,
and debt and liability profile, and believe they are in line with
those of the sector."
BENTON ENTERPRISES: Singh Buying Madera County Property for $4M
---------------------------------------------------------------
Benton Enterprises, LLC, asks the U.S. Bankruptcy Court for the
Eastern District of California to authorize the sale of the
agricultural real property, consisting of approximately 130 acres
of real property in Madera County, California, APNs 028-030-015,
028-030-012, 028-030-015, and 028-030-012; and nut processing
equipment, to Prabjit Singh or assignee for $4 million, subject to
higher and better bids.
A hearing on the Motion is set for March 30, 2021, at 9:30 a.m.
The Debtor owns the Property. Approximately 102 acres of the Real
Property are planted to almonds. Approximately 28 acres contain an
almond handling operation which includes a 20,600 square foot nut
processing facility, 3,000 square foot storage warehouse, 2,640
square foot pole barn, 4,000 square foot residence, and 1,700
square foot home that is used as office space. The Debtor also has
a substantial amount of nut processing equipment located on the
Real Property.
The Debtor anticipates that the following secured claims will be
paid from the sale escrow:
a. Property taxes – approximately $190,000;
b. First deed of trust of Fresno-Madera Federal Land Bank
Association, FLCA in the approximate amount of $2.5 million
(Estimate based on Nov. 30, 2020, amount owing of $2,461,004.79);
and
c. Second deed of trust of Fresno-Madera Production Credit
Association in the approximate amount of $770,000 (Estimate based
on Nov. 30, 2020 amount owing of $769,384.70).s
The remaining secured claims against the Property will be treated
as described.
The Debtor has proposed a Chapter 11 Plan, which contemplates the
sale of the Property and provides that the sale will be free and
clear of certain liens on the Property, with those liens to attach
to the proceeds of the sale. It anticipates that the affected
lienholders may consent, but if they do not consent, such sale free
and clear is proper pursuant to 11 U.S.C. Section
1129(b)(2)(A)(ii).
Specifically, the Plan provides that Property is to be sold free
and clear of the liens of the following secured creditors with
those liens ("Designated Liens") attaching to the proceeds of the
sale:
a. ESHEG, Inc., successor in interest to Fresno First Bank.
Plan Classes 2.3, 2.6, and 2.7, reflected by the following recorded
security documents:
i. Financing statements recorded December 21, 2015, as
Document No. 2015029754 in favor of Fresno First Bank.
ii. A deed of trust dated July 26, 2017, securing the
principal amount of $2.25 million for loan no. 105973 in favor of
Fresno First Bank, recorded August 3, 2017, as Document No.
2017019647 of Official Records.
b. Everett Meisser, Jr., Trustee of the Amended and Restated
Jeffrey M. Canepa 2012 Irrevocable Trust dated December 11, 2012.
Plan Classes 2.4 and 2.5, reflected by the following recorded
security documents:
i. A deed of trust dated July 18, 2018, securing the
principal amount of $500,000 in favor of Everett Meisser, Jr.,
Trustee of the amended and restated Jeffrey M. Canepa 2012
Irrevocable Trust dated Dec. 11, 2012, recorded July 23, 2018, as
Document No. 2018016447 of Official Records; and
ii. A deed of trust dated September 10, 2018, securing
the principal amount of $821,201 in favor of Everett Meisser, Jr.
as successor Trustee of the Jeffrey M. Canepa 2012 Irreovocable
Trust dated Dec. 11, 2012, as amended and restated Feb. 19, 2016,
recorded Sept. 13, 2018 as Document No. 2018020579 of Official
Records.
The hearing on confirmation of the Plan is set for hearing at the
same time as the hearing on the Motion. The Debtor is asking that
the Property be sold free and clear of the Designated Liens based
on the Plan, Section 1129(b)(2)(A)(ii), and Section 363(f)(5).
The proposed sale is subject to higher and better bid.
The Debtor asks that the Court approves the following overbid
procedures:
a. All proposed overbidders should take all of the following
actions no later than close of business on March 23, 2021:
1. Deposit with the counsel for the Debtor certified
monies in the amount of $75,000. Any unsuccessful bidder's deposit
will be returned at the conclusion of the sale Motion hearing.
2. Provide proof in the form of a letter of credit, or
some other written pre-qualification for any financing that may be
required to complete the purchase of the Property sufficient to
cover the necessary overbid amount.
b. The sale of the Property is in "As-Is" condition with no
warranty or representations, express, implied or otherwise by the
bankruptcy estate, the Debtors or their representatives, and upon
entry of the order approving the sale, all contingencies will have
been released.
c. Provide proof that any successful over bidder can and will
close the sale within 15 days of delivery of a certified copy of
the Court’s order approving the sale, and execute a Purchase
Agreement for the Property with no contingencies.
d. In the event a successful over bidder fails to close the
sale within 15 days of delivery of a certified copy of the Court's
order approving the sale and execute a Purchase Agreement for the
Property, then the deposit will become non-refundable, and the next
highest bidder will become the buyer.
e. Any party wishing to overbid may do so only by making an
appearance at the sale hearing or in their absence, have an
authorized representative with written proof of authority to bid on
behalf of the prospective overbidder. Due to the pandemic,
appearances are by Courtcall, as described in the notice of
hearing.
f. All overbids will be in the minimum increments of
$10,000.
g. Any unsuccessful bidder's deposit will be returned
following the conclusion of the sale Motion hearing.
The Debtor asks that the Court enters an order (i) granting the
Motion, (ii) waiving the 14-day stay of Fed. R. Bankr. P. 6004(h),
(ii) authorizing it to sell the Property to the Buyer, or to the
highest and best bidder for the Property, (iv) authorizing the sale
of the Property free and clear of the following liens, with those
liens attaching to the net sale proceeds, (v) directing that the
net sales proceeds will be held in the attorney-client trust
account for the Debtor's attorney to be distributed pursuant to the
terms of the confirmed Chapter 11 Plan, (vi) authorizing it to pay
a brokers' commission in the amount of 5% of the total sale price,
and (vii) authorizing it to pay all costs, commissions, real
property taxes and secured liens senior to the Designated Liens
directly from escrow.
About Benton Enterprises, LLC
Benton Enterprises, LLC d/b/a Heart Ridge Farms --
https://www.heartridgefarms.com -- produces snack products made
from almonds.
Benton Enterprises sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Cal. Case No. 20-11612) on May 5,
2020. The petition was signed by William B. Pitman, CEO/managing
member. At the time of filing, the Debtor estimated $1 million to
$10 million in assets and $10 million to $50 million in
liabilities.
BERLIN PACKAGING: S&P Rates New $500MM First-Lien Term Loan 'B-'
----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level and '3' recovery
ratings to hybrid packaging supplier Berlin Packaging LLC's
proposed $500 million incremental first-lien term loan facility.
The financing will comprise a $400 million funded first-lien
portion and a $100 million delayed-draw portion. The company is
seeking to refinance the entirety of its existing first-lien euro
term loan facility ($170 million equivalent), $155 million of its
existing $355 million second-lien term loan facility, and fund cash
to the balance sheet. S&P expects the $100 million delayed-draw
term loan and cash on the balance sheet will be used for mergers
and acquisitions in 2021. The company will also upsize its
revolving credit facility to $125 million concurrently. All other
ratings remain unchanged.
S&P said, "We expect the transaction to be modestly leveraging but
still within the expectation for the rating. We expect continued
organic sales growth and stabilizing operating margins will
continue to support the company's strong cash flow generation. We
expect Berlin will continue to pursue accretive acquisition
opportunities, though not enough to constrain liquidity. We expect
Berlin will maintain an adjusted debt-to-EBITDA ratio at about 7x
over the next 12 months, though debt leverage could increase
temporarily."
Issue-Level Ratings - Recovery Analysis
Key analytical factors
-- S&P's simulated default scenario considers a payment default in
2023 caused by a drop in demand for the company's products due to
ongoing weak economic conditions and rising raw material costs that
the company cannot pass on to customers. Significantly lower demand
and increased costs would strain Berlin Packaging's cash flow and
liquidity such that the company would not meet its ongoing debt
service payments and working capital requirements. As a result, it
may have to fund its cash flow shortfalls with available cash and
revolver borrowings. Eventually, the company's liquidity and
capital resources would become strained to the point where it could
not continue operating without filing for bankruptcy.
-- S&P believes the company's underlying business would continue
to have considerable value and expect that Berlin would reemerge
from bankruptcy, rather than pursue liquidation.
-- S&P assumes the company will seek covenant amendments on its
path to default--resulting in higher interest costs--and anticipate
it will have drawn approximately 85% of its revolving credit
facility.
-- S&P values the company as a going concern, using a 5.5x
multiple to our estimated post-default emergence EBITDA of $184
million.
Simulated default assumptions
-- Year of default: 2023
-- Emergence EBITDA: $184 million
-- Multiple: 5.5x
Simplified waterfall
-- Net enterprise value (less 5% administrative expenses): $962
million
-- Valuation split (obligor/nonobligor): 70%/30%
-- Value available to first-lien debt: $882 million
-- First-lien debt claims: $1.6 billion
--Recovery expectations: 50%-70% (rounded estimate: 55%)
Note: All debt amounts include six months of prepetition interest.
BESTWALL LLC: Court OKs Probe on Asbestos Claim in Bankruptcy Case
------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that Bestwall LLC got bankruptcy
court approval to investigate thousands of pending asbestos
exposure claims for errors or evidence of manipulation as the
Georgia-Pacific LLC affiliate develops a Chapter 11 plan.
Thursday's discovery order will allow the company, created to
address Georgia-Pacific's legacy asbestos liabilities, to test the
veracity and value of claims that its old drywall-related products
caused mesothelioma and other diseases.
Bestwall and Georgia-Pacific said in court filings that they have
evidence that they "were subject to a widespread pattern in which
certain plaintiff firms failed to disclose material evidence of
their clients' exposures to other companies' products."
About Bestwall LLC
Bestwall LLC -- http://www.Bestwall.com/-- was created in an
internal corporate restructuring and now holds asbestos
liabilities. Bestwall's asbestos liabilities relate primarily to
joint systems products manufactured by Bestwall Gypsum Company, a
company acquired by Georgia-Pacific in 1965. The former Bestwall
Gypsum entity manufactured joint compounds containing small amounts
of chrysotile asbestos. The manufacture of these
asbestos-containing products ceased in 1977.
Bestwall's non-debtor subsidiary, GP Industrial Plasters LLC
develops, manufactures, sells and distributes gypsum plaster
products.
Bestwall sought Chapter 11 protection (Bankr. W.D.N.C. Case No.
17-31795) on Nov. 2, 2017, in an effort to equitably and
permanently resolve all its current and future asbestos claims. The
Debtor estimated assets and debt of $500 million to $1 billion. It
has no funded indebtedness.
The Hon. Laura T. Beyer is the case judge.
The Debtor tapped Jones Day as general bankruptcy counsel, Robinson
Bradshaw & Hinson P.A. as local counsel, Schachter Harris LLP as
special litigation counsel for medicine science issues, King &
Spalding as special counsel for asbestos matters, and Bates White
LLC as asbestos consultant. Donlin Recano LLC is the claims and
noticing agent.
On Nov. 8, 2017, the U.S. bankruptcy administrator appointed an
official committee of asbestos claimants in the Debtor's case. The
committee retained Montgomery McCracken Walker & Rhoads LLP as its
legal counsel, Hamilton Stephens Steele + Martin, PLLC and JD
Thompson Law as local counsel, and FTI Consulting, Inc., as
financial advisor.
On Feb. 22, 2018, the court approved the appointment of Sander L.
Esserman as the future claimants' representative in the Debtor's
case. Mr. Esserman tapped Young Conaway Stargatt & Taylor, LLP as
his legal counsel and Alexander Ricks PLLC as his North Carolina
counsel.
BETA MUSIC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Beta Music Group, Inc.
DBA BEMGF
DBA MBO Holdings
4581 Weston Rd.
Suite 162
Weston, FL 33331
Business Description: BEMG, through its operating subsidiary Get
Credit Healthy (www.getcredithealthy.com),
utilizes its proprietary processes,
platform, and software to integrate with
lenders to make it easier to recapture
leads.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 21-12199
Judge: Hon. Scott M. Grossman
Debtor's Counsel: Grace E. Robson, Esq.
MARKOWITZ, RINGEL, TRUSTY & HARTOG, P.A.
101 N.E. Third Ave.
Suite 1210
Fort Lauderdale, FL 33301
Tel: (954) 767-0030
E-mail: grobson@mrthlaw.com
Total Assets: $802,688
Total Liabilities: $1,336,478
The petition was signed by Elizabeth Karwowski, president.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/IMLR6QI/Beta_Music_Group_Inc__flsbke-21-12199__0001.0.pdf?mcid=tGE4TAMA
BIBHU LLC: Trustee Gets OK to Hire Geron Legal Advisors as Counsel
------------------------------------------------------------------
Yann Geron, the trustee appointed in Bibhu, LLC's Chapter 11 case,
obtained an order from the U.S. Bankruptcy Court for the Southern
District of New York, which authorized his own firm, Geron Legal
Advisors, to assist him in connection with the case.
Geron Legal Advisors will substitute for Reitler Kailas &
Rosenblatt, LLC, the firm that initially represented the trustee in
the Debtor's case.
Geron Legal Advisors will provide these services:
(a) liquidate property of the Debtor's estate, if appropriate;
(b) generally assist, advise and represent the trustee in the
administration of the Debtor's estate;
(c) assist the trustee in the examination and analysis of the
conduct of the Debtor's affairs;
(d) review and analyze all potential estate claims, including,
but not limited to, potential avoidance claims;
(e) take all necessary actions to protect and preserve the
interests of the trustee, including, without limitation, the
commencement and prosecution of actions deemed necessary by the
trustee, negotiations concerning all litigation in which the
trustee or Debtor's estate is involved, and review and analysis of
all claims filed against the estate;
(f) prepare legal papers;
(g) appear in courts; and
(h) perform other legal services necessary to administer the
Debtor's estate.
The firm will be paid based upon its normal and usual hourly rates
and will be reimbursed for out-of-pocket expenses incurred.
Mr. Geron, Esq., a partner at Geron Legal Advisors, 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.
The firm can be reached at:
Yann Geron, Esq.
Geron Legal Advisors
370 Lexington Avenue, Suite 1101
New York, NY 10017
Tel: (646) 560-3224
Email: ygeron@geronlegaladvisors.com
About Bibhu LLC
Bibhu, LLC filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y.
Case No. 17-10042) on Jan. 10, 2017. In the petition signed by its
authorized representative, Bihbu Mohapatra, the Debtor estimated
less than $100,000 in assets and less than $1 million in
liabilities.
Judge Martin Glenn presides over the case.
The Law Offices of Alla Kachan P.C. serves as the Debtor's legal
counsel.
Yann Geron is the Chapter 11 trustee appointed in the Debtor's
bankruptcy case. The trustee is represented by Geron Legal
Advisors. Klinger & Klinger, LLP is the trustee's accountant.
BIOLASE INC: Signs Seventh Amendment to SWK Credit Agreement
------------------------------------------------------------
Biolase, Inc. entered into the Seventh Amendment to Credit
Agreement with SWK Funding LLC.
The amendment provides for minimum aggregate revenue requirements
at the end of certain periods to the extent that liquid assets are
less than $15,000,000, as follows:
Three month period ending Q1 2021 $5,000,000
Three month period ending Q2 2021 $5,000,000
Three month period ending Q3 2021 $9,000,000
Six month period ending Q4 2021 $19,000,000
Nine month period ending Q1 2022 $30,000,000
Twelve month period ending Q2 2022 $37,000,000
Twelve month period ending Q3 2022 $38,000,000
Twelve month period ending Q4 2022
and each Fiscal Quarter thereafter $40,000,000
In addition, the amendment provides for minimum EBITDA requirements
at the end of certain periods to the extent that liquid assets are
less than $15,000,000, as follows:
Three month period ending Q1 2021 -($4,000,000)
Three month period ending Q2 2021 -($4,500,000)
Three month period ending Q3 2021 $1
Six month period ending Q4 2021 $500,000
Nine month period ending Q1 2022 -($1,000,000)
Twelve month period ending Q2 2022 -($1,000,000)
Twelve month period ending Q3 2022 -($1,000,000)
Twelve month period ending Q4 2022 and
each Fiscal Quarter thereafter $1
The Seventh Amendment contains representations, warranties,
covenants, releases, and conditions customary for a credit
agreement amendment of this type.
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.
BRAZOS ELECTRIC: S&P Lowers ICR to 'D' Due to Bankruptcy Filing
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating (ICR) to 'D'
from 'A' on Brazos Electric Power Cooperative Inc., Texas. S&P also
lowered our rating to 'CCC' from 'A' on Brazos Sandy Creek Electric
Cooperative Inc.'s series 2009A senior-secured notes, and placed
the rating on CreditWatch with negative implications. Brazos Sandy
Creek, a wholly-owned subsidiary of Brazos, was created as a
financing vehicle for Brazos' investment in the Sandy Creek Energy
Station.
On Monday, March 1, Brazos filed a voluntary petition under Chapter
11 of the U.S. Bankruptcy Court for the Southern District of Texas,
citing a disputed $1.8 billion bill from the Electric Reliability
Council of Texas (ERCOT).
"The downgrade and CreditWatch Negative placement on Brazos Sandy
Creek's series 2009A senior-secured notes reflect their credit
exposure to Brazos under a power purchased contract that supports
payment on the bonds," said S&P Global Ratings credit analyst Scott
Sagen.
On a consolidated basis, Brazos had $2.2 billion in total debt as
of Dec. 31, 2019 (excluding cushion of credit funds). $1.8 billion
of Brazos' total debt is placed with Rural Utilities Service
(RUS).
The series 2009A senior secured notes totaling $400 million
outstanding were issued for the benefit of Brazos and are privately
placed. The series 2009A notes were issued to establish a long-term
method for Brazos to finance Brazos Sandy Creek's 25%
(approximately 225 MW) undivided ownership interest in Sandy Creek
Energy Station. In connection with the transaction, Brazos Sandy
Creek entered into a purchased-power agreement with Brazos in which
Brazos is obligated to take or pay all of the subscribed capacity
from Brazos Sandy Creek.
"The CreditWatch Negative placement reflects the fact that it is
not yet known whether in bankruptcy Brazos will reject or accept
its remaining obligations under the Sandy Creek purchased power
contract," added Mr. Sagen. If Brazos were to reject its remaining
obligations under the power purchase agreement, S&P would lower its
rating on the notes to 'D' because Brazos' payments under the
purchase power contract support payment on the bonds.
S&P said, "We associate additional environmental risks with the
utility and Texas' power markets because the utility was exposed to
the ERCOT market's vulnerability to extreme weather events.
Therefore, we conclude that this past week's extreme weather
highlighted the utility's environmental exposure because the
utility must rely on its purchased power arrangements and market
purchases to complement its owned generation and the amalgam of
these resources did not withstand extreme weather during certain
hours last week. While we view elevated environmental and
governance risks as the primary factor in our rating action, we
believe this past week's extreme spikes in power procurement and
natural gas costs elevate the social risks the utility faces." The
problems the utility encountered also highlight governance
exposures due to the limits of management's hedging strategies.
BRILLIANT INDUSTRIES: Hires Michael D. Kwasigroch as Legal Counsel
------------------------------------------------------------------
Brilliant Industries, Inc. seeks approval from the U.S. Bankruptcy
Court for the Central District of California to employ the Law
Offices of Michael D. Kwasigroch as its legal counsel.
The Debtor needs legal counsel to propose a Chapter 11 plan, assist
with the requirements of the Office of the U.S. Trustee, litigate
potential disputes, and provide other services in connection with
its Chapter 11 case.
The firm will be paid at hourly rates ranging from $350 to $500 and
will be reimbursed for out-of-pocket expenses incurred. The
retainer fee is $5,000.
Michael Kwasigroch, Esq., 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.
The firm can be reached at:
Michael D. Kwasigroch Esq.
Law Offices of Michael D. Kwasigroch
1975 Royal Ave Suite 4
Simi Valley, CAa 93065
Email: (805) 522-1800
About Brilliant Industries
Brilliant Industries Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Calif. Case No. 21-11046) on Feb. 9,
2021. Brilliant Industries President Eric Hill signed the
petition.
At the time of the filing, the Debtor disclosed assets of between
$1 million and $10 million and liabilities of the same range.
The Law Offices Of Michael D. Kwasigroch is the Debtor's legal
counsel.
BROOKS BROTHERS: Court Confirms Chapter 11 Plan Without Opposition
------------------------------------------------------------------
Law360 reports that bankrupt clothing retailer Brooks Brothers
Group Inc. received court approval Friday, March 5, 2021, for its
Chapter 11 plan of liquidation that will pay secured creditors in
full and enjoyed unanimous support from impaired creditors.
During a virtual hearing, debtor attorney Garrett A. Fail of Weil
Gotshal & Manges LLP said the plan had support from general
unsecured creditors and the official committee of unsecured
creditors, which will share in a litigation trust tasked with
pursuing potentially valuable claims against the company's former
leadership. "The debtors are pleased the plan enjoys the level of
creditor support that it does," Fail told the court.
About Brooks Brothers Group
Brooks Brothers -- https://www.brooksbrothers.com/ -- was a
clothing retailer with over 1,400 locations in over 45 countries.
Brooks Brothers Group, Inc., and 12 of its affiliates filed for
Chapter 11 protection (Bankr. D. Del., Lead Case No. 20-11785) on
July 8, 2020. The Debtors were estimated to have assets and
liabilities of $500 million to $1 billion.
The Hon. Christopher Sontchi presides over the cases.
Richards, Layton & Finger, P.A., and Weil, Gotshal & Manges LLP
serve as counsel to the Debtors. PJ Solomon, L.P acts as
investment banker; Ankura Consulting Group LLC as financial
advisor; and Prime Clerk LLC as claims and noticing agent.
On July 21, 2020, the Office of the United States Trustee formed an
official committee of unsecured creditors. The Committee selected
Akin Gump Strauss Hauer & Feld LLP and Troutman Pepper Hamilton
Sanders LLP as its counsel, and FTI Consulting, Inc. as its
financial advisor.
* * *
In August 2020, the Court entered an order authorizing the Debtors
to sell substantially all assets for $325 million to SPARC Group
LLC, the successful bidder. The sale closed Aug. 31, 2020. The
Debtors were renamed to BBGI US Inc., et al., following the sale.
C.R.M. OF SPARTA: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: C.R.M. of Sparta, LLC
8369 Rivoli Road
Bolingbroke, GA 31004
Business Description: C.R.M. of Sparta, LLC operates a skilled
nursing facility.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Middle District of Georgia
Case No.: 21-50200
Judge: Hon. James P. Smith
Debtor's Counsel: Wesley J. Boyer, Esq.
BOYER TERRY LLC
348 Cotton Avenue, Suite 200
Macon, GA 31201
Tel: (478) 742-6481
Email: Wes@BoyerTerry.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael E. Winget, Sr., managing
member.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/5UDD2OY/CRM_of_Sparta_LLC__gambke-21-50200__0001.0.pdf?mcid=tGE4TAMA
C.R.M. OF WARRENTON: Case Summary & 20 Top Unsecured Creditors
--------------------------------------------------------------
Debtor: C.R.M. of Warrenton, LLC
8369 Rivoli Road
Bolingbroke, GA 31004
Business Description: C.R.M. of Warrenton, LLC operates in the
health care industry.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Middle District of Georgia
Case No.: 21-50201
Judge: Hon. James P. Smith
Debtor's Counsel: Wesley J. Boyer, Esq.
BOYER TERRY LLC
348 Cotton Avenue, Suite 200
Macon, GA 31201
Tel: (478) 742-6481
E-mail: Wes@BoyerTerry.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael E. Winget, Sr., managing
member.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/6YWCQCA/CRM_of_Warrenton_LLC__gambke-21-50201__0001.0.pdf?mcid=tGE4TAMA
CANYONS END: Seeks Cash Collateral Access
-----------------------------------------
Canyons End, LLC asks the U.S. Bankruptcy Court for the District of
Arizona for authority to use cash collateral on an interim and
final basis in accordance with its proposed budget.
The Debtor requires the use of cash collateral to continue
operating and maintaining its business in order to preserve its
value. Specifically, the Debtor needs to use the revenue generated
from operations to maintain its value and relationships with
suppliers to continue day to day operations.
On or about February 14, 2018, Canyons End took possession of the
Canyons End Motel and entered into a written purchase agreement
regarding the sale and transfer of the property on March 14, 2018
with Cary Schweitzer that included the Seller financing of the
balance of $225,000.
On August 28, 2018 Canyons End filed a Verified Complaint for
Breach of Contract against Schweitzer. The Verified Complaint
alleged that Canyons End had deposited monies of $50,000 into
escrow but a deed had not been tendered.
On December 27, 2018 a Quitclaim Deed was filed. As part of a
settlement with Schweitzer, after paying Schweitzer $50,000 for
Schweitzer relinquishing all rights and claims to the real
property, Canyons End agreed to assume any IRS tax lien or and any
tax lien from the State of Arizona that is currently connected with
the Property, so long as the liens did not to exceed of $225,000
(in compliance with the purchase agreement). These past due taxes
owing by Schweitzer for the property included real property taxes
to Mohave County, employment taxes to the Internal Revenue Service
and transaction privilege taxes to the Arizona Department of
Revenue.
Canyons End then successfully operated in 2019 as the Motel closest
to the west end of the Grand Canyon and the Grand Canyons Skywalk
and received top ratings from international travelers and tourists
coming from 39 counties. As business grew, Canyons End
aggressively pursued new financing to satisfy the tax liens and to
raise the funds required to fully remodel the Motel, according to
the original plans to sell the Motel as an improved income
producing property. The Seller financing from the original
purchase contract and the Motel's remote location with less than 2
years of ownership became major obstacles to obtaining any new
financing.
Barely 7 months after signing the Settlement, Schweitzer hired a
lawyer to ask Canyons End to contact the tax agencies directly to
arrange for payments. This was not a part of the Settlement. The
only provisions in the Settlement about the liens were for
obtaining financing and mutual cooperation to keep or to settle the
liens below $225,000 if they exceeded that amount. No cooperation
was ever offered.
On February 25, 2020, Schweitzer filed a Verified Complaint
alleging breach of contract due to the non-payment of the tax
liens. Schweitzer does not have a secured interest in any of the
assets of the Debtor.
Schweitzer's lawsuit immediately crippled the ability of Canyons
End to obtain any financing to pay the tax liens or to remodel.
On March 14, 2020, President Trump issued travel restriction of
tourists flying to the US from Europe and on April 01, 2020 the
Governor of Arizona closed the Grand Canyon for 3 months. This
halted 90% of the Motel’s business and 100s of reservations made
in January and February for the 2020 season were cancelled.
Since reopening the Grand Canyon, a surge of tourists from
neighboring states began visiting the Grand Canyon and the Motel is
booking reservations to June 2021.
The Lenders that may claim the revenue generated by Canyons End is
their "cash collateral" and the properties securing their
respective interests are:
a) Advance Services Group, LLC whose interest is secured by a
UCC filing;
b) Stephanie Walker whose interest is secured by two Deeds of
Trust;
c) Internal Revenue Service whose interest is secured by UCC
liens; and
d) Arizona Department of Revenue.
The Debtor proposes to use income generated by motel reservations
to pay its expenses in accordance with the Budget, with a 20%
variance. The Debtor also intends to make ongoing payments to the
Lenders in accordance with the terms of the Budget.
The Lenders, if any, will be adequately protected by Canyons End
continuation and preservation of the going concern value of the
business, by the equity cushion in the value of the business, by
the replacement lien in Canyons End's assets, and by making
adequate protection payments as set forth in the Budget.
A copy of the motion is available at https://bit.ly/3eakwM5 from
PacerMonitor.com.
About Canyons End, LLC
Canyons End operates as the closest motel to the Grand Canyon
Skywalk, Canyons End Motel. Robert McDowell is the sole member and
manager of Canyons End, LLC.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Ariz. Case No. 0:21-bk-01469) on March
2, 2021. In the petition signed by Robert McDowell, manager, the
Debtor disclosed up to $ 1 million in assets and up to $500,000 in
liabilities.
Lamar Hawkins is the Debtor's counsel.
CAPITAL TRUST: S&P Places 'B+' 2018-B Bond Rating on Watch Neg.
---------------------------------------------------------------
S&P Global Ratings has placed its 'B+' rating on Capital Trust
Agency, Fla.'s series 2018A senior living bonds and its 'B-' rating
on the agency's second-tier 2018B senior living bonds on
CreditWatch, with negative implications. The bonds were issued for
H-Bay Ministries Inc., Texas' Superior Residences project in
Florida.
"The CreditWatch placement is based on persistently low
occupancy--reported as 60% for the full year--leading to debt
service coverage for 2020 that is below 1x on both tiers of bonds,
as per our calculations," said S&P Global Ratings credit analyst
Adam Torres.
S&P said, "We note that the project paid debt service in January
2021 without the use of draws on the debt service reserve fund,
partially assisted by deferred payments to the owner and asset
manager, and secured loans under the federal government's Paycheck
Protection Program that reimbursed certain operating expenses.
"We further note that while the borrower has produced full-year
unaudited financial statements, we believe independent third-party
audited statements would provide a more complete description of how
the properties are operating.
"Given that the audit will likely be completed within our 90-day
CreditWatch period, we expect to resolve this placement within the
next three months."
CARDINAL BAY: S&P Places 'BB-' Rating on 2016C Bonds on Watch Neg.
------------------------------------------------------------------
S&P Global Ratings placed the following ratings on New Hope
Cultural Education Finance Corp., Texas' senior living revenue
bonds, issued for Cardinal Bay Inc. (Village on the Park/Carriage
Inn Project) on CreditWatch with negative implications:
-- The 'BBB' rating on the series 2016A bonds;
-- The 'BB' rating on the series 2016B bonds; and
-- The 'BB-' rating on the series 2016C bonds.
"The CreditWatch action reflects our opinion of the project's low
occupancy rate of 77% in the fourth quarter of 2020; very low
projected debt service coverage near or below 1x on the
transaction's second and third lien bonds, based on 2020
fourth-quarter interim financial statements; and property damage
incurred throughout the portfolio due to inclement weather in
February 2021," said S&P Global credit analyst Raymond Kim.
CBL & ASSOCIATES: Deadline to File Claims Set for March 26
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas set
March 26, 2021, at 5:00 p.m. (Prevailing Central Time) as the
deadline for general creditors to file proofs of claim against CBL
& Associates Properties Inc. and its debtor-affiliates. The Court
also set April 30, 2021, at 5:00 p.m. (Prevailing Central Time) for
governmental units to file their claims against the Debtors.
Claims can be filed electronically through Public Access to Court
Electronic Records at https://ecf.txsb.uscourts.gov. Also, claims
can be sent to the following addresses:
a) If by First-Class Mail:
CBL & Associates Properties, Inc. Claims Processing Center
c/o Epiq Corporate Restructuring, LLC
P.O. Box 4419
Beaverton, OR 97076-4419
b) If by Hand Delivery or Overnight Mail:
CBL & Associates Properties, Inc. Claims Processing Center
c/o Epiq Corporate Restructuring, LLC
10300 SW Allen Blvd.
Beaverton, OR 97005
About CBL & Associates
CBL & Associates Properties, Inc. --
http://www.cblproperties.com/--is a self-managed,
self-administered, fully integrated real estate investment trust
(REIT) that is engaged in the ownership, development, acquisition,
leasing, management and operation of regional shopping malls,
open-air and mixed-use centers, outlet centers, associated centers,
community centers, and office properties.
CBL's portfolio is comprised of 107 properties totaling 66.7
million square feet across 26 states, including 65 high-quality
enclosed, outlet and open-air retail centers and 8 properties
managed for third parties. It seeks to continuously strengthen its
company and portfolio through active management, aggressive leasing
and profitable reinvestment in its properties.
CBL, CBL & Associates Limited Partnership and certain other related
entities filed voluntary petitions for reorganization under Chapter
11 of the U.S. Bankruptcy Code in Houston, Texas, on Nov. 1, 2020
(Bankr. S.D. Tex. Lead Case No. 20-35226).
The Debtors have tapped Weil, Gotshal & Manges LLP as their legal
counsel, Moelis & Company as restructuring advisor and Berkeley
Research Group, LLC, as financial advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
CBL & ASSOCIATES: Seeks Extension of Plan Exclusivity Until May 31
------------------------------------------------------------------
CBL & Associates Properties, Inc. and its affiliates request the
U.S. Bankruptcy Court for the Southern District of Texas, Houston
Division to extend by 90 days the exclusive periods during which
the Debtors may file a Chapter 11 plan and solicit acceptances
until May 31, 2021, and July 29, 2021, respectively. This is the
Debtors' first request to extend the Exclusive Periods.
Since the Petition Date, the Debtors have made significant progress
towards a value-maximizing exit from chapter 11. As detailed in the
First Day Declaration, the Debtors entered these chapter 11 cases
have entered into that certain Restructuring Support Agreement with
the Consenting Noteholders. After the Petition Date, the Debtors
and the Consenting Noteholders negotiated further modifications to
the restructuring, which are reflected in the Plan previously filed
with the Court. The Debtors also intend to work with the Creditors'
Committee and other constituents to build further consensus around
the Plan already filed with the Court. The Debtors, however, still
believe that the optimal outcome of these chapter 11 cases is a
fully consensual resolution with the Consenting Noteholders, Bank
Lenders, and Creditors' Committee.
With that goal in mind, the Debtors suggested, spearheaded, and
engaged in the Mediation with those constituents—and continued
negotiations with the Bank Lenders even after the Bank Lenders
elected to leave the Mediation— on the terms of a fully
consensual plan.
In addition to participating in the ongoing plan negotiations and
driving the Mediation process forward, since the Petition Date, the
Debtors have also advanced a number of critical work streams
necessary to maximize value for the Debtors' stakeholders.
The Debtors are paying administrative expenses as they come due and
will continue to do so. The Debtors continue to monitor their
liquidity closely and are confident that sufficient funding will be
available to satisfy their post-petition payment obligations during
the requested extension of the Exclusive Periods.
To enable the Debtors to finalize, solicit, and seek confirmation
of the Plan, as well as to continue negotiations with their key
constituents on the terms of a fully consensual transaction —
which the Debtors believe would be the optimal outcome to these
chapter 11 cases — the Debtors are requesting a 90-day extension
of the Exclusive Periods. The Debtors' stakeholders will benefit
from the requested 90-day extension because such extension will
provide the continued stability and predictability that comes with
the Debtors being the sole plan proponents, and will continue to
promote the Debtors' ability to maximize value for the benefit of
their estates in these chapter 11 cases. Importantly, both the Ad
Hoc Bondholder Group and the Creditors' Committee have no
objections to the Debtors' request to extend the Exclusive
Periods.
A copy of the Debtors' Motion to extend is available at
https://bit.ly/3kLo3C1 from epiq11.com.
About CBL & Associates
CBL & Associates Properties, Inc. --
http://www.cblproperties.com/--is a self-managed,
self-administered, fully integrated real estate investment trust
(REIT) that is engaged in the ownership, development, acquisition,
leasing, management, and operation of regional shopping malls,
open-air and mixed-use centers, outlet centers, associated centers,
community centers, and office properties.
CBL's portfolio is comprised of 107 properties totaling 66.7
million square feet across 26 states, including 65 high-quality
enclosed, outlet, and open-air retail centers and 8 properties
managed for third parties. It seeks to continuously strengthen its
company and portfolio through active management, aggressive
leasing, and profitable reinvestment in its properties.
CBL, CBL & Associates Limited Partnership, and certain other
related entities filed voluntary petitions for reorganization under
Chapter 11 of the U.S. Bankruptcy Code in Houston, Texas, on
November 1, 2020 (Bankr. S.D. Tex. Lead Case No. 20-35226).
Judge David R. Jones oversees the case. The Debtors have tapped
Weil, Gotshal & Manges LLP as their legal counsel, Moelis & Company
as restructuring advisor, and Berkeley Research Group, LLC as
financial advisor. Epiq Corporate Restructuring, LLC, is the claims
agent.
CE ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: CE Electrical Contractors LLC
51 Wooster Court
Bristol, CT 06010
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
District of Connecticut
Case No.: 21-20211
Judge: Hon. James J. Tancredi
Debtor's Counsel: Jenna N. Sternberg, Esq.
BOATMAN LAW LLC
155 Sycamore Street
Glastonbury, CT 06033
Tel: (860) 291-9061
Fax: (860) 291-9073
E-mail: jsternberg@boatmanlaw.com
Total Assets: $1,625,485
Total Liabilities: $8,648,831
The petition was signed by Paul Calafiore, the managing member.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/5D3A42I/CE_Electrical_Contractors_LLC__ctbke-21-20211__0001.0.pdf?mcid=tGE4TAMA
CENTURY 21: Gets OK to Hire Deloitte as Tax Advisor
---------------------------------------------------
Century 21 Department Stores LLC and its affiliates received
approval from the U.S. Bankruptcy Court for the Southern District
of New York to employ Deloitte Tax, LLP.
The firm will provide tax audit services and tax advisory services
related to federal, foreign, state and local tax matters.
Deloitte Tax will be paid at these rates:
Partner/Principal/Managing Director $855 per hour
Senior Manager $765 per hour
Manager $650 per hour
Senior Consultant $540 per hour
Consultant $435 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
Philip Lee, a partner at Century 21, disclosed in a court filing
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Philip B. Lee
Deloitte Tax LLP
2 Jericho Plaza
Jericho, NY 11753
Tel: (516) 918-7000/(516) 918-7809
Email: philee@deloitte.com
About Century 21 Department Stores
Century 21 Department Stores LLC -- http://www.c21stores.com/--
and its affiliates are pioneers in off-price retail offering access
to designer brands at amazing prices. The companies opened their
iconic flagship location in downtown Manhattan in 1961. As of the
petition date, the Debtors have 13 stores across New York, New
Jersey, Pennsylvania and Florida and an online retail presence,
operate seasonal pop-ups, and employ other innovative retail
concepts.
Century 21 Department Stores and its affiliates sought Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 20-12097 on Sept. 10,
2020).
Century 21 was estimated to have $100 million to $500 million in
assets and liabilities as of the bankruptcy filing.
The Hon. Shelley C. Chapman is the case judge.
The Debtors tapped Proskauer Rose LLP as their legal counsel,
Berkeley Research Group LLC as financial advisor, Hilco Merchant
Resources LLC as liquidation consultant, and Deloitte Tax LLP as
tax advisor. Stretto is the Debtors' claims agent.
On Sept. 16, 2020, the U.S. Trustee for Region 2 appointed an
official committee of unsecured creditors. The committee is
represented by Lowenstein Sandler, LLP.
CENTURY ALUMINUM: Incurs $123.3 Million Net Loss in 2020
--------------------------------------------------------
Century Aluminum Company filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$123.3 million on $1.60 billion of total net sales for the year
ended Dec. 31, 2020, compared to a net loss of $80.8 million on
$1.83 billion of total net sales for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $1.39 billion in total assets,
$240.3 million in total current liabilities, $613.2 million in
total noncurrent liabilities, and $546.1 million in total
shareholders' equity.
The Company believes that cash provided from operations and
financing activities will be adequate to cover its operations and
business needs over the next 12 months. As of Dec. 31, 2020, the
Company had cash and cash equivalents of approximately $81.6
million and unused availability under its revolving credit
facilities of $100.6 million, resulting in a total liquidity
position of approximately $182.2 million.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/949157/000094915721000042/cenx-20201231.htm
About Century Aluminum Company
Century Aluminum Company -- http://www.centuryaluminum.com-- is a
global producer of primary aluminum and operates aluminum reduction
facilities, or "smelters," in the United States and Iceland.
* * *
As reported by the TCR on April 17, 2020, Moody's Investors Service
downgraded the Corporate Family Rating of Century Aluminum Company
to Caa1 from B3. "The ratings downgrade reflects Moody's
expectations of further deterioration in Century's credit profile
due to the impact of the coronavirus outbreak on the global
aluminum demand, prices and regional premiums, which have declined
materially since the beginning of 2020," said Botir Sharipov, vice
president and lead analyst for Century Aluminum.
CERIDIAN HCM: S&P Alters Outlook to Stable, Affirms 'B+' ICR
------------------------------------------------------------
S&P Global Ratings revised its outlook on Minnesota-based Ceridian
HCM Holding Inc., a cloud-based human capital management (HCM)
provider, to stable from negative and affirmed its 'B+' issuer
credit rating on the company.
S&P said, "At the same time, we affirmed our 'B+' issue-level
rating on the company's senior secured debt. The '3' recovery
rating is unchanged but we have revised the recovery prospects on
the debt to 65% from 55%.
"The stable outlook reflects our view that Ceridian will be able to
generate strengthening EBITDA spurred by the robust performance of
its Dayforce product, which could sustain adjusted leverage
measures in the 4.5x-5.0x range over the next 12 months along with
moderate levels of free operating cash flow (FOCF) generation.
"EBITDA growth supports the company's deleveraging strategy to
maintain leverage measures below 5.0x over the next 12 months. We
anticipate Ceridian will achieve about 20%-25% revenue growth over
the next 12 months driven by its organic growth strategy and its
recently completed acquisition of Ascender. We expect the ongoing
deployment of the vaccine could spur economic growth and lead to
lower unemployment levels compared with 2020, thus supporting
Ceridian's topline growth in 2021. At the same time, the continued
transition of enterprise and small to midsize business customers to
the company's cloud-based software as a service (SaaS) offering
from legacy HCM applications offers additional momentum to the
company's growth trajectory (especially for its cloud-based
Dayforce product). As a result, we anticipate the company's
adjusted net leverage measures will be about 4.5x-5.0x over the
next 12 months, which supports our stable outlook.
"A combination of organic and inorganic growth strategy should
support the company's EBITDA growth over the next 12-24 months. We
expect the company to penetrate further into the US$20 billion HCM
market in North America. The company's continuous payroll
calculation and tax capabilities, along with a competitively priced
product offering, should support its ability to expand its market
share in a fragmented and competitive market. In addition,
Ceridian's increasing focus on acquiring enterprise customers
through its successful system integrator relationships and its
ability to upsell new products into its current customer base, are
additional growth pillars to support the company's organic growth
strategy over the next 12-24 months. The company's increasing cloud
recurring revenue base of about two-thirds of fiscal 2020 revenues
(excluding the float revenues) and strong customer retention rates
of above 95% provide EBITDA stability and predictability in a
highly competitive and fragmented HCM market. In our view, the
company's new product, Dayforce Wallet, offers a competitive
advantage over other cloud-based HCM providers; however, we don't
expect it to generate material earnings in the next 12 months."
At the same time, Ceridian's global expansion strategy through
acquisitions will support the company's geographic diversity in the
longer term. The recent acquisitions (Ascender, RITEQ, and Excilty
Global) in Asia-Pacific (APAC) have an existing customer base of
about 1,500 clients. Ceridian expects to migrate these customers
onto its Dayforce platform gradually, building a significant
revenue stream in a new jurisdiction. At the same time, these
acquisitions offer a platform to penetrate further into these new
markets through the regional offerings, supporting Ceridian's
ambitious plan to be a global cloud-based HCM service provider.
Cerdian's capital allocation policy could be key to maintaining
credit quality. S&P said, "We anticipate the company's growth
aspirations of penetrating into US$20 billion total addressable
market outside North America will lead to substantial investments
in terms of product development (building a payroll rule engine for
each jurisdiction) and acquisitions. We expect the company's
overarching goal of offering a global HCM product suite to its
large enterprise customers could lead to debt-funded acquisitions,
thereby elevating credit measures and, absent a deleveraging plan,
potentially pressure Ceridian's credit quality." As a result, the
company's ability to maintain an adequate balance between achieving
its global growth ambitions and maintaining leverage measures below
5.0x will determine the direction of the ratings.
The stable outlook on Ceridian reflects S&P Global Ratings'
expectation that the company's growth strategy of expanding
Ceridian's market share and anticipated global expansion will lead
to an adjusted debt-to-EBITDA ratio of close to 4.5x-5.0x over the
next 12 months. In our view, the company's strong growth from its
cloud-based product (Dayforce), robust customer retention rates,
and prudent investments in the business, should support moderate
levels of FOCF.
S&P said, "We could raise the rating over the next 12 months if the
company's adjusted debt-to-EBITDA ratio improves, and we believe it
can be sustained below 4x along with adjusted FOCF-to-debt
approaching 10%. In this scenario, we would expect Ceridian to
exhibit sustainable revenue growth in the double-digit area (about
25%) from its cloud-based products and increase scale by adding
more customers and upselling new products.
"At the same time, we would also expect the company to demonstrate
a commitment to a conservative financial policy such that adjusted
debt to EBITDA remains below 4x including acquisitions.
"We could lower the rating in the next 12 months if Ceridian's
adjusted debt-to-EBITDA ratio increases above 5x or adjusted FOCF
to debt approaches 2%. In our opinion, this scenario could occur if
the company adopts an aggressive growth strategy for its
cloud-based HCM offerings, along with high business investments,
which pressures near-term profitability and its deleveraging
strategy. Alternatively, if the company makes a large debt-funded
acquisition to expand its global footprint, this could lead to
adjusted debt to EBITDA remaining above 5x for a prolonged period."
CHRISTOPHER & BANKS: Committee Hires FTI as Financial Advisor
-------------------------------------------------------------
The official committee of unsecured creditors of Christopher &
Banks Corporation and its affiliates received approval from the
U.S. Bankruptcy Court for the District of New Jersey to employ FTI
Consulting, Inc. as its financial advisor.
The firm will provide these services:
a. assist in the review of financial-related disclosures
required by the court, including the Debtors' schedules of assets
and liabilities, statement of financial affairs and monthly
operating reports;
b. assist in the preparation of analyses required to assess the
use of cash collateral;
c. assess and monitor the Debtors' short term cash flow,
liquidity and operating results;
d. review the Debtors' proposed key employee retention and other
employee benefit programs;
e. review the Debtors' analyses of the sale of their business;
f. review the Debtors' identification of potential cost
savings;
g. review and monitor the asset sale process, including, but not
limited to an assessment of the adequacy of the marketing process,
completeness of any buyer lists, review and quantifications of any
bids;
h. review tax issues associated with, but not limited to,
claims/stock trading, preservation of net operating losses, refunds
due to the Debtors, plans of liquidation, and asset sales;
i. if necessary, review claims reconciliation and estimation
process;
j. review other financial information prepared by the Debtors,
including, but not limited to, cash flow projections and budgets,
business plans, cash receipts and disbursement analysis, asset and
liability analysis, and the economic analysis of proposed
transactions for which court approval is sought;
k. attend meetings and assist in discussions;
l. review and prepare information and analysis necessary for the
confirmation of a Chapter 11 plan and related disclosure
statement;
m. evaluate and analyze avoidance actions, including fraudulent
conveyances and preferential transfers;
n. assist with the filing of committee responses or objections
to the Debtors' motions; and
o. render other general business consulting services.
FTI will be paid at these rates:
Senior Managing Directors $950 to $1,295 per hour
Directors/Senior Directors/
Managing Directors $715 to $935 per hour
Consultants/Senior Consultants $385 to $680 per hour
Administrative/Paraprofessionals $155 to $290 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
Conor Tully, senior managing director at FTI, disclosed in a court
filing that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Conor P. Tully
FTI Consulting, Inc.
Three Times Square, 9th Floor
New York, NY 10036
Tel: (212) 247-1010
Fax: (212) 841-9350
About Christopher & Banks Corporation
Christopher & Banks Corporation (OTC: CBKC) is a Minneapolis-based
specialty retailer featuring exclusively designed privately branded
women's apparel and accessories. As of Jan. 13, 2021, the company
operates stores in 44 states consisting of 315 MPW stores, 76
outlet stores, 31 Christopher & Banks stores, and 28 stores in its
women's plus size clothing division CJ Banks. It also operates the
www.ChristopherandBanks.com eCommerce website.
Christopher & Banks and two affiliates sought Chapter 11 protection
(Bankr. D.N.J. Lead Case No. 21-10269) on Jan. 13, 2021.
As of Dec. 14, 2020, Christopher & Banks had $166,396,185 in assets
and $105,639,182 in liabilities.
Judge Andrew B. Altenburg Jr. oversees the cases.
The Debtors tapped Cole Schotz P.C. as their legal counsel, BRG,
LLC as financial advisor, and B. Riley Securities Inc. as
investment banker. Omni Management Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped Pachulski Stang Ziehl & Jones LLP and Kelley Drye
& Warren LLP as its legal counsel, and FTI Consulting, Inc. as its
financial advisor.
CHRISTOPHER & BANKS: Committee Hires Kelley Drye as Co-Counsel
--------------------------------------------------------------
The official committee of unsecured creditors of Christopher &
Banks Corporation and its affiliates received approval from the
U.S. Bankruptcy Court for the District of New Jersey to employ
Kelley Drye & Warren, LLP.
Kelley Drye will serve as co-counsel with Pachulski Stang Ziehl &
Jones, LLP, the other firm tapped to represent the committee in the
Debtors' Chapter 11 cases.
The firm will be paid at these rates:
Partners $745 to $1,315 per hour
Special Counsel $625 to $870 per hour
Associates $455 to $680 per hour
Paraprofessionals $285 to $380 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, the
following is provided in response to the request for additional
information:
Question: Did you agree to any variations from, or
alternatives to, your standard or customary billing
arrangements for this engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic
location of the bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and
material financial terms for the prepetition
engagement, including any adjustments during the 12
months prepetition. If your billing rates and
material financial terms have changed postpetition,
explain the difference and the reasons for the
difference.
Response: No.
Question: Has your client approved your prospective budget
and staffing plan, and, if so for what budget
period?
Response: The budget for committee professionals will be
governed by the line item set forth in the court's
final order, which authorized the Debtors' use of
cash collateral. The committee and the firm reserve
all rights to seek approval of professional fees in
excess of the budgeted amounts.
James Carr, Esq., a partner at Kelley Drye, 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.
The firm can be reached at:
James S. Carr, Esq.
Dana P. Kane, Esq.
Kelley Drye & Warren LLP
One Jefferson Road, Second Floor
Parsippany, NJ 07054
Tel: (973) 503-5900
Email: jcarr@kelleydrye.com
dkane@kelleydrye.com
About Christopher & Banks Corporation
Christopher & Banks Corporation (OTC: CBKC) is a Minneapolis-based
specialty retailer featuring exclusively designed privately branded
women's apparel and accessories. As of Jan. 13, 2021, the company
operates stores in 44 states consisting of 315 MPW stores, 76
outlet stores, 31 Christopher & Banks stores, and 28 stores in its
women's plus size clothing division CJ Banks. It also operates the
www.ChristopherandBanks.com eCommerce website.
Christopher & Banks and two affiliates sought Chapter 11 protection
(Bankr. D.N.J. Lead Case No. 21-10269) on Jan. 13, 2021. As of
Dec. 14, 2020, Christopher & Banks had $166,396,185 in assets and
$105,639,182 in liabilities.
Judge Andrew B. Altenburg Jr. oversees the cases.
The Debtors tapped Cole Schotz P.C. as their legal counsel, BRG,
LLC as financial advisor, and B. Riley Securities Inc. as
investment banker. Omni Management Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped Pachulski Stang Ziehl & Jones LLP and Kelley Drye
& Warren LLP as its legal counsel, and FTI Consulting, Inc. as its
financial advisor.
CHRISTOPHER & BANKS: Committee Hires Pachulski Stang as Counsel
---------------------------------------------------------------
The official committee of unsecured creditors of Christopher &
Banks Corporation and its affiliates received approval from the
U.S. Bankruptcy Court for the District of New Jersey to employ
Pachulski Stang Ziehl & Jones, LLP as its legal counsel.
The firm will provide these services:
a. assist the committee in its consultations with the Debtors
regarding the administration of their Chapter 11 cases;
b. advise the committee with respect to the Debtors' retention
of bankruptcy professionals;
c. assist the committee in analyzing the Debtors' assets and
liabilities, investigating the extent and validity of liens and
participating in and reviewing any proposed asset sales, any asset
dispositions, financing arrangements and cash collateral
stipulations or proceedings;
d. assist the committee in any manner relevant to reviewing and
determining the Debtors' rights and obligations under their leases
and executory contracts;
e. assist the committee in investigating the acts, conduct,
assets, liabilities, and financial condition of the Debtors, the
Debtors' operations and any other matters relevant to the cases or
to the formulation of a Chapter 11 plan;
f. assist the committee in connection with any sale of the
Debtors' assets;
g. assist the committee in the negotiation, formulation and
drafting of a plan of liquidation or reorganization;
h. advise the committee regarding its powers and duties under
the Bankruptcy Code and the Bankruptcy Rules;
i. assist the committee in the valuation of claims and on any
litigation matters, including avoidance actions;
j. provide other legal services related to the cases.
Pachulski will be paid at these rates:
Partners $845 to $1,695 per hour
Associates $695 to $1,275 per hour
Paralegals $425 to $460 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, the
following is provided in response to the request for additional
information:
Question: Did you agree to any variations from, or
alternatives to, your standard or customary billing
arrangements for this engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic
location of the bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and
material financial terms for the prepetition
engagement, including any adjustments during the 12
months prepetition. If your billing rates and
material financial terms have changed postpetition,
explain the difference and the reasons for the
difference.
Response: Not applicable.
Question: Has your client approved your prospective budget
and staffing plan, and, if so for what budget
period?
Response: The budget for committee professionals will be
governed by the line item set forth in the court's
final order, which authorized the Debtors' use of
cash collateral. The committee and the firm reserve
all rights to seek approval of committee
professional fees in excess of the budgeted amounts.
Bradford Sandler, Esq., a partner at Pachulski Stang Ziehl & Jones
LLP, 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.
The firm can be reached at:
Bradford J. Sandler, Esq.
Pachulski Stang Ziehl & Jones LLP
780 Third Avenue, 34th Floor
New York, NY 10017
Telephone: (212) 561-7700
Facsimile: (212) 561-7777
Email: bsandler@pszjlaw.com
About Christopher & Banks Corporation
Christopher & Banks Corporation (OTC: CBKC) is a Minneapolis-based
specialty retailer featuring exclusively designed privately branded
women's apparel and accessories. As of Jan. 13, 2021, the company
operates stores in 44 states consisting of 315 MPW stores, 76
outlet stores, 31 Christopher & Banks stores, and 28 stores in its
women's plus size clothing division CJ Banks. It also operates the
www.ChristopherandBanks.com eCommerce website.
Christopher & Banks and two affiliates sought Chapter 11 protection
(Bankr. D.N.J. Lead Case No. 21-10269) on Jan. 13, 2021. As of
Dec. 14, 2020, Christopher & Banks had $166,396,185 in assets and
$105,639,182 in liabilities.
Judge Andrew B. Altenburg Jr. oversees the cases.
The Debtors tapped Cole Schotz P.C. as their legal counsel, BRG,
LLC as financial advisor, and B. Riley Securities Inc. as
investment banker. Omni Management Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped Pachulski Stang Ziehl & Jones LLP and Kelley Drye
& Warren LLP as its legal counsel, and FTI Consulting, Inc. as its
financial advisor.
CHURCHILL DOWNS: S&P Affirms BB Issuer Credit Rating, Outlook Neg.
------------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on
Churchill Downs Inc.
S&P said, "We are assigning our 'BBB-' issue-level rating and '1'
recovery rating to the company's planned $200 million term loan B.
Churchill Downs plans on raising new secured and unsecured debt to
repay the outstanding balance on its revolver and add cash to the
balance sheet for general corporate purposes.
"The negative outlook reflects our forecast for elevated leverage
because of increased project capital spending, a payment to settle
outstanding litigation, and a large share repurchase in the first
quarter and we expect leverage will fall below our 4x downgrade
threshold next year."
Churchill Downs' leverage should improve to the low-4x by the end
of 2021 and below 4x in 2022 after a significant spike in 2020 due
to the closure of its gaming properties for several months as a
result of the pandemic. Regional gaming markets, like the ones in
which Churchill operates, are recovering faster because they cater
to customers who live in the local area and can drive to the
properties. These casinos are benefitting from customers staying
closer to home and limited other entertainment and travel options.
S&P said, "Capacity restrictions in most markets have not impaired
gaming revenue as much as we initially expected because historical
peak utilization rates were well below these limits in most
markets, except for those with the strictest limitations (e.g.,
Churchill Downs' Oxford Casino in Maine). Regional gaming
operators' cash flow is also benefitting from cost cuts management
implemented while the properties were closed, particularly in labor
and marketing. Since reopening, casinos have operated at lower
levels of labor and marketing expense, given capacity limitations
and closed amenities. While we believe incremental costs may creep
back as operations normalize, some reductions are likely permanent.
Additionally, the ongoing closure of many lower-margin or
loss-leading amenities, like buffets, for health and safety reasons
is supporting margin improvement, and these amenities may not
reopen for some time, if at all. We also believe Churchill Downs
may benefit from loosening of capacity restrictions in the second
half of 2021 that should further support revenue recovery,
especially if virus cases continue to decline and widespread
immunization is achieved."
S&P said, "We believe the regional gaming recovery underway and
good TwinSpires growth, as well as the expectation that the
Kentucky Derby will recover closer to 2019 levels next year, and
returns from newly opened historical horse racing machine (HRM)
facilities in Kentucky this year and next will support leverage
improving well under 4x in 2022. Although we now expect leverage to
be about 0.2x higher at the end of 2021 than our previous forecast
and not fall below our 4x downgrade threshold until 2022, we
believe the strength of the company's iconic Kentucky Derby event
warrants looking out into the first half of 2022. Under our
assumption that the May 2022 Kentucky Derby will recover closer to
2019 levels, we believe the company's leverage will fall below 4x
by mid-2022. Further, Churchill Downs recently announced it has
engaged a broker to sell 326 acres of land that is currently home
to its Arlington International Racecourse. The potential sale of
this land, if completed, could accelerate leverage improvement
later this year or early next year. We have not factored any
potential land sale proceeds in our forecast given uncertainty as
to whether a sale will be completed, when, and at what price.
Lastly, Churchill Downs has strong liquidity to absorb required
calls on cash this year, even absent the proposed transaction,
which further enhances the company's liquidity if completed.
"The long-term strength of Churchill Down's iconic Kentucky Derby
event remains largely intact. The ongoing success of the Kentucky
Derby is a key competitive advantage and we believe the long-term
strength of the event remains intact. Churchill Downs benefits from
the uniqueness of The Kentucky Derby, which typically draws strong
and consistent attendance year after year, allowing Churchill to
command ticket price premiums. Furthermore, ticketing revenue is
relatively predictable because the vast majority of revenue comes
from reserved seats, about one-third of which are sold through
noncancellable contracts like personal seat license or suite
contracts, and the remainder are sold well in advance of the event.
Additionally, the event's attendance and sizable television
viewership drive long-term media rights contracts and contribute to
greater revenue certainty for the company. Despite a long track
record of continuously holding the Derby, last year highlights the
risk of concentration in a single event which, while rare, can be
materially disrupted and cause significant cash flow volatility.
"We expect the company will be able to run the 147th Kentucky Derby
on its usual timeline (first Saturday in May), after rescheduling
the event in 2020 to September. We also assume the company will be
able to have spectators although we believe this number will be far
lower than typical attendance of 150,000 to 170,000. The company
plans to initially limit capacity and has begun selling 40% to 50%
of reserved seating. As premium reserved seats total about 60,000,
this would represent attendance of 24,000 to 30,000 and is modestly
higher than the 23,000 fans Kentucky initially permitted for the
September 2020 Derby, and in line with recent in-person attendance
of about 25,000 at the Super Bowl. Because demand for the event's
premium tickets typically exceeds supply, we do not expect the
company to face difficulties selling these seats. This should
support significant recovery in ticketing revenue (about 50% to 60%
of the event's total revenue) because premium seats comprise the
majority of this revenue stream. We also assume that wagering
revenue at the 2021 event returns to more normal levels, although
it could be modestly hurt by fewer spectators and weaker economic
conditions. Wagering in 2020's event was down by half, which the
company attributes to the loss of casual fans from a rescheduled
event, lack of on-track wagering locations, fewer horses per race,
and unusually heavy favorites. We also assume that sponsorship
revenue next year could be modestly affected by weaker economic
conditions but that it should recover somewhat as the event is run
on its traditional day."
Churchill Downs' TwinSpires online horse wagering business
supported 2020's cash flow with robust revenue and EBITDA growth
and we expect continued growth in 2021. The company's TwinSpires
business is benefitting from a shift of horse wagering to online
platforms and away from brick and mortar track and off-track
betting (OTB) locations. S&P said, "We believe the pandemic
accelerated this trend, and that much of the shift is likely
sustainable given the convenience of online wagering. This business
provided a source of revenue and cash flow in 2020 even when the
company's casinos were closed because some racetracks were still
conducting horse races without fans. In 2020, revenue and EBITDA in
this segment grew 39% and 62%, respectively. We believe the segment
is benefitting from economies of scale as handle increases and this
should continue in 2021. We also believe that TwinSpires will
benefit this year from improved wagering on Triple Crown events,
which should occur on their normal days. Wagering on these events
last year was hurt by rescheduled events and heavy favorites.
Additionally, the number of horse races held in 2020 was
significantly lower than 2019, and we believe some of these races
may return in 2021, which should further improve revenue."
S&P said, "The negative outlook reflects our forecast for leverage
to be elevated in the low-4x area in 2021 because of increased
project capex, a payment to settle outstanding litigation, and a
large share repurchase in the first quarter. Incorporating expected
returns from project capex spent in 2021 and a more normal 2022
Kentucky Derby week event, we expect leverage will fall below our
4x downgrade threshold next year. The company has little cushion to
absorb operating weakness relative to our forecast. The negative
outlook further reflects the potential for continued operating
restrictions across its gaming markets over the coming months until
widespread immunization is achieved; and the continued
implementation of social distancing measures that may impair
consumer discretionary spending.
"We could consider lowering our ratings on Churchill Downs if we no
longer believe its adjusted leverage will improve below 4x in 2022.
This could occur if its recovery is materially slower than we
currently expect because of persistent high unemployment or changes
in customer behavior stemming from the coronavirus or if an
increasing number of virus cases in its primary markets lead to
additional property closures or more stringent operating
restrictions. This could also occur if Churchill Downs is unable to
run the Kentucky Derby with some spectators, which could cause us
to lose confidence that the 2022 Kentucky Derby can recover closer
to 2019 levels and that leverage could improve below 4x in the
first half of 2022. We could also lower our ratings if Churchill
Downs increases capex spending or shareholder returns compared to
our current forecast.
"It is unlikely we will revise our outlook to stable over the next
year given our expectation that leverage will not improve below our
4x downgrade threshold until the middle of 2022 after what we
expect to be a more normal Kentucky Derby event. That said, we
could revise our outlook to stable once we are more certain the
coronavirus has been effectively contained and Churchill Downs'
operating performance has stabilized in a manner that supports S&P
Global Ratings' adjusted leverage improving below 4x."
CINEMARK USA: S&P Assigns 'B' Rating on $405MM Sr. Unsecured Notes
------------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level and '4' recovery
ratings to U.S. theater operator Cinemark Holdings Inc.'s proposed
$405 million senior unsecured notes due 2026, issued at operating
subsidiary Cinemark USA Inc. The '4' recovery rating indicates its
expectation for average recovery (30%-50%; rounded estimate: 45%)
for lenders in the event of a payment default. The company will use
the proceeds to refinance its existing $400 million senior
unsecured notes due 2022. The transaction is leverage neutral,
reduces near-term refinancing risk, and S&P does not expect it to
have a material effect on the company's interest burden.
S&P said, "Our 'B' issuer credit rating and negative outlook on
Cinemark reflect our expectation that the company has enough
liquidity to fund its operations through the economic recovery, but
we expect it to operate with leverage above 5x into 2022. We expect
cinema attendance will remain constrained by consumers' health and
safety concerns and social-distancing measures until an effective
treatment or vaccine becomes widely distributed--which could be
accomplished by the end of the third quarter--and will not recover
to 2019 levels (on a per-film basis) until 2022. The negative
outlook also reflects our expectation that studios will continue to
challenge the traditional theatrical release window and may
continue to favor premium video on-demand or streaming for small to
midsize films after the pandemic ends."
CLEARWAY ENERGY: S&P Assigns 'BB' Rating on $925MM Unsecured Notes
------------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level and '3' recovery
ratings to Clearway Energy Operating LLC's $925 million senior
unsecured notes offering. The company will use the proceeds to
repay the $600 million 2025 senior unsecured notes and borrowings
outstanding on the revolver, pay fees and expenses, and fund
general corporate purposes. While the company is increasing net
debt by about $130 million, the effect on credit metrics is
mitigated by growth projects coming online that will increase
EBITDA and cash available for distributions (CAFD). Thus, S&P
expects both debt to EBITDA and funds from operations to debt will
remain in line with the 'BB' rating over the next few years. S&P
has rated the notes in line with the company's other senior
unsecured debt. The '3' recovery rating reflects its expectation of
meaningful (50%-70%; rounded estimate: 55%) recovery in the case of
default.
S&P said, "Our outlook on the 'BB' issuer credit rating on Clearway
Energy Inc. is stable. We expect run-rate S&P Global
Ratings-adjusted debt to EBITDA to average 4.5x-5x over the next
few years using a blended P75 performance level. The stability in
our forecast is predicated on moderate EBITDA and CAFD growth as
the company adds post-construction contracted renewables and
conventional power projects in the U.S. We expect the growth
strategy to remain prudent and funded with a mix of debt, equity,
and operating cash flow.
"The recent announcement that the Texas weather outages will
decrease Clearway's cash generation by about $20 million-$30
million this year does not affect our long-term view of the rating.
The isolated event will likely lead to weaker-than-expected metrics
this year."
CMG CAPITAL: In Chapter 11 to Stop Foreclosure
----------------------------------------------
Brian Bandell of South Florida Business Journal reports that the
owner of a three-story office building near Miami's Brickell
neighborhood filed for Chapter 11 reorganization just days before a
foreclosure auction was set to strip it of the property.
CMG Capital LLC sought Chapter 11 reorganization in U.S. Bankruptcy
Court in Miami on Feb. 27, 2021. Steven Suh, Sang Lee, Said Lopez
and Alen Hsu signed the petition as members of the LLC.
Attorney Nathan G. Mancuso, who represents the debtor, couldn't be
reached for comment.
CMG Capital LLC owns the 8,556-square-foot office at 232 S.W.
Eighth St., plus a 967-square-foot home at 1431 N.W. 37th Ave. It
acquired the office building for $4 million in 2017 and the home
for $110,000 in 2019.
In the case management summary, CMG Capital LLC said it filed
Chapter 11 to stay the foreclosure over its property. It valued the
two real estate assets at $5.2 million.
Elizon DB Transfer Agent LLC won a $2.65 million foreclosure
judgment in December against CMG Capital LLC over a loan with $1.85
million in principal, plus interest and fees, outstanding. The
foreclosure auction was set for March 1, 2021 but the bankruptcy
filing stayed it.
The Chapter 11 petition listed Elizon DB as its largest creditor,
followed by an $1.3 million mortgage to Valbros Investments Corp.,
the previous owner of the building.
The company has a $5,000 month-to-month lease for the office
building with a tenant, according to the case summary. That was its
main source of income.
The office building was constructed on the 7,000-square-foot lot in
1972. The area is zoned for up to 24 stories.
About CMG Capital LLC
CMG Capital, LLC, is a leading commercial real estate lending
(non-bank) firm in Miami, Florida.
The company filed for Chapter 11 protection (Bankr. S.D. Fla. Case
No. 21-12013) on Feb. 27, 2021. The petition was signed by Steven
Suh, member. The company listed assets of between $1 million to
$10 million and liabilities of between $1 million to $10 million.
The Honorable Judge Jay A. Cristol handled the case. Mancuso Law,
P.A., led by Nathan G. Mancuso, is the Debtor's counsel.
COMPASS GROUP: S&P Assigns 'B+' Rating on Senior Unsecured Notes
----------------------------------------------------------------
S&P Global Ratings assigned its 'B+' debt rating to Compass Group
Diversified Holdings LLC's (CODI's) announced $750 million senior
unsecured notes due in 2029. S&P's recovery rating on the company's
senior unsecured notes is '4', indicating an average recovery
(30%-50%) in the event of a default.
S&P said, "We expect the company to use the proceeds to repay
outstanding debt, including its $600 million 8% senior unsecured
notes due in 2026 and a portion of the outstanding revolving credit
facility. We expect the company to use any upsize of the proposed
senior unsecured notes to further reduce the balance on the
revolver.
"Our long-term issuer credit rating on CODI remains 'B+', and the
outlook is stable. Our recovery rating on the company's 'BB' senior
secured revolving credit facility remains '1', indicating a very
high recovery (90%-100%) in the event of a default.
"We expect that CODI's loan-to-value ratio will remain 30%-45% and
that cash flow adequacy will remain greater than 0.7x. The proposed
transaction will free up more of the company's revolving credit
facility, improving liquidity. While we do not anticipate any
sizable acquisitions in the near term, significant draws on the
revolver to fund bolt-on acquisitions could result in the company's
loan-to-value ratio rising above 45%, our downside threshold for
the rating."
CONSOLIDATED COMMUNICATIONS: S&P Rates Senior Secured Notes 'B+'
----------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level and '2' recovery
ratings to Consolidated Communications Inc.'s proposed $400 million
senior secured notes due 2028. The company is a wholly-owned
subsidiary of Mattoon, Ill.-based telecommunications service
provider Consolidated Communications Holdings Inc. The '2' recovery
rating indicates S&P's expectation for substantial (70%-90%;
rounded estimate: 70%) recovery in the event of a payment default.
The company will use the proceeds from these notes to repay $400
million of its existing $1.4 billion term loan due 2027 and pay
related fees and expenses.
S&P said, "Because the transaction does not materially affect
Consolidated's credit metrics, our issuer credit rating and outlook
on the company are unchanged. Furthermore, we view the transaction
favorably because Consolidated will reduce its interest costs
through a repricing of the remaining $1 billion of outstanding term
loan debt.
Consolidated's results improved during fourth-quarter 2020 despite
the typical seasonal weakness in its Northern New England markets.
The overall revenue decline moderated to 1.5% during the quarter
because of the company's ongoing network upgrades and increased
data and transport, and broadband revenue. Meanwhile, its adjusted
EBITDA grew 1.1% during the quarter. Consolidated plans to upgrade
about 300,000 homes to fiber-to-the-home in 2021. It has
longer-term plans to cover more than 70% of its homes passed with
fiber by 2025. S&P said, "We view Consolidated's upgrade strategy
favorably because it will better enable the company to compete with
incumbent cable providers such as Comcast Corp. and Charter
Communications Inc., drive broadband market share gains, and enable
longer-term top-line stability. However, the expanded capex program
and associated funding requirements will keep leverage elevated and
result in negative free operating cash flow over the next several
years. For 2021, we expect revenue and EBITDA declines of up to 2%
and adjusted debt to EBITDA in the low-5x area, up from the high-4x
area in 2020. However, we believe leverage will remain comfortably
below our downgrade threshold of 6x."
CONSTANT CONTACT: S&P Assigns 'B' ICR on Initial Adjusted Leverage
------------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
Constant Contact Inc. S&P also assigned its 'B' issue-level and '3'
recovery ratings to the company's first-lien debt and its 'CCC+'
issue-level and '6' recovery ratings to the second-lien term loan.
The stable outlook reflects S&P's expectation that leverage will
remain in the high 5x area over the next 12 months as high one-time
costs associated with the carve-out and costs to achieve its margin
enhancement plan offset the company's cost optimization efforts.
The 'B' issuer credit rating reflects Constant Contact's initial
adjusted leverage in the high-5x area, its niche focus within the
email marketing software industry, and fragmented and competitive
market environment. Partly offsetting these factors are the
company's good brand presence and high EBITDA margins. Formerly
operating as a stand-alone unit of Endurance, Constant Contact
offers a software as a service (SaaS) online marketing platform
that enables SMBs to create, send, and track email marketing
campaigns. The company is the second-largest player in the SMB
email marketing space, behind MailChimp based on research provided
by G2.com. Given that it targets SMBs that are relatively early in
their lifecycles, Constant Contact experiences churn associated
with the underlying business creation and destruction lifecycle.
The company structures its pricing based on the number of contacts
within its client's portfolios, which creates organic upsell
opportunities and growth in average revenue per subscriber (ARPS)
as clients mature and expand their contact list. Additionally, its
brand recognition coupled with paid customer acquisition strategy
not only help mitigate churn rates but also grow revenue in the
low-single-digit area.
The email marketing industry is very competitive with low barriers
to entry and little differentiation among competitors. Given the
widespread use of email, email marketing remains highly effective
and offers the highest return on investment of all types of
marketing, making it very attractive for SMBs. S&P expects the need
for larger scale and scope of marketing solutions will drive a wave
of consolidation in the industry, as the addressable market is
large and very fragmented. Constant Contact targets SMBs with less
than 20 employees for which email marketing is the primary form of
customer engagement, highlighting the mission-critical nature of
the solutions given its relevance to revenue generating functions
for SMBs. Costs to acquire new SMB customers are relatively high
and sources typically range from paid search and affiliates.
S&P said, "We expect a 3% organic revenue increase in 2021, as
stable customer attrition offsets modest growth in subscribers and
ARPS. However, there could be downward pressure on churn because of
trailing SMB failures as a result of the COVID-19 pandemic. We
expect the company to action cost savings over the next two years,
ultimately arriving at EBITDA margin of about 43% in 2021. We
estimate Constant Contact's initial adjusted leverage of about 5.8x
as of Dec. 30, 2020, and expect leverage to remain in the high-5x
area by the end of 2021. We also expect Constant Contact to
generate free cash flow of $55 million-$60 million over the next
year, with approximately $53 million in interest expense. The $180
million delayed draw term loan has a 12-month draw period and is
earmarked for acquisitions, which could increase leverage.
"The stable outlook reflects our expectation that leverage will
remain in the high-5x area over the next 12 months as high one-time
costs associated with the carve-out and cost to achieve its margin
enhancement plan offset its cost optimization efforts. The stable
outlook also reflects our expectation for low-single-digit percent
organic customer growth in its core product offerings, with support
from growth in ARPS and an increase in net additional users. We
expect free cash flow to debt in the 6%-7% range in 2021.
"We could lower the rating on Constant Contact if we expect
leverage to rise and remain above 7x over the coming year. This
could occur if Constant Contact incurs higher-than-expected
carve-out costs, increasing SMB churn negatively affects its
operations, or it engages in a large debt-funded acquisition. We
could also lower the rating if more intense competition leads to
significant erosion of its core email marketing business, and free
cash flow as a percentage of debt decreases to the low-single-digit
area.
"Although unlikely over the next 12 months, we could consider an
upgrade if the company grows revenue organically and expands EBITDA
margins, such that it reduces leverage to below 5x for an extended
period. We expect revenue growth to come from adding new customers
and higher ARPS from its existing client base. An upgrade would
also require a commitment to operating with leverage consistently
below 5x considering acquisitions and/or shareholder returns."
CORNERSTONE ONDEMAND: S&P Upgrades ICR to 'B+', Outlook Stable
--------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on talent
management software provider Cornerstone OnDemand Inc. to 'B+'. The
outlook remains stable.
S&P said, "We are also raising our issue-level rating on the
company's revolving credit facility and first-lien term loan to
'B+'. The '3' recovery rating is unchanged.
"The stable outlook reflects our expectation that Cornerstone will
have stable performance through continued macroeconomic effects of
the COVID-19 pandemic and its cost-savings plan. We expect good
organic revenue growth on strong demand from its subscription
revenue base to help drive leverage to the mid-4x area in 2021."
Growth in subscription revenue helped stabilize Cornerstone's
performance through the macroeconomic factors of the COVID-19
pandemic and the Saba acquisition. In 2020, Cornerstone faced
potential headwinds that could have disrupted its business
operations, including macroeconomic factors of COVID-19 that could
have caused sales or cash flow disruptions to its financial
performance. Cornerstone also acquired Saba in April 2020 for $1.4
billion, its largest acquisition ever. The integration of Saba and
enactment of its large cost-savings plan could have disrupted
business operations. However, despite all these potential
headwinds, Cornerstone achieved good organic revenue growth in
2020.
Cornerstone grew its top line in the mid-single-digit percent area
organically in 2020 on good demand on its subscription revenue. The
company has been investing in its curated content subscription
solutions over the past few years and has seen more than a 40%
compound annual growth rate (CAGR) over the past two years.
Cornerstone has also tapped into the Saba customer base and cross
sold its other subscription products to those customer. Cornerstone
saw subscription revenue increase in the high-single-digit percent
area in 2020, which helped drive overall top-line growth. S&P
expects good demand for its subscription revenue to drive revenue
growth in the mid-single-digit percent area in 2021.
Cornerstone has committed to use free cash flow to pay down debt.
When Cornerstone completed the Saba acquisition, it said it would
use free cash flow generation to pay down its debt so that it could
quickly reduce leverage. Cornerstone has paid down a significant
amount of debt over the past few quarters, including $50 million of
its first-lien term loan in fourth-quarter 2020. This allowed for
leverage to decrease to below 5x in 2020. In February 2021,
Cornerstone paid down another $100 million of debt. S&P believes
Cornerstone will continue to use free cash flow generated to pay
down debt.
While reported free operating cash flow (FOCF) was depressed on
large restructuring and acquisition costs related to the 2020 Saba
acquisition, Cornerstone still generated more than $60 million in
reported FOCF. S&P said, "We believe the company will generate more
in 2021 as a result of good revenue growth and achieved synergies
from 2020 boosting FOCF. While we expect capital expenditure
(capex) to be in the low-$40 million area, we still expect
Cornerstone to generate more than $130 million in FOCF in 2021."
While EBITDA margins will drop in 2021 due to restructuring costs,
we expect S&P Global Ratings-adjusted leverage will be the low-4x
area by year-end 2021. After the Saba acquisition, Cornerstone
executed a large cost-savings plan to remove duplicative costs from
both companies. While it identified about $70 million of synergies
from the Saba acquisition, Cornerstone has since identified more
cost-savings opportunities. It is now also undergoing a
transformation cost-savings plan to reduce management layers and
use low-cost locations. S&P said, "We expect Cornerstone to have
large restructuring costs related to the transformation
cost-savings plan that will depress EBITDA such that EBITDA margins
will be in the mid-20% area in 2021. However, we expect those
restructuring costs to be one-time in nature, such that EBITDA
margins should bounce back to the low-30% area in 2022. While
EBITDA will be depressed on the large restructuring costs in 2021,
we still expect leverage to be in the low-4x area by year-end
because of Cornerstone's debt paydown."
Strong subscription revenue will help Cornerstone somewhat offset
the volatility in macroeconomic factors and its cost-savings plan.
Cornerstone's business model is selling most of its talent
management solutions as software-as-a-service (SaaS) offerings.
This has allowed for about 95% of total revenue to be subscription
revenue. Cornerstone generally has three-year contracts for which
it collects the cash upfront annually and defers revenue to be
recognized ratably over the subscription period. S&P said, "We view
its strong revenue visibility and increasing deferred revenues as
credit positives. We believe that this strong recurring revenue
will help Cornerstone somewhat mitigate volatility in its business
performance from macroeconomic factors such as the COVID-19
pandemic or its continued cost-savings plan."
S&P said, "The stable outlook reflects our expectation that
Cornerstone will have stable performance through continued
macroeconomic factors of the pandemic and its cost-savings plan. We
expect good organic revenue growth on strong demand from its
subscription revenue base to help drive leverage to the mid-4x area
in 2021.
"We could upgrade Cornerstone over the next 12 months if we believe
it will maintain leverage below 4x and FOCF to debt above 10%. This
could happen if Cornerstone further achieves its cost-savings plan
and grows its subscription revenue.
"We could downgrade Cornerstone if we expect it will sustain
leverage above 6x. This could occur if the company suffers
disruptions to business operations from its cost-savings plan that
could cause revenue volatility or larger-than-expected
restructuring costs. This could also occur if Cornerstone engages
in debt-funded acquisitions or shareholder returns."
COUNTRY FRESH: Auction of All U.S. & Canadian Assets on March 22
----------------------------------------------------------------
Country Fresh Holdings, LLC, and affiliates filed with the U.S.
Bankruptcy Court for the Southern District of Texas a notice of
their proposed sale of substantially all assets to Stellex/CF Buyer
(US) and Stellex/CF Buyer (CN) Inc., subject to overbid.
The Stalking Horse Bidder will buy the Assets for a total
consideration of: (a) $30 million in cash consideration; (b) $25
million senior secured note; (c) assumption of certain liabilities
relating to PACA Claims, Assumed Prepetition Payables and
Post-Petition Trade Payables not to exceed, in the aggregate, $21.5
million; and (d) Cure Costs.
On Feb. 17, 2021, the Canadian affiliates of the U.S. Debtors
commenced parallel insolvency proceedings ("CCAA Proceedings")
before the Ontario Superior Court of Justice (Commercial List)
("CCAA Court") under the Companies' Creditors Arrangement Act
("CCAA").
On Feb. 17, 2021, the U.S. Debtors filed their Emergency Motion For
Entry of an Order: (I) (A) Authorizing and Approving Bid
Procedures; (B) Authorizing and Approving the Debtors' Entry into
the Stalking Horse Purchase Agreement; (C) Authorizing and
Approving the Expense Reimbursement and Break-Up Fee; (D)
Scheduling an Auction and Sale Hearing; (E) Authorizing and
Approving Assumption and Assignment Procedures; and (F) Approving
Notice Procedures; (II) Approving the Sale of Substantially All of
the U.S. Debtors' Assets Free and Clear Of All Liens, Claims,
Encumbrances and Interests; and (III) Granting Related Relief in
the Bankruptcy Court.
On Feb. 26, 2021, the Court entered its Bid Procedures Order in the
Chapter 11 Cases, authorizing the U.S. Debtors to market their
business and assets in accordance with the sale and bid procedures
annexed to the Bid Procedures Order and conduct an auction to
select a party or parties to purchase all or some of the U.S.
Debtors' assets in accordance with the U.S. Bid Procedures.
On March 1, 2021, the CCAA Court issued a Bidding Procedures Order
in the CCAA Proceedings which, among other things, approved the
execution of the Stalking Horse Agreement and authorized the
Canadian Debtors to market their business and assets in accordance
with the sale and bid procedures annexed to the Canadian Bidding
Procedures Order.
The Bid Deadline under the Bid Procedures is March 19, 2021 at 4:00
p.m. (CT), and that any person or entity who wishes to participate
in the Auction must comply with the participation requirements, bid
requirements, and other requirements set forth in the Bid
Procedures.
The Sellers intend to conduct the Auction at which it will consider
proposals submitted to the Sellers and their professionals, by and
pursuant to the Bid Procedures as set forth in the Bid Procedures
Order and the Canadian Bidding Procedures Order, on March 22, 2021,
at 10:00 a.m. (CT). Instructions to participate in the Auction via
video will be provided to Qualified Bidders prior to the Auction.
The Sale Hearing to approve and authorized the sale of the U.S.
Debtors' Assets will be held on March 25, 2021, at 9:30 a.m.
prevailing (CT). The hearing to approve and authorize the sale of
the Canadian Debtors' Assets will be held on March 26, 2021 at
12:00 p.m. (ET). The Canadian Sale Hearing and the U.S. Sale
Hearing may be heard concurrently or jointly by the Bankruptcy
Court and CCAA Court if determined efficient and desirable.
The Sale Hearings may be adjourned or rescheduled as ordered by the
Bankruptcy Court and/or the CCAA Court, or by the Sellers in
consultation with the Consultation Parties, but without further
notice to creditors and parties in interest other than by
announcement by Debtors of the adjourned date at the Sale Hearings.
The deadline for filing an objection to the Sale(s) is March 23,
2021, at 4:00 p.m. (CT).
The copies of pleadings related to the proposed Sale as related to
the U.S. Debtors, including the Bid Procedures Order approved by
the Bankruptcy Court, are available on the U.S. Debtors' website at
https://dm.epiq11.com/freshfoodgroup or on the Court's website at
https://ecf.txsb.uscourts.gov/. Parties can request any pleading
needed from (i) the proposed noticing agent, Epiq Corporate
Restructuring, LLC (CountryFreshInfo@epiqglobal.com), or (ii).
counsel for the U.S. Debtors at: Foley & Lardner LLP, c/o Sharon M.
Beausoleil (sbeausoleil@foley.com).
The copies of motions and materials related to the proposed Sale as
related to the Canadian Debtors and the CCAA Proceedings, including
the Canadian Bidding Procedures Order, are available on the website
of Ernst & Young Inc., in its capacity as Court-appointed Monitor
of the Canadian Debtors at https://www.ey.com/ca/freshfoodcanada.
Should the parties require further information regarding the
Canadian Debtors and the CCAA Proceedings, they may contact, (i)
the Monitor at (freshfoodcanada.monitor@ca.ey.com); or (ii) counsel
for the Canadian Debtors at: Stikeman Elliott LLP, c/o Lee
Nicholson (leenicholson@stikeman.com).
A copy of the Agreement and the Bidding Procedures is available at
https://tinyurl.com/2xrxj79s from PacerMonitor.com free of charge.
About Country Fresh Holding
Country Fresh Holdings, LLC, operates as a holding company. The
Company, through its subsidiaries, provides fresh-cut fruits and
vegetables, snacking products, and home meal replacement
solutions. Country Fresh Holdings serves customers in the United
States and
Canada.
Country Fresh Holding Company Inc. and its affiliates sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 21-30574) on
Feb. 15, 2021.
The Hon. David R. Jones is the case judge.
The Debtors tapped FOLEY & LARDNER, LLP, as counsel; and ANKURA
CONSULTING GROUP, LLC, is the management and restructuring
services
provider. EPIQ CORPORATE RESTRUCTURING is the claims agent.
COWEN INC: S&P Assigns 'BB-' ICR and Senior Secured Debt Rating
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issuer credit and senior
secured debt ratings to New York-based securities firm Cowen Inc.
The outlook is stable.
S&P said, "Our ratings on Cowen reflect its focused and growing
institutional and investment banking franchise, fairly volatile
revenue, adequate capitalization and liquidity, but weaker than
peer funding. It also reflects the company's transition to being
less focused on principal investing, which could be a more-stable
and better-capitalized business model. We expect Cowen to issue a
$300 million senior secured term loan and use the proceeds to repay
$228 million of existing debt and add $66 million cash to the
balance sheet."
Cowen is a nonoperating holding company formed in 2009 that,
through its mostly regulated brokerage subsidiaries, provides
investment banking, securities brokerage, research, sales and
trading, prime brokerage, global clearing, and investment
management services. While Cowen's current strategy and business
mix is focused and well-coordinated to support its institutional
brokerage and investment banking efforts, this has only come
together in the past two years and Cowen does not yet have as long
a track record of some of its better-rated peers, in S&P's view.
S&P said, "Cowen is fairly diverse for its size; we believe it has
developed a solid niche position in health care investment banking
and in equity brokerage supported by its research, investment, and
sales and trading efforts. Nevertheless, we believe Cowen's focus
on more-cyclical and volatile investment banking and institutional
sales and trading, with limited recuring revenue from its smaller
asset management business ($12.5 billion of assets under management
at end-year 2020) leave its business more exposed than peers to
market and economic conditions. Moreover, Cowen faces heavy
competition from much larger investment banks. Unlike some
institutional brokerage peers, Cowen did very well in 2020, posting
record profitability, but earnings in prior years were more
volatile and weaker than some peers.
"We view funding as a moderate ratings weakness because of the
level of less-liquid investments, growth in inventory of equity
securities, and in the book of equities financed for clients, which
results in a low gross stable funding ratio (GSFR) of 65%. We view
liquidity as supporting the ratings given Cowen's high levels of
cash and an LCM that we expect to remain near 1x. Cowen's funding
and liquidity is also supported by its use of third-party banks to
custody and clear most of the prime brokerage clients assets,
reducing its exposure to these clients' confidence sensitivity.
"Despite holding considerable investments in private equity and
investment funds (including seed money for its investment
management business), Cowen has good risk-adjusted capitalization
(RAC) that we expect to remain at about 8%-9%. This is supported by
Cowen's improved earnings and the planned monetization of some
noncore investments. We view positively the company's underwriting
only on a best-efforts basis. We further view Cowen's risk
management, declining risk appetite, and good loss experience as
supporting the ratings."
The rating on Cowen is two notches lower than the group credit
profile, reflecting the entity's structural subordination as a
nonoperating holding company for mostly regulated subsidiaries.
S&P's rating on the senior secured bank loan is 'BB-' reflecting
its being the most-senior debt of the holding company.
The stable outlook reflects S&P's expectation that Cowen will
maintain adequate capitalization with a RAC ratio of at least 8%,
liquidity with a liquidity coverage metric (LCM) of about 1x, and
profitability as it monetizes some investments and moves to a
less-capital-intensive business model.
Over the next 12 months, S&P could lower the ratings if:
-- Cowen experiences weak profitability due to a downturn in
business performance or write-down in assets;
-- S&P expects the company to maintain its RAC ratio below 7%; or
-- S&P expects it to maintain its LCM below 0.9x' or liquidity
otherwise deteriorates.
Over the same horizon, S&P could raise its ratings if Cowen
demonstrates sustained growth and stable revenue and profitability,
and either;
-- maintains a RAC ratio sustainably above 10% or
-- S&P expects funding to improve, with GSFR sustainably above
100%.
CRC BROADCASTING: Has Cash Collateral Access Thru March 31
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona has
authorized CRC Broadcasting Co. to use cash collateral on an
interim basis, in accordance with the approved budget, through
March 31, 2021, with a 5% variance.
The Debtor entered into several loan documents. These loan
documents are:
(a) Loan number 2900000248 on May 8, 2015 for a principal balance
of $725,000, evidenced by a Promissory Note, Loan Agreement,
General Security Agreement, UCC Financing Statement dated May 15,
2015 (filing #2015-001-6915-2), Resolutions of the Board of
Directors of CRC Broadcasting Company, Inc., Collateral Assignment
of Marks, Guaranty executed by CRC Media West, LLC, Guaranty
executed by Ronald E. Cohen as Trustee of The Ronald Cohen Family
Trust, Guaranty executed by Ronald E. Cohen, a Certificate of
Borrower and Guarantors, Forbearance Agreement entered July 1,
2018, and a Second Forbearance Agreement entered December 1, 2018;
(b) Loan number 2900000249 on May 8, 2015 for a principal balance
of $90,000, evidenced by a Promissory Note, Loan Agreement, General
Security Agreement, UCC Financing Statement dated May 15, 2015
(filing #2015-001-6915-2), Resolutions of the Board of Directors of
CRC Broadcasting, Collateral Assignment of Marks, Guaranty executed
by the Trust, Guaranty executed by CRC Media, Guaranty executed by
Cohen, a Certificate of Borrower and Guarantors, Forbearance
Agreement entered July 1, 2018, and a Second Forbearance Agreement
entered December 1, 2018;
(c) Loan number 2900000250 on May 8, 2015 for a principal balance
of $200,000, evidenced by a Revolving Line of Credit Promissory
Note, Revolving Line of Credit Agreement, General Security
Agreement, UCC Financing Statement dated May 15, 2015 (filing
#2015-001-6915-2), Resolutions of the Board of Directors of CRC
Broadcasting, Collateral Assignment of Marks, Guaranty executed by
the Trust, Guaranty executed by CRC Media, Guaranty executed by
Cohen, Certificate of Borrower and Guarantors, Loan Extension and
Modification Agreement dated April 28, 2017, Second Loan
Modification Agreement dated October 16, 2017, Forbearance
Agreement entered July 1, 2018, Second Forbearance Agreement
entered December 1, 2018, Change in Terms Agreement dated March 4,
2019, Third Loan Modification Agreement dated July 31, 2019, and
Subordination Agreement dated July 31, 2019.
(d) Loan number 2900000422 on April 28, 2017 for a principal
balance of $650,000, evidenced by a Promissory Note, Loan
Agreement, General Security Agreement, UCC Financing Statement
dated May 15, 2015 (filing #2015-001-6915-2), Resolutions of the
Manager and Members of CRC Media, Resolutions of the Board of
Directors of CRC Broadcasting, Guaranty executed by the Trust,
Guaranty executed by CRC Media, Guaranty executed by Cohen,
Certificate of Borrower and Guarantors, Deed of Trust and
Assignment of Leases and Rents – 9660 East Camino Del Santo,
Scottsdale, Arizona 85260, Asset Purchase Agreement dated November
4, 2016, Loan Extension and Modification Agreement, Forbearance
Agreement entered July 1, 2018, and a Second Forbearance Agreement
entered December 1, 2018.
The Loan Documents are valid and enforceable agreements in
accordance with their terms and constitute legal, valid, binding
obligations of the Debtor enforceable in accordance with their
terms.
In addition, the Debtor guaranteed, and cross-collateralized with
its own assets, the debts of its sister company, CRC Media West,
LLC. CRC Media filed a Chapter 11 case on the same day as the
Debtor. The Debtor's guarantees of CRC Media's debt are evidenced
by Guaranty Agreements entered in connection with a Loan number
2900000251 from Desert Financial Federal Credit Union to CRC Media,
entered on May 8, 2015.
As of the petition date, the Debtor was and continues to be in
default under the Loan Documents. As a result of its own primary
debts, and the debts of CRC Media that it guaranteed and secured,
the Debtor owes Desert Financial no less than $1,477,963 under the
Loan Documents as of February 28, 2020.
As security for the obligations of the Debtor under the Loan
Documents, the Debtor granted Desert Financial first-priority liens
and senior security interests in all of Debtor's property,
including, without limitation, cash.
As adequate protection, Desert Financial is granted replacement
liens on all Debtor's property after the Petition Date. The
Replacement Liens will secure Desert Financial to the extent
necessary to adequately protect it from any diminution in value of
its interests in estate property as of the Petition Date, and will
have the same validity, priority, and enforceability as Desert
Financial's liens on the same assets as of the Petition Date.
The Replacement Liens also encumber estate property that otherwise
would be unencumbered in accordance with Bankruptcy Code section
552.
Desert Financial is also granted a superpriority administrative
expense claim under Bankruptcy Code section 507(b) (without the
need to file or request any such claim with the Bankruptcy Court or
otherwise), to the extent Replacement Liens above do not adequately
protect Desert Financial for any diminution of collateral,
including Cash Collateral.
Crestmark Vendor Finance, a division of MetaBank has asserted that
it has a perfected, first priority purchase money security interest
in certain specified collateral pursuant to Equipment Finance
Agreement # 153522 entered into between Regents Capital Corporation
and CRC Media West, LLC, which Equipment Finance Agreement was
subsequently assigned by Regents Capital to Crestmark.
The Debtor asserts that in April 2020 it received a $10,000 advance
under the Economic Injury Disaster Loan Emergency Advance program
(however, its loan application was ultimately denied). Desert
Financial asserts that such Advance now constitutes Cash
Collateral, which is disputed by the Debtor. The Debtor proposes
to use $5,000 of the Advance to purchase an air conditioner unit
discussed between the Parties. Desert Financial approves the
purchase of the Unit, which constitutes collateral of Desert
Financial under the Loan Documents. The Debtor is authorized to
use the remaining $5,000 of the Advance solely for the expenses set
forth in the Budget.
A copy of the Order and the Debtor's budget through March 31 is
available at https://bit.ly/3sWFDpt from PacerMonitor.com.
About CRC Broadcasting Co.
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.
Judge Paul Sala oversees the case.
Allan D. NewDelman, Esq., at Allan D. NewDelman, P.C., is the
Debtor's legal counsel.
CRECHALE PROPERTIES: BYRD & Wiser Represents Two Banks
------------------------------------------------------
In the Chapter 11 cases of Crechale Properties, LLC, the law firm
of BYRD & Wiser submitted a verified statement under Rule 2019 of
the Federal Rules of Bankruptcy Procedure, to disclose that it is
representing the following creditors:
a. Citizen Bank
PO Box 232
Columbia, MS 39429
b. First Southern Bank
PO Box 268
Columbia, MS 39429
The Firm can be reached at:
Robert Alan Byrd, Esq.
BYRD & Wiser
145 Main Street
P.O. Box 1939
Biloxi, MS 39533
Tel: (228) 432-8123
Fax: (228) 432-7029
E-mail: rab@byrdwiser.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3e8igoE
About Crechale Properties
Crechale Properties, LLC, is primarily engaged in the operation of
apartment buildings.
Crechale Properties filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case No.
21-50079) on Jan. 21, 2021. Elizabeth Crechale, manager, signed
the petition. At the time of filing, the Debtor estimated $1
million to $10 million in assets and $10 million to $50 million in
liabilities. Judge Katharine M. Samson presides over the case.
Lentz & Little, PA, serves as the Debtor's legal counsel.
CRED INC: Examiner Seeks to Hire Ankura as Financial Advisor
------------------------------------------------------------
Robert Stark, the court-appointed examiner of Cred Inc. and its
affiliates, seeks approval from the U.S. Bankruptcy Court for the
District of Delaware to employ Ankura Consulting Group, LLC as his
financial advisor.
The firm will provide these services:
a. advise the examiner in the discharge of his duties;
b. assist the examiner in the evaluation and analysis of
financial and cryptocurrency issues raised in connection with his
investigation;
c. assist the examiner in evaluating the relationship between
the Debtors' assets and liabilities vis-à-vis crypto currency
valuations;
d. assist the examiner in interviews, examinations and the
review of documents and other materials in connection with the
investigation;
e. assist in the preparation of reports and other documents
necessary for the examiner to discharge his duties; and
f. assist the examiner in undertaking any additional tasks or
duties that the court may direct or that the examiner may determine
are necessary in connection with the discharge of his duties.
The firm will be paid at hourly rates ranging from $300 to $875 and
will be reimbursed for out-of-pocket expenses incurred.
Vikram Kapoor, a partner at Ankura, disclosed in a court filing
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Vikram Kapoor
Ankura Consulting Group, LLC
485 Lexington Avenue, 10th Floor
New York, NY 10017
Main: +1.212.818.1555
Direct: +1.646.227.4259
Email: vikram.kapoor@ankura.com
About Cred Inc.
Cred Inc. is a cryptocurrency platform that accepts loans of
cryptocurrency from non-U.S. persons and pays interest on those
loans. Cred -- https://mycred.io -- is a global financial services
platform serving customers in over 100 countries. Cred is a
licensed lender and allows some borrowers to earn a yield on
cryptocurrency pledged as collateral.
Cred Inc. and its affiliates sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 20-12836) on Nov. 7, 2020. Cred was estimated
to have assets of $50 million to $100 million and liabilities of
$100 million to $500 million as of the bankruptcy filing.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Paul Hastings LLP as their bankruptcy counsel,
Cousins Law LLC as local counsel, and MACCO Restructuring Group,
LLC as financial advisor. Donlin, Recano & Company, Inc. is the
claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases on Dec. 3,
2020. The committee tapped McDermott Will & Emery LLLP as counsel
and Dundon Advisers LLC as financial advisor.
Robert Stark is the examiner appointed in the Debtors' cases.
Ashby & Geddes, P.A. and Ankura Consulting Group, LLC serve as the
examiner's legal counsel and financial advisor, respectively.
CUPPA INC: Seeks to Hire Blanchard Law as Legal Counsel
-------------------------------------------------------
Cuppa, Inc. seeks approval from the U.S. Bankruptcy Court for the
Middle District of Florida to employ Blanchard Law, P.A. as its
legal counsel.
Blanchard Law will provide these services:
a. advise the Debtor with respect to its powers and duties in
the continued operation of its business and management of its
property;
b. prepare legal papers; and
c. perform other legal services necessary to administer the
Debtor's Chapter 11 case.
The firm will be paid at these rates:
Attorneys $350 per hour
Associates $250 per hour
Paralegals $100 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
The retainer fee is $10,262.
Jake Blanchard, Esq., a partner at Blanchard Law, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Jake C. Blanchard, Esq.
Blanchard Law, P.A.
1501 Belcher Road South Unit 6B
Largo, FL 33771
Tel: (727) 531-7068
Fax: (727) 535-2086
Email: jake@jakeblanchardlaw.com
About Cuppa Inc.
Cuppa, Inc. sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. M.D. Fla. Case No. 21-00747) on Feb. 17, 2021. Cuppa
President Louis A. Moser signed the petition.
At the time of the filing, the Debtor disclosed assets of $37,466
and liabilities of $1,402,590.
Blanchard Law, P.A. is the Debtor's legal counsel.
D.W. TRIM: Seeks to Hire Fox Law Corp. as Legal Counsel
-------------------------------------------------------
D.W. Trim, Inc. seeks approval from the U.S. Bankruptcy Court for
the Central District of California to employ The Fox Law
Corporation, Inc. as its legal counsel.
The firm will provide these services:
a. advise the Debtor with respect to its powers and duties and
the management of property of the estate;
b. negotiate, formulate, draft and seek confirmation of a plan
of reorganization, attend court hearings on plan confirmation, and
conduct examinations;
c. examine all claims filed in the Debtor's Chapter 11 case;
d. assist the Debtor in connection with the collection, sale or
refinancing of assets;
e. take actions to protect the properties of the estate from
seizure or other proceedings;
f. advise the Debtor with respect to the rejection or
affirmation of executory contracts;
g. assist the Debtor in fulfilling its obligations as
fiduciaries of the Chapter 11 estate;
h. prepare pleadings;
i. prepare applications and reports that are necessary and for
which the services of an attorney are required, including
responding to the compliance requirements of the U.S. trustee; and
j. provide other legal services necessary to administer the
Debtor's Chapter 11 case.
Fox Law Corporation will be paid at these rates:
Principals $500 per hour
Associates $250 to $450 per hour
Paralegals $125 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
The firm received a retainer from the Debtor in the amount of
$50,062.
Steven Fox, Esq., a partner at Fox Law Corporation, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Steven R. Fox, Esq.
Janis Abrams, Esq.
The Fox Law Corporation, Inc.
17835 Ventura Blvd., Suite 306
Encino, CA 91316
Tel: (818)774-3545
Fax: (818)774-3707
Email: srfox@foxlaw.com
jabrams@foxlaw.com
About D.W. Trim Inc.
D.W. Trim, Inc. provides labor and materials as a finish carpentry
sub-contractor on tract home projects, largely in the Inland
Empire. It was incorporated in 2008 and operates its business in
Riverside, Calif.
D.W. Trim sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. C.D. Calif. Case No. 21-10758) on Feb. 15, 2021. In its
petition, the Debtor disclosed assets of between $1 million and $10
million and liabilities of the same range. D.W. Trim President
Christopher S. De Mint signed the petition.
Judge Mark D. Houle oversees the case.
The Fox Law Corporation, Inc. is the Debtor's legal counsel.
DANNYLAND LLC: AAKA Holdings Buying Paducah Property for $320K
--------------------------------------------------------------
Dannyland, LLC, asks the U.S. Bankruptcy Court for the Western
District of Kentucky to authorize the private sale of the real
property located at 120, 130, 140, 155 Limerick Drive, in Paducah,
Kentucky, further described in Deed Book 1119, Page 184, McCracken
County, to AAKA Holdings, LLC, Frank Long, MMBR, for $320,000.
The Debtor disclosed ownership of the Property on Schedule A of the
petition. The market value, at the time of filing, was $380,000.
Lien(s) were owed against the property by SL Capital Fund, LLC in
the approximate amount of $198,000. On Feb. 22, 2021, SL Capital
filed an amended proof of claim in the amount of $232,369.93
however, the counsel for the Debtor has objected to the amended
claim. To the best of the Debtor's knowledge, no other liens are
owed against the Property.
The Debtor has entered into a sales contract with the Buyer, a
private, third party buyer.
The Debtor previously reported to the Court that the sale could
occur on March 5, 2021; however, the title insurance underwriter is
requiring the appear period of the anticipated Order allowing the
sale, to expire prior to closing.
The Debtor proposes to sell the property free and clear of all
liens, claims, interests, and other encumbrances. The sale
proceeds totaling the amount of SL Capital's claim of $232,369.93
will be held in a Farmer & Wright trust account until the outcome
of the objection to SL Capital's amended claim.
The Debtor believes that the Sale will accomplish a "sound business
purpose" and will maximize the value of its estate in the most
expeditious manner possible. The Sale satisfies the requirements
of Bankruptcy Code Section 363(f) to the extent that any secured
creditors consent.
By the Sale Motion, the Debtor asks the Court to enter an order (i)
authorizing it to execute the contract and transfer clear and
marketable title to the Buyer via private sale free and clear of
liens, claims, and encumbrances, which will attach to the proceeds
of sale in the order of priority; (ii) waiving the 14-day stays of
Bankruptcy Rules 6004(h) and 6006(d); (iii) authorizing the
disbursement of the proceeds; and (iv) granting such other and
further relief as may be necessary or appropriate under the
circumstances.
The counsel for the Debtor will hold the proceeds totaling
$232,369.93 in a Farmer & Wright trust account until such time as
the objection to the amended claim filed by SL Capital is
resolved.
A copy of the Contract is available at https://tinyurl.com/hzppzzp2
from PacerMonitor.com free of charge.
About Dannyland LLC
Based in Paducah, Kentucky, Dannyland, LLC, sought protection
under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No.
20-50336) on June 26, 2020, listing under $1 million in both
assets and liabilities. Judge Alan C. Stout oversees the case.
Samuel J.
Wright, Esq. at Farmer & Wright, PLLC, is the Debtor's counsel.
DANNYLAND LLC: Objection Time on Property Sale Shortened to 10 Days
-------------------------------------------------------------------
Judge Alan C. Stout of the U.S. Bankruptcy Court for the Western
District of Kentucky shortened the objection period to 10 days, as
it relates to Dannyland, LLC's private sale of the real property
located at 120, 130, 140, 155 Limerick Drive, in Paducah, Kentucky,
further described in Deed Book 1119, Page 184, McCracken County, to
AAKA Holdings, LLC, Frank Long, MMBR, for $320,000, free and clear
of all liens, claims, interests, and other encumbrances.
A copy of the Order is mailed to the Debtor; the Counsel for the
Debtor; the Trustee; and to all creditors and parties of interest.
About Dannyland LLC
Based in Paducah, Kentucky, Dannyland, LLC, sought protection
under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No.
20-50336) on June 26, 2020, listing under $1 million in both
assets and liabilities. Judge Alan C. Stout oversees the case.
Samuel J.
Wright, Esq. at Farmer & Wright, PLLC, is the Debtor's counsel.
DANNYLAND LLC: Seeks to Shorten Objection Period on Property Sale
-----------------------------------------------------------------
Dannyland, LLC, asks the U.S. Bankruptcy Court for the Western
District of Kentucky to shorten the objection period to 10 days, as
it relates to its private sale of the real property located at 120,
130, 140, 155 Limerick Drive, in Paducah, Kentucky, further
described in Deed Book 1119, Page 184, McCracken County, to AAKA
Holdings, LLC, Frank Long, MMBR, for $320,000, free and clear of
all liens, claims, interests, and other encumbrances.
The Debtor recently filed a 363 Motion to Sell the Property. It
had previously been reported to the Court that the sale could close
on March 5, 2021; however, the title insurance underwriter, is
requiring that the appeal period for the anticipated Order allowing
the sale, expire before closing can occur. The Debtor is concerned
that the buyer will withdraw the offer and contract if the closing
cannot occur. It is for this reason the Debtor asks the objection
period be shortened to 10 days.
About Dannyland LLC
Based in Paducah, Kentucky, Dannyland, LLC, sought protection
under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No.
20-50336) on June 26, 2020, listing under $1 million in both
assets and liabilities. Judge Alan C. Stout oversees the case.
Samuel J.
Wright, Esq. at Farmer & Wright, PLLC, is the Debtor's counsel.
DEER CREEK: Property Sale or Refinance to Fund Plan Payments
------------------------------------------------------------
Deer Creek Village, LLC, filed with the U.S. Bankruptcy Court for
the Northern District of Texas, Fort Worth Division, a Disclosure
Statement describing Plan of Reorganization on Feb. 26, 2021.
Debtor owns certain real property located in Burleson, Texas. The
Debtor believes the current value of the Property is $6,000,000 if
the Property were fully developed. The Debtor is currently owned by
K-D Partners, LLC. K-D is owned by Dennis Head and Kenny Bounds.
The Debtor pre-petition entered into an a lease agreement Texas
Roadhouse, Inc. on a portion of the Debtor's property. This Lease
agreement provides that the Debtor will receive rental income of
$147,000 per year escalating over the term of the Lease to $236,000
per year. The Debtor is in the process of obtaining a loan secured
by the Lease to complete these improvements. The loan amount will
be sufficient to pay all creditors in full. The Debtor has received
a Letter of Intent ("LOI") to purchase another portion of the
property for $3,200,000. Either of these transactions will provide
sufficient income to make the required payments under this Plan.
Class 3 consists of Allowed Secured Claim of Crooked Creek which is
impaired. Crooked shall have a secured claim in the amount of its
allowed outstanding indebtedness to be paid in full upon the
refinancing of the Property or the sale of a portion of the
Property. Crooked shall retain its lien in its current priority
until paid in full in accordance with this Plan.
Class 4 consists of Allowed Secured Claim of Crowley Commercial,
LLC which is impaired. Crowley's Class 4 Claim shall be
subordinated to all other creditors of the Debtor. Upon sale or
refinancing, Crowley's Class 4 Claim shall be paid only after all
other creditors of the Debtor have been paid in full. Crowley shall
retain its lien on the Property in its current priority, however,
in the event of a sale or refinancing of all or a portion of the
Property, Crowley shall release its lien whether paid in full or
not from the proceeds of the refinancing or sale.
Class 5 consists of the Allowed Secured Claim of Casey Wedgeworth
which is impaired. Wedgeworth shall have a secured claim in the
amount of its allowed outstanding indebtedness to be paid in full
upon the refinancing of the Property or the sale of a portion of
the Property. Wedgeworth shall retain its lien in its current
priority until paid in full in accordance with this Plan.
Class 7 consists of Allowed Non-Insider Unsecured Creditor Claims
which are impaired. The Allowed Non-Insider Unsecured Creditors .
The Allowed Class 7 Creditor Claims shall be paid their pro rata
share of funds received by the Debtor in the re-financing or sale
of the Property after payment of Classes 1, 2, 3, 5, and 6. Based
upon the Debtor's current Lease and LOI, all Allowed Class 7
Creditors shall be paid in full.
Class 8 consists of Allowed Insider Unsecured Creditors Claims
which are impaired. The Allowed Class 8 Creditor Claims shall be
paid their pro rata share of funds received by the Debtor in the
re-financing or sale of the Property after payment of Classes 1, 2,
3, 5 , 6, and 7. Based upon the Debtor's current Lease and LOI all
Allowed Class 8 Creditors shall be paid in full.
Class 9 consists of Allowed Equity Holderswhich are not impaired
under this Plan. The current equity holders shall retain their
interest in the Debtor under the terms of this Plan.
Debtor shall refinance or sell a portion of the Property to fund
the Plan. The refinance or sale proceeds shall be used to pay the
amount necessary to pay the Allowed Claims of Class 1 through 8.
A full-text copy of the Disclosure Statement dated Feb. 26, 2021,
is available at https://bit.ly/3uXL2OI from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Eric A. Liepins, Esq.
ERIC A. LIEPINS, P.C.
12770 Coit Road, Suite 1100
Dallas, TX 75251
Telephone: (972) 991-5591
Facsimile: (972) 991-5788
E-mail: eric@ealpc.com
About Deer Creek Village
Deer Creek Village, LLC is a Single Asset Real Estate debtor (as
defined in 11 U.S.C. Section 101(51B)). The Company is the fee
simple owner of a property located at 12301 Southwest Freeway,
Burleson, Texas having a current value of $6 million.
Deer Creek Village filed a voluntary petition for relief under
Chapter 11 of Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-43612)
on Nov. 30, 2020. The petition was signed by Dennis Head, managing
member. At the time of the filing, the Debtor disclosed total
assets of $6,000,500 and total liabilities of $5,892,729. Eric A.
Liepins, Esq., serves as the Debtor's counsel.
DISPATCH ACQUISITION: S&P Assigns 'B-' ICR, Outlook Stable
----------------------------------------------------------
S&P Global Ratings assigned its 'B-' long-term issuer credit rating
to specialty waste and environmental services company Dispatch
Acquisition Holdings LLC.
S&P said, "At the same time, we are assigning our 'B-' issue-level
and '3' recovery ratings to the proposed $60 million first-lien
revolving credit facility due 2026 and to the proposed $395 million
first-lien term loan B due 2028.
"The stable outlook reflects our view that the company's recurring
revenue stream and favorable industry tailwinds should allow it to
maintain debt leverage below 7x over the next 12 months.
"We expect modest deleveraging over the next 12-18 months. We
expect Dispatch will have an S&P Global Ratings adjusted debt
leverage above 7x at the close of the transaction, but reduce debt
leverage to under 7x by year-end 2021. Over the next 12-18 months,
we expect the company to experience continued growth in revenue,
operating margin, and free cash flow, driven by market and
geographical expansion, favorable industry tailwinds driving demand
for sustainable specialty waste services, contributions from
previously completed acquisitions and associated synergies, and the
realization of various process-improvement/cost-reduction
initiatives currently underway. We also expect the company to
continue to actively integrate bolt-on acquisitions to expand its
service offerings and geographic footprint, but nothing that would
materially affect its credit metrics on a sustained basis."
Dispatch benefits from high barriers to entry and leading market
shares to help drive profitability. Waste management services are
sticky in nature and create barriers to entry due to high switching
costs for customers as the cost of failure significantly outweighs
the cost of service. Specifically, nine out of Dispatch's top-10
customers have been contracted with the company for at least five
years, and six have been contracted for at least 10 years. The
company also maintains a national network of reuse sites secured by
permits, geographic proximity to transfer waste streams to reuse
outlets, and customer and application-specific treatment processes
that are difficult to replicate by smaller industry players. In
addition, the company owns an extensive fleet of specialized
equipment, including over 800 trucks, 800 trailers, and 500 storage
containers and tanks. Dispatch is the industry leader in
sustainable solutions for industrial food processing wastewater
collection and food waste collection for supermarkets and the
second-leading service provider in the $2 billion municipal
wastewater residual collection end market. The company's strong
barriers to entry, customer stickiness, and leading market
positions lend to its strong profitability.
Most of Dispatch's services provide a predictable, recurring
revenue stream. Over 90% of the combined business provides
recurring services that are considered critical and
nondiscretionary for its customers. These services include the
routine collection and disposal of wastewater residuals within food
processing facilities and municipal water treatment plants and food
waste collection primarily within grocery stores, which have over a
90% renewal rate. In addition to the services provided to the
company's primary customers, Dispatch then processes the waste
streams at reuse sites where it is converted into animal feed,
compost, or used within farms, providing additional revenues
streams for the company. The sustainable specialty waste services
Dispatch provides are a key competitive advantage for the company.
Landfill avoidance and diminishing landfill capacity are major
trends driving demand for sustainable specialty waste services.
Landfill capacity has decreased over the past 20 years and S&P
expects the trend to continue amid tightening regulations in some
states that ban organic waste at existing landfills. Dispatch does
not send its waste to landfills, but rather repurposes various
organic waste streams. After Dispatch collects wastewater
residuals, the company processes compostable organics to
manufacture agriculture and horticultural products including
compost, soils, and mulch. Within Organix, food waste is diverted
primarily to farms or feeds lots directly from collection trucks or
to processors that make animal feed. The company anticipates these
favorable demand trends to continue while focusing on environmental
sustainability.
The COVID-19 pandemic has not had a major impact on Dispatch's
performance. Much of Dispatch's work has been deemed an essential
service and its operations have not been constrained by the effects
of the COVID-19 pandemic. Dispatch provides a critical and
nondiscretionary service for its customers' daily business
activities; thus, only one month in 2020 (May) had less sales than
2019 when comparing pro forma revenues.
S&P said, "The stable outlook reflects our view that the company's
recurring revenue stream and favorable industry tailwinds should
allow it to modestly reduce debt leverage to under 7x in the next
12 months. This incorporates our forecast for EBITDA growth,
supported by ongoing cost-saving initiatives and increased adoption
of beneficial reuse waste services."
S&P may lower its ratings on Dispatch over the next 12 months if:
-- Business conditions in the organic water waste streams and food
waste collection deteriorate such that EBITDA declines materially,
causing adjusted debt leverage at levels S&P deems unsustainable;
or
-- The company consistently generates negative free cash flow
stemming from meaningful integration missteps or loss of major
contracts, causing liquidity to become constrained and/or covenants
cushions to tighten.
S&P may raise its rating on Dispatch over the next 12 months if:
-- Debt leverage approaches 6x and we believe the company's
financial policy, inclusive of debt-financed acquisitions and
shareholder returns, is supportive of this improved level of
leverage; and
-- The company continues to generate positive free operating cash
flow and maintains adequate liquidity.
DOWN TOWN ASSOCIATION: Cites Shrinking Membership for Woes
----------------------------------------------------------
The Down Town Association has sought Chapter 11 bankruptcy
protection, citing rising costs and reduced dues from a shrinking
membership over the recent years.
The Debtor was the first club established in Lower Manhattan in
1860 and is the fifth oldest club in New York. The member-owned
social club is dedicated to providing its members and guests with
the finest hospitality.
On Aug. 6, 2018, the Debtor conveyed its sole real property,
commonly known as 60 Pine Street, New York, New York 10005 to Great
Empire Realty LLC for the purchase price of $28.28 million because
the Debtor had been operating at a loss for several years and was
out of operating capital. Thereafter, the Debtor and Great Empire
Realty LLC executed a lease agreement for a period of 49 years to
permit the Debtor to continue occupancy of the Real Property. As
part of that sale, Great Empire Realty LLC also provided the Debtor
with a $4 million credit line on an unsecured basis to fund
operations pending the construction of additional floors to the
building and the renovation of the club. Great Empire Realty LLC
was supposed to begin construction but did not. Due to the delay
in commencing the construction at the Real Property, the Debtor was
running out of operating capital.
Given the revenue shortfall and the fact the Debtor's members would
not have access to the Real Property when the construction began,
the Debtor entered into an agreement with a social club commonly
known as The Players. Members of the Debtor in good standing were
assigned a "Players DTA Membership" which permitted them access to
almost all of the benefits of The Players membership. For the most
part, dues were paid directly to The Players by those members
availing themselves of that membership.
Due to these factors and the national Covid-19 emergency, which
deterred many members from visiting the Real Property, the Debtor
ceased its operations and laid off its employees. To date, the
construction has still not commenced.
The Debtor also leased one floor and part of the elevator lobby of
the condominium commonly known as 70 Pine Street, New York 10003,
for the use of multiple hotel rooms for its members and guests.
Due to lower than expected occupancy and revenues, the Debtor
attempted to negotiate a new financial arrangement with the
landlord of 70 Pine Street. This effort was unsuccessful and due
to the emergence of COVID-19, occupancy collapsed in early 2020.
The Debtor closed the hotel rooms as of Feb. 28, 2020. The
landlord of 70 Pine Street has attempted to accelerate the rent for
the remaining 43 years of the lease and has demanded more than $18
million in rent.
Due to the COVID-19 pandemic, the Debtor did not believe it could
charge its members' dues for 2021, which were in excess of those
charged by The Players, without substantial resignations. Most
members of the Debtor had not been able to visit The Players prior
to the Governor's Executive Order. Many of the Debtor's members
requested leaves of absence for 2021. This was something not
generally approved prior to 2020. The Debtor decided to lower dues
to the same levels as The Players and allow leaves of absence for
2021 in order to retain as many members as possible. The leaves
were approved pending a one-time fee. The one-time fee was to be
paid during 2021 and was set at $500 for resident members and $250
for all other classes of members. The result was that all dues
income accrued to The Players with the exception of leave of
absence receipts. The outstanding dues are approximately $10,000.
The Debtor has commenced a case under sub-chapter V of Chapter 11
of the United States Bankruptcy Code.
The Debtor's assets consist of its inventory, equipment, lease and
membership list, with a total value of approximately $50,000. The
Debtor's liabilities at this point are approximately $6,935,331.
The Debtor's substantial assets are located at 60 Pine Street, New
York, New York. Mark R. Altherr is the President of the Members
and has been for 23 years.
Prior to closing its operations, the Debtor had 19 union and 2
non-union employees. The Debtor's operations remain closed and
does not incur weekly payroll at this time. There is a pending
demand for arbitration from the Hotel, Restaurant & Club Employees
and Bartenders Union, Local 6, UNITE HERE seeking an amount not
less than $80,378 for severance for employees laid off about one
year ago.
About Down Town Association
The Down Town Association, Inc., is the oldest social club in lower
Manhattan and a former haven for New York and national power
brokers.
Down Town Association sought Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 21-10413) on March 4, 2021. The Debtor estimated up to
$100,000 in assets against $1 million to $10 million in liabilities
as of the bankruptcy filing. The Law Offices Of Avrum J. Rosen,
PLLC, is the Debtor's counsel.
DOWN TOWN ASSOCIATION: Files for Chapter 11 Bankruptcy
------------------------------------------------------
Steven Church of Bloomberg News reports that the Down Town
Association, the oldest social club in lower Manhattan and a former
haven for New York and national power brokers, has filed for
bankruptcy.
The not-for-profit corporation, founded in 1859, has less than
$75,000 in cash and property to cover $6.9 million in debt, most of
which is owed to landlord Great Empire Realty, according to its
bankruptcy petition filed Thursday in New York. It's seeking to
reorganize under Chapter 11 protection using rules usually reserved
for small businesses.
About Down Town Association
Down Town Association, Inc., is the oldest social club in lower
Manhattan.
Down Town Association sought Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 21-10413) on March 4, 2021. The Debtor estimated up to
$100,000 in assets and $1 million to $10 million in liabilities.
The Law Offices Of Avrum J. Rosen, PLLC, is the Debtor's counsel.
EAGLE MANUFACTURING: Central Buying All Assets for $1.27M Cash
--------------------------------------------------------------
Eagle Manufacturing, Inc., asks the U.S. Bankruptcy Court for the
District of Minnesota to authorize the private sale of the majority
of its assets to Central Boiler, Inc. for the cash price of $1.27
million, subject to higher offers.
A hearing on the Motion is set for March 23, 2021, at 1:30 p.m.,
via telephone or by other electronic means pursuant to the order of
the Court. Parties wishing to appear telephonically should contact
Heidi Jackson, Chief Judge Ridgway's Calendar Clerk at 612-664-5263
or by email: Heidi_Jackson@mnb.uscourts.gov. Any response to this
motion must be filed and delivered or mailed not later than two
hours before the expedited hearing.
On April 13, 1990, brothers Ron, Chuck, and Bruce Gagner formed the
S Corporation named Northwest Manufacturing, Inc. to manufacture
and sell their outdoor wood burning furnaces with the brand name of
"WoodMaster." At its peak in 2008, Northwest had 130 employees and
generated just shy of $30 million in sales. Unfortunately, in 2009
the Great Recession began the turnaround of the company's growth
and profitability.
The stress on the company's finances led to issues with
relationship with Northwest's bank, Ultima Bank of Minnesota. In
April of 2019 Northwest entered into a forbearance agreement with
Ultima which included supplying letters of credit to the Debtor and
Ultima from both Ron and Bruce Gagner in the amount of $200,000
each for a total of $400,000. Ron and Bruce also elected to not
receive any pay while running the company for a period of one year.
Chuck Gagner could not financially go without pay and was forced
to leave the company, although he remains a board member and Vice
President.
Because of its struggling finances, Northwest has for several years
actively sought to sell both its real estate and its core
businesses. In 2018, the Debtor sold its shipping & receiving
building and their warranty/tech building. In addition, in the
fall of 2019 Northwest was approached by Central Boiler, its
biggest competitor to purchase the WoodMaster brand of pellet
stoves and the dealer network and other assets of that business.
In January of 2020 a sale of these assets in the amount of $1.5
million was completed. The funds received were used to pay down
secured debt with Ultima. Although the real estate agent hired by
the Debtor kept marketing the remaining real estate and the Debtor
eventually reduced the asking price, no other offers for the
remaining real estate were ever received. As a result of the
January 2020 sale to Central Boiler, Eagle Manufacturing Inc is now
primarily a welding shop although it did retain two product lines
-- wood pellet barbeque grills and commercial wood pellet/wood chip
boilers.
The Debtor has no current line of credit agreement with its bank
and has been turned down the Small Business Administration for a
second round Paycheck Protection Program loan. It has found it
difficult during the COVID-19 pandemic to both increase current
sales and predict the future of sale in a manner necessary to
support a plan of reorganization where it continued to operate
under its current business plan.
Throughout the course of the Chapter 11, Central Boiler has told
the Debtor that it was interested in buying all of its remaining
real estate and all equipment except for the assets for the
commercial boiler and woodchip grill business. It plans to is
continue the business of the Debtor under their ownership as well
as move other portions of their business to the premises of the
Debtor. In February of 2021, Central Boiler made a firm offer for
those assets. The Debtor has considered the two options and
determined that the surest way that the unsecured creditors in the
case can obtain a return is to accept the offer of Central Boiler,
subject to any higher offers coming in that would provide even more
to their creditors. Therefore, it has entered into an asset
purchase agreement dated March 1, 2021 for the sale of all its real
property and the majority of its personal assets for the cash price
of $1.27 million.
Further, Central Boiler is confident of its ability to close on the
purchase of assets from the Debtor and desires to start its
operations in Red Lake Falls at the Debtor's facility immediately.
Therefore, the Debtor and Central Boiler have entered into a lease
agreement whereby as of March 1, 2021, Central Boiler will rent a
portion of the facilities and personal property that they are
buying on an "as is" basis and will begin employing some of the
employees of the Debtor in connection with the Lease. The Debtor
is entitled to rent empty space and to terminate employees in the
normal course of his business pursuant to his powers as a DIP,
however, out of an abundance of caution and to fully inform the
Court and any other party in interest of the full contours of the
deal that the Debtor is seeking to have the Court approve, the
Debtor asks that the Court enters an order approving the Lease
under 11 USC Section 363(b).
As part of the Motion, the Debtor asks approval of the payment of a
$38,100 (3%) break-up fee to Central Boiler if it does not end up
with the assets being sold.
While it is debatable that the sale of assets contemplated by the
APA with Central Boiler is a sale of "substantially all of the
Debtor's assets" since after the sale the Debtor will retain assets
of the approximate value of $300,000, the Debtor believes that even
the high standards for a sale of substantially all of their assets
are met by the proposed sale to Central Boiler. The proposed sale
of the assets and the Lease represents the exercise of sound
business judgment.
A copy of the APA is available at https://tinyurl.com/526w5jpr from
PacerMonitor.com free of charge.
The Purchaser:
CENTRAL BROILER, INC.
20502 160th Street
Greenbush, MN 56726
Attn: Rodney Tollefson
E-mail: rodnex@centralboiler.com
The Purchaser is represented by:
Michelle Moren, Esq.
LAW OFFICES OF PATRICK D. MOREN
309 Third Street NW
Roseau, MN 56751
E-mail: michellemoren@mncable.net
About Eagle Manufacturing
Eagle Manufacturing, Inc., manufactures outdoor furnaces offering
a
range of furnaces to heat homes, garages, pools and spas; radiant
floor heating systems; and replacement parts for all outdoor
furnaces brands.
Eagle Manufacturing filed a Chapter 11 petition (Bankr. D. Minn.
Case No. 20-60555) on Nov. 6, 2020. In the petition signed by CFO
Ronald Gagner, the Debtor disclosed total assets of $5,496,035 and
total liabilities of $3,117,376.
Judge Michael E. Ridgway oversees the case.
Kenneth C. Edstrom, Esq., at Sapientia Law Group is serving as the
Debtor's counsel.
EASTMAN KODAK: S&P Alters Outlook to Stable, Affirms 'CCC+' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on Eastman Kodak Co. to
stable from negative and affirmed its 'CCC+' issuer credit rating,
reflecting its view that while the firm's capital structure remains
unsustainable without substantial improvement in operating
performance, it has no clear near-term catalysts for default within
24 months.
S&P is also revising its liquidity assessment to adequate from less
than adequate given the modest cash balances.
The stable outlook reflects that the company will have no imminent
liquidity or refinancing risks and will likely pursue growth
opportunities, while shifting its focus to operational
improvements.
The refinancing alleviates Kodak's near-term maturity concerns.
Kodak's new capital structure consists of:
-- $90 million asset-backed revolving credit facility (RCF) and
$50 million cash-backed letter of credit facility, both due 2024.
-- $275 million senior secured term loan (including $50 million
delayed-draw) due 2026 issued to Kennedy Lewis Investment
Management (KLIM), with 8.5% cash interest and 4% payment-in-kind
(PIK) (or cash) interest.
-- $25 million nonvoting convertible notes due 2026 issued to
KLIM, with 5% PIK interest.
-- $100 million of series A preferred stock redeemed and remaining
$100 million exchanged for series B preferred stock due 2026, with
4% quarterly cash dividend.
-- $100 million of series C preferred stock due 2026 issued to GO
EK VENTURES IV LLC, with 5% quarterly dividend payable in shares.
Post-transaction, the company will have cash and cash equivalents
of approximately $400 million and approximately $40 million of
availability under its combined revolving credit facilities. This
enhanced liquidity position, along with extended maturities has
provided it greater flexibility to improve its business operations
and cash generation. That said, the PIK structure allows the
company to conserve liquidity over the short term, but will likely
provide a modest headwind in terms of company's ability to reduce
leverage over the longer term, absent significant repayments on the
senior secured term loan. S&P said, "Kodak still remains very
highly leveraged since we consider the preferred shares to be debt
under our criteria, and we believe the company would need to
stabilize its declining sales and generate positive and consistent
EBITDA/free cash flows before we view its capital structure as
sustainable."
S&P said, "Free operating cash flow (FOCF) will remain negative for
a prolonged period, which constrains our rating. Given the
longstanding secular decline in the printing hardware industry,
combined with the COVID-19 pandemic, Kodak's performance
deteriorated considerably in 2020, which resulted in reduced
product demand as many of its customers operated at significantly
decreased volumes. In response, the company implemented certain
restructuring actions including pay cuts for nonmanufacturing
employees and temporary furloughs for manufacturing employees due
to lower production volumes. In spite of these measures, Kodak will
likely report negative FOCF for the seventh consecutive fiscal year
(since it remerged from bankruptcy), and we continue to expect
modestly negative FOCF generation from 2021 to 2023. Management has
highlighted a potential path to recovery through several growth
initiatives focused in Kodak's core businesses of print and
advanced materials, and chemicals. Accordingly, we expect the
company to incur significant capital spending over the next 24
months to generate additional growth within these units.
"The stable outlook reflects our view that Kodak will not face a
near-term liquidity crisis because it has substantially improved
its balance sheet and addressed the prior upcoming maturity wall.
That said, we continue to believe that the capital structure is
unsustainable over the long term as industry fundamentals remain
weak and FOCF is expected to remain negative over the next two
years."
S&P could lower its rating on Kodak if:
-- S&P comes to believe that the company will likely default
within the next 12 months. This could occur if cash flows from
operations become significantly negative.
-- The company cannot successfully refinance its debt in a timely
manner.
Although unlikely, S&P could raise its rating on Kodak during the
next 12 months if:
-- The company experiences significantly improved business,
financial, or economic conditions.
-- It generates consistent positive free cash flow.
ED'S BEANS: Unsecured Creditors to Recover 5% in Subchapter V Plan
------------------------------------------------------------------
Ed's Beans, Inc., doing business as Crazy Mocha, Crazy Mocha
Coffee, Crazy Mocha Coffee Co., Kiva Han, Kiva Han Coffee, KH, and
KHC, filed with the U.S. Bankruptcy Court for the Western District
of Pennsylvania a Subchapter V Small Business Plan of
Reorganization dated Feb. 25, 2021.
The Debtor was effectively forced to close all of its locations in
March 2020 due to the COVID-19 Pandemic. The restrictions placed
on food and beverage businesses and closures led to the filing of
this Bankruptcy Case. The Debtor determined that the best course
of action in this Bankruptcy Case is to sell all assets used in
connection with the Crazy Mocha Business and reorganize the Kiva
Han Business as set forth in this Plan.
Ablak and the Debtor entered into the Stalking Horse APA dated Feb.
4, 2021 for a purchase price of $1,500,000. March 23, 2021, at
2:00 p.m., is the Zoom hearing on consideration of the Motion for
Order Authorizing and Approving the Sale of Substantially all of
the Crazy Mocha Assets Free and Clear of All Liens.
Class 8 consists of General Unsecured Creditors with $3,926,949
total estimated allowed claims and 5% estimated recovery. In full
satisfaction of the Allowed General Unsecured Claims, holders of
Allowed General Unsecured Claims will be paid their pro-rata share
of the following annual distributions:
Dec. 31, 2021: $10,000
Dec. 31, 2022: $60,000
Dec. 31, 2023: $80,000
March 31, 2024: $60,000
----------
Total Distribution: $210,000
Upon the Effective Date of the Plan, Ed Wethli, Marcie Wethli,
Nicholas Redondo, Timothy Albinese and Timothy Burgan will retain
their respective ownership interests in the Debtor in the same
amounts and in the same voting class as existed on the Effective
Date of the Plan.
The Plan will be funded, in part by the $1,500,000 in sale proceeds
from the sale of the Crazy Mocha Business; and the operating income
from the Debtor's continued operation of the Kiva Han Business. The
sale proceeds will be used to pay cure costs associated with the
assumption and assignment of Unexpired Leases/Executory Contracts,
pay normal and customary closing costs and pay certain of the
Administrative Claims. The Net Sale Proceeds will fund the
distribution to the holder of Class 3 Allowed Secured Claims.
The income generated from the Debtor's operation of the Kiva Han
Business will serve as the funding source for distribution to: (i)
holders of Allowed Secured Claims in Class 1; (ii) certain other
Administrative Claims; (iii) holders of Allowed Priority Tax
Claims; and (iv) holders of Allowed General Unsecured Claims in
Class 8.
The Bankruptcy Court has scheduled March 29, 2021 as the last day
to cast votes to accept or reject the Plan. March 31, 2021 at 10:00
A.M. via zoom video is the hearing on the confirmation of the
Plan.
A full-text copy of the Subchapter V Plan dated Feb. 25, 2021, is
available at https://bit.ly/2MK29lM from PacerMonitor.com at no
charge.
Counsel for the Debtor:
John M. Steiner, Esq.
Crystal H. Thornton-Illar, Esq.
Leech Tishman Fuscaldo & Lampl, LLC
525 William Penn Place, 28th Floor
Pittsburgh, PA 15219
Telephone: (412) 261-1600
Email: jsteiner@leechtishman.com
cthornton-illar@leechtishman.com
About Ed's Beans Inc.
Ed's Beans, Inc., owner of Kiva Han Coffee and Crazy Mocha
restaurants, sought Chapter 11 protection (Bankr. W.D. Pa. Case No.
20-22974) on Oct. 19, 2020. The Debtor was estimated to have
$100,000 to $500,000 in assets and $1 million to $10 million in
liabilities. Crystal H. Thornton-Illar of Leech Tishman Fuscaldo &
Lampl, LLC, is the Debtor's legal counsel.
EDISON INTERNATIONAL: S&P Rates Series A Preferred Stock 'BB+'
--------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating to Edison
International's series A fixed-rate reset cumulative perpetual
preferred stock. Edison intends to use the net proceeds from these
notes to repay commercial paper borrowings and for general
corporate purposes.
S&P said, "We classify these notes as hybrid securities with
intermediate equity content (50%). We rate the securities two
notches below our 'BBB' long-term issuer credit rating on Edison
International to reflect their subordination and the company's
ability to defer dividend payments on the instruments. Our
intermediate equity treatment is premised on the instruments'
permanence, subordination, and deferability features."
The preferred stock's perpetual nature, along with the company's
limited ability and lack of incentive to redeem the issuance for a
long-dated period, meets S&P's standards for permanence. In
addition, the dividend payments are deferrable, which fulfills the
deferability element. The instruments are also subordinated to all
of Edison International's existing and future senior debt
obligations, thereby satisfying the condition for subordination.
The issuer credit rating on Edison International is 'BBB' and the
outlook is negative.
EDISON INT’L: Fitch Assigns BB Rating on Series A Preferred Stock
-------------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Edison International's
(EIX) Fixed Rate Reset Cumulative Perpetual Preferred Stock, Series
A (Cumulative, $1000 Liquidation Value). Proceeds from the offering
will be used to repay outstanding CP borrowings or for general
corporate purposes. The securities are eligible for 50% equity
credit.
The rating and Stable Outlook reflect credit supportive elements of
legislation enacted in 2019, Assembly Bill (A.B.) 1054. Among other
things, A.B. 1054 creates a $21 billion insurance fund to buffer
utilities from potential wildfire exposure while they and the state
develop and implement measures to reduce the severity and frequency
of catastrophic wildfires. Future rating actions are likely to be
driven by the effectiveness of EIX subsidiary Southern California
Edison Co.'s (SCE) efforts to minimize wildfire activity and reduce
liability to more manageable pre-2017-2018 fire season levels or
better.
While financial impacts from the coronavirus pandemic are a concern
in the near-to-intermediate term, Fitch believes EIX and SCE are
reasonably well-positioned to absorb rating pressure within their
current rating categories.
KEY RATING DRIVERS
Recent Wild Fire Activity: California wildfires based on California
Department of Forestry and Fire Protection Fire (Cal Fire) data for
2020 burned approximately 4.3 million acres and damaged or
destroyed just under 10,500 structures. The rebound from much lower
levels of wildfire destruction in 2019 highlights the persistent
nature of catastrophic wildfire activity.
Unlike 2017 and 2018, however, a majority of wildfire activity in
2020 was not attributable to utility equipment, but to natural
phenomenon. A lightning siege in August 2020 ignited hundreds of
wildfires and a majority of the largest, most damaging firestorms
of 2020. The relative paucity of utility triggered catastrophic
wildfires in 2019 and 2020 compared to 2017 and 2018 is a
constructive development from a credit perspective.
The respite provides nascent hope recent initiatives including
wildfire resilience and response strategies deployed by
investor-owned utilities (IOUs) and governmental agencies will bear
fruit. The dual effects of the reduction in the number of utility
triggered firestorms in 2019 and 2020 and implementation of the
wildfire insurance fund and other aspects of AB 1054 and other
legislative initiatives are key elements supporting SCE's and EIX's
current ratings and the Stable Rating Outlook.
Subrogation Claim Settlements: In September 2020 and January 2021,
EIX and SCE entered into settlement agreements resolving all
insurance subrogation claims related to the 2017 Thomas and
Koenigstein fires and Montecito Mudslides and 2018 Woolsey fire,
respectively. No admission of wrongdoing or liability was made by
EIX or SCE in reaching the settlements. The settlements bring EIX
and SCE closer to resolving third-party liabilities associated with
2017 and 2018 wildfires and are a constructive development.
Settlement of third-party liabilities is a prerequisite for
recovery in rates. Fitch expects SCE to seek recovery of wildfire
costs but has not modeled any recovery into Fitch's projections.
Under the terms of the 2017 wildfire and mudslide subrogation
claims settlement, SCE agreed to pay $1.2 billion plus $0.555 for
each dollar ultimately paid by settling subrogation claimants to
their policy holders before July 15, 2023 up to an agreed cap.
Under the terms of the settlement of the 2018 Woolsey fire
subrogation claims, SCE agreed to pay an aggregate of $2.2 billion
by April 22, 2021. This payment equals $0.67 for each dollar in
claims already paid by the Woolsey Subrogation Plaintiffs to their
policy holders. SCE has also agreed to pay $0.67 for each dollar in
claims to be paid by the Woolsey Subrogation Plaintiffs to their
policy holders on or before July 15, 2023, up to an agreed upon
cap.
Credit Metrics: EIX's credit metrics weaken meaningfully in 2020
reflecting pressures stemming from 2017 and 2018 wildfire
liabilities and the cost of participating in A.B. 1054, including
contributions to the fund, large capex and no equity return on $1.6
billion of wildfire related capex. Fitch estimates FFO leverage
will approximate 5.5x in 2021 improving to 4.7x in 2023. Fitch
believes EIX's credit metrics are consistent with the company's
current 'BBB-'/Outlook Stable IDR in light its business risk file.
Strong Legislative Response: A.B. 1054 was signed into law in July
2019 and Senate Bill 901 in 2018. The laws are part of a broad
effort underway across California to address root causes and
minimize the destructive force and frequency of catastrophic
wildfires. Enactment of AB 1054 and creation of a $21 billion
wildfire insurance fund under the law is, in Fitch's opinion, a
positive credit development. The relative magnitude of the fund is
further enhanced by a 40% limitation of subrogation claims under
the law, but flexibility is provided to consider settlements in
excess of 40%.
The insurance fund provides a means to pay potential liabilities
from post-July 12, 2019 wildfires, without increasing customer
rates, as the state pursues a comprehensive plan to battle
catastrophic wildfires on several fronts including enhanced
forestry management and changes in state and utility investment,
operation, cooperation, preparedness and response.
Reasonable Prudence Standard: Fitch believes A.B. 1054 mandates a
more reasonable prudence standard that is consistent with the
Federal Energy Regulatory Commission (FERC) standard, subject to a
degree of interpretation risk at the California Public Utilities
Commission (CPUC). Fitch notes that FERC approved San Diego Gas &
Electric's (SDG&E) net 2007 wildfire-related jurisdictional
liabilities, while the CPUC rejected SDG&E's petition for recovery
of net jurisdictional costs.
Imprudence Risk Capped: In the event that a utility is found to be
imprudent or partially imprudent, A.B. 1054 limits exposure to 20%
of the utility's T&D equity rate base or approximately $3.2 billion
for SCE based on the utility's average 2021 rate base. The
liability cap is applied on a trailing three-year basis ending on
Dec. 31 of the calendar year in which the calculation is rendered.
Insurance Fund Buffers IOU Exposure: A.B. 1054 creates a robust,
wildfire insurance fund that can be accessed by participating
utilities that have been issued a valid safety certification to pay
wildfire victims' claims in excess of $1 billion when utility
equipment ignites a fire and inverse condemnation (IC) is invoked.
Fitch believes access to the wildfire fund effectively addresses
the timing mismatch between payments by utilities to victims under
IC and recovery of third-party liability payments subject to CPUC
review.
Public Safety Power Shutoffs: SCE initiated public safety power
shutoffs (PSPS) during periods of elevated wildfire risk during
2019 and 2020 as a part of its wildfire mitigation plan.
While SCE believes PSPS is an effective tool to reduce the risk of
starting wildfires in its service territory during severe weather
events, the public and political reaction was overwhelmingly
negative in 2019 especially with regard to more widespread outages
in northern California. Governor Newsom and CPUC President Batjer
have made it clear that widespread, lengthy outages experienced
primarily in Northern California in 2019 are unacceptable.
In 2020, key SCE constituents, including the CPUC and other state
agencies, have raised concerns regarding the utility's execution of
PSPS. SCE recognizes the dangers PSPS poses to the public and
continues to bolster system operations and infrastructure to reduce
the adverse effects of PSPS on customers.
In addition to political/regulatory risks associated with PSPS,
other credit risks include potential liabilities due to frequent,
widespread outages and tail risk associated with potential system
reliability impacts.
2020-2023 Capex: SCE's capex is projected to approximate $20.2
billion - $21.7 billion for 2020-2023 driven by infrastructure
replacement, wildfire mitigation, transportation sector
electrification and transmission infrastructure investment. SCE's
capex program is designed to further California policy initiatives
to achieve the state's ambitious carbon emissions reduction goals,
including zero electric system carbon emissions by 2045, and
mitigate catastrophic wildfire activity.
Projected 2020-2023 wildfire mitigation capex of $3.8 billion
includes risk-prioritized replacement of more than 4,000 miles of
bare conductor to covered conductor by 2022. Under A.B. 1054 $1.6
billion of SCE's wildfire mitigation capex will not earn an equity
return and is expected to be securitized pending CPUC approval.
Inverse Condemnation: Under the doctrine of IC, which is enshrined
in California's constitution, a utility may be held strictly liable
for property damages and legal expenses if its equipment is deemed
to have played a role igniting a wildfire, even if the utility
followed all rules and regulations. Socialization of wildfire costs
through IC in California generally results in relatively timely
settlement of wildfire victims' claims where utility equipment is
deemed to have ignited the fire.
The problem from a credit perspective is that utilities are
unlikely to recover claims until long after paying wildfire
victims, if at all. The resulting liquidity pressure from the
timing mismatch between liability payments and recovery in rates
is, in Fitch's view, the most pressing threat to utility
creditworthiness under IC given the parabolic increase in 2017-2018
wildfire liabilities. The A.B. 1054 wildfire fund addresses this
liquidity shortfall by providing utility access to the $21 billion
wildfire fund to support wildfire victim payments.
Coronavirus Impacts: Fitch does not expect impacts of the
coronavirus to result in adverse credit rating actions for SCE or
its corporate parent. The utility, in response to the coronavirus,
has suspended disconnections and is waiving late fees. These
actions are consistent with a CPUC resolution issued April 2020 to
support utility customers during the pandemic. The CPUC resolution,
among other things, requires SCE to waive customer late fees and
disconnections. Fitch expects the resolution to remain in effect
until April 2021.
The CPUC has approved the COVID-19 Pandemic Protections Memorandum
Account (CPPMA) to track coronavirus-related costs for future
recovery. Fitch assumes coronavirus-related expenses will be
deferred this year and recovered in 2021 and 2022 with load impacts
recovered in SCE's annual revenue decoupling true up process. Bad
debt and other coronavirus costs are expected to be deferred and
recovered through SCE's CPPMA and Catastrophic Event Memorandum
Account. Through Dec. 31, 2020, SCE recorded $176 million related
to uncollectible accounts and other expenses due to the emergency
in the CPPMA.
Fitch is not aware of any meaningful supply chain disruptions and
wildfire mitigation work remains a top priority. Fitch does not
believe the pandemic has delayed completion targets outlined in
SCE's wildfire mitigation plan. Work continues in a manner that
prioritizes employee and customer safety. Work practices align with
World Health Organization and Centers for Disease Control and
Prevention guidelines.
Parent-Subsidiary Rating Linkage: EIX subsidiary SCE accounts for
virtually all of EIX's consolidated earnings and cash flows. As
such, Fitch applies a weaker parent-stronger subsidiary approach in
rating SCE and EIX, reflecting EIX's dependence on cash flows from
SCE to meet its obligations. SCE's IDR is the same as EIX's,
reflecting moderate to strong rating linkage due to robust
strategic and operational linkage. IDR notching also considers
structural subordination of EIX debt relative to SCE and the
utility's dependence on capital from its corporate parent to
balance its regulatory capital structure.
EIX Debt: Fitch believes EIX's balance-sheet debt is manageable,
totalling $25.0 billion as of Dec. 31, 2020, including utility
preferred and preference securities of $1.9 billion and parent-only
debt of $3.2 billion. Parent-only EIX debt has increased sharply
from approximately $400 million at end-2013. Higher EIX debt is due
to funding requirements at SCE for high capex, catastrophic
wildfire costs and payments to creditors of former subsidiary
Edison Mission Energy under its bankruptcy court-approved
reorganization plan. EIX's parent-only debt represents
approximately 13% of EIX's consolidated balance sheet debt and
preferred and preference securities.
Regulatory Update: Fitch believes CPUC reform remains a key
objective for Governor Newsom. Toward that end, the recent
reappointment of Marybel Batjer as president of the CPUC by the
governor is a constructive development. Batjer most recently served
as California's first secretary of the state's Government
Operations Agency, implementing data- and technology-based
solutions to enhance operating efficiency and has a record of
restructuring challenged government agencies, most recently at the
California Department of Motor Vehicles.
Key regulatory proceedings include SCE's pending 2021 GRC and
review of its wildfire mitigation plan and related memorandum
accounts, securitization proceedings and ongoing review of the
utility's de-energization policy and execution. Gov. Newsom earlier
this year appointed Darcy L. Houck to the CPUC. Commissioner Houck
most recently served as chief counsel for the California Energy
Commission and has expertise in nuclear decommissioning,
environmental equity and safety policy.
In 2020, the CPUC issued a decision modifying its rate case plan
for utilities. Among other things, the commission's decision
changes the generic general rate case cycle (GRC) to a four-year
cycle (composed of a forecasted test year and three subsequent
attrition years) from a three-year cycle (composed of a forward
test year and two attrition years). The changes are designed to
facilitate greater efficiency during the ratemaking process.
SCE 2021 GRC: On Aug. 30, 2019, SCE filed its 2021 GRC application
with the CPUC. SCE in rebuttal testimony filed September 2020, SCE
is seeking authority to increase rates $1.3 billion effective Jan.
1, 2021. The filing also requests subsequent increases of $452
million in 2022 and $524 million in 2023.
The filing includes planned investments to advance the state's
ambitious carbon-reduction policies, which include a 33% renewable
standard by 2020, increasing to 60% by 2030 with a 100% carbon-free
standard by 2045, along with investments to battle catastrophic
wildfires. Consistent with AB 1054, SCE's GRC filing excludes the
revenue requirement associated with approximately $1.6 billion of
wildfire risk mitigation capex that SCE will not include in the
equity portion of rate base.
The CPUC has incorporated additional tracks into SCE's GRC. Tracks
2 will consider 2018 and 2019 wildfire mitigation costs and track 3
incremental 2020 wildfire mitigation costs inclusive of amounts
above the previously settled grid safety and resiliency program
amounts. Track 4 will add a third attrition year to SCE's 2021 GRC
in accordance with CPUC's the January 2020 ratemaking process
decision discussed above. The CPUC in a recent proposed decision
approved with no modifications, a settlement-in-principle reached
by SCE and parties to its Track 2 proceeding. If finalized by the
CPUC, the Track 2 settlement would result in $391 million revenue
increase.
WEMA Decision: The CPUC reached a decision in SCE's pending
Wildfire Expense Memorandum Account (WEMA) on Sept. 24, 2020
seeking recovery of $505 million of insurance premiums and other
costs. The decision approves recovery of $505 million over two
years. Recovery of costs over two years, rather than one year, is
somewhat negative from a credit perspective given the cash burdens
imposed upon the utility from related to 2017 and 2018 wildfire
liabilities and AB 1054.
Securitization of Wildfire Capex: SCE recently received CPUC
authorization to securitize and issued to securitize $300 million
of approved wildfire mitigation capex that will not receive a
return on equity under A.B. 1054. As discussed above, A.B. 1054
requires SCE to forgo an equity return on $1.6 billion of projected
wildfire mitigation plan capex and allows authorized costs to be
securitized subject to issuance of a CPUC financing order. Fitch
includes $1.6 billion of securitization debt in its 2021-2024
projections.
EIX has an ESG Relevance Score (RS) of '5' for exposure to
environmental impacts, reflecting increased catastrophic wildfire
activity in recent years driven by cycles of drought-rain-drought,
high winds and low humidity among other factors. Exposure to
wildfire related third party liabilities under inverse condemnation
has resulted in multiple downgrades for EIX. The ESG RS for
exposure to environmental factors is relevant to the utility's
ratings along with other factors.
EIX's ESG relevance score of '4' for exposure to social impacts is
also related to wildfire activity and its adverse impact on the
utility's relationship with customers and is relevant to EIX's
ratings in conjunction with other factors.
EIX is exposed to large third-party liabilities under the doctrine
of inverse condemnation and, as a result, heightened regulatory
uncertainty regarding full and timely recovery of wildfire-related
costs and potential, related liquidity challenges. While future
adverse credit rating action due to wildfire exposure cannot be
ruled out, Fitch believes wildfire risk is manageable within EIX's
current rating category in the near-to-intermediate term.
DERIVATION SUMMARY
EIX, similar to peer utility holding companies PCG and Pinnacle
West Capital Corporation (PNW; A-/Negative), is solely dependent on
earnings and cash flow from its wholly owned California-based
utility subsidiary, SCE. PNW's and PCG's respective core operating
utilities are Arizona Public Service Company (APS; A-/Negative) and
Pacific Gas & Electric Company (PG&E; BB/Stable).
PNW, through its sole operating utility subsidiary APS, supplies
electricity to large portions of Arizona. Similarly, EIX and PCG,
through their respective sole operating utilities, SCE and PG&E,
provide electricity to large portions of California. By contrast,
FirstEnergy Corporation (FE; BB+/Negative), a large multi-state
utility holding company operates 10 utilities across six
Mid-Atlantic states, has much greater earnings, cash flow and
regulatory diversity.
Virtually all of EIX's, PNW's, PCG's and FE's consolidated cash
flows are from utility operations. Conversely, Sempra Energy's
operations are more diverse. SRE's utility operations account for
approximately 80% of consolidated earnings with competitive
operations contributing the remainder. SRE's California-based
combination electric and gas utility, SDG&E, has a far better
record of avoiding catastrophic wildfires compared to EIX's and
PCG's operating utilities. SDG&E was able to avoid catastrophic
wildfires and related outsized liabilities in 2017-2018, unlike SCE
and PG&E.
Fitch expects parent-only debt at EIX and PCG to remain below 20%.
Parent-only debt is considerably higher for FE and SRE at
approximately 34% and in excess of 35%, respectively. Fitch
projects FFO leverage for FE of 6.0x in 2021 and 5.8x in 2022.
Fitch estimates average FFO leverage at PNW of 4.4x in 2020-2024
and projects average FFO leverage for SRE of 4.5x in the next three
years. Fitch expects EIX leverage to improve to 4.7x in 2023 from
an estimated 5.5x in 2021. EIX subsidiary SCE is one of the
nation's largest electric utilities with total assets as of Dec.
31, 2020 of $69 billion, smaller in comparison to PG&E's $95
billion of total assets but considerably larger than SDG&E's $22
billion and APS's $20 billion.
The regulatory environment in Arizona, similar to California prior
to the advent of outsized wildfires in 2017-2018, has generally
been supportive from a credit point of view, with both
jurisdictions providing utilities operating in the state with a
reasonable opportunity to earn their authorized ROE. However,
unlike APS, meaningful uncertainty exists for California utilities
regarding the risk of future firestorms and recovery of potentially
large third-party liabilities.
Uncertainty regarding the magnitude, frequency and destructive
force of future wildfires and efforts to enhance wildfire
resilience is a key risk factor to the creditworthiness of SCE,
PG&E and, to a lesser degree, SDG&E. The significant reduction in
catastrophic wildfire destruction triggered by electric utility
equipment in 2019 and 2020 offers a modicum of hope that measures
deployed by the California utilities and state and local
authorities (including an extensive legislative response) will
meaningfully reduce catastrophic wildfire activity, destruction and
liability.
KEY ASSUMPTIONS
-- SCE pays approximately $6 billion of wildfire-related third
party liabilities;
-- No equity return on the first $1.6 billion of capex related to
the wildfire-mitigation plan;
-- Capex of $20.2 billion to $21.7 billion during 2020-2023;
-- Balanced funding of SCE's capex program;
-- A 10.3% authorized ROE through the forecast period.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade for EIX:
-- Consistent progress mitigating firestorm risk in the
intermediate-to-long term and FFO leverage of 5.0x or lower on
a sustained basis;
-- Firestorm activity on par with 2019/2020 or consistent with
pre-2017 experience;
-- Successful implementation of A.B. 1054, with regard to
resiliency initiatives, CPUC interpretation of prudence
standards and durability of the wildfire fund;
-- Better than expected regulatory outcomes with respect to
timeliness and substance;
-- Consecutive years of more manageable wildfire activity
consistent with 2019/2020 with ongoing PSPS implementation
improvement.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for EIX:
-- Significant debt issuance;
-- A downgrade of SCE;
-- FFO leverage of greater than 5.5x on a sustained basis;
-- Continuing catastrophic wildfire activity leading to an
untimely depletion of the wildfire fund and resulting exposure
to incremental wildfire liabilities;
-- Execution risk associated with implementation of the wildfire
insurance fund, including unexpectedly large prudence
disallowance under the new law by the CPUC;
-- Ineffective implementation of wildfire mitigation plans or
poor operating response to wildfires;
-- Poor wildfire mitigation plan PSPS execution, communication
and management;
-- Worse-than-expected regulatory outcomes in SCE's pending
wildfire spending and 2021 GRC proceedings;
-- Adverse political, legislative or regulatory developments;
-- Significant delay or inability to recover coronavirus
deferrals on a reasonably timely basis;
-- Increases to EIX's FFO-adjusted leverage to greater than 5.5x
on a sustained basis.
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
Fitch believes EIX has ample consolidated liquidity. EIX has
negotiated $4.5 billion of consolidated revolving credit facilities
(RCFs) composed of a $1.5 billion revolver at the corporate parent
and a $3.0 billion revolver at SCE. As of Dec. 31, 2020, $1.4
billion was available to EIX under its $1.5 billion revolver and
$2.1 billion was available under SCE's $3.0 billion revolving
credit agreement.
The credit facilities mature May 2024. As of Dec. 31, 2020, EIX had
consolidated cash and cash equivalents of $87 million ($32 million
of which was parent-only) and consolidated, borrowing capacity of
approximately $5.3 under credit facilities at EIX and SCE,
including two 364-day credit facilities negotiated earlier in 2020
totaling $2.3 billion. SCE's $800 million revolver matures March
2021 and its $1.5 billion revolver matures May 2021. As of Dec. 31,
2020, approximately $305 million was available under the $800
million revolver and there were no borrowing under the $1.5 billion
revolver at the end of 3Q20.
The $800 million revolver is available to fund wildfire-related
capex required under AB 1054. The $1.5 billion revolver is
earmarked for general corporate purposes and to provide liquidity
to fund pandemic-related expenses. Fitch expects EIX to have
negative FCF in 2021-2023, reflecting wildfire-related expenditures
and higher capex to advance greenhouse gas emissions reduction
goals and to strengthen system resilience and preparedness against
catastrophic wildfires.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch applies 50% equity credit to EIX's Fixed Rate Reset
Cumulative Perpetual Preferred Stock, Series A (Cumulative, $1000
Liquidation Value).
ESG CONSIDERATIONS
Edison International: Exposure to Environmental Impacts: 5,
Exposure to Social Impacts: 4
EIX has an ESG Relevance Score (RS) of '5' for exposure to
environmental impacts, reflecting increased catastrophic wildfire
activity in recent years driven by cycles of drought-rain-drought,
high winds and low humidity among other factors. Exposure to
wildfire related third party liabilities under inverse condemnation
has resulted in multiple downgrades for EIX. The ESG RS for
exposure to environmental factors is relevant to the utility's
ratings along with other factors.
EIX's ESG relevance score of '4' for exposure to social impacts is
also related to wildfire activity and its adverse impact on the
utility's relationship with customers and is relevant to EIX's
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.
EKSO BIONICS: Board Appoves Bonus Payouts for Execs
---------------------------------------------------
The compensation committee of the board of directors of Ekso
Bionics Holdings, Inc. approved of bonus payout amounts for the
Company's named executive officers under the Company's non-equity
incentive award program for 2020. The payouts to the NEOs were
made based on the Compensation Committee's determination that 40%
of bonus targets would be funded for applicable milestone
achievement for 2020, with Jack Peurach therefore receiving $82,500
(based on an eligible bonus of up to 75% of his annual base
salary), John Glenn receiving $55,000 (based on an eligible bonus
of up to 50% of his annual base salary) and Jason Jones receiving
$30,800 (based on an eligible bonus of up to 35% of his annual base
salary).
In addition, on March 3, 2020, the Compensation Committee granted
the NEOs equity awards that allocated 50% of the intended value in
the form of restricted stock units subject solely to time-based
vesting (RSUs) and 50% as performance-based restricted stock units
(PSUs), as follows:
Number of PSU's
Granted
Number of RSUs (Assuming Target
NEO Granted Threshold)
------------ -------------- ---------------
Jack Peurach 45,725 45,725
Jack Glenn 13,015 13,015
Jason Jones 12,270 12,270
The RSUs vest and will be paid out in three equal increments
annually on each of the first three anniversaries of the grant
date, subject to the grantee's continued service to the Company.
The PSUs vest upon achievement of performance targets based on the
Company's annual operating plan revenue for the fiscal year ended
Dec. 31, 2021 as approved by the Company's board of directors, with
50% of the award vesting when a minimum threshold of 90% of the
revenue target is met, 100% of the award vesting where the target
threshold of 100% of the revenue target is met, and one 150% of the
award vesting when a maximum threshold of 120% of the revenue
target is met. The PSUs will vest linearly in proportion to the
revenue target achieved between the minimum threshold and target
and between the target and the maximum threshold. Following
confirmation of achievement of any revenue targets and associated
vesting by the Compensation Committee, any vested PSUs will be paid
out in three equal increments annually, with the first payable upon
such confirmation, and the remaining two payments made on the
subsequent two anniversaries of the grant date, in each case
subject to the grantee's continued service to the Company. In
connection with a change in control transaction that occurs prior
to the Compensation Committee's determination of revenue target
achievement for the year ended Dec. 31, 2021, any then-outstanding
PSUs will become subject solely to time-based vesting on the same
terms as the RSUs as if performance levels had been achieved at the
target threshold (unless the Compensation Committee determines in
its sole discretion to vest performance levels at a higher
threshold based on Company performance as of such transaction).
About Ekso Bionics
Ekso Bionics -- http://www.eksobionics.com-- is a developer of
exoskeleton solutions that amplify human potential by supporting or
enhancing strength, endurance and mobility across medical and
industrial applications. Founded in 2005, the Company continues to
build upon its expertise to design some of the most cutting-edge,
innovative wearable robots available on the market. The Company is
headquartered in the Bay Area and is listed on the Nasdaq
CapitalMarket under the symbol EKSO.
Ekso Bionics reported a net loss of $15.83 million for the year
ended Dec. 31, 2020, compared to a net loss of $12.13 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$20.60 million in total assets, $16.16 million in total
liabilities, and $4.43 million in total stockholders' equity.
ELK CITY: Seeks Cash Collateral Access
--------------------------------------
Elk City Lodging, LLC asks the U.S. Bankruptcy Court for the
Western District of Oklahoma for authority to use Escrow Funds
which constitute cash collateral on an interim basis to complete
repairs and pay expenses in accordance with the budget, plus an
amount not to exceed 10% per line item.
The Debtor seeks authority to draw down so much of the $150,000
non-refundable earnest money deposit in escrow with Fidelity
National Title Agency to complete water damage repairs caused by
the Texas winter storm in February 2021, to pay operational
expenses, and to provide adequate protection to secured creditors
holding interests in escrow funds used by the Debtor.
The Debtor believes that the only creditor that can claim an
interest in the funds in escrow is Celtic Bank.
The repairs to be made at the Debtor's property will serve as
adequate protection against any diminution in value as a result of
the use of the Escrow Funds.
On August 20, 2020, the Court entered its Order Granting Motion to
Sell Real Property Free and Clear of Liens, Claims and
Encumbrances. Pursuant to the Sale Order, the Debtor has
contracted to sell its property to a third-party buyer for
$1,700,000. The buyer has deposited a nonrefundable earnest money
deposit of $150,000 in escrow with Fidelity National Title Agency
pursuant to the contract for sale. The proceeds of the sale will
be used to pay off the tax liens on the property and Celtic Bank in
accordance with the Sale Order.
The Debtor received a Statement of Work from Service Master
Recovery Management, an independent asset recovery company, setting
forth the cost of clean up the Debtor's property from the flooding.
The Debtor needs to pay at least $56,682.87 for labor and material
for remodeling that needs to be completed.
The Debtor also needs $55,458.89 to pay operational expenses from
the shutdown of the hotel and also from unexpected expenses in
December and January caused by delays in closing.
A copy of the motion is available at https://bit.ly/30hsElI from
PacerMonitor.com.
About Elk City Lodging, LLC
Elk City Lodging, LLC, d/b/a Comfort Inn & Suites, is a privately
held company in Elk City, Oklahoma, that operates in the hotel and
lodging industry.
Elk City Lodging filed a Chapter 11 bankruptcy petition (Bankr.
W.D. Okla. Case No. 19-13945) on Sept. 26, 2019 in Oklahoma City,
Oklahoma. In the petition signed by CEO Kumar Khemlani, the Debtor
was estimated to have both assets and liabilities at $1 million to
$10 million.
Judge Sarah A. Hall is assigned the case.
JOYCE W. LINDAUER ATTORNEY, PLLC, is the Debtor's counsel.
ENDO INT'L: Tries to Rework $3.3B Loan as Opioid Litigation Looms
-----------------------------------------------------------------
Endo International plc (NASDAQ: ENDP) on March 4, 2021, announced
that it has commenced a refinancing of its existing $3.3 billion
senior secured term loan due 2024 with the net proceeds of a new
senior secured term loan and other debt issuances. The new term
loan will have the same guarantees and collateral as Endo's
existing credit agreement. The proposed transactions, if
completed, are not expected to increase Endo's total indebtedness
but would extend Endo's debt maturity profile and provide Endo with
greater financial flexibility.
Katherine Doherty of Bloomberg News reports that Endo International
is trying to get more breathing room on its debt as it contests
with ongoing opioid and patent litigation and an expected drop in
earnings.
According to Bloomberg, the company is in talks for a $2.295
billion first-lien term loan managed by JPMorgan Chase & Co.
About Endo International
Dublin, Ireland-based Endo International Public Limited Company
(NASDAQ: ENDP) -- HTTP://www.endo.com/ -- provides specialty
healthcare solutions. The Company develops, manufactures, markets,
and distributes pharmaceutical products and generic drugs. Endo
International offers its products to the medical and healthcare
industries worldwide. The Company generated over 93% of its 2017
sales from the U.S. healthcare system.
ENDO INTERNATIONAL: S&P Assigns 'B+' Rating on New First-Lien Debt
------------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level rating and '2'
recovery rating to the proposed revolver maturing 2026, pushing out
the maturity on a portion of the company's $1 billion revolver and
the proposed $2.295 billion senior secured first-lien term loan
maturing 2028 issued by Endo International PLC's subsidiary Endo
Luxembourg Finance Co. S.a.r.l and Endo LLC and guaranteed by Endo
International PLC and certain material wholly-owned restricted
subsidiaries.
S&P said, "The '2' recovery rating indicates our expectation for
substantial (70%-90%; rounded estimate: 70%) recovery in the event
of a payment default, and is consistent with our ratings on the
outstanding first-lien debt, which are all pari passu. We expect
the company will use the proceeds of the new term loan to partially
repay the $3.3 billion first-lien term loan maturing 2024, in a
leverage-neutral transaction.
"Our 'CCC+' issue-level rating on Endo's second-lien and senior
unsecured debt and the recovery rating of '6' on those obligations
are unchanged.
"Our 'B' long-term issuer credit rating is on negative outlook. The
rating reflects the company's decent scale (about $2.9 billion in
revenues in 2020), good product and therapeutic diversification,
strong EBITDA margins (above 40%), and decent cash flow generation.
These considerations are partially offset by high leverage in the
range of 5x-6x, declining revenues in multiple segments, material
risk relating to opioid litigation, potential competition to its
largest product Vasostrict, and risks to our expectations for
substantial growth in sales of Xiaflex and Qwo (a new treatment for
cellulite).
"We could lower the rating on Endo if we expect leverage to rise
above 7x, even if cash flow remains positive. This could occur if
opioid-related liabilities exceed our expectations or there is a
significant near-term decline in Vasostrict revenues."
EXTENDED STAY: S&P Alters Outlook to Stable, Affirms 'B+' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on hotel company Extended
Stay America Inc. to stable from negative. S&P also affirmed all
its ratings on the company, including the 'B+' issuer credit
rating, reflecting its updated base-case forecast that its measure
of adjusted leverage will improve to the low-mid 5x area in 2021 as
operating performance continues to recover.
S&P said, "The stable outlook reflects our expectation that,
despite the risk of slow or uneven travel recovery, downside for
the rating is limited because of the anticipated cushion in our
base-case leverage forecast through 2022 compared to our 6.0x
downgrade threshold at the current rating.
"The outlook revision is primarily the result of
stronger-than-anticipated operating performance in 2020 and an
anticipated recovery in 2021, and reflects our updated base-case
forecast that the company will have some cushion compared to our 6x
downgrade threshold in 2021. In spite of the pandemic, the company
was able to limit the revenue per room (RevPAR) decline at its
portfolio of hotels to 16% in 2020 compared to a near 50% RevPAR
decline in the U.S. lodging industry overall. The company did so by
focusing on low-rate, long-stay customers, and attracting business,
first responder, and leisure travelers that were willing to, or had
to travel, and sustained its portfolio occupancy rate above 70% in
2020. Although EBITDA margin declined, adjusted EBITDA dropped a
moderate 30% in 2020 compared to severe declines or negative EBITDA
at many other lodging companies. Extended Stay's 2020 EBITDA
decline resembled the typical relationship between RevPAR and
EBITDA for a hotel owner during a downturn. The company also pulled
back on capital spending, which generated better-than-anticipated
free cash flow. As a result, adjusted leverage was 6.2x in 2020,
better than our previous base-case, and only modestly above our
6.0x downgrade threshold at the current rating. Furthermore, we
updated our forecast to reflect onogoing recovery in RevPAR and
modest margin improvement in 2021, which could drive leverage to
the low- to mid-5x range in 2021. This forecast represents a
cushion compared to our 6.0x downgrade threshold in the event the
travel recovery is slow or uneven.
"Under our revised base case, we assume RevPAR growth will be
driven by widespread immunization, a shift back toward higher rate
business and an ongoing economic recovery. We expect Extended
Stay's RevPAR will remain depressed through the first half of 2021.
However, as business and leisure travel spending begin to recover
in the second half of 2021, we expect rates to ramp up, as the
company will return its focus to customers with shorter lengths of
stay. The company has positioned itself for this shift through its
recently announced Premier Suites brand, which targets business
travelers who stay two to three weeks and are less price-sensitive
than the company's average guest. As a result, we assume RevPAR
increases about 10% in 2021, EBITDA margin modestly improves, and
EBITDA grows by 15%-20%."
Extended Stay continues to outperform many rated lodging sector
peers through the pandemic. Extended Stay's hotels have large,
residential-like rooms with kitchens that enable longer-term stays
than the typical hotel room. Despite the widespread travel
downturn, construction and health care professionals, for example,
continued to travel and favored the extended stay segment. As a
result, demand and occupancy at Extended Stay's hotels were much
higher than other segments of lodging. S&P said, "Additionally, the
company's economy-priced hotels also compared favorably to the
midscale extended stay segment where RevPAR declined 26% in 2020.
We believe this reflects Extended Stay's recognized brand and price
advantage within the extended stay segment. Following widespread
immunization, it is highly likely that other types of lodging will
become more attractive as the pandemic-related drivers that caused
travelers to favor extended stay hotels recede, but we still
believe the company's RevPAR and EBITDA will recover in 2021."
Reducing leverage to the company's 3.5x-4.0x target policy range
will be slow given the REIT's distributions requirements. Extended
Stay declared both special and regular dividends in the first
quarter of 2021. The special dividend partly distributes capital
gains from an asset sale and partly distributes income generated in
the second half of 2020. S&P said, "For purposes of modeling
aggregate distribution in 2021, we have assumed the company will
continue to pay a quarterly dividend through the remainder of 2021
at a similar amount to the first quarter dividend. Under our
current base-case assumptions for revenue and EBITDA, and the
company's guidance for capital spending, the company's
discretionary cash flow could be negligible in 2021 after the
distributions. As a result, we anticipate leverage in the low- to
mid-5x area in 2021, and that it will likely take several years for
Extended Stay to reduce leverage further to its publicly stated
target policy range of 3.5x to 4x."
The highly competitive nature of Extended Stay's business is
somewhat offset by its geographic diversity and above-average
EBITDA margin. Extended Stay operates in the highly competitive
economy segment of the lodging industry, which has relatively low
barriers to entry and price-sensitive consumers. The company's
hotels are primarily in secondary market locations where land is
more readily available for new construction with less onerous
zoning restrictions than its full-service lodging peers in city
center locations. Although Extended Stay targets customers with a
longer average length of stay, S&P believes it competes for
customers against all lodging operators in the mid-scale and
economy segments. Following widespread distribution of the vaccine,
Extended Stay could face intense competition from competitors who
could potentially be willing to discount heavily.
The company has some geographic diversity as it operates 646 hotels
across the U.S., although about 39% of its rooms are concentrated
in California, Texas, Florida, and Illinois. The company also
benefits from a good EBITDA margin compared to many other rated
hotel owners. For several years prior to the pandemic, Extended
Stay maintained an EBITDA margin above 40% by modestly increasing
its low economy segment average daily rate (ADR), maintaining a
limited service cost model, and generating efficiencies from its
longer average length of stay, which results in lower guest
turnover and related costs.
S&P said, "The stable outlook reflects our expectation that
leverage will improve to around 5.0x-5.5x in 2021 as the company's
revenue and EBITDA begin to recover following the pandemic.
"We could lower ratings if an unexpected decline in operating
performance caused the company to sustain leverage higher than 6x.
"We could raise the rating if we gain confidence that a recovery
from the impact of the COVID-19 pandemic is stronger than we assume
and the company would sustain leverage below 5x."
FERRELLGAS PARTNERS: Court Approves Chapter 11 Plan
---------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that Ferrellgas Partners
LP, a bankrupt holding company behind the marketer of Blue Rhino
propane, won court approval of a Chapter 11 restructuring plan that
will help its affiliates refinance $1.5 billion in debt and
preserve value for equity holders.
Confirming the plan Friday, March 5, 2021, Judge Mary F. Walrath of
the U.S. Bankruptcy Court for the District of Delaware overruled
objections from a group of unit holders who said the company's
disclosures weren't sufficiently transparent and the plan wasn't
negotiated in good faith.
The arguments "simply do not hold water," the judge said.
About Ferrellgas Partners
Ferrellgas Partners, LP, is a publicly-traded Delaware limited
partnership formed in 1994 that has two direct subsidiaries,
Ferrellgas Partners Finance Corp. and non-debtor Ferrellgas, LP.
Ferrellgas 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 non-debtor OpCo, 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 and commercial and portable tank
exchange customers are generally urban.
Ferrellgas Partners LP and Ferrellgas Partners Finance filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Case Nos. 21-10021 and 21-10020) on Jan. 11,
2021. James E. Ferrell, chief executive officer and president,
signed the petitions.
At the time of the filing, Ferrellgas Partners, LP was estimated to
have $100 million to $500 million in both assets and liabilities
while Ferrellgas Partners Finance was estimated to have less than
$50,000 in assets and $100 million to $500 million in liabilities.
Judge Mary F. Walrath oversees the cases.
The Debtors tapped Squire Patton Boggs (US) LLP as primary
bankruptcy and restructuring counsel; Chipman, Brown, Cicero &
Cole, LLP as local bankruptcy counsel; Moelis & Company LLC as
investment banker; and Ryniker Consultants as financial advisor.
Prime Clerk LLC is the claims, noticing & solicitation agent.
FERRO CORP: S&P Upgrades ICR to 'BB-' on Improved Metrics
---------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Ferro Corp to
'BB-' from 'B+'. S&P also raised its issue-level rating on Ferro's
first-lien term loan facility to 'BB-', this notching up is in line
with the upgrade of Ferro. The '3' recovery rating reflects its
expectations of moderate (50%-70%; rounded estimate: 60%) recovery
prospects in the event of a payment default.
The stable outlook reflects S&P's view that the company will
continue to counter earnings volatility with working capital
improvements, cost-improvement initiatives, and debt reduction.
The upgrade reflects Ferro's better than anticipated earnings
during 2020 despite the pandemic. Additionally, Ferro closed on the
previously announced sale of its tile coatings business for $460
million. It used the proceeds to pay down $435 million of debt on
its term loan B. S&P said, "We now expect improved leverage metrics
such as S&P Global Ratings' weighted-average calculation of funds
from operations (FFO) to debt of 12%-20% over the next 12 months.
The completed divestiture is in line with the company's goal to
deleverage, balance its geographic coverage, and reduce exposure to
the cyclical construction market, which we view as credit-positive.
Furthermore, we expect Ferro to increase EBITDA and margins over
the next couple years as it lowers capital expenditures and working
capital requirements and maintains reduced financial leverage."
S&P said, "Our assessment reflects business strengths such as
Ferro's leading market position in porcelain enamel coatings,
ceramic glaze coatings, and pigments for digital tile printing.
Ferro's customer concentration remains low, with no single customer
making up more than 10% of sales. Additionally, Ferro has good
geographic revenue distribution, with approximately 75% of sales
outside the U.S. Ferro produces differentiated products that are
important functional components in the end markets they serve. For
example, Ferro's porcelain enamel is made to withstand intermittent
heat, which is needed in the appliance market. Offsetting these
strengths is Ferro's exposure to the cyclical automotive end
market. We believe a downturn in this market could hamper demand
for the company's products. Despite some product and raw material
differentiation, historically, Ferro lagged in passing on raw
material volatility to its customers, resulting in lower margins
during certain periods. However, with the divestiture of the tile
coatings business we believe the company has improved its ability
to execute raw material price recovery.
"The stable outlook reflects our expectation that Ferro's FFO to
debt will remain well above 12% and the company will continue to
focus on innovation. Our base case assumes Ferro will increase
revenues by mid-single-digit percentages over the next two years
while expanding EBITDA margins without materially increasing
debt."
S&P could lower the rating within the next 12 months if:
-- A weaker operating environment led to a 200-basis-point (bps)
decline in both EBITDA margins and revenue from our base case;
-- FFO to debt approached 12% from current levels in the mid-teen
percentages; or
-- Against our expectations, the company undertook more aggressive
financial policies, such as a large debt-funded acquisition or
shareholder rewards, weakening credit measures.
S&P could raise the rating within the next 12 months if:
-- FFO to debt rose above 20% on a sustained basis. In such a
scenario, S&P would expect both EBITDA margins and revenue growth
to improve 300 bps from its expectations, likely with a
greater-than-expected shift to new products and higher EBITDA
margins; and
-- S&P gained clarity that the company's financial policies and
growth initiatives would support maintaining these credit measures
and profitability.
FIELDWOOD ENERGY: Eni Petroleum Has Serious Concerns With Plan
--------------------------------------------------------------
Law360 reports that another former owner of bankrupt oil
exploration company Fieldwood Energy LLC oil and gas leases has
asked a Texas bankruptcy judge to reject the company's Chapter 11
plan disclosure, saying it is trying to foist off the expense of
cleaning up abandoned wells.
In a filing Wednesday, March 3, 2021, Eni Petroleum said it had
"serious concerns" about whether Fieldwood's plan — which it said
would pawn off hundreds of millions of dollars in
well-decommissioning costs on former leaseholders while ensuring
its term lenders can buy its more valuable assets -- can meet the
standards for confirmation.
About Fieldwood Energy
Fieldwood Energy LLC -- http://www.fieldwoodenergy.com/-- is a
portfolio company of Riverstone Holdings focused on acquiring and
developing conventional assets, primarily in the Gulf of Mexico
region. It is the largest operator in the Gulf of Mexico owning an
interest in approximately 500 leases covering over two million
gross acres with 1,000 wells and 750 employees.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 18-30648) on Feb. 15,
2018, with a prepackaged plan that would deleverage $3.286 billion
of funded by $1.626 billion.
On Aug. 3, 2020, Fieldwood Energy and its 13 affiliates again filed
voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case No.
20-33948). Mike Dane, senior vice president, and CFO signed the
petitions. At the time of the filing, the Debtors disclosed $1
billion to $10 billion in both assets and liabilities.
Judge David R. Jones oversees the cases.
The Debtors have tapped Weil, Gotshal & Manges LLP as their legal
counsel, Houlihan Lokey Capital, Inc., as an investment banker, and
AlixPartners, LLP as financial advisor. Prime Clerk LLC is the
claims, noticing, and solicitation agent.
The first-lien group has employed O'Melveny & Myers LLP as its
legal counsel and Houlihan Lokey Capital, Inc., as its financial
advisor.
The RBL lenders have employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA qAdvisors, LLC as their financial advisor.
The cross-holder group has tapped Davis Polk & Wardwell LLP as its
legal counsel and PJT Partners LP as its financial advisor.
On Aug. 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan, LLP,
and Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively. On Nov. 30, the Committee
received approval to hire Mani Little & Wortmann, PLLC, as its
legal counsel.
FIT FOOD FRESH: Hits Chapter 11 Bankruptcy Protection
-----------------------------------------------------
Matthew Arrojas of South Florida Business Journal reports that meal
plan provider Fit Food Fresh Inc. filed for Chapter 11 bankruptcy
protection.
The Boca Raton-based company, which delivers meals across the
tri-county region and Martin County, made the filing Feb. 26, 2021,
in U.S. Bankruptcy Court for the Southern District of Florida. Fit
Food Fresh listed $1.67 million in total liabilities and
approximately $126,000 in assets.
Co-founder and CEO Stephen Kaiser said he does not intend to sell
the company. He hopes to use the Chapter 11 bankruptcy proceedings
to reorganize debt and restructure the business, all while
continuing operations
The company was negatively impacted by the Covid-19 pandemic, he
said. Fit Fresh Food customers losing their jobs and being less
willing to spend on meal plans caused an estimated 30% dip in gross
revenue.
"Basically the debt has just piled up so much that it's difficult
to pay it," he said. "Chapter 11 will allow us to zoom out and
reevaluate the company and where the real profit margins are."
According to court documents, Fit Food Fresh reported $3 million in
gross revenue in 2020, down from $3.4 million in 2019.
Fit Food Fresh received a $183,000 Paycheck Protection Program loan
from TD Bank, according to the bankruptcy filing.
The company's largest listed creditor is Kaiser. According to the
filing, Fit Food Fresh owes Kaiser $362,000, and he said he used
revenue from some of his other business ventures to pay Fit Food
Fresh employees during the pandemic.
The Florida Department of Revenue is the second-largest creditor,
with $220,000 owed to the agency. The company also owes
Orlando-based seafood wholesaler Bar Harbor Seafood $134,000,
according to the filing.
A meeting of creditors is scheduled for April 5, 2021.
The filing also states that Casey Cochran owes Fit Food Fresh
$86,000. Cochran is a co-founder of the company, but his LinkedIn
account indicates he left his role as COO in April 2020.
Susan Lasky of Fort Lauderdale-based Sue Lasky P.A. represented Fit
Food Fresh in the filing.
Ms. Kaiser said he still believes Fit Food Fresh can be a
profitable business, but he's considering adding more revenue
streams. A consulting service to help other restaurants and meal
delivery providers get acquainted with delivery operations is an
addition he'd like to make, he said.
About Fit Food Fresh
Fit Food Fresh Inc. -- https://fitfoodfresh.com/ -- is a premium
meal plan provider across the tri-county region and Martin County.
Fit Food Fresh filed for Chapter 11 bankruptcy petition (Bankr.
S.D. Fla. Case No. 21-11858) on Feb. 26, 2021. The petition was
signed by Stephen Kaiser, president. Fit Food Fresh listed $1.68
million in total liabilities and approximately $126,636 in assets.
Honorable Judge Mindy A. Mora handled the case. SUE LASKY, PA, led
by Susan D. Lasky, is the Debtor's counsel.
FLITWAYS TECHNOLOGY: Has Until May 14 to File Plan & Disclosures
----------------------------------------------------------------
Judge Erik P. Kimball of the U.S. Bankruptcy Court for the Southern
District of Florida, West Palm Beach Division, has entered an order
within which debtors Flitways Technology, Inc., Tiger Reef, Inc.
and Blue Water Global Group, Inc. will file a Plan and Disclosure
Statement on or before May 14, 2021.
A full-text copy of the order dated Feb. 26, 2021, is available at
https://bit.ly/3egeMAu from PacerMonitor.com at no charge.
About Flitways Technology
Flitways Technology Inc. and its affiliates, Tiger Reef, Inc. and
Blue Water Global Group, Inc., sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Lead Case No.
21-10317) on Jan. 14, 2021. At the time of the filing, Flitways
Technology had estimated assets of less than $50,000 and
liabilities of between $100,001 and $500,000. Judge Erik P.
Kimball oversees the cases. Van Horn Law Group, Inc. is the
Debtors' legal counsel.
FMT SJ: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------
Debtor: FMT SJ LLC
c/k/a San Jose Fairmont
3223 Crow Canyon Road
Suite 300
San Ramon, CA 94583
Business Description: FMT SJ LLC is engaged in activities related
to real estate.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
District of Delaware
Case No.: 21-10521
Judge: Hon. John T. Dorsey
Debtor's
Bankruptcy
Counsel: PILLSBURY WINTHROP SHAW PITTMAN LLP
Debtor's
Local
Counsel: Justin R. Alberto, Esq.
COLE SCHOTZ P.C.
500 Delaware Avenue, Suite 1410
Wilmington, DE 19801
Tel: (302) 652-3131
Email: jalberto@coleschotz.com
Debtor's
Restructuring
Officer: Neil Demchick
VERITY LLC
Baltimore, Maryland
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $100 million to $500 million
The petition was signed by Neil Demchick, chief restructuring
officer.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/PDFDCDI/FMT_SJ_LLC__debke-21-10521__0001.0.pdf?mcid=tGE4TAMA
FMT SJ: Fairmont San Jose Files for Chapter 11 Bankruptcy
---------------------------------------------------------
Erica Pieschke of KRON4 reports that Fairmont San Jose filed for
Chapter 11 reorganization bankruptcy on Friday, March 5, 2021.
The hotel closed as it seeks a management partner and extend the
existing mortgage debt.
The few guests remaining in the hotel were relocated to other
hotels.
"We know that by taking this difficult step we will come back a
more vibrant hotel to the benefit of everyone in San Jose,
including the vitality of the City's downtown, nearby businesses,
and Silicon Valley conventions in a post-COVID-19 world," said the
hotel's representative Sam Singer.
Mr. Singer expects that operations will resume in about 60 to 90
days.
The Fairmont, just like others in the hospitality business,
suffered as conventions were canceled and occupancy drastically
dropped due to the pandemic.
In 2020, the owner says the hotel lost at least $18 million and
projects a loss of another $20 million in 2021.
A statement released said that the owner is 'optimistic that the
hotel's secured lender will work cooperatively to ensure the hotel
comes back stronger after its reorganization and as the region and
the nation come out of the pandemic.'
"The owner is committed to a process that will ensure the hotel's
long-term viability and drive business both to the hotel and to San
Jose's important downtown and convention center," Singer said.
The Chapter 11 reorganization will focus on three objectives:
1. Rejecting the existing hotel management agreement so that the
owner can transition to a new hotel brand
2. Running a comprehensive process to solicit proposals from
appropriate hotel brands who are willing to provide substantial
exit financing for the hotel
3. Extending the maturity date on its mortgage loan
About Fairmont Hotel San Jose
FMT SJ LLC operates San Jose Fairmont, a hotel in San Jose,
California.
FMT SJ LLC sought Chapter 11 protection (Bankr. D. Del. Case No.
21-10521) on March 5, 2021. Pillsbury Winthrop Shaw Pittman LLP is
the Debtor's counsel. Cole Schotz P.C. is the Debtor's local
counsel. Neil Demchick of Verity LLC is the Debtor's restructuring
officer.
FOREST CITY: S&P Affirms 'B+' ICR on Planned Life Sciences Sale
---------------------------------------------------------------
S&P Global Ratings revised its business risk assessment on Forest
City Realty Trust Inc. to fair from satisfactory.
S&P said, "At the same time, we are affirming our 'B+' ratings on
Forest City and its credit facilities and term loan B, based on our
expectation for deleveraging in 2021, provided some of the proceeds
from the sale are used to pay down outstanding debt, making the
transaction leverage neutral.
"We view the impending sale of Forest City's life sciences
portfolio as negative for the company's business prospects. This
well-located, high-quality portfolio (most assets are in Cambridge,
Mass.) is a relative bright spot for Forest City as the assets are
near full occupancy and have above-average rental rates and strong
tenant demand. We expect the loss of these life sciences assets to
weaken risk adjusted operating metrics in 2021, with Forest City's
remaining retail, traditional office, and multifamily assets
pressured from the pandemic. While we anticipate a gradual economic
recovery starting in the back half of 2021 as vaccines are more
widely distributed, we nevertheless expect occupancy in Forest
City's assets in gateway markets to remain challenged over the next
few years, and the loss of net operating income (NOI) from the life
sciences portfolio will be felt.
"The negative outlook reflects that EBITDA generation could remain
stressed in 2021 from the underperformance of Forest City's
remaining asset classes, which are primarily in urban markets
facing the most pressure from pandemic-related rent concessions and
move-outs. We would consider a downgrade if office, multifamily, or
retail assets remain challenged from secular headwinds that hinder
operating recovery prospects even as vaccines are more widely
distributed. This challenged operating performance could cause
leverage to remain above our threshold for the current rating
despite our expectation for material debt repayment post-asset
sales."
S&P would lower its rating on Forest City if:
-- The company cannot deleverage over the next year, such that it
sustains debt leverage of more than 13x, perhaps because of a
weaker EBITDA growth trajectory due to greater-than-expected
pressure from the recession or secular changes that cause
persistent same-property NOI declines and deteriorating occupancy,
or from greater-than-expected debt-funded development activity or
distributions.
-- Its operating performance does not recover and causes us to
view the company less favorably versus peers, perhaps due to
structural changes within its largest markets that cause
below-average occupancy and future rent growth potential.
S&P could revise its outlook to stable if:
-- The company deleverages such that adjusted debt to EBITDA
declines to and remains below 13x over the next year, supported by
steady EBITDA generation for office and multifamily asset classes
as economic activity resumes in the largest markets following
vaccine distribution.
-- Its operating performance stabilizes starting in the back half
of 2021 and S&P expects multifamily, office, and retail
fundamentals to remain healthy within the largest markets.
S&P Global Ratings believes there remains high, albeit moderating,
uncertainty about the evolution of the coronavirus pandemic and its
economic effects. Vaccine production is ramping up and rollouts are
gathering pace around the world. Widespread immunization, which
will help pave the way for a return to more normal levels of social
and economic activity, looks to be achievable by most developed
economies by the end of the third quarter. However, some emerging
markets may only be able to achieve widespread immunization by
year-end or later. S&P said, "We use these assumptions about
vaccine timing in assessing the economic and credit implications
associated with the pandemic. As the situation evolves, we will
update our assumptions and estimates accordingly."
FORT DEARBORN: S&P Affirms 'B-' Issuer Credit Rating, Outlook Neg.
------------------------------------------------------------------
S&P Global Ratings affirmed its ratings, including its 'B-' issuer
credit rating on Elk Grove, Ill.-based label producer Fort Dearborn
Holding Co. Inc.
The negative outlook reflects the one-in-three potential for lower
ratings during the next year because the company still has high
debt leverage and has not yet established a track record of
generating positive free cash flow.
The company has yet to consistently operate with lower debt
leverage and generate solid and consistent free cash flow. S&P
estimates the company as a stand-alone entity to have posted a
trailing-12-month adjusted debt-to-EBITDA ratio of less than 8x as
of Dec. 31, 2020. If so, then that would have been the first time
that has happened in the past 10 quarters. It is still a high
leverage ratio, though it represents an improvement from the 9.1x
ratio on Sept. 30, 2020. Fort Dearborn's debt leverage ratio has
been very high for some time, hovering in the 9x-10x range for the
past three years following operational challenges. S&P's figures
exclude a series of add-backs that are permitted under the
company's credit agreement. These add-backs increase Fort
Dearborn's EBITDA by over 20%.
For free cash flow, S&P notes the company's adjusted free cash
flows were negative in 2016, breakeven in 2017, and slightly
negative in 2018 and 2019. They were also quite negative through
the first nine months of 2020 as well.
It is possible its operational issues have abated and are unlikely
to recur, and that the company can realize efficiency gains from
its operational initiatives and acquisition synergies. However,
attaining and maintaining an adjusted debt to EBITDA ratio below
8.5x and sustaining positive free cash flow are key to the rating.
Realizing synergies from the Hammer Packaging acquisition is
important to Fort Dearborn's deleveraging. Fort Dearborn amended
its credit facility to raise $90 million of fungible incremental
first-lien term debt to fund the acquisition. S&P said, "With the
deal, we estimate that the pro forma adjusted debt-to-EBITDA ratio
was 8.0x. It is our assumption that some procurement synergies may
be realized, which could reduce the company's debt leverage to
below 7x by year-end. We note that Fort Dearborn's financial
sponsor Advent International is committing $20 million of
additional equity to support the transaction, which eases the
leverage burden a bit."
Revenue growth was solid in 2020, but profitability can still
improve. Fort Dearborn enjoyed good growth in 2020 as stay-at-home
trends catalyzed demand for various label types. It achieved more
than 23% revenue growth during the year, much of which was organic.
Still, S&P expects that some of this growth was temporary and may
not recur in 2021. As the economy re-opens, a pick-up in commercial
sales may help offset the difficult comparisons. The company
continued to execute its operational improvement initiatives to
reduce labor, material, and procurement costs at lower-performing
plants; however, the anticipated benefits have not been fully
realized yet. Gross margins and adjusted EBITDA margins in the June
and September quarters of 2020 were slightly below those in the
same prior-year periods despite revenues having grown by more than
20%. The company discretionarily delayed closing certain plants to
use all of their available capacity to meet high demand. However,
this affected profitability, as the mix of provisional volumes was
of lower margin. S&P expects margins in the fourth quarter of 2020
to have been sequentially higher, but it remains to be seen whether
the company can consistently operate at higher profitability.
Liquidity is adequate. S&P believes the company has sufficient
liquidity sources to meet its fixed charges. It should have ample
availability on its $75 million revolving facility due July 2023
and we expect cash flow to improve in 2021. Annual debt
amortization of roughly $6 million is manageable, as are working
capital and maintenance-related capital spending needs. The debt
maturity profile is satisfactory, with the revolver, first-lien
term loans, and second-lien debt not due until July 2023, October
2023, and October 2024, respectively.
S&P said, "S&P Global Ratings' negative outlook on Fort Dearborn
Holding Co. Inc. reflects our view that there is a one-in-three
chance that we may lower our ratings within the next year. To this
point, the company has struggled to show consistent and lasting
improvement in profitability and positive free cash flow. A
macroeconomic recovery along with company-specific operational
improvements and acquisition synergies could improve the company's
status in the future but these factors carry some uncertainty and
have not been realized yet. We view an adjusted debt-to-EBITDA
metric of 7.5x-8.5x and an EBITDA-to-interest coverage ratio of
more than 1.4x with adequate liquidity as appropriate for the
ratings.
"We could revise our outlook to stable if it becomes apparent the
company has made progress in reducing its adjusted debt-to-EBITDA
ratio in 2021, keeping it below 8.5x consistently, and is able to
generate consistently positive free cash flow. Its acquisition of
Hammer Packaging Corp. provides modest enhancement to Fort
Dearborn's operational scale, product offering, and ability to
negotiate with suppliers. A recovering macroeconomic environment
and end-market demand for the company's various label types
remaining solid are also relevant factors that underpin this
scenario.
"We could lower our ratings on Fort Dearborn if the anticipated
pace of deleveraging slows or reverses, such that its adjusted
debt-to-EBITDA ratio again exceeds 8.5x. This could occur if
economic and market conditions worsen, operational improvement
plans are not realized or cause disruption, integration challenges
arise, or if changing customer preferences regarding label types
disrupt the company's demand. These conditions could cause its
adjusted EBITDA margins to contract by more than 400 basis points,
revenue to grow by only 15% (instead of growing by over 20% as we
expect in our base-case assumptions), and the rate of cash burn to
accelerate." Liquidity could become constrained, rendering its
capital structure, which comprises mainly covenant-lite term loans,
unsustainable. Financial policy decisions (albeit less likely)
could also result in lower ratings, if large debt-financed
acquisitions or shareholder rewards delay the company's ability to
improve credit measures sufficiently within one year.
FORUM ENERGY: David Baldwin Retires From Board
----------------------------------------------
David Baldwin, a member of Forum Energy Technologies, Inc.'s board
of directors and Nominating, Governance & Sustainability Committee,
notified the Company of his desire to retire from the Board,
effective March 5, 2021. Mr. Baldwin's retirement is not the
result of any disagreement with the Company on any matter relating
to its operations, policies, practices or otherwise.
In connection with Mr. Baldwin's retirement from his position as a
director, the Board decreased its size from eight to seven
directors, effective March 5, 2021.
About Forum Energy
Forum Energy Technologies is a global oilfield products company,
serving the drilling, downhole, subsea, completions and production
sectors of the oil and natural gas industry. The Company's
products include highly engineered capital equipment as well as
products that are consumed in the drilling, well construction,
production and transportation of oil and natural gas. Forum is
headquartered in Houston, TX with manufacturing and distribution
facilities strategically located around the globe. For more
information, please visit www.f-e-t.com
Forum Energy reported a net loss of $96.89 million for the year
ended Dec. 31, 2020, compared to a net loss of $567.06 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$889.93 million in total assets, $483.69 million in total
liabilities, and $406.24 million in total equity.
* * *
As reported by the TCR on Aug. 21, 2020, S&P Global Ratings raised
its issuer credit rating on Houston-based oilfield products and
services provider, Forum Energy Technologies Inc., to 'CCC+' from
'SD' (selective default) after the company completed its debt
exchange for the majority of its 6.25% senior unsecured notes due
2021.
Also in August 2020, Moody's Investors Service upgraded Forum
Energy Technologies, Inc.'s Corporate Family Rating to Caa2 from
Ca. "The upgrade of Forum's ratings reflects the extended debt
maturity profile and resulting improvement in liquidity," Jonathan
Teitel, a Moody's analyst, said.
FRANKLIN AUTO BODY: Pascale Parisien's Bid to Stop Cash Use Denied
------------------------------------------------------------------
Judge Christine M. Gravelle denied secured creditor Pascale
Parisien's motion which sought to prohibit Franklin Auto Body, Inc.
from using cash collateral.
Parisien does not consent to the use of her cash collateral and,
therefore, pursuant to 11 U.S.C. Sec. 363(c)(2), the Debtor cannot
use it without court approval. Parisien argued the Court should
enter an order prohibiting the Debtor from using Parisien's cash
collateral or, alternatively, conditioning it on adequate
protection to Parisien.
Parisien was granted a security interest in all of the Debtor's
assets by Barbella in exchange for an $875,000 loan. As of the
petition date, the debt remains in payment default with an
outstanding amount due under the Note Agreement of not less than
$1,538,247.10, which includes the principal amount of $875,000,
plus simple and default interest due under the Note Agreement from
the date of default to the date of the petition in the amount of
$700,803.35, plus late charges totaling $42,443.75, less $80,000 in
payments made by the Debtor during the term of the Note Agreement.
In addition, Barbella owes Parisien's attorneys' fees and other and
collection-related expenses.
Parisien argued that, at the very least, the Court must order the
Debtor to provide Parisien with adequate protection because the
value of the Debtor and its assets are at risk of significant
depreciation in light of the Debtor's struggling business
operations, Barbella's severe mismanagement of the business, and
the bankruptcy filing.
The Debtor is a corporation that is 100% owned and controlled by
Barbella, who filed for bankruptcy on the same day as the Debtor.
Barbella purchased the Debtor with the loan from Parisien.
Counsel for Secured Creditor, Pascale Parisien:
Lisa S. Bonsall, Esq.
Franklin Barbosa, Jr., Esq.
McCARTER & ENGLISH, LLP
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102
Telephone: (973) 622-4444
Facsimile: (973) 624-7070
Email: lbonsall@mccarter.com
fbarbosa@mccarter.com
About Franklin Auto Body
Franklin Auto Body, Inc. filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No.
21-10126) on Jan. 8, 2021. At the time of the filing, the Debtor
had estimated assets of less than $50,000 and liabilities of
between $1 million and $10 million.
The Law Offices Of Douglas T Tabachnik, PC serves as the Debtor's
counsel.
GARRETT MOTION: Reaches Deal With Shareholders on Plan
------------------------------------------------------
Law360 reports that bankrupt car parts maker Garrett Motion Inc.
told a New York bankruptcy judge Friday, March 5, 2021, that it has
reached a deal with shareholders to increase their share of the
reorganized company in exchange for their support for the Chapter
11 plan.
At a short virtual hearing, counsel for Garrett told U.S.
Bankruptcy Judge Michael Wiles that a week of mediation with the
case's equity holders' committee had produced a deal and that the
company is putting a revised Chapter 11 plan into writing to
present to the court next week.
About Garrett Motion
Based in Switzerland, Garrett Motion Inc. (NYSE: GTX) designs,
manufactures and sells highly engineered turbocharger and
electric-boosting technologies for light and commercial vehicle
original equipment manufacturers ("OEMs") and the global vehicle
and independent aftermarket.
Garrett Motion and its affiliates sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 20-12212) on Sept. 20, 2020.
Garrett disclosed $2,066,000,000 in assets and $4,169,000,000 in
liabilities as of June 30, 2020.
The Debtors tapped SULLIVAN & CROMWELL LLP as counsel; QUINN
EMANUEL URQUHART & SULLIVAN LLP as co-counsel; PERELLA WEINBERG
PARTNERS as investment banker; MORGAN STANLEY & CO. LLC as
investment banker; and ALIXPARTNERS LLP as restructuring advisor.
KURTZMAN CARSON CONSULTANTS LLC is the claims agent.
GARRETT MOTION: Wants April 18 Plan Filing Period Extension
-----------------------------------------------------------
Garrett Motion Inc. and its affiliated Debtors ask the U.S.
Bankruptcy Court for the Southern District of New York to extend
their exclusive periods for filing a Chapter 11 plan and soliciting
acceptances to the plan through April 18, 2021 and June 17, 2021,
respectively.
On January 8, 2021, within the current Exclusive Filing Period, the
Debtors filed:
(i) the Debtors' Joint Plan of Reorganization Under Chapter 11
of the Bankruptcy Code,
(ii) the Disclosure Statement for Debtors' Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, and
(iii) the Debtors' Motion for Entry of an Order (I) Approving
the Disclosure Statement; (II) Establishing a Voting Record Date;
(III) Approving Solicitation Packages and Solicitation Procedures;
(IV) Approving the Forms of Ballots; (V) Establishing Voting and
Tabulation Procedures; (VI) Establishing Notice and Objection
Procedures for the Confirmation of the Plan and (VII) Approving the
Rights Offering Procedures and the Rights Offering Materials.
As a result of the Debtors' filing the Plan within the Exclusive
Filing Period, no party-in-interest may currently file a chapter 11
plan in the Chapter 11 Cases.
On January 22, 2021, the Debtors filed an amended Plan, a revised
Disclosure Statement, and a revised proposed order for the
Solicitation Procedures Motion. On January 27, the Debtors filed a
revised Disclosure Statement. On February 15, the Debtors filed a
further amended Plan, a further revised Disclosure Statement and a
further revised proposed order for the Solicitation Procedures
Motion.
The Debtors' plan is premised on a plan support agreement they
entered into with the COH Group, which consists of a consortium of
stockholders led by Centerbridge Partners, L.P., and funds managed
by Oaktree Capital Management, L.P., Garrett's former parent
Honeywell International Inc., and certain shareholders represented
by the Jones Day law firm. The Plan provides that the Company's
prepetition funded debt will be reduced from about $1.86 billion as
of the Chapter 11 filing to an estimated $1.1 billion at
emergence.
The Plan promises payment in full in cash, plus accrued and unpaid
interest at the non-default contractual rate, plus additional
interest of 1.00% per annum on all outstanding principal and other
overdue amounts under the Debtors’ prepetition credit agreement
from the Petition Date to the Plan effective date for Holders of
Prepetition Credit Agreement Claims.
The Plan also provides payment in full in cash, plus accrued and
unpaid interest in cash at the non-default contractual rate through
the Effective Date plus $15 million in cash to resolve claims
related to the Applicable Premium, for holders of Senior
Subordinated Noteholder Claims.
Other secured and unsecured creditors, except Honeywell, will also
receive full payment in cash.
The COH Group participants will offer to acquire all the stock held
by shareholders that are not parties to the PSA at an equity
valuation of $475 million. Current stockholders will be offered
the option of receiving cash for their shares at a price of $6.25
per share, a 30% premium over the market price as of the close of
trading Jan. 8. Stockholders who do not opt to receive cash will
be entitled to retain their existing shares of common stock and
receive the right to participate in the Series A rights offering on
the same terms as the Plan Sponsors.
Finally, the COH Plan incorporates a global settlement that
resolves Honeywell's claims related to the spin-off for roughly
$1.2 billion. In addition to receiving a $375 million cash payment
at emergence, Honeywell will receive Series B Preferred Stock
payable in installments of $35 million in 2022, and $100 million
annually 2023-2030. Garrett will have the option to prepay the
Series B Preferred Stock in full at any time at a call price
equivalent to $584 million as of the emergence date (representing
the present value of the installments at a 7.25% discount rate).
The Company will also have the option to make a partial payment of
the Series B Preferred Stock, reducing the present value to $400
million, at any time within 18 months of emergence.
In every case the duration of future liabilities to Honeywell will
be reduced from 30 years prior to the Chapter 11 filing to a
maximum of nine years. Garrett projects Honeywell's recovery under
the Plan at $958.7 million, including the $375 million cash, if the
Series B Preferred Stock call option is exercised as of the Plan
effective date.
On February 16, 2021, the Court commenced a hearing to consider,
among other things, the Solicitation Procedures Motion and approval
of the Disclosure Statement. After the Court's remarks, the
Debtors and the other parties agreed to adjourn the hearing in
order to engage in discussions regarding a consensual resolution
with respect to certain objections to the Plan and related motions.
The adjourned hearing was scheduled to resume on March 3, 2021.
"While the Debtors' Plan solicitation and confirmation schedule may
shift slightly as a result of the adjournment, the Debtors
anticipate that the deadline for solicitation of votes on the Plan
will be shortly after the expiration of the current Exclusive
Solicitation Period. Accordingly, the Debtors request a 90-day
extension of the Exclusive Solicitation Period through and
including June 17, 2021 in order to ensure solicitation can be
completed within the exclusive period. Furthermore, out of an
abundance of caution, the Debtors also request a 90-day extension
of the Exclusive Filing Period through and including April 18,
2021, even though the Debtors' filing of their Plan within the
initial Exclusive Filing Period precludes the filing of a plan by
any other party-in-interest. The requested extensions will ensure
that the Debtors have an opportunity to present the Plan to the
Court for consideration, without the prospect of the filing of
competing plans in the middle of the Plan solicitation period that
would risk delay and disruption of the confirmation process," the
Debtors tell the Court.
The Debtors contend that they have made substantial progress in the
Chapter 11 Cases since the Petition Date. The Debtors have, among
other things:
(a) continued to operate their businesses in the ordinary
course without interruption, actually outperforming the Debtors'
cash flow projections and projected EBITDA for postpetition
debtors-in-possession financing;
(b) worked closely with their employees, suppliers, service
providers, customers and counterparties to minimize the impact of
these Chapter 11 Cases on their day-to-day operations, including
the continuous and punctual payment of the Debtors' obligations to
each such party in the ordinary course of business;
(c) obtained postpetition financing and consensual use of cash
collateral on both an interim and final basis;
(d) retained professionals and experts to advise the Debtors
on all aspects of their restructuring;
(e) prepared and filed all of the Debtors' schedules of assets
and liabilities and statements of financial affairs;
(f) filed motions, approved by the Court, to establish bar
dates for the filing of prepetition claims;
(g) conducted a robust marketing and competitive auction
process pursuant to Court-approved bid procedures and filed a Plan
and Disclosure Statement to effectuate the winning transaction;
and
(h) negotiated the terms of the Plan Support Agreement and
Backstop Commitment Agreement with the COH Group, which serve as
the basis of the Plan and includes resolutions to significant
pending litigations.
The Debtors anticipate that, with the requested 90-day extension of
the Exclusive Periods, they will be able to obtain approval of the
Disclosure Statement, solicit votes on the Plan, confirm the Plan,
and emerge from bankruptcy as a healthy and viable company.
The hearing on the Debtors' Motion is scheduled for March 16, 2021
at 11 a.m. The deadline for the filing of objections to the
Debtors' Motion is March 9, 2021 at 4 p.m.
A full-text copy of the Debtors' Motion for an Order Extending the
Exclusive Periods During Which Only the Debtors May File a Chapter
11 Plan and Solicit Acceptances Thereof, dated March 2, 2021, is
available at https://tinyurl.com/33mymwjw from Kurtzman Carson LLC,
the claims agent.
About Garrett Motion Inc.
Based in Switzerland, Garrett Motion Inc. (NYSE: GTX) designs,
manufactures and sells highly engineered turbocharger and
electric-boosting technologies for light and commercial vehicle
original equipment manufacturers ("OEMs") and the global vehicle
and independent aftermarket.
Garrett Motion and its affiliates sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 20-12212) on Sept. 20, 2020.
Garrett disclosed $2,066,000,000 in assets and $4,169,000,000 in
liabilities as of June 30, 2020.
The Debtors tapped SULLIVAN & CROMWELL LLP as counsel; QUINN
EMANUEL URQUHART & SULLIVAN LLP as co-counsel; PERELLA WEINBERG
PARTNERS as investment banker; MORGAN STANLEY & CO. LLC as
investment banker; and ALIXPARTNERS LLP as restructuring advisor.
KURTZMAN CARSON CONSULTANTS LLC is the claims agent.
GAUKHAR K. KUSSAINOVA: Judgment Creditors Buying McLean Property
----------------------------------------------------------------
Gaukhar Kabulovna Kussainova asks the U.S. Bankruptcy Court for the
Eastern District of Virginia to authorize the private sale of the
single-family residence located at 8200 Sparger St., in McLean,
Virginia, to the Judgment Creditors or their designee in exchange
for a credit against the Judgment in the agreed amount of $3
million.
The Debtor was the defendant in prepetition lawsuits commenced by
BTA Bank and by John Milsom and David Standish, Joint Receivers of
the assets of Mukhtar Ablyazov; Denmar Asset Management, Inc., by
and through its Receivers, John Milsom and David Standish; and
Devesta Limited, by and through its Receivers, John Milsom and
David Standish ("Judgment Creditors") in the Circuit Court of
Fairfax County, Virginia in the matters of BTA Bank v. Gaukhar
Kussainova, Case No. CL 2016-8335 consolidated with John Milsom et
al. v. Gaukhar Kussainova, Case Nos. CL 2016-11565 & CL 2017-4261.
On May 27, 2019, the Circuit Court entered an adverse judgment
against the Debtor in the Lawsuit in an amount, with costs awarded
and accruing post-judgment interest, now in excess of $6.6 million.
The Debtor subsequently filed a notice of appeal of the Judgment
to the Virginia Supreme Court in an effort to have it reversed.
On July 19, 2019, the Debtor commenced the bankruotcy case by
filing a voluntary petitition under Chapter 11 of the Bankruptcy
Code, in order to stay the Judgment Creditors' ongoing collection
actions while her appeal was pending. It continues to conduct her
financial affairs as a DIP. No creditors' committee has been
appointed in the case.
The Virginia Supreme Court ultimately declined to accept the
Debtor's appeal and later denied a request for rehearing filed by
the Debtor. The Debtor and the Judgment Creditors commenced
negotiations for a structured dismissal of the case and reached the
Settlement Agreement that is being submitted to the Court for
approval contemporaneously with the Motion.
The Debtor is the sole owner of the Property. A component of the
settlement is that the Debtor will sell the Property to the
Judgment Creditors or their designee in exchange for a credit
against the Judgment in the agreed amount of $3 million, which
reflects the fair market value of the Property as agreed by the
Parties.
The Property is not encumbered by any mortgage debt or other liens,
except for outstanding real estate taxes owed to Fairfax County,
Virginia, in the approximate amount of $29,000, which will be paid
in full at settlement, and the liens in favor of the Judgment
Creditors, which will be released of record at settlement.
The Debtor requests (a) that the Court enters an Order approving
the proposed sale of the Property to the Purchaser and the payment,
at settlement out of the Alexandria Proceeds, of the outstanding
real estate taxes owed to Fairfax County, Virginia and all other
ordinary and appropriate fees and costs that arise in connection
with the closing on the sale of the Property consistent with the
Settlement Agreement and the terms of the proposed sale order filed
with the Motion; (b) that any order approving the sale not be
stayed pursuant to any applicable rule of the Court so as to ensure
an expeditious closing on the proposed sale; and (c) that the Court
grants such other and further relief as it deems just and
appropriate.
Gaukhar Kabulovna Kussainova sought Chapter 11 protection (Bankr.
E.D. Va. Case No. 19-12371) on July 19, 2019. The Debtor tapped
Steven B. Ramsdell, Esq., at Tyler, Bartl & Ramsdell, P.L.C. as
counsel.
GENESIS HEALTHCARE: Wants to Continue Using Cash Collateral
-----------------------------------------------------------
Genesis Healthcare Institute, LLC asks the U.S. Bankruptcy Court
for the Northern District of Illinois, Eastern Division, for
authorization to continue using cash collateral.
The Court had previously authorized the Debtor to use cash
collateral through March 10, 2021.
The Debtor says the IRS holds a perfected lien and security
interest in its bank accounts. The Debtor also says it has
currently no source of funding to pay its ongoing operating
expenses, other than cash on hand in the Bank Accounts and requires
its continued use for a successful reorganization. The Debtor adds
that without the ability to use cash collateral, it will be unable
to continue operating its business enterprise and/or pay necessary
living expenses, and will suffer immediate and irreparable harm.
The Debtor tells the Court the respective interests of the secured
creditor in cash collateral is adequately protected by:
(1) the value of the Debtor's assets;
(2) the Debtor's ongoing operation of its business;
(3) the Debtor's maintenance of hazard and liability insurance
and payments of premiums thereon;
(4) the Debtor's performance of its duties to keep records and
make reports pursuant to Bankruptcy Rule 2015;
(5) the Debtor's satisfaction of the U.S. Trustee's filing and
reporting requirements, and
(6) the Debtor's compliance with all provisions of the Code.
"Since the Petition Date the Debtor's Cash Collateral has been
utilized in operating the business in its ordinary course. The
Debtor's cash balances in the Bank Accounts on the Petition Date
were approximately $26,000. As of January 31, 2021 Operating
Report showed a balance of $26,835. The Debtor estimates that the
cash balance in the Bank Accounts through the end of February 28,
2021, has increased and is currently holding approximately
$39,921.59," the Debtor contends. The Debtor further contends that
it has made adequate protection payments to the IRS for February
and March.
The hearing on the Debtor's Motion is scheduled for March 9, 2021
at 1:00 p.m.
A full-text copy of the Motion, dated March 4, 2021, is available
for free at https://tinyurl.com/ff63dcb8 from PacerMonitor.com.
About Genesis Healthcare Institute LLC
Genesis Healthcare Institute LLC sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. N. D. Ill. Case No. 21-00245)
on January 9, 2021. In the petition signed by Corazon Cordero, as
member-manager, the Debtor estimated between $100,001 to $500,000
in both assets and liabilities.
The case is assigned to Judge Jacqueline Cox.
Konstantine T. Sparagis, Esq., at Law Offices of Konstantine
Sparagis, P.C. represents the Debtor as counsel.
GET CREDIT: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Get Credit Healthy, Inc.
d/b/a GCH
d/b/a GCH360
4581 Weston Road
Suite 162
Weston, FL 33331
Case No.: 21-12201
Business Description: Get Credit Healthy, Inc. --
https://getcredithealthy.com/ -- is an
organization that provides consumers with
the tools and resources they need to
eliminate debt, build credit, and make sound
financial decisions.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Southern District of Florida
Judge: Hon. Scott M. Grossman
Debtor's Counsel: Grace E. Robson, Esq.
MARKOWITZ, RINGEL, TRUSTY & HARTOG, P.A.
101 NE Third Ave., Suite 1210
Fort Lauderdale, FL 33301
Tel: (954) 767-0030
E-mail: grobson@mrthlaw.com
Total Assets: $451,806
Total Liabilities: $1,078,455
The petition was signed by Elizabeth Karwowski, president.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/MTAES2A/Get_Credit_Healthy_Inc__flsbke-21-12201__0001.0.pdf?mcid=tGE4TAMA
GREAT OUTDOORS: S&P Affirms 'B+' Term Loan Rating After Upsizing
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issue-level rating on Great
Outdoors Group's term loan facility after the $405 million
upsizing. The recovery rating on the secured term loan facility due
2028 remains '3'. That said, S&P has revised its weighted average
recovery band to a rounded estimate of 50% from 55% because of
higher levels of secured debt in its simulated default scenario.
The '3' recovery rating indicates its expectation for meaningful
recovery to lenders (50%-70%; rounded estimate: 50%) in the event
of default.
S&P said, "Our issuer credit ratings on Great Outdoors Group
reflects its leading market position in the highly competitive
sporting goods and outdoor recreation market. The company's
profitability has historically benefited from its good penetration
of owned brands and its fast-growing, vertically integrated
recreational boat and adjacent businesses. We view Great Outdoors'
large destination store format, compelling in-store experiences,
and recently enhanced e-commerce platform as positive business
aspects. We also think these dynamics will help sustain credit
metrics, including projected adjusted leverage in the low- to
mid-5x area in fiscal year 2021, modestly greater than our prior
projections because of the increase in debt."
HAUBERT HOMES: Roesch Buying Pleasant Unity Property for $30K
-------------------------------------------------------------
Haubert Homes, Inc., filed with the U.S. Bankruptcy Court for the
Middle District of Pennsylvania a notice of its proposed sale of
the real property located at and known as 225 Ali Drive, Pleasant
Unity (Lot 2), in Westmoreland County, Pennsylvania, to Pamela M.
Roesch for $29,900.
The sale will be free and clear of liens, claims, encumbrances and
other interests. It is subject to Court approval.
The Debtor believes the sale is for a proper amount and is in its
estate's best interests.
It proposes to pay the following expenses of the sale from the sale
proceeds:
a. Any notarization or incidental filing charges required to
be paid by the Debtor as the Seller.
b. All other costs and charges apportioned to the Debtor as
the Seller;
c. All costs associated with the preparation of the
conveyance instruments and normal services with respect to closing,
including payment of a total of $4,000.00 on account of legal fees
and expenses owed or to be owed to Cunningham, Chernicoff &
Warshawsky, P.C. and to Fox Rothschild, LLP, and other
professionals, in connection with implementation of the sale, the
presentation and pursuit of this Motion, consummation of closing
and otherwise in connection with this case. Cunningham, Chernicoff
& Warshawsky, P.C. and Fox Rothschild, LLP will split this fee
equally.
d. Past due real estate taxes and present real estate taxes
pro rated to the date of closing on the sale.
e. Any municipal charges and liens, pro rated, to the date of
closing on the sale.
f. As it is a sale under a Confirmed Plan of Reorganization,
no transfer taxes are be due and owing.
g. A commission at the rate of 6% payable to Re/Max Select
Realty. The Broker may not represent any party other than the
Debtor, except for ministerial actions to be performed by the
Broker which operate for the benefit of the Debtor and in order to
effectuate closing and in connection with the sale.
Subsequent to the payment of costs of sale as set forth, the net
proceeds will be utilized by the Debtor to pay administrative costs
and thereafter to be held to fund a payment to priority and
unsecured creditors under the Plan. Any payment to unsecured
creditors will be upon further Order of the Court or as set forth
in a Plan of Reorganization. It is believed that the net proceeds
will be approximately $195,000.
A hearing will be held on the Sale Motion on March 19, 2021, at
10:00 a.m., via Zoom. The Objection Deadline is March 17, 2021.
About Haubert Homes
Haubert Homes, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Pa. Case No. 15-03340) on Aug. 3,
2015. The petition was signed by Don E. Haubert, Sr., president.
The case is assigned to Judge Mary D. France. Robert E.
Chernicoff, Esq., at Cunningham Chernicoff & Warshawsky, P.C.,
serves as bankruptcy counsel.
At the time of the filing, the Debtor estimated its assets and
liabilities at $1 million to $10 million.
The Official Committee of Unsecured Creditors of Haubert Homes,
Inc., was appointed on Sept. 11, 2015. The Committee hired Fox
Rothschild LLP, as counsel, and Alan L. Frank Law Associates,
P.C.,
as special counsel.
HENRY ANESTHESIA: Gets Cash Collateral Access Thru March 25
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
Atlanta Division, has authorized Henry Anesthesia Associates, LLC
to use cash collateral on an interim basis through March 25, 2021.
The Debtor, SMS Financial Strategic Investments LLC, Georgia
Department of Labor, Georgia Departmet of Revenue, and the Internal
Revenue Service have conferred regarding the Cash Collateral Motion
and the Interim Period and agreed to extend the Interim Period
through and including March 25 in accordance with the terms of the
previous Interim Cash Collateral Orders issued by the court.
The court says all terms and conditions of the Interim Cash
Collateral Orders will remain in full force and effect except as
modified by the Fifth Interim Order.
A hearing on the continuation of the terms of the Fifth Interim
Order and continued use of cash collateral is scheduled for March
25 at 10:15 a.m.
A copy of the Order is available at https://bit.ly/3v0go7e from
PacerMonitor.com.
About Henry Anesthesia Associates, LLC
Henry Anesthesia Associates LLC is a Stockbridge, Ga.-based
for-profit limited liability company, which provides anesthesiology
services.
Henry Anesthesia Associates filed a Chapter 11 petition (Bankr.
N.D. Ga. Case No. 20-68477) on July 28, 2020. It first sought
bankruptcy protection (Bankr. N.D. Ga. Case No. 19-64159) on Sept.
6, 2019.
In the petition signed by Kenneth Mims, M.D., manager, the Debtor
disclosed assets of up to $10 million in both assets and
liabilities.
Judge Lisa Ritchey Craig presides over the case.
The Debtor tapped Jones & Walden, LLC as its bankruptcy counsel and
Moorman and Pieschel, LLC as its corporate counsel.
SMS Financial Strategic Investments, LLC is represented by:
Beth E. Rogers, Esq.
100 Peachtree Street, Ste. 1950
Atlanta, Georgia 30303
Tel. No: 770-685-6320
brogers@berlawoffice.com
HERTZ GLOBAL: Unsecured Lenders Mull Alternate Plan, IPO
--------------------------------------------------------
The New York Post, citing its sources, reports that a group of
unsecured lenders that would help Hertz out of bankruptcy,
including JPMorgan, Fidelity and Pentwater Capital, are considering
halting their investments in favor of a plan to take the company
public.
As reported in the TCR, Hertz on Tuesday filed a plan to exit
bankruptcy where new investors, including Knighthead Capital
Management LLC, Certares Opportunities LLC and Larry Fink's
Blackrock will take control of the company in exchange for an
investment of $2.3 billion. The group would also backstop a rights
offering for up to approximately $1.9 billion of common equity in
reorganized Hertz, which will be made available to unsecured
creditors as part of the Plan. Reorganized Hertz would be
privately held when it exits bankruptcy.
But, according to The New York Post, Hertz's unsecured lenders, a
group that includes JPMorgan, Fidelity and hedge fund Pentwater
Capital, are considering slamming the brakes on that plan in favor
of their own proposal to pull the company out of bankruptcy via an
initial public offering.
According to Bloomberg, the unsecured lenders want to convert their
holdings in the bankrupt company into shares of the reorganized
company, which could be traded publicly.
The IPO plan, which has been submitted to Hertz but not yet to the
bankruptcy court, calls for the unsecured lenders to convert their
debt to stock and then "immediately list" the company on an
exchange, a source close to the lenders told The Post.
"I think the process to sell the company has really just begun,"
this person said. "Our group controls the vote. Anyone wanting to
buy Hertz has to kiss our ring."
Indeed, the unsecured lenders, a group that also includes Bank of
America and Marathon Asset Management and AllianceBernstein, own
more than 60 percent of the company's $4.6 billion in corporate
debt, which sources say could make it hard for the Delaware
bankruptcy judge to approve a sale over their objections.
IPO Plan
The lenders plan to push their IPO plan to the judge unless the
Knighthead deal is sweetened. It currently values Hertz's
unsecured loans at around 70 cents on the dollar while making
first- and second-lien lenders whole.
Plans for a post-bankruptcy Hertz IPO come as small investors
clamor to buy small cap stocks popular on trading forums like
Reddit's WallStreetBets, or so-called "meme stocks." In fact, Hertz
was one of the first stocks to benefit from chatter on Reddit after
its sales got crushed by pandemic lockdowns -- resulting in a
buying frenzy that sent shares of the bankrupt company as high as
$5.53 a share last year.
Current shareholders will be wiped out regardless of which plan
wins the day, an outcome that is reflected in Hertz's stock price
of 87 cents a share.
The new investors looking to buy Hertz have been calling junior
lenders individually in an effort to come to an agreement, sources
said. But skeptical lenders have only to point to rival car maker
Avis, which has doubled in price since October amid growing
expectations that travel will rebound as people get vaccinated
against COVID-19, sources added.
On Wednesday, the Hertz rival closed at a six-year high of $60.85 a
share.
"The price looks cheap relative to Avis," agreed Jefferies analyst
Hamzah Mazari of the Knighthead deal, which values Hertz at just
6.5 times its pre-pandemic earnings.
Avis, by contrast, is trading at 8.6 times its pre-COVID earnings.
And Hertz on Tuesday estimated that revenue will rise from nearly
$6.1 billion this year to $8.6 billion in 2023 as more people get
vaccinated.
"They are trying to steal the company," one junior lender source
griped to The Post. "This seems value destructive. Imagine if a
public company took an offer 14 percent below the trading price?"
About Hertz Global Holdings
Hertz Corp. and its subsidiaries -- http://www.hertz.com/--
operate a worldwide vehicle rental business under the Hertz,
Dollar, and Thrifty brands, with car rental locations in North
America, Europe, Latin America, Africa, Asia, Australia, the
Caribbean, the Middle East, and New Zealand. The Company also
operates a vehicle leasing and fleet management solutions
business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court
(Bankr. D. Del. Case No. 20-11218).
The Hon. Mary F. Walrath is the presiding judge.
White & Case LLP is serving as legal advisor, Moelis & Co. is
serving as investment banker, and FTI Consulting is serving as
financial advisor. Richards, Layton & Finger, P.A., is the local
counsel.
Prime Clerk LLC is the claims agent, maintaining the page
https://restructuring.primeclerk.com/hertz
HITESHRI PATEL: Benjamin Smith Buying Hillboro Property for $435K
-----------------------------------------------------------------
Hiteshri Patel asks the U.S. Bankruptcy Court for the District of
New Jersey to authorize the sale of the real property located at
10535 NE Park Ridge Way, in Hillsboro, Oregon, to Benjamin Smith
$435,000.
A hearing on the Motion is set for March 30, 2021, at 10:00 a.m.
Objections, if any, must be filed at least seven days prior to the
hearing date.
The Debtor holds an interest in the Property. In June 2015, the
Property was purchased for $286,995. The Property is listed on the
Debtor's Petition. The Property was purchased for the purpose of
formation of a partnership, but the Deed remained in the Debtor's
name as of the filing of the Petition.
West Valley National Bank holds a secured mortgage against the
Property in the amount of $591,638.782 (Claims Register at Proof of
Claim No. 5).
On Feb. 8, 2021, the Property was listed for $425,000, pursuant to
the MLS Listing.
On Feb. 25, 2021, an Application for Retention of Professional Tim
Saeland as Realtor was filed on behalf of the Debtor.
On Jan. 28, 2021, a Second Modified Chapter 11 Plan was filed on
behalf of the Debtor proposing sale of the Property to partially
satisfy Claim 5, and reflecting that net proceeds from the sale
will at time of closing be distributed to West Valley National Bank
in a sum of no less than $375,000.
The Debtor desires to sell the Property to the Proposed Purchaser
pursuant to their Contract of Sale for the purchase price of
$435,000. It respectfully submits that the proposed purchase price
for the Property is reasonable as demonstrated by the Contract and
the MLS Listing.
The Debtor proposes to convey the Property to the Proposed
Purchaser, free and clear of all liens, claims and encumbrances, if
any, with valid liens, claims and encumbrances, if any, to attach
to the proceeds of sale.
Hiteshri Patel sought Chapter 11 protection (Bankr. D.N.J. Case No.
20-17880) on June 25, 2020. The Debtor tapped Melinda
Middlebrooks, Esq., at Middlebrooks Shapiro, P.C. as counsel.
HOME COMBERATION: Hires Analytic Financial as Financial Advisor
---------------------------------------------------------------
Home Comberation, LLC received approval from the U.S. Bankruptcy
Court for the Eastern District of New York to employ Analytic
Financial Group, LLC as its financial advisor.
The firm will provide these services:
a. gather and verify all pertinent information required to
compile and prepare monthly operating reports;
b. prepare monthly operating reports for the Debtor;
c. prepare any necessary reports pursuant to Rule 2015.3 of the
Federal Rules of Bankruptcy Procedure regarding non-debtor
businesses;
d. prepare budgets and financial disclosures;
e. assist the Debtor in administering its Chapter 11 case; and
f. render such additional services as the Debtor may require in
its case.
The firm will be paid based upon its normal and usual hourly
billing rates and will be reimbursed for out-of-pocket expenses
incurred.
The retainer fee is $5,000.
Scott Miller, a partner at Analytic Financial Group, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Scott W. Miller
Analytic Financial Group, LLC
816 Hillsboro Dr. 13
Silver Spring, MD 20902
Tel: (301) 602-9258
About Home Comberation
Home Comberation LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
20-44441) on Dec. 30, 2020. 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 Elizabeth S. Stong oversees the case.
Shiryak, Bowman, Anderson, Gill & Kadochnikov, LLP and Analytic
Financial Group, LLC serve as the Debtors' legal counsel and
financial advisor, respectively.
HUDSON RIVER: S&P Assigns 'BB-' Rating on Senior Secured Term Loan
-------------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue rating to Hudson River
Trading LLC's new senior secured term loan B due 2028. This
refinances the firm's existing $1.225 billion in term loans and
adds incremental debt.
The company will use the additional proceeds for general corporate
purposes and to increase trading capital for its market-making
business. S&P said, "The issue has no impact on the issuer credit
rating on Hudson River because we see it as opportunistic. We
expect the firm to deploy the additional trading capital prudently
over time, which is critical to maintaining its risk-adjusted
capital ratio above 7% to support current ratings."
IMPRESA HOLDINGS: Unsecureds to Split $250K in Liquidating Plan
---------------------------------------------------------------
Debtors Impresa Holdings Acquisition Corporation, et al.,
prepetition lender
Twin Haven Special Opportunities IV, L.P., and the Official
Committee of Unsecured Creditors filed a combined Disclosure
Statement and Plan for the liquidation of the Debtors' remaining
assets and distribution of the proceeds of the estates' assets to
the holders of allowed claims.
The Debtors filed the Chapter 11 cases in order to pursue a sale of
all or substantially all of their assets with the goal of
maximizing the recovery for their estates and creditors. Prior to
the Petition Date, the Debtors and the Prepetition Lender entered
into a "stalking horse" asset purchase agreement, whereby the
Prepetition Lender agreed to credit bid $10 million of its secured
prepetition debt in exchange for substantially all of the Debtors'
assets. Using the Prepetition Lender's bid as a floor, the Debtors
and Duff & Phelps marketed the Debtors' assets, seeking to solicit
and secure the highest and best offers to maximize recoveries for
the stakeholders of the Estates. To that end, on the Petition
Date, the Debtors filed the Sale Motion.
Under the Plan, Class 4 General Unsecured Claims will each receive
its pro rata share of the GUC Recovery; provided, however, that the
Prepetition Lender Deficiency Claim shall not receive any
distribution on the GUC Recovery and, as part of the Settlement
Term Sheet, the Prepetition Lender shall not vote its Prepetition
Lender Deficiency Claim. The recovery percentage of the creditors
is still unknown. Class 4 is impaired.
"GUC Recovery" means $250,000 Cash to be funded on the Effective
Date, as set forth in the Debtors' Motion for Entry of an Order
Approving the Settlement Term Sheet between the Debtors, Twin Haven
Special Opportunities Fund IV, L.P. and the Official Committee of
Unsecured Creditors.
Class 5 Class Action Claims totaling $5,617,060 are impaired. Each
member of the Class Action Lawsuit who does not opt out of the CAP
Recovery pursuant to Class Notice shall receive a distribution
pursuant to the terms of the Class Action Settlement.
Counsel to the Debtors:
Robert J. Dehney
Matthew B. Harvey
Paige N. Topper
Taylor M. Haga
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 N. Market Street, 16th Floor
Wilmington, Delaware 19801
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
E-mail: rdehney@morrisnichols.com
mharvey@morrisnichols.com
ptopper@morrisnichols.com
thaga@morrisnichols.com
A copy of the Combined Disclosure Statement and Plan for the
Liquidation is available at https://bit.ly/3e9r3Xh from Stretto,
the claims agent.
About Impresa Holdings
Impresa Holdings designs, manufactures, and supplies precision
sheet metal parts, CNC-machined components, and assemblies for
commercial jets, regional and business aircraft, military
aircraft,
and civil/military helicopters. The company's services include
sheet metal fabrication, hydroform pressing, brake.
Impresa began operating in 1973 as Venture Aircraft and expanded
through a 2012 acquisition of Swift-Cor Aerospace. It then changed
its name Impresa Aerospace.
Operating from a production facility in Gardena, California,
Impresa provides machined parts, fabricated components, assembled
parts and tooling for the aerospace and defense industries. In
addition to Boeing, the debtor's customers include Spirit
AeroSystems, Raytheon, Northrop Grumman, Cessna, Lockheed Martin
and Gulfstream. It has provided parts and components for Boeing's
major airframes, including the 787, 777 and 747 as well as the
Airbus A380 and Gulfstream's G550 and G650 planes.
On Sept. 24, 2020, Impresa Holdings Acquisition Corp. and its
affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case
No. 20-12399). At the time of the filing, Impresa Holdings had
estimated assets of less than $50,000 and liabilities of between
$10 million and $50 million.
Robert J. Dehney, Matthew B. Harvey, Paige N. Topper and Taylor M.
Haga of Morris Nichols Arsht & Tunnell LLP, serve as counsel to
Impresa. Duff & Phelps Securities, LLC, is the investment banker.
Stretto is the claims agent.
INFINERA CORP: Incurs $206.7 Million Net Loss in 2020
-----------------------------------------------------
Infinera Corporation filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$206.72 million on $1.35 billion of total revenue for the year
ended Dec. 26, 2020, compared to a net loss of $386.62 million on
$1.29 billion of total revenue for the year ended Dec. 28, 2019.
As of Dec. 26, 2020, the Company had $1.73 billion in total assets,
$633.88 million in total current liabilities, $445.99 million in
net long-term debt, $1.38 million in long-term financing lease
obligation, $21.34 million in non-current accrued warranty, $29.81
million in non-current deferred revenue, $4.16 million in deferred
tax liability, $76.13 million in operating lease liabilities,
$93.51 million in other long-term liabilities, and $426.28 million
in total stockholders' equity.
"We have implemented measures to preserve cash and enhance
liquidity, including suspending salary increases and bonuses,
reducing salaries paid to a portion of our workforce, instituting a
broad-based hiring freeze, significantly reducing business travel,
reducing capital expenditures, and delaying or eliminating
discretionary spending. We are also focused on managing our
working capital needs, maintaining as much flexibility as possible
around timing of taking and paying for inventory and manufacturing
our products while managing potential changes or delays in
installations," Infinera said.
"While we believe we have enough cash to operate our business for
the next 12 months, if the impact of the COVID-19 pandemic to our
business and financial position is more extensive than expected, we
may need additional capital to enhance liquidity and working
capital. We have historically been successful in our ability to
secure other sources of financing, such as accessing capital
markets, and implementing other cost reduction initiatives such as
restructuring, delaying or eliminating discretionary spending to
satisfy our liquidity needs. However, our access to these sources
of capital could be materially and adversely impacted and we may
not be able to receive terms as favorable as we have historically
received. Capital markets have been volatile and there is no
assurance that we would have access to capital markets at a
reasonable cost, or at all, at times when capital is needed. In
addition, some of our existing debt has restrictive covenants that
may limit our ability to raise new debt, which would limit our
ability to access liquidity by those means without obtaining the
consent of our lenders," Infinera further said.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1138639/000113863921000026/infn-20201226.htm
About About Infinera
Headquartered in Sunnyvale, Calif., Infinera -- www.infinera.com --
is a global supplier of innovative networking solutions that enable
carriers, cloud operators, governments, and enterprises to scale
network bandwidth, accelerate service innovation, and automate
network operations. The Infinera end-to-end packet-optical
portfolio delivers industry-leading economics and performance in
long-haul, submarine, data center interconnect, and metro
transport
applications.
INVENERGY THERMAL: S&P Places 'BB' Term Loan Rating on Watch Neg.
-----------------------------------------------------------------
S&P Global Ratings placed its 'BB' rating on Invenergy Thermal
Operating I LLC's (ITOI) term loan B and revolver bank loan ratings
on CreditWatch with negative implications.
Invenergy owns a 2.68-gigawatt (GW; net capacity) portfolio of
seven operating gas-fired electric power plants, each in a
different North American Electric Reliability Corp. (NERC) region.
The winter storm in Texas last week was unprecedented. In advance
of management confirmation as to whether Ector has a liability, S&P
is presuming that it may have been part of the estimated 80 GW of
power plant capacity that was offline last week. Soaring demand
forced ERCOT to institute rolling blackouts, and market forces
priced scare generation at real-time power prices that peaked at
$9,000/MWh within ERCOT on Feb. 14 and averaged around $7,000/MWH
around the clock.
Ector is in a hedge--a heat rate call option or HRCO--which while
generally a way to mitigate price exposure for generators, can
produce a perfect storm of rapid deterioration in credit quality if
market prices spike and the generation unit is unable to perform.
S&P said, "While we do not know if Ector was indeed offline, and
for how long, we think it is reasonable to assume it may have been.
The epic storm caused roughly 45% of all Texas power plant capacity
to be unable to generate. The market and its participants are in
the early stages in gauging liabilities, but we expect there could
be credit fallout for some generators."
Given that Texas is normally a summer peaking market, it is common
for power plants in the state to be down for maintenance in winter
months. In a worst-case scenario, assuming the plant was offline
for several days, Ector's liability could be in the low hundreds of
millions. This calculation reflects being offline for at least
three days with an obligation of at least 300 MWs and prices at the
$9,000/MWh cap.
S&P said, "We expect in the coming days to get clarification from
management as to whether last week's events indeed create a
liability for Ector. While not apparently a direct liability of
ITOI, it could still impact the cash flows to ITOI. ITOI's lenders
(both for the TLB and credit facility) have a first-priority lien
on the assets of Ector, and the HRCO counterparty has a subordinate
claim beyond the credit support obligation in the swap agreement
(in the single millions of dollars), which is backed by a letter of
credit. If there is an Ector obligation under the hedging contract,
we will assess whether there could be any consequence for the term
loan B lenders. Absent any regulatory resolution that reprices the
extraordinary market-clearing prices realized or any
to-be-determined claim Ector would have under force majeure, we
assume the HRCO counterparty will pursue any liability Ector has.
"Ector has no debt outstanding at the asset level. In our forecast,
Ector contributes roughly 5% of ITOI's cash flows. ITOI's total
term loan B debt outstanding is $366 million, and the credit
facility is $70 million.
"The CreditWatch listing reflects the potential for Ector to have
been offline and thus exposed to the wildly high market prices seen
in ERCOT due to a winter storm the week of Feb. 14. While we have
yet to confirm Ector and thus ITOI's exposure, we believe the
prices witnessed during the disruption create significant credit
risks for any counterparty that was short in the market at the time
the storm hit. We will lower the ITOI ratings if Ector's loss has
the potential to extend to ITOI. Because the asset contributes only
about 5% of consolidated cash flows to the portfolio, if any
liabilities are contained to Ector, we might conclude that ITOI
would be able to support the loss of the asset to the group."
JOHN PICCIRILLI: Gets Cash Collateral Access on a Continuing Basis
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of New York has
authorized John Piccirilli, Inc., LLC to use cash collateral on a
continuing basis in accordance with the weekly budget and to pay
pre-petition employee compensation.
The court finds the use of cash collateral is in the best interest
of the Debtor and its creditors, estate, and other parties in
interest.
The Debtor is authorized to use cash collateral to satisfy payroll
and other operational costs and expenses arising in connection with
the administration of Debtor's estate.
A copy of the Order is available at https://bit.ly/3c6Da4O from
PacerMonitor.com.
About John Piccirilli Inc.
John Piccirilli Inc. operates a plumbing, heating and air
conditioning business in Conklin, New York. It was incorporated on
June 14, 2005. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D.N.Y. Case No. 21-60057) on January
28, 2021.
In the petition signed by John Piccirilli, the president, the
Debtor disclosed up to $500,000 in assets and up to $1 million in
liabilities.
Judge Diane Davis oversees the case.
Peter A. Orville, Esq., at Orville & McDonald Law, P.C. serves as
the Debtor's counsel.
JSAA REALTY: Plan Says Enterprises to Hike Rental by $1K Per Year
-----------------------------------------------------------------
JSAA Realty, LLC, filed an Amended Plan of Reorganization and an
explanatory Disclosure Statement on Feb. 26, 2021.
The Debtor is the owner of a piece of real property located at
11505 Anaheim Street, Dallas, Texas ("Property"). Prior to the
Chapter 11 filing, the Debtor informally rented the Property to
Enterprises. The rental payment was the monthly payment to
Sunshine as well as all expenses for operation. At the time of the
bankruptcy the rental was $6,000 per month. A new lease will be
executed in connection with confirmation that will provide rent of
$6,000 per month until December 2021. Thereafter, the rent
increases by $1,000 per year for 2022, 2023, 2024 and 2025. The
rent caps at $10,000 per month from 2025 until the end of the Lease
term. Enterprises is responsible for property taxes and insurance
on the Property. Enterprise continues to expend funds in
completing the renovations. All of the major renovations have been
completed and green tagged by the City of Dallas. As a result of
the pandemic the renovations has slowed because the nightclub would
not be allowed to open at this time.
Under the Debtor's Plan, the Debtor will pay its creditors from the
rental received on the Property. Enterprises along with the Debtor
have been involved in renovating the Property repetition. The
Renovations will continue post-petition. It is anticipated that
the completed renovations will allow the Property to be used as a
nightclub. In 2019 Enterprises had gross revenues of $175,534. The
property was under construction during 2019 and was not fully
operational. In 2020 Enterprises had gross revenues of $162,325.
Enterprises was effected by the pandemic which closed the location
for more than a month.
Substantial renovations have been completed since the October 2018
appraisal. At the current time, all major structural renovations
have been complete. The Debtor estimates that the entire project is
80% complete. The remaining areas of completion consist of
flooring, both carpet and tile, all counter-tops and installation
of equipment for bar areas, fixtures in all bathrooms, installation
of kitchen equipment, speaker system installation and wiring, and
completion of fire alarm and sprinkler systems. The debtor believes
the total cost for completion will not exceed $200,000. Based upon
the current funds available by Enterprises, it is anticipated the
nightclub will open by the end of 2022.
Like in the prior iteration of the Plan, Unsecured Creditors will
receive 100% of their allowed claims. All creditors holding
allowed unsecured claims will be paid from the operations of the
company.
Class 7 Claimants (Current Ownership) is not impaired under the
Plan and shall be satisfied by retaining their interest in the
Debtor. Ownership shall remain 50% Arpit Joshi and 50% Andy
Sinkular.
The Debtor will continue to rent the Property. The rental proceeds
will be used to pay the amount necessary to pay the Allowed Claims
of Class 2 through 6. The Plan is premised on the Debtor's
continued rental of the Property. Based upon the current rental
income, the Debtor believes the Plan to be feasible.
A full-text copy of the Amended Plan of Reorganization dated Feb.
26, 2021, is available at https://bit.ly/2MPT2QA from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Eric A. Liepins
ERIC A. LIEPINS, P.C.
12770 Coit Road, Suite 1100
Dallas, Texas 75251
Tel: (972) 991-5591
Fax: (972) 991-5788
About JSAA Realty
JSAA Realty, LLC, is a single asset real estate debtor (as defined
in 11 U.S.C. Section 101(51B)). It is the owner of a fee simple
title to a property located at 11505 Anaheim Drive, in Dallas,
Texas, which is valued at $2.2 million.
JSAA Realty filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-32504) on
Oct. 2, 2020. Arpit Joshi, the managing member, signed the
petition. At the time of the filing, the Debtor disclosed $2.2
million in assets and $651,046 in liabilities. Eric A. Liepins,
P.C., serves as the Debtor's legal counsel.
JVA OPERATING: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: JVA Operating Company, Inc.
P.O. Box 52608
Midland, TX 79710
Business Description: JVA Operating Company, Inc. is part of the
oil & gas exploration & production Industry.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 21-70028
Debtor's Counsel: Michael McConnell, Esq.
Nancy Ribaudo, Esq.
Katherine T. Hopkins, Esq.
KELLY HART & HALLMAN LLP
201 Main Street, Suite 2500
Fort Worth, TX 76102
Tel: (817) 332-2500
Fax: (817) 878-9280
E-mail: michael.mcconnell@kellyhart.com
nancy.ribaudo@kellyhart.com
katherine.hopkins@kellyhart.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jerry V. Atkinson, president.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/QXRDUIY/JVA_Operating_Company_Inc__txwbke-21-70028__0001.0.pdf?mcid=tGE4TAMA
K3D PROPERTY: Unsecureds Will Get 20% in 72 Months Under Plan
-------------------------------------------------------------
K3D Property Services, LLC, filed with the U.S. Bankruptcy Court
for the Eastern District of Tennessee, Southern Division, a Chapter
11 Plan of Reorganization and a Disclosure Statement on Feb. 26,
2021.
Insiders of the Debtor are Kenneth Morris and Kenneth Morris who
each hold a 50% interest in K3D. Denia Morris, wife of Kenneth
Morris, is also an insider. Affiliates of the Debtor include Scenic
City Investments, LLC and Morris Holdings, LLC. Kenneth and Kurtis
Morris will continue to operate the Debtor's business
post-confirmation and they will acquire the equity in the
reorganized debtor as well. Post-confirmation, K3D will continue
to maintain its internal bookkeeping and will continue to use an
outside accountant firm.
Secured Creditors are claims secured by estate property. Terms
applicable to all classes of Secured Claims unless stated
otherwise:
* The payment amounts proposed to holders of Allowed Secured
Claims include the estimated interest rate stated for each Class;
* The payments proposed to the holders of these Claims shall
be in full satisfaction of their claims against the Debtor;
* If a holder of an Allowed Secured Claim has a properly
perfected Lien, then such holder shall retain its Lien(s) until
paid in full as provided for in the Plan; and
* Upon payment of all monies required by the Plan to be paid
on account of an Allowed Secured Claim, the holder of such Claim
must immediately record a release of such holder's security
interest(s) in the Debtor's assets and that of any other person or
entity that may be liable for the Allowed Secured Claim.
General unsecured creditors not otherwise classified are classified
in Class 8 and will receive a distribution of 20% of their allowed
claim, to be distributed in quarterly payments, over a 72 months
period starting from month 1. At month 44, the Debtor's principals
will pay $100,000 in a lump sum to members of the unsecured
creditor class. Total estimated payment to Class 8 is $671,395.
Class 9 consists of Small General Unsecured Claims or de minimis
claims in the total amount of $40,884. Members of this class will
be paid 25% of their claims at month 1 of the Plan - the Effective
Date. Other creditors whose claims exceed $2,500 but who timely
notify Debtor's counsel of their intent to be a member of this
Class and who timely vote to accept the Plan, agree to reduce their
claim amount to $2,500 may become members of this class. In that
event, their claim will be paid at 25% of $2,500.
Kenneth Morris 50% Kurtis Morris 50% are equity interest holders.
If the General Unsecured Classes accept the Plan, the equity
Interests will be treated as follows: They will contribute new
value of $100,000 if there is no equity auction or in the amount of
the high bid at an auction to the Plan prior to Month 1 and, in
exchange, shall receive Reorganized Debtor's Equity Interests
Debtor.
If on the other hand, holders of General Unsecured Claims, Class 8,
vote to reject the Plan and the Court determines that as a result
of such rejection, the treatment here does not comply with the
absolute priority rule, then the Member Interests in the Debtor
will be cancelled and the Reorganized Debtor's Interests will be
sold at an Equity Auction.
Payments and distributions under the Plan will be funded by the
following:
* Funding on the Effective Date will be funded from the cash
on hand from operations and either by the new monies contributed by
Kenneth Morris and Kurtis Morris or whomever the equity holders
are.
* Funding after the Effective Date. These funds will be
obtained from: (a) any and all remaining cash retained by the
Reorganized Debtor after the Effective Date; (b) Cash generated
from the post-Effective Date operations of the reorganized Debtor;
and (c) contributions which the Reorganized Debtor obtains from its
equity holder(s).
A full-text copy of the Initial Disclosure Statement dated Feb. 26,
2021, is available at https://bit.ly/3c5Kde5 from PacerMonitor.com
at no charge.
Attorneys for Debtor:
THE FOX LAW CORPORATION, INC.
Steven R. Fox, CA SBN 138808
17835 Ventura Blvd., Suite 306
Encino, CA 91316
Tel: (818) 774-3545
E-mail: srfox@foxlaw.com
- and –
FARINASH & STOFAN
Amanda M. Stofan, SBN 024734
100 West M L King Blvd, Ste 816
Chattanooga, TN 37402
Tel: (423) 805-3100
E-mail: amanda@8053100.com
About K3D Property Services
K3D Property Services, LLC offers a variety of services, including
home remodeling, basement finishing, drywall installation and
finishing, tile installation, carpet installation, wall framing,
bathroom remodeling, kitchen remodeling, deck installation and
maintenance, interior and exterior painting, commercial painting,
wallpaper and popcorn ceiling removal, deck staining, concrete
floor coatings, and metal roof painting.
K3D Property Services filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tenn. Case No.
19-15361) on Dec. 23, 2019. The petition was signed by Kenneth
Morris, its managing member. At the time of the filing, the Debtor
had estimated $1 million to $10 million in both assets and
liabilities.
Judge Shelley D. Rucker oversees the case.
The Debtor tapped Farinash & Stofan and The Fox Law Corporation,
Inc. as bankruptcy counsel; The Law Offices of Stephan Wright PLLC
as special counsel; Lucove, Say & Co. as accountant; and Pointe
Commercial Real Estate, LLC as real estate broker.
KADMON HOLDINGS: Posts $111 Million Net Loss in 2020
----------------------------------------------------
Kadmon Holdings, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss
attributable to common stockholders of $111.03 million on $8.29
million of total revenue for the year ended Dec. 31, 2020, compared
to a net loss attributable to common stockholders of $63.43 million
on $5.09 million of total revenue for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $162.71 million in total
assets, $46.68 million in total liabilities, and $116.02 million in
total stockholders' equity.
At Dec. 31, 2020, the Company's cash, cash equivalents and
marketable debt securities totaled $123.9 million, compared to
$139.6 million at Dec. 31, 2019. On Feb. 16, 2021, the Company
issued $240.0 million aggregate principal amount of 3.625%
convertible senior notes due 2027, in a private offering conducted
in accordance with Rule 144A under the Securities Act of 1933,
which included the full exercise of the $40 million over-allotment
option. The initial conversion price of the Notes is equivalent to
$6.96 per share, a premium of approximately 30% over the $5.35 per
share closing price of Kadmon's common stock on Feb. 10, 2021. The
Company entered into capped call transactions to raise the
conversion price to $10.70 per share, a premium of 100% over the
$5.35 per share closing price of Kadmon's common stock on Feb. 10,
2021. The Company received net proceeds from the offering of
approximately $200.0 million, after deducting the initial
purchasers' discount and the cost of the capped call transactions.
In addition, as of Dec. 31, 2020, the Company held approximately
0.7 million ordinary shares of MeiraGTx Holdings plc (MeiraGTx), a
clinical-stage gene therapy company, as compared to approximately
2.1 million ordinary shares held as of Dec. 31, 2019. During
fiscal year ended Dec. 31, 2020, the Company entered into multiple
transactions pursuant to which it sold approximately 1.4 million
ordinary shares of MeiraGTx for total net proceeds of approximately
$19.8 million.
COVID-19
"The global COVID-19 pandemic may materially affect the Company's
results of operations and financial position. While the economic
impact of the COVID-19 pandemic may be difficult to assess or
predict, this widespread pandemic has resulted in a significant
disruption of global financial markets, which may reduce the
Company's ability to access capital. If the disruption to the
financial markets is protracted, the Company's liquidity could be
negatively affected in the future. In addition, a recession or
market correction resulting from the COVID-19 pandemic could
materially affect the Company's business and the value of its
common stock. During these uncertain times, the Company's top
priorities are to ensure the health and welfare of its employees,
maintain product safety and continue to advance its clinical
studies. However, the Company's clinical trials have been impacted,
and the Company may experience delays in anticipated timelines and
milestones. For instance, due to interruptions at clinical sites,
enrollment has been delayed in the Company's ongoing Phase 2
clinical trial of belumosudil in systemic sclerosis and enrollment
was also delayed in the Company's ongoing Phase 1 clinical trial of
KD033 in patients with metastatic or locally advanced solid tumors.
In addition, the Company may experience disruptions in its supply
chain, including its supply of product candidates, which may
adversely affect the conduct of its clinical trials. The Company
relies on contract research organizations ("CROs") to conduct its
clinical trials. CROs may be unable to conduct clinical trials for
product candidates as a result of the COVID-19 pandemic. The
COVID-19 pandemic could impact healthcare systems and clinical
trial sites' ability to conduct trials to varied degrees and times.
COVID-19 creates risk of interrupting availability of necessary
clinical supplies as well as local regulatory reviews, hospital
ethics committee reviews and site monitors."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1557142/000155714221000022/kdmn-20201231x10k.htm
About Kadmon Holdings
Based in New York, Kadmon Holdings, Inc. -- http://www.kadmon.com
-- is a clinical-stage biopharmaceutical company that discovers,
develops and delivers transformative therapies for unmet medical
needs. The Company's clinical pipeline includes treatments for
immune and fibrotic diseases as well as immuno-oncology therapies.
KENAN ADVANTAGE: S&P Upgrades ICR to 'B-' on Good Performance
-------------------------------------------------------------
S&P Global Ratings upgraded Kenan Advantage Group Inc. to 'B-' from
'CCC+', reflecting the company's good operating performance through
the pandemic and the improvement in its debt maturity profile pro
forma for the refinancing.
S&P said, "At the same time, we are assigning our 'B' ratings to
the proposed $150 million revolving credit facility and $1 billion
term loan due 2026, with '2' recovery ratings, indicating our
expectation of substantial (70%-90%; rounded estimate: 75%)
recovery in the event of a payment default.
"We are also raising our rating on the company's unsecured notes to
'CCC' from 'CCC-'. The recovery rating remains '6', indicating our
expectation of negligible (0%-10%, rounded estimate 5%) recovery.
"The stable outlook reflects our view that the company will sustain
good profitability this year and our expectation for improved
credit metrics in 2021."
The company will no longer face material near-term maturities pro
forma for the refinancing. Additionally, the company plans to
upsize its revolving credit facility to $150 million, which would
provide the company with additional liquidity. Pro forma for the
transaction, the $405 million unsecured notes due July 2023 will
remain outstanding.
S&P said, "Kenan's 2020 performance was better than expected, and
we forecast its credit metrics will improve further in 2021,
bolstered by recent acquisitions and EBITDA margin expansion.
Although the COVID-19 pandemic hurt 2020 revenue, the company
maintained its profitability at about the same level as in 2019. We
assume Kenan will sustain EBITDA margins in the
mid-teen-digit-percent area achieved in 2020, as it benefits from
cost-saving initiatives and fleet upgrades over the past few years.
Moreover, we expect the company will reap the full revenue and
earnings benefits in 2021 from acquisitions it completed in late
2020. Therefore, we anticipate adjusted debt leverage declining to
below 6x in 2021, and funds from operations (FFO) to debt above
10%.
"The stable outlook reflects our view that the company will deliver
solid operating performance this year, benefiting from recent
acquisitions and enhanced profitability. We expect adjusted debt to
EBITDA declining below 6x in 2021.
"We could raise the rating if the company demonstrates consistent
operating performance, resulting in adjusted leverage comfortably
below 6x and FFO-to-total-adjusted-debt ratio above 12% on a
sustained basis. We would also look for financial policies that
allow sustained improvement of its credit measures."
Although not anticipated currently, S&P could lower the rating if:
-- The company is not able to complete the refinancing before its
revolver and term loan facilities become current in July 2021,
causing its liquidity to become constrained;or
-- The company experiences unexpected earnings deterioration, such
that we view the capital structure as unsustainable.
KONTOOR BRANDS: S&P Alters Outlook to Stable, Affirms 'B+' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative, and
affirmed all of its ratings on Greenboro, N.C.-based Kontoor Brands
Inc., including its 'B+' issuer credit rating.
S&P said, "The stable outlook reflects our expectation for
Kontoor's adjusted leverage to improve below 5x in the next 12
months. It also reflects our view that 2021 will continue to be a
difficult year for the apparel industry as consumer demand will
likely remain volatile, traffic at brick-and-mortar stores will
likely be weak, and supply chain constraints could pressure its
profitability and cause the company to underperform our current
base-case forecast.
"Although demand was disrupted during the pandemic, Kontoor
recovered quicker than we had expected and we now forecast adjusted
leverage could fall below 4x. A material portion of Kontoor's
wholesale customers such as Walmart was classified as essential
businesses during the initial pandemic lockdown and avoided the
total shutdown apparel retailers experienced, leading to a faster
recovery for the company. Consumers refrained from unnecessary
shopping trips and increased their apparel purchases from stores
such as Walmart and Target during the pandemic. Kontoor benefited
from this trend as it is a key brand for denim in the U.S.
mass-channel. Lee and Wrangler brands also turned positive in the
fourth quarter of 2020 despite severe declines in the first three
quarters of the year. We expect this momentum to continue, and for
Kontoor's revenues to grow in the high-single-digit area in 2021.
The recovery reflected an increase in its digital sales, and its
new Lee contract with Walmart which the company started supplying
in the second half of 2020. We also expect its EBITDA margin to
expand as the company will have lower enterprise investment costs
in 2021, and the unabsorbed manufacturing costs it incurred in the
first half of 2020 will not be repeated this year. As such, we
expect the company to end 2021 with adjusted leverage in the mid-3x
area, as compared with our previous expectation of over 4x.
"Although adjusted leverage could be below 4x in fiscal 2021, we
believe there is risk to the company's ability to sustain adjusted
leverage at these levels given the uncertainty in the
macroenvironment, including the fragile and uneven economy,
inflation, and changes in consumer mobility. S&P Global Ratings
forecasts that vaccines will be widely disseminated by late summer
2021, and consumer behaviors will begin to normalize somewhat by
the end of the year. As such, we believe consumer demands for the
apparel industry will remain volatile for the year. Additionally,
supply chain issues will remain a challenge for the industry with
congested global freight lanes from the disruptions of 2020, and
continued labor problems at the ports. We believe a combination of
these factors could put additional pressure on our base-case
forecast and prevent the company from deleveraging below 4x in
2021.
"The company prioritized liquidity during the pandemic and we
believe it will focus on debt reduction in 2021. The company
suspended its dividends during the onset of the pandemic, and
re-instated the program in the fourth quarter of 2020 in
conjunction with paying down its revolver. It also announced that
it has paid down an additional $75 million of its term loans in the
first quarter of 2021. As such, in combination with better
profitability, we expect the company's 2021 adjusted leverage will
improve to the mid-3x area for 2021.
"Kontoor's manufacturing model was beneficial to the company in
2020 and helped it win new business. We believe a shorter and
reliable supply chain and pre-COVID-19 investments in its Lee brand
were the major contributors to Kontoor winning its Walmart contract
in 2020 and helping the company's recovery from the pandemic."
Kontoor's supply chain is shorter than most of its peers who source
predominately from Asia. The company internally manufactures
approximately 35% of its products, and its owned supply chain are
mostly Western-hemisphere based. The shorter supply chain allowed
the company to supply customers faster and avoid some of the
congestions on the Asia-Pacific to North America freight route.
Kontoor successfully executed on its global enterprise systems
implementation in 2020 and continues to establish its own
operations after its spin-off from V.F. Corp in 2019. The company
planned for a multi-year systems and infrastructure investment
process to establish its own operating system post its 2019 spin
from V.F. Corp. Its global SAP "go-live" started in 2020 and was
executed accordingly to plan despite the challenges of workplace
shutdowns and working from home. The company plans to complete its
integration of its North American and European regions in 2021, and
S&P believes the process should be largely uneventful given the
company's demonstrated track record last year.
Cotton is a key raw material for Kontoor and we expect there will
be some input cost pressures arising from the U.S. ban on the use
of Xinjiang cotton. Cotton is the main raw material in the
manufacturing of denim. The company does not directly import
cotton, instead it purchases fabrics for the manufacturing of its
products and thus has no direct exposure to the Xinjiang cotton
ban. However, risks with its suppliers in their raw material
sourcing remain. Ethical business practices are important for the
industry, and we believe Kontoor has supply chain cadenced inline
with peers to ensure its suppliers are accountable for sourcing
cotton from reputable growers. S& said, "We believe that
large-scale verifiable testing of the origin of cotton is still in
its early stages, and will gradually be accepted as an operating
standard, but will likely take several years to be established. As
such, we do not believe there will be large supply chain disruption
related to U.S.'s Xinjiang cotton ban at this time. However, we
expect some input cost pressure given that Xinjiang accounts for
approximately 20% of the world's cotton production. We expect
Kontoor will be able to offset the majority of potential cotton
price pressures from price increases and manufacturing
efficiencies."
S&P said, "The stable outlook reflects our expectation for
Kontoor's adjusted leverage to improve to below 5x in the next 12
months. It also takes into account our view that 2021 will remain
difficult for the apparel industry as demand will likely remain
volatile, traffic at brick-and-mortar stores stay weak, and
constraints in the supply chain could pressure profitability. This
could cause the company to underperform our current base-case
forecast."
S&P could raise its ratings if the company's credit metrics
improves and adjusted leverage decreased to below 4x. This could
occur if:
-- Its revenue and profitability continue to improve with higher
demand as consumer behavior normalizes by the end of the year.
-- The company continues to manage its balance sheet
conservatively and prioritize deleveraging.
S&P could lower its ratings if the company sustains adjusted
leverage above 5.5x. This could occur if:
-- There is incremental volatility in the market due to a
resurgence of the virus or disruptions in the dissemination of the
vaccine.
-- Its integration plans are not successful and causes disruption
in its operations.
-- Its brands and products fall out of favor with consumers,
causing a drop in demand and the loss of key customers such as
Walmart.
KOPIN CORP: Incurs $4.53 Million Net Loss in 2020
-------------------------------------------------
Kopin Corporation filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $4.53
million on $40.13 million of total revenue for the year ended Dec.
26, 2020, compared to a net loss of $29.37 million on $29.52
million of total revenue for the year ended Dec. 28, 2019.
Research and development expenses for 2020 were $11.7 million, a
13% decrease compared with $13.3 million in 2019. Funded R&D
expenses were $7.7 million for 2020 as compared to $4.2 million for
2019, an 84% increase.
Selling, general and administrative expenses were $11.8 million in
2020, a 45% decrease compared with $21.3 million in 2019. SG&A in
the of 2020 and 2019 included 0.8 million and $2.1 million in
noncash stock-based compensation, respectively.
Other income (expense) for fiscal year 2020 and 2019 were income of
$0.4 million and a loss of $2.9 million, respectively. Other
income (expense) for fiscal year 2020 included $0.3 million of
foreign currency gains compared to $0.2 million of foreign currency
gains recorded in fiscal year 2019. In the fiscal year 2019, the
Company recorded a non-cash $1.4 million gain on equity investments
and an impairment charge of $5.2 million on equity investment.
The net loss from controlling interest for the fiscal year ended
Dec. 26, 2020 was $4.4 million or $0.05 per share, versus a net
loss of $29.5 million or $0.37 per share for 2019.
Kopin's cash and equivalents and marketable securities were
approximately $20.7 million at Dec. 26, 2020 as compared to $21.8
million at Dec. 28, 2019, with no long-term debt. During the
fourth quarter the Company issued 1.9 million shares under its At
The Market (ATM) program, generating $3.9 million in net proceed
cash. Subsequent to fiscal year end the Company issued 2.4 million
shares under its ATM and generated additional $15.5 million in net
proceed cash. Accordingly, the Company has fulfilled its ATM which
was for $20 million.
During 2020 Kopin had 12 new patents granted and filed for four new
applications. Kopin has over 200 patents and patents pending,
almost all of which are related to wearable applications.
As of Dec. 26, 2020, the Company had $47.55 million in total
assets, $16.88 million in total current liabilities, $276,409 in
noncurrent contract liabilities and asset retirement obligations,
$821,306 in operating lease liabilities, $1.27 million in other
long-term liabilities, and $28.29 million in total stockholders'
equity.
"We are delighted to have finished 2020 with very strong results in
both our top and bottom lines, with revenue growth of 36%
year-over-year and increased efficiency in our operations. Our
fourth quarter 2020 revenue growth was particularly strong, growing
60% from a year ago, our strongest quarterly year-over-year growth
since the fourth quarter of 2017. We also made great progress in
streamlining our cost structure along with increasing our product
yields and production efficiencies, resulting in a net income of
$1.3 million for the fourth quarter of 2020. We are very proud of
this achievement, and though we acknowledge it was due to the
convergence of many favorable factors, it is undeniable that we are
on the right track with momentum continuing into the current year,"
said Dr. John C. C. Fan, CEO of Kopin.
"Our business was strong across multiple segments and was again led
by our defense product revenues which increased 112% in the fourth
quarter of 2020 compared with the fourth quarter of 2019. This
significant increase was driven by our two production programs --
the display sub-assembly system for the FWS-I thermal weapon sight
program and displays for the F-35 Fighter jet program. As
announced in September 2020, we were awarded a $22.9 million
follow-on contract for the FWS-I program, with shipments scheduled
through the third quarter of 2021. We expect these two production
programs will continue to generate strong revenue in the coming
years. We are also on track to transition three more products, out
of a dozen programs currently in development, to initial low-rate
production, with revenues expected to begin ramping in the second
half of this year. We believe these programs will provide
accelerated growth momentum for 2022 and beyond. Our active
pipeline of development programs includes using our advanced
display products in armored vehicle targeting systems, rotary-wing
aircraft helmets, automatic and semi-automatic rifle day scopes and
targeting systems, among others. These programs are all using our
microdisplays and also increasingly utilizing our sophisticated
optics systems and dust-free assemblies. We believe we are the
sole source supplier to most of these programs.
"In the fourth quarter we saw solid growth in our industrial
wearables led by sales to RealWear Inc. www.realwear.com, a market
leader in enterprise AR and computing headsets, along with sales to
3D metrology applications. We expect both industrial wearables and
3D metrology revenues will continue solid growth in 2021. However,
revenues from the sale of our products for public safety
applications were down in the fourth quarter of 2020 which we
believe is attributable to the negative impact of Covid-19 on
municipal budgets. We expect this segment will recover later in
2021. In the fourth quarter of 2020, we announced that HMDmd and
Kopin have entered an agreement to develop a specialized headset
for surgeries, our initial entry into the expanding field medical
applications utilizing AR headsets."
Dr. Fan continued, "In the fourth quarter of 2020 our funded
Research and Development (R&D) revenue and our R&D expenses both
increased very significantly this year. As AR and VR applications
are increasingly adopted, we have accelerated our R&D activities in
advanced OLED and LED microdisplays and optics. We are excited
about our R&D progress, which we believe will provide a stream of
new, differentiated products as well as further enhance our already
strong IP positions.
"This quarter we received our first production order and began
shipments of our 720p duo-stack, ColorMax OLED microdisplays. We
also announced an agreement to develop superbright monochrome
MicroLED displays. We believe that both our advanced ColorMax OLED
and our MicroLED displays will be key enablers of what we see as
the coming wave of AR and VR products in defense, enterprise and
consumer applications. We believe Kopin offers the widest range of
leading microdisplay technologies in the world, which is
particularly valuable as we anticipate the long-awaited adoption of
AR and VR systems is beginning to take hold. As expected, these
systems are being adopted first in defense, followed by
industrial/enterprise/medical and consumer applications.
Currently, almost all of our development programs are related to AR
and VR applications. As the AR and VR market segments continue to
gain traction, Kopin is ideally positioned to meet this demand.
With industry leading displays and modules for AR and VR devices,
Kopin clearly sees growing opportunities in many wearable sectors
and we are making great progress in executing our strategy to
improve the performance in all aspects of the Company. We are
confident that we are well positioned for the coming era of AR/VR,
and our future is bright," concluded Dr. Fan.
Fourth Quarter Financial Results
Total revenues for the fourth quarter ended Dec. 26, 2020 were
$13.9 million, compared with $8.7 million for the fourth quarter
ended Dec. 28, 2019, a 60% increase year over year. Product
revenues and R&D revenues grew 50% and 56% year over year,
respectively.
Research and development expenses for the fourth quarter of 2020
were $4.4 million compared to $2.7 million for the fourth quarter
of 2019, a 65% increase year over year. Funded R&D expenses were
$3.3 million for the fourth quarter of 2020 as compared to $1.7
million for the fourth quarter of 2019, an 87% increase.
Selling, general and administrative expenses were $2.4 million for
the fourth quarter of 2020, compared to $4.5 million for the fourth
quarter of 2019, a 47% decrease year over year. SG&A in the fourth
quarter of 2020 and 2019 included $0.2 million and $0.2 million in
noncash stock-based compensation, respectively.
Other income (expense) for the fourth quarter of 2020 and 2019 were
income of $0.3 million and a loss of $3.7 million, respectively.
Other income (expense) for the fourth quarter of fiscal year 2020
included $0.3 million of foreign currency gains compared to $0.2
million of foreign currency gains recorded in fourth quarter of
fiscal year 2019. In the fourth quarter of fiscal year 2019, the
Company recorded a non-cash $0.6 million gain on equity investments
and an impairment charge of $5.2 million on equity investment.
The net income attributable to controlling interest for the fourth
quarter of 2020 was $1.3 million, or $0.02 per share, compared with
net loss of $7.3 million, or $0.09 per share, for the fourth
quarter of 2019.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/771266/000149315221005466/form10-k.htm
About Kopin
Kopin Corporation -- http://www.kopin.com-- is a developer and
provider of innovative display and optical technologies sold as
critical components and subassemblies for military, industrial and
consumer products. Kopin's technology portfolio includes
ultra-small Active Matrix Liquid Crystal displays (AMLCD), Liquid
Crystal on Silicon (LCOS) displays and Organic Light Emitting Diode
(OLED) displays, a variety of optics, and low-power ASICs.
KOPIN CORP: Signs $50 Million Sales Agreement with Nicolaus & Co.
-----------------------------------------------------------------
Kopin Corporation entered into an At-The-Market Equity Offering
Sales Agreement with Stifel, Nicolaus & Company, Incorporated, as
agent, pursuant to which the Company may offer and sell, from time
to time through Stifel, shares of its common stock, par value $0.01
per share, with aggregate gross proceeds of up to $50.0 million.
The offer and sale of the Shares will be made pursuant to a shelf
registration statement on Form S-3 and the related prospectus (File
No. 333-253933), which became effective upon filing with the
Securities and Exchange Commission on March 5, 2021, and a
prospectus supplement dated March 5, 2021 related thereto.
Pursuant to the Sales Agreement, Stifel may sell the Shares in
sales deemed to be "at-the-market" equity offerings as defined in
Rule 415 under the Securities Act of 1933, as amended, including
sales made directly on or through the Nasdaq Capital Market. If
agreed to in a terms agreement, the Company may also sell Common
Stock to Stifel as principal, at a purchase price agreed upon by
Stifel and the Company. The offer and sale of the Shares pursuant
to the Sales Agreement will terminate upon the earlier of (a) the
sale of all of the Shares subject to the Sales Agreement or (b) the
termination of the Sales Agreement by Stifel or the Company
pursuant to the terms thereof.
The Company will pay Stifel a commission of 3.0% of the aggregate
gross proceeds from any Shares sold by Stifel and the Company has
agreed to provide Stifel with customary indemnification and
contribution rights, including for liabilities under the Securities
Act. The Company also will reimburse Stifel for certain specified
expenses in connection with entering into the Sales Agreement. The
Sales Agreement contains customary representations and warranties
and conditions to the placements of the Shares.
About Kopin
Kopin Corporation -- http://www.kopin.com-- is a developer and
provider of innovative display and optical technologies sold as
critical components and subassemblies for military, industrial and
consumer products. Kopin's technology portfolio includes
ultra-small Active Matrix Liquid Crystal displays (AMLCD), Liquid
Crystal on Silicon (LCOS) displays and Organic Light Emitting Diode
(OLED) displays, a variety of optics, and low-power ASICs.
Kopin reported a net loss of $4.53 million for the year ended Dec.
26, 2020, compared to a net loss of $29.37 million for the year
ended Dec. 28, 2019. As of Dec. 26, 2020, the Company had $47.55
million in total assets, $16.88 million in total current
liabilities, $276,409 in noncurrent contract liabilities and asset
retirement obligations, $821,306 in operating lease liabilities,
$1.27 million in other long-term liabilities, and $28.29 million in
total stockholders' equity.
LANTHEUS HOLDINGS: S&P Alters Outlook to Neg., Affirms 'B+' ICR
---------------------------------------------------------------
On March 3, 2021, S&P Global Ratings revised its outlook on
diagnostic medical imaging agent provider Lantheus Holdings to
negative from stable and affirmed its 'B+' issuer credit rating on
the company.
S&P said, "The negative outlook reflects our expectation that
adjusted debt to EBITDA should remain above 4x through most of
2021, leaving little room for the company to underperform against
our forecast before we lower the rating.
"The negative outlook primarily reflects credit metrics that we
consider weak for the current rating and downside risks to our base
case forecast. Credit measures are trending weaker than we had
previously expected stemming primarily from COVID-related decreased
demand and higher operating costs, partially resulting from the
Progenics acquisition that we believe could persist through the
first half of 2021. As a result, we now forecast adjusted debt to-
EBITDA to be about 4x in 2021 and about 3.5x in 2022 (about 1x
higher than we previously assumed). The pandemic has resulted in a
decline in procedures, thereby reducing demand for Lantheus'
products. While we expect demand to largely recover contributing to
revenue growth of 10%-15% as vaccinations are administered
nationally and patients begin to gain confidence in the healthcare
system this year, the lingering presence of the pandemic adds
downside risk to our revenue projections.
"We also believe earnings and profitability could be weaker than we
assume in our base case if the company faces significant decrease
in demand this year or significantly increases its spending to
scale its commercial and manufacturing capabilities to deploy new
products. This spending could include accelerated spending on sales
and marketing in advance of PyL's Prescription Drug User Fee Act
(PDUFA) date on May 28th, 2021.
"The negative outlook reflects our expectation that adjusted debt
to EBITDA should remain above 4x through most of 2021, leaving
little room for the company to underperform against our forecast.
"We could lower our issuer credit rating on Lantheus within the
next 12 months if we expect adjusted debt-to-EBITDA to remain at or
above 4x with weaker prospects of returning leverage well below 4x.
This could result from higher-than-expected costs to scale up the
company's commercial and manufacturing capabilities,
slower-than-anticipated return in demand for procedures, or if the
company takes on a more aggressive financial policy. We could also
lower our rating if the company's liquidity position significantly
weakens.
"We could revise our outlook on Lantheus to stable within the next
12 months if it is more likely adjusted debt to-EBITDA will return
comfortably below 4x. This could occur if earnings improve roughly
in line with our forecast, which assumes adjusted EBITDA largely
recover to 2019 levels within the next couple of years on
double-digit revenue growth and a modest improvement in profit
margins."
LEARNING CARE: S&P Upgrades ICR to 'CCC+', Outlook Stable
---------------------------------------------------------
S&P Global Ratings raised its rating on Learning Care Group (US)
No. 2 Inc. to 'CCC+' from 'CCC.' At the same time, S&P raised the
ratings on the company's first-lien revolver and term loan to
'CCC+' from 'CCC' and the rating on the second-lien term loan to
'CCC-' from 'CC.' The recovery ratings remain unchanged.
The stable outlook reflects S&P's expectation that the company will
maintain adequate liquidity and that operating performance will
continue to improve as utilization rates return to historical
levels over the next 12 months.
Center utilization rates have stabilized and shown a positive
trajectory that will improve credit metrics over the next 12
months. Since closing many of its centers at the onset of the
pandemic, Learning Care has reopened the majority of its 940
centers due to increasing demand for child care from households
returning to work. S&P said, "We believe utilization rates troughed
in April 2020 and have consistently improved since then. We expect
occupancy rates to reach pre-pandemic levels in the low-70% range
over the next 12 months, resulting in about 30% revenue growth for
the company's fiscal 2022. The company implemented safety protocols
in its centers that have minimized COVID-19 infections, allowing
for improved utilization trends. We believe occupancy will continue
to improve over the near term as concerns over COVID-19 subside and
more households return to work and historical child care usage
rates."
S&P said, "Increased levels of governmental support has mitigated
concerns of cash burn during 2021; we expect continued support into
2022. State level programs, the CARES Act, as well as expansion of
the federal Child Care Development Block Grant has helped offset
the operating and reopening expenses incurred by child care
providers across the U.S. We believe existing levels of support
will continue and are likely to expand because of recent
legislative action, which should benefit large operators such as
Learning Care. By helping to offset many operating expenses,
government support and enrollment improvements have helped the
company to avoid a period of cash burn while center occupancy has
improved.
"Liquidity improved as a result of 2020's recapitalization, and we
expect the company to make aggressive acquisitions over the next 12
months. Learning Care added $190 million to its first lien term
loan, as well as $30 million of equity contribution to the
company's balance sheet to shore up liquidity. We believe the
company's liquidity has materially improved with the additional
cash as well as the lack of cash burn brought about by
higher-than-expected government assistance. Given the
faster-than-expected pace of utilization improvement, we expect the
company to prioritize acquisitions over the next 12-18 months.
"The stable outlook reflects our expectation that Learning Care's
operating performance will continue to improve as occupancy rates
continue to strengthen, improving credit metrics over the next 12
months, including sustained adjusted free operating cash flow of at
least $50 million."
S&P could lower its ratings on Learning Care if it expects a
specific default scenario is likely over the next 12 months,
including a near-term liquidity shortfall or financial covenant
violation. This could occur if:
-- Revenue and EBITDA recovery takes longer than anticipated due
to increased restrictions because of new COVID-19 variants and
infections; and
-- Expected levels of government support fail to materialize and
the company's liquidity significantly declines.
Although unlikely, S&P could raise its ratings on Learning Care
if;
-- The company can return to historical utilization rates at the
majority of its centers.
-- The company is able to generate pre-pandemic levels of reported
free operating cash flow and reduce adjusted debt to EBITDA to
about 7x on a sustained basis.
LIGHTHOUSE RESOURCES: UST Says Plan Releases Go Too Far
-------------------------------------------------------
Law360 reports that the U. S. Trustee's Office Friday, March 5,
2021, asked a Delaware bankruptcy judge to reject coal mining
company Lighthouse Resources' Chapter 11 plan, saying it would
force creditors to release legal claims against too many parties.
In the filing, U.S. Trustee Andrew Vara said the plan cannot be
confirmed both because the releases are non-consensual and too
broad and because it contains provisions that would improperly
limit post-confirmation fees paid to his office. Utah-based
Lighthouse and multiple affiliates hit Chapter 11 in December 2020
with more than $256 million in secured debt, reporting plans for a
partial sale forced in part by the COVID-19 pandemic.
About Lighthouse Resources
Lighthouse Resources Inc. is an owner and operates two coal mines
located in Wyoming and Montana, delivering low sulfur,
subbituminous coal to both domestic and export customers. It also
owns and operates the Millennium Bulk Terminal in Longview,
Washington. The Company is widely recognized for its extraordinary
performance in both safety and environmental stewardship. Its
flagship project is the development of a trade route for coal from
the Rocky Mountain region of the United States to demand centers in
Asia.
Utah-based Lighthouse Resources and 13 subsidiaries, including
Decker Coal Company, filed for Chapter 11 bankruptcy protection
(Bankr. D. Del. Case No. 20-13056) on Dec. 3, 2020.
Lighthouse Resources was estimated to have $100 million to $500
million in assets and liabilities as of the filing.
The Debtors tapped JACKSON KELLY PLLC as general bankruptcy counsel
and BDO USA LLP as restructuring advisor. POTTER ANDERSON &
CORROON LLP is the local bankruptcy counsel. LANG LASALLE
AMERICAS, INC., is the marketer and seller of assets related to the
dock facility owned by Millennium Bulk Terminals-Longview, LLC.
ENERGY VENTURES ANALYSIS is the marketer and seller of Debtors'
coal mining assets. STRETTO is the claims agent.
LINDA M. ARMELLINO: Selling Three Alexandria Townhouses for $1.8M
-----------------------------------------------------------------
Linda M. and Michael J. Armellino ask the U.S. Bankruptcy Court for
the Eastern District of Virginia to authorize the sale to Thomas
Foster and/or Foster Consulting, Inc. for $1,795,000, pursuant to a
contract dated Feb. 22, 2021, with Addendums, of the properties
described as:
Lot 500 of AWS Subdivision, as shown on a plat of a
subdivision prepared by John A. Kephart, dated Nov. 2, 1976, and
recorded March 10, 1977, In Deed Book 851 at Page 133, among the
records of the City of Alexandria, Virginia,
and
Lots 501 and 502, of AWS Subdivision, as shown on a plat of
subdivision prepared by John A. Kephart, dated Nov. 2, 1976 and
recorded March 10, 1977 in Deed Book 851 at page 133, among the
land records of the City of Alexandria, Virginia,
and otherwise known as 606, 608, and 610 Queen Street,
Alexandria, Virginia 22314, with the Tax ID Numbers 065.03-09-04,
065.03-09-05, and 065.03-09-06.
The properties are three townhouses, located side by side, and
sharing connected internal spaces which were most recently used for
the Bilbo Baggins restaurant.
The Debtors propose selling the properties to the Buyer for
$1,795,000, pursuant to their Contract.
There is a real estate commission incurred in the transaction of
5.5% of the sales price, or $98,725, to be apportioned between the
Sellers' and the Buyer's agents, Century 21 Commercial New
Millennium and Proplocate Realty, LLC.
The sales transaction includes the sale of restaurant equipment,
fixtures, and other property owned by Armac, Inc., as described in
the contract, and located in the properties. Since Armac, Inc. is
a corporation owned solely by the debtor, Michael J. Armillino, it
is also appropriate to seek the Court's authority in this motion
for the sale of its property. While the apportionment of the sale
proceeds between the debtors and Armac is to be determined prior to
the sale, all of the proceeds will be used to pay the claims
secured by the properties and the balance will be placed into the
Debtors' DIP account.
The properties are encumbered by two liens which will be paid at
settlement: one arising out a series of mortgage notes and a
judgment in favor of Burke and Herbert Bank with a balance of
approximately $1,232,521.41 (Proof of Claim No.7), and a property
tax lien held by the City of Alexandria in the amount of $52,808
(Proof of Claim 3). While the Debtors expect the property tax to
increase slightly by the time of sale, the net proceeds which will
come from the proposed sale exceed total of all liens on the
property.
The value received from the sale is appropriate, the Contract was
acquired after a reasonable marketing effort, and is the best
result the commercial sales agent believes will be obtained. The
proposed sale is in the best interest of the estate since it
represents the greatest value to the estate and to the creditors
which may be derived from the properties.
A copy of the Contract is available at https://tinyurl.com/mwx3t52y
from PacerMonitor.com free of charge.
Linda M. and Michael J. Armellino sought Chapter 11 protection
(Bankr. E.D. Va. Case No. 20-12475) on Nov. 6, 2020. The Debtors
tapped Richard Hall, Esq., as counsel.
LPL HOLDINGS: S&P Assigns 'BB+' Rating on Senior Secured Revolver
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue rating to LPL Holdings
Inc.'s new $1 billion senior secured revolving credit facility
maturing in 2026 and its 'BB' rating to LPL's new $900 million of
senior unsecured notes due 2029. The new revolver matures two years
later and is $250 million larger than the current revolver.
LPL will use the proceeds of the notes to redeem its existing $900
million of senior unsecured notes due in 2025. S&P said, "We expect
LPL to use the revolver mostly as a liquidity backstop, and it may
help finance its $300 million purchase of the independent brokerage
and wealth management business of Waddell & Reed, which we expect
to close in the second quarter. We expect this to increase debt to
EBTDA, but anticipate it will be around 2.75x at the close of the
transaction."
S&P said, "We rate the revolver 'BB+' because it is at the
senior-most level of the issuing holding company's debt, along with
the $1 billion senior secured term loan due 2026. Our 'BB' rating
on the senior unsecured notes reflects the level of priority debt
ahead of them, as well as our expectation that there are sufficient
available assets relative to the unsecured notes."
The outlook on LPL remains negative, indicating the potential that
deterioration in operating performance or increased debt could
cause covenant debt to EBITDA to rise above 3x over the next 12
months.
LUXURY OUTER: Case Summary & 7 Unsecured Creditors
--------------------------------------------------
Debtor: Luxury Outer Banks Homes, LLC
Grand Ritz Palm, LLC
116 W Duchess Court
Kill Devil Hills, NC 27948
Business Description: Luxury Outer Banks Homes, LLC owns a house
and lot located at 1340 DuckRoad, Duck, NC
valued at $4.85 million and a house and lot
located at 116 Duchess Court, Kill Devil
Hills, NC valued at $489,700.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Eastern District of North Carolina
Case No.: 21-00508
Judge: Hon. Joseph N. Callaway
Debtor's
Counsel: James B. Angell, Esq.
HOWARD, STALLINGS, FROM, ATKINS, ANGELL & DAVIS, P.A.
P.O. Box 12347
Raleigh, NC 27605
Tel: (919) 821-7700
Fax: (919) 821-7703
E-mail: JAngell@hsfh.com
Total Assets: $5,352,747
Total Liabilities: $2,192,061
The petition was signed by Kimberly H. Lane, manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/ZXLVWFI/Luxury_Outer_Banks_Homes_LLC__ncebke-21-00508__0001.0.pdf?mcid=tGE4TAMA
MACY'S RETAIL: S&P Assigns 'B' Rating on New $500MM Unsec. Notes
----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '5'
recovery rating to Macy's Retail Holdings LLC's proposed $500
million senior unsecured notes due 2029. The '5' recovery rating
indicates its expectation for modest (10%-30%; rounded estimate:
20%) recovery in the event of a default. The company plans to use
the net proceeds from these notes to fund a tender for an
equivalent amount of its existing senior unsecured notes due
2022-2025. S&P's 'B+' issuer credit rating and negative outlook on
Macy's Inc. and Macy's Retail Holdings LLC are unaffected by the
transaction.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario assumes a limited recovery in
the company's sales and operating profit following the COVID-19
pandemic with a weak environment and shifting consumer preferences
exacerbated by merchandise missteps and increased competition that
lead to a continued loss of market share.
-- S&P assumes Macy's would emerge as a going concern given its
name recognition. It applied a 5.0x EBITDA multiple (in line with
the multiples it uses for other department stores) to its projected
emergence-level EBITDA figure.
-- S&P believes that as Macy's approaches default, it would
further rationalize its store footprint and sell assets.
-- S&P also believes the company could take on additional secured
debt as it approaches default, which would pressure the recovery
prospects for its debtholders.
-- S&P assumes the asset-based lending (ABL) facility (unrated) is
60% drawn at default and believes its claim would rank ahead of
that of the secured debt at Macy's Retail Holdings LLC and the
unsecured notes' claim in bankruptcy.
Simulated default assumptions
-- Simulated year of default: 2025
-- S&P uses a combined discrete asset valuation (DAV) approach and
enterprise value (EV) approach to value Macy's as certain real
estate are carved out to secure the $1.3 billion secured notes due
2025.
-- S&P estimates a gross EV of $4.7 billion based on $3.6 billion
of going-concern value (emergence EBITDA of $727 million and a 5x
multiple) and $1.1 billion of adjusted real estate value
(collateral for the $1.3 billion secured notes).
Simplified waterfall
-- Net EV after 5% administrative costs and estimated unfunded
pension claims: $4 billion
-- About 25% of the recovery value to the $1.3 billion secured
notes due 2025.
-- About 75% of the value distributed to the ABL, senior unsecured
notes, and senior secured notes under Macy's Retail Holdings, with
the ABL ranking ahead of all other notes in terms of priority.
-- Secured note claims: $1.4 billion*
--Recovery expectations: 70%-90% (rounded estimate: 75%)
-- ABL secured claims: $1.9 billion*
--Recovery expectations: Not rated
-- Debt at Macy's Retail Holdings and other unsecured debt claims:
$5.3 billion*
--Recovery expectations: 10%-30% (rounded estimate: 20%)
*All debt claims include six months of prepetition interest.
MAGNOLIA OIL: S&P Alters Outlook to Stable, Affirms 'B+' ICR
------------------------------------------------------------
S&P Global Ratings affirming its 'B+' issuer credit rating on
U.S.-based oil and gas exploration and production company Magnolia
Oil & Gas Corp.
S&P said, "At the same time, we are affirming our 'BB-' issue-level
rating and '2' recovery rating on the company's unsecured debt.
"The stable outlook reflects our assessment of the company's
strengthening underlying cash flows and credit metrics.
"We revised the rating outlook to stable from negative due to
strengthening credit ratios. We expect debt to EBITDA to improve
to just below 1x and funds from operations (FFO) to debt to more
than 100% in 2021 from 1.4x and 68%, respectively in 2020 under our
current commodity assumptions. The improvement is driven largely by
the projected increase in crude oil prices, along with growth in
production relative to 2020. These ratios are further supported by
the company's commitment to spend within 60% of free cash flow,
which it has been able to do since 2018. While our rating takes
into account the company's currently very low leverage, we also
consider the potential cash flow volatility given the lack of
hedges and the limited asset diversification. Additionally, our
projections include the recently instated modest annual dividend of
$12.5 million, as well as small expected share repurchases of at
least 1% of outstanding shares per quarter throughout 2021."
The company's size and scale relative to higher-rated peers
constrains the rating. The rating reflects the company's small SEC
proved reserve base of 112 million barrels of oil equivalent (boe)
and production levels of 60,600boe/d, proved undeveloped reserves
(PUDs) at 24% which we view less favorably from a credit
perspective given the additional risk and costs associated with
bringing PUDs to production--as well as significant asset
concentration, and the still limited track record of operations in
the Giddings field. All of Magnolia's reserves and production are
in South Texas. The company holds about 23,500 net acres in Karnes
County and 440,000 in the Giddings Field, although just 70,000 of
those acres are considered core.
The Giddings Field remains a key driver of future production
growth. While the Giddings Field in South Texas has been producing
since 1920, the company has been applying horizontal drilling and
fracking techniques developed in Karnes County to tap the reserves
from the Austin Chalk. Despite a history of mixed results from
other operators in the play, Magnolia's recent outcomes have been
in line with, if not better than, the company's Karnes acreage and
the field now represents approximately 50% of current production.
The company's horizontal appraisal program began during the third
quarter of 2017 and since that time it has brought online more than
40 wells, with about 20 to 25 earmarked to be drilled and completed
in 2021. The company has one rig running in Giddings and it expects
to add a second in the second half of 2021, while it has one
completions crew to address 10 drilled but uncompleted wells (DUCs)
in Karnes County.
S&P said, "The stable outlook reflects our view Magnolia will
maintain FFO/debt in excess of 100% and generate significant
positive free operating cash flow while successfully increasing
production and reserves on its underlying assets. Our current
outlook also incorporates the company's policy of spending 60% or
less of EBITDAX on internal growth.
"We could lower the rating if we expected FFO to debt to approach
45% or debt to EBITDA to approach 1.5x on a sustained basis. This
would most likely occur if commodity prices were to weaken below
our price deck assumptions or if the company did not meet our oil
production expectations. Alternatively, we could lower the ratings
should liquidity materially weaken."
An upgrade would be possible if the company improved the scale of
its proved developed reserves and production to levels more
consistent with 'BB-' rated peers, while maintaining FFO/debt
comfortably above 45%, and adequate liquidity.
MARTIN MIDSTREAM: Incurs $6.8 Million Net Loss in 2020
------------------------------------------------------
Martin Midstream Partners L.P. filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing a net
loss of $6.77 million on $672.14 million of total revenues for the
year ended Dec. 31, 2020, compared to a net loss of $174.95 million
on $847.12 million of total revenues for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $579.64 million in total
assets, $626.51 million in total liabilities, and a total partners'
deficit of $46.87 million.
"If we are unable to access funds under our credit facility, we
will need to meet our capital requirements, including some of our
short-term capital requirements, using other sources. Alternative
sources of liquidity may not be available on acceptable terms, if
at all. If the cash generated from our operations or the funds we
are able to obtain under our credit facility or other sources of
liquidity are not sufficient to meet our capital requirements, then
we may need to delay or abandon capital projects or other business
opportunities, which could have a material adverse effect on our
business, financial condition and results of operations," Martin
Midstream said.
"In addition, we have from time to time entered into interest rate
protection agreements to manage our interest rate risk exposure by
fixing a portion of the interest expense we pay on our long-term
debt under our credit facility. If the counterparties fail to
honor their commitments, we could experience higher interest rates,
which could have a material adverse effect on our business,
financial condition and results of operations. In addition, if the
counterparties fail to honor their commitments, we also may be
required to replace such interest rate protection agreements with
new interest rate protection agreements, and such replacement
interest rate protection agreements may be at higher rates than our
current interest rate protection agreements, which could have a
material adverse effect on our business, financial condition and
results of operations," the Company further said.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1176334/000117633421000061/mmlp-20201231.htm
About Martin Midstream
Martin Midstream Partners L.P. is a publicly traded limited
partnership with a diverse set of operations focused primarily in
the United States Gulf Coast region. The Partnership's primary
business lines include: (1) terminalling, processing, storage, and
packaging services for petroleum products and by-products; (2) land
and marine transportation services for petroleum products and
by-products, chemicals, and specialty products; (3) sulfur and
sulfur-based products processing, manufacturing, marketing and
distribution; and (4) natural gas liquids marketing, distribution
and transportation services.
* * *
As reported by the TCR on Aug. 17, 2020, Moody's Investors Service
upgraded Martin Midstream Partners L.P.'s Corporate Family Rating
to Caa1 from Caa3. "The upgrade of MMLP's ratings reflect the
extended debt maturity profile and improved liquidity," Jonathan
Teitel, a Moody's analyst, said.
MATTEL INC: Fitch Raises LongTerm IDR to 'BB', Outlook Stable
-------------------------------------------------------------
Fitch Ratings has upgraded Mattel, Inc.'s Long-Term Issuer Default
Rating (IDR) to 'BB' from 'B'. The Rating Outlook is Stable.
The Upgrade reflects Mattel's meaningfully improved operating
trajectory, which has increased Fitch's confidence in the company's
longer-term prospects and financial flexibility. EBITDA in 2020
reached approximately $710 million, building on the recovery to
approximately $460 million in 2019 from a 2017/2018 trough of
approximately $270 million. Revenue over this time frame has
remained relatively stable in the mid-$4 billion range but EBITDA
margin improved to 15.4%, close to 2015 levels of 16.1% on gross
margin recovery and cost reductions. EBITDA improvement caused FCF
to turn positive in 2019/2020 after four years of outflows; gross
debt/EBITDA improved from the 11x peak in 2017/2018 to 4.1x in
2020. Many of Mattel's key brands are demonstrating good consumer
trends at retail. Fitch projects low single digit revenue growth
beginning 2021, which could drive similar to slightly higher growth
in EBITDA assuming some benefits from Mattel's recently announced
$250 million cost reduction program.
As part of its actions, Fitch has upgraded Mattel's ABL to
'BBB-'/'RR1' from 'BB'/'RR1', upgraded its guaranteed unsecured
notes to 'BB'/'RR4' from 'BB-'/'RR2' and upgraded its nonguaranteed
unsecured notes to 'BB-'/'RR5' from 'B+'/'RR3'.
KEY RATING DRIVERS
Revenue Stabilization: Mattel's revenue has stabilized around $4.5
billion in 2018-2020, after steadily falling from the $6.5 billion
peak in 2013. Fitch believes market share losses have been due to
historical brand mismanagement, exacerbated by the 2017 bankruptcy
of Toys 'R' Us and subsequent liquidation of its U.S. business. As
such, flattening revenue trends in recent years have improved
Fitch's confidence in Mattel's ability to defend market share over
the next several years.
Modest top-line growth of 2% in 2020 was the result of a number of
competing forces stemming from the coronavirus pandemic. Mattel's
sales at retail benefited from shelter in place activity with
families spending more time playing with toys. The company's 1H20
revenue, however, declined approximately 14% to $1.3 billion on
supply chain delays due to the pandemic and reduced orders from
temporarily closed retail customers; Fitch expects other retailers
may have slowed reorders as they focused efforts on essential
categories like grocery, health and cleaning supplies. This
imbalance likely improved somewhat by year-end, given Mattel's 10%
topline growth in the more seasonally important 2H. In addition to
these factors, while toy sales at retail have generally benefited
from the pandemic, leading toymakers like Mattel have seen declines
in sales of toys connected with theatrical releases, given delays
in filming and exhibition schedules.
While overall results have improved, Mattel's performance by brand
remains somewhat inconsistent. For example, while 2020 gross
bookings for the Barbie brand (approximately 25% of gross revenue)
were up a strong 16% and Hot Wheels (approximately 20%) showed 3%
growth, the remainder of Mattel's portfolio which comprises around
half of gross bookings, including the Fisher-Price and Thomas &
Friends brands, were down in the mid-single digits.
Fitch projects Mattel's 2021 revenue could grow 3% to 4%, with
growth concentrated in 1H21 and potential modest declines in 2H21
given the 2020 seasonal trajectory. Revenue growth is expected to
be predicated on modest growth in the traditional toy business,
continued improvement to the inventory supply-demand imbalance at
retail, and an improved slate of film releases (streaming and
eventually theatrical) with toy tie-ins. Beginning 2022, Mattel's
revenue growth could be around 2%, in line with longer-term toy
industry averages. This assumes more modest growth in Mattel's
recently outperforming brand alongside improvement to trends in
weaker brands as the company invests in product and marketing
innovation.
Improved EBITDA Trajectory: Mattel has demonstrated stabilizing
results across much of its operating and financial profile. EBITDA
in 2020 was approximately $710 million, up materially from
approximately $460 million in 2019 and the trough average around
$270 million in 2017/2018, albeit well below the $1.4 billion peak
in 2012/2013. EBITDA improvement is the result of Mattel's
structural simplification cost reduction program, with over $1
billion in run-rate gross savings achieved from its 2017 inception
through the end of 2020. Key features of the program include
reducing manufacturing complexity, reducing organizational
headcount and optimizing marketing spend. Some of these savings
have been reinvested into business improvements initiatives,
yielding around $450 million of EBITDA growth from trough levels.
In February 2021, the company announced another $250 million cost
reduction target, through outsourcing key manufacturing functions
and further business simplification efforts. Given Mattel's
demonstrated ability to achieve cost reduction targets in recent
years, Fitch expects the $250 million could support modest EBITDA
margin expansion from the 15.4% level in 2020 given some mitigating
factors like cost inflation and ongoing business reinvestment. As
such, given Fitch's revenue growth forecast, EBITDA could improve
from approximately $710 million in 2020 toward $775 million by
2023.
4.0x Leverage; Positive FCF: Mattel's improved operating trajectory
has led to leverage declines, with 2020 gross debt/EBITDA of 4.1x
relative to 6.4x in 2019 and the 11x peak in 2017/2018. Assuming
modest growth in EBITDA beginning 2021, leverage could trend around
4.0x over the next two to three years.
Mattel's operating performance has also led to a meaningful
turnaround in the company's cash flow. Following several years of
materially negative cash flow, FCF turned positive at $65 million
in 2019, largely on EBITDA growth, but aided by reduced capex and
the suspension of Mattel's dividend of around $500 million per year
(approximately $310 million in 2017 due to a mid-year suspension).
FCF in 2020 further improved to approximately $170 million on
EBITDA growth, somewhat restrained by an approximately $130 million
cash usage from working capital swings. Beginning 2021, Fitch
estimates FCF could expand to the $250 million to $300 million
range, given Fitch's EBITDA projections and assuming neutral
working capital.
The company's improving FCF generation and reduced leverage have
enhanced financial flexibility, particularly considering the
seasonal nature of Mattel's business and its need to fund holiday
inventory in advance of the selling season. During the 2016-2018
period, the company issued approximately $750 million of debt (net
of repayments) to support ongoing operations given weak cash
trends; the company has not needed to issue debt subsequently given
its improved FCF position. In fact, assuming around $250 million to
$300 million of annual FCF beginning 2021, the company could be
poised to contemplate deployment options, including resumption of
Mattel's dividend, debt reduction, strategic investments or other
options. Upcoming debt maturities are manageable, with $250 million
and $1.5 billion of unsecured notes due March 2023 and December
2025, respectively; Fitch expects Mattel to extend its $1.6 billion
asset-based revolver due November 2022.
DERIVATION SUMMARY
Mattel's Upgrade to BB/Stable reflects the company's meaningfully
improved operating trajectory, which has increased Fitch's
confidence in the company's longer-term prospects and financial
flexibility. EBITDA in 2020 reached approximately $710 million, up
from the 2017/2018 trough of approximately $270 million, largely on
cost reductions. EBITDA improvement caused FCF to turn positive in
2019/2020 after four years of outflows; gross debt/EBITDA improved
from the 11x peak in 2017/2018 to 4.1x in 2019. Revenue has
stabilized in the $4.5 billion range with many of Mattel's key
brands demonstrating good consumer trends at retail. Fitch projects
low single digit revenue growth beginning 2021, which could drive
similar to slightly higher growth in EBITDA assuming some benefits
from Mattel's recently announced $250 million cost reduction
program.
Mattel is one of the largest companies in the approximately $90
billion (at retail) global toy industry and its direct competitors
include Hasbro Inc. (BBB-/Negative, $5.5 billion in 2020 revenue),
The Lego Group ($6.3 billion in 2019 revenue) and Bandai Namco
Holdings ($6.4 billion in 2020 revenue).
Hasbro's (BBB-/Negative) operating results have been significantly
less volatile than Mattel's; with revenue increasing at a five-year
CAGR of 2.0% through 2019 compared with a 5.6% decline at Mattel in
the same period, prior to coronavirus-impacted results in 2020.
Hasbro's long-term revenue growth is attributed to its successful
focus on brand extensions and product innovation, and entertainment
licensing wins, such as its takeover of the Disney princess license
from Mattel beginning in 2016. The company's leverage profile is
elevated following the acquisition of Entertainment One Ltd. (eOne)
in December 2019, ending at approximately 4.9x in 2020. The
Negative Outlook reflects concerns that gross debt/EBITDA could be
sustained above 3.5x beyond 2022, and therefore ratings could be
stabilized with greater confidence that a combination of good
organic growth, synergy achievement and debt reduction yield gross
debt/EBITDA below 3.5x.
Mattel is similarly rated to Spectrum Brands, Inc. (BB/Stable),
ACCO Brands Corporation (BB/Stable), Central Garden and Pet Company
(BB/Stable), and Levi Strauss & Co. (BB/Negative).
Spectrum's 'BB' rating reflects the company's diversified portfolio
across products and categories with well-known brands, and
commitment to maintain leverage (net debt/EBITDA) between 3.0x and
4.0x, which equates to a similar gross debt/EBITDA target. The
rating also reflects expectations for modest organic revenue growth
over the long term, reasonable profitability with an EBITDA margins
near 15%, and positive FCF. These positive factors are offset by
recent profit margin pressures across segments and the company's
acquisitive posture, which could cause temporary leverage spikes
following a transaction.
ACCO's IDR of 'BB' reflects the company's consistent FCF and
reasonable gross leverage around 3x given ongoing debt repayment
post recent acquisitions. The ratings are constrained by secular
challenges in the office products industry and channel shifts
within the company's customer mix, as evidenced by recent results,
along with the risk of further debt-financed acquisitions.
Central Garden & Pet Company's 'BB'/Stable rating reflects the
company's strong market positions within the pet and lawn and
garden segments, robust FCF and moderate leverage offset by limited
scale with EBITDA below $400 million, pro forma for recent
acquisitions. Fitch expects modest organic revenue growth over the
medium term supplemented by acquisitions, with EBITDA margins in
the 11% range. Gross leverage (total debt/EBITDA) is expected to
trend in the mid-to-high 3x range, up from 2.6x in fiscal 2020
(ended September) as the company manages leverage in this range
over time.
Levi's 'BB' IDR reflects the significant business interruption
resulting from the coronavirus pandemic and changes in consumer
behavior, which have materially reduced sales of apparel, while the
Negative Outlook reflects uncertainty regarding the timing and
magnitude of a recovery in operating momentum.
Adjusted leverage increased to approximately 6.0x in fiscal 2020
(ended November 2020) from 3.1x in fiscal 2019 as EBITDA declined
to approximately $360 million from approximately $750 million in
fiscal 2019 on a nearly 23% sales decline to $4.45 billion.
Adjusted leverage is expected to be in the high-3.0x in fiscal
2021, assuming sales and EBITDA declines of around 12% from fiscal
2019 levels. Increased confidence in Levi's ability to achieve
Fitch's projections and bring adjusted leverage to under 4x would
lead to a stabilization in Fitch's Ratings Outlook.
KEY ASSUMPTIONS
Fitch's key assumptions within the agency's rating case for the
issuer include:
-- Revenue in 2021 is expected to be around $4.8 billion, up
around 4% from 2020 levels on an improving supply/demand
inventory balance at retail and an enhanced slate of
theatrical and streaming media releases with toy tie-ins.
Revenue beginning 2022 is projected in the 2% range, similar
to long term growth averages for the global toy category.
-- EBITDA is forecast to increase to around $730 million in 2021,
above the approximately $710 million in 2020 and well above
the approximately $270 million trough in 2017/2018 largely due
to Mattel's structural simplification cost savings in recent
years, partially offset by inflation pressures and top-line
reinvestments. EBITDA growth from 2020 to 2021 is predicated
on revenue expansion and benefits from Mattel's newly
announced cost reduction program. EBITDA beginning 2022 could
grow modestly, in line with top-line expansion.
-- FCF is expected to be in the $250 million to $300 million
range beginning 2021, above the approximately $170 million
recorded in 2020, which was negatively impacted by a working
capital swing; Fitch assumes working capital is neutral in its
forecast. Fitch's FCF projection assumes dividends, which were
last paid in 2017, continue to be suspended over the medium
term. FCF could be used to support new growth initiatives,
resume the company's share buyback program or repay upcoming
debt maturities.
-- Gross leverage (gross debt/EBITDA), which improved to 4.1x in
2020 from 6.4x in 2019 on EBITDA improvement, is projected to
trend in the 4x range beginning 2021 assuming modest annual
EBITDA growth and flat debt levels. Mattel's next maturities
include its $1.6 billion ABL due November 2022 and $250
million of unsecured notes due March 2023. Fitch assumes the
2023 maturity will be refinanced although Mattel could use
internally generated cash to repay these notes.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action could result if Mattel generates
organic revenue growth in the low single digits, yielding
EBITDA trending toward $800 million, with gross leverage
(gross debt/EBITDA) sustained below 4x.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A negative rating action would result from resumption of
negative top-line trends or EBITDA declining toward $600
million, yielding gross leverage (gross debt/EBITDA) 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 Near-Term Liquidity: As of Dec 31, 2020, Fitch estimates
Mattel's liquidity totaled approximately $1.6 billion and consisted
of $762 million of cash and equivalents and estimated $850 million
of availability (defined as borrowing base less outstanding
borrowings and LOC) under its $1.6 billion senior secured revolving
credit facilities due November 2022.
The $1.6 billion credit facilities consist of a $1.31 billion
asset-based lending facility, with availability subject to a
borrowing base, and a fully funded $294.0 million facility. The
$1.31 billion facility is secured by the inventory and accounts
receivable of its large subsidiaries in developed markets while the
$294 million facility is secured by certain U.S. fixed assets and
intellectual property of the U.S. borrowers and certain equity
interests in various subsidiaries of Mattel.
The net book value of the accounts receivable and inventory
currently pledged as collateral under the $1.31 billion facility
was approximately $935 million per Mattel's 2020 10-K, which
equates to approximately 60% of total working capital assets (total
accounts receivable of $1,034 million and inventory of $515
million) as of Dec. 31, 2020. Fitch consequently assumes 60% of
Mattel's total inventory and receivables on an ongoing basis serve
as collateral for the $1.31 billion facility and then applies a 30%
haircut to calculate net orderly liquidation value and an 85%
advance rate against the NOLV to derive the quarterly borrowing
base. Fitch assumes the $294 million fixed asset and IP facility is
well collateralized and fully available at all times.
Given expectations of positive FCF of at least $250 million
annually beginning 2021, Fitch expects excess liquidity after
seasonal borrowings and LOC to at least meet the current projected
$1 billion level.
The company's next maturities include its asset-based loan in
November 2022 and $250 million of unsecured bonds due March 2023.
Under its covenants, Mattel currently has the capacity to continue
issuing guaranteed debt to refinance these maturities.
Recovery Considerations
Fitch has assigned Recovery Ratings (RRs) to the various debt
tranches in accordance with Fitch criteria, which allows for the
assignment of RRs for issuers with IDRs in the 'BB' category. Given
the distance to default, RRs in the 'BB' category are not computed
by bespoke analysis. Instead, they serve as a label to reflect an
estimate of the risk of these instruments relative to other
instruments in the entity's capital structure. Fitch assigned
Mattel's ABL an 'BBB-'/'RR1', notched up two from the IDR and
indicating outstanding recovery prospects (91%-100%) in a default
scenario. Mattel's guaranteed unsecured debt was assigned an
'BB'/'RR4' given average recovery prospects (51%-70%). Mattel's
non-guaranteed unsecured debt was assigned an 'BB'/'RR5',
indicating below average recovery prospects (31%-50%) given the
presence of guaranteed debt in the capital structure.
SUMMARY OF FINANCIAL ADJUSTMENTS
Summary of Financial Statement Adjustments - Stock-based
compensation, severance and restructuring expenses, and product
recall expenses.
ESG CONSIDERATIONS
Mattel has an ESG Relevance Score of '4' for Financial Transparency
due to recent financial restatements, which has a negative impact
on the credit profile and is relevant to the ratings in conjunction
with other factors.
In November 2019, Mattel filed an amended 2018 10K, which corrected
certain tax-related entries for 3Q17 and 4Q17; together these
corrections had no impact on Mattel's full year 2017 results or its
cash flows. This action followed an independent investigation,
initiated after a whistleblower letter was sent to management. The
company determined there were material weaknesses in its internal
controls over financial reporting.
As remediation, the company replaced its lead audit partner
although Price water house Coopers LLP remains the company's
external audit firm. The company has also added controls and
processes to its accounting function to reduce the risk of future
errors. Finally, Mattel's CFO departed the company in 2020, which
may be related to the investigation. In December 2019, the company
received a subpoena from the SEC requesting documentation and
information regarding the issue, and per the company's 2020 10K
(filed Feb. 25, 2021) continues to respond to the SEC's request.
Fitch recognizes the company's steps taken to reduce risk.
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.
MERCY HOSPITAL: Buyer Looks to Flint for Chicago Revival
--------------------------------------------------------
Lauren Coleman-Lochner of Bloomberg News reports that Insight, the
buyer that would save Mercy Hospital and Medical Center, is looking
to Flint, Michigan, as it plots a revival for the bankrupt Chicago
facility.
Mercy and its Bronzeville neighborhood bear "striking similarities"
in terms of demographics and history, Atif Bawahab, chief strategy
officer of Insight, said in an interview. The Flint-based
biomedical company agreed to purchase Mercy this week in a deal
that still needs regulatory approval.
Bawahab said Mercy came to Insight's attention last 2020 after
reports that owner Trinity Health Corp. planned to close it.
About Mercy Hospital
Mercy Chicago is a general medical and surgical Catholic teaching
hospital in Chicago, Illinois that was established in 1852 and was
the first chartered hospital in state. Mercy Hospital operates the
general acute care hospital known as Mercy Hospital & Medical
Center, located at 2525 South Michigan Avenue, Chicago, Illinois.
The Hospital has 412 authorized beds and offers inpatient and
outpatient services. Mercy Health System of Chicago, an Illinois
not-for-profit corporation, is the sole member of Mercy Hospital.
The health care facilities that are part of Trinity Health's
network of health care providers. On the Web:
http://www.mercy-chicago.org/
Mercy Hospital and Medical Center and Mercy Health System of
Chicago sought Chapter 11 protection (Bankr. N.D. Ill. Case Nos.
21-01805 and 21-01806) in Chicago on Feb. 10, 2021. The Debtor
estimated $100 million to $500 million in assets and liabilities as
of the bankruptcy filing.
Foley Lardner LLP, led by Matthew J. Stockl, is the Debtor's
counsel.
MERITAGE COMPANIES: Wins April 26 Plan Exclusivity Extension
------------------------------------------------------------
Judge Madeleine C. Wanslee of the U.S. Bankruptcy Court for the
District of Arizona extended by 60 days the periods, on an interim
basis within which Meritage Companies, LLC has the exclusive right
to file a plan of reorganization and to solicit acceptances to
April 26, 2021. This is the Debtor's second request for an
extension.
The extension is appropriate under the circumstances like the
Debtor and the principal for the Debtor, Jack A. Barrett, will be
participating in mediation to hopefully come to a resolution on the
claims asserted by Robert "Bob" A. Gross and it would be best to
see if this mediation can be fruitful before proceeding on the
Plan.
The Debtor is leading this case to a fair and equitable resolution
by, among other things, participating in mediation to facilitate a
potential resolution of Gross' claims.
In light of these issues, the Debtor will use the 60-day extension
to complete the mediation and then work on the Plan of
Reorganization.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3kRVAdx from PacerMonitor.com.
A copy of the Court's Interim Extension Order is available at
https://bit.ly/3bjchvc from PacerMonitor.com.
About Meritage Companies
Meritage Companies, LLC, a land developer in Wasilla, Alaska,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Ariz. Case No. 20-07718) on June 30, 2020. The petition was
signed by Jack A. Barrett, manager.
At the time of the filing, the Debtor had estimated assets of less
than $50,000 and liabilities of between $10 million and $50
million.
Previously, Judge Brenda K. Martin oversees the case. Now, Judge
Madeleine C. Wanslee presides over the case. The Debtor tapped
Lamar D. Hawkins, Esq., at Guidant Law, PLC, as legal counsel,
David H. Bundy, Esq., of the Law Office of David H. Bundy, PC as
special counsel and Coldwell Banker Brokerage-Ogden, as real estate
broker. On December 8, 2020, the Debtor employed Rick Jones as a
criminal investigator.
MGM RESORTS: S&P Lowers Issuer Credit Rating to 'B+', Outlook Neg.
------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit ratings on global
gaming operator MGM Resorts International and its majority-owned
subsidiaries MGM China and MGM Growth Properties (MGP) to 'B+' from
'BB-'. The outlook is negative.
S&P said, "We are revising our recovery rating on MGP's unsecured
notes to '2' from '3' and affirming our 'BB-' issue-level ratings
on the notes. Previously, our recovery rating was capped at '3'
because MGP was rated 'BB-'. We are lowering all other issue-level
ratings by one notch.
"At the same time, we are removing all ratings from CreditWatch,
where we placed them with negative implications on March 20, 2020.
The negative outlook reflects continued significant stress on
revenue and cash flow in 2021 and our forecast for lease-adjusted
net leverage to be very high in 2021. This places heavy reliance on
a significant recovery in cash flow in 2022 to support leverage
improving below our downgrade threshold of 6.5x at the 'B+' rating
level."
MGM's leverage will likely remain very high in 2021 because its
portfolio of properties in its largest markets, Las Vegas and
Macau, is recovering more slowly than its regional casinos, but
leverage could improve below 6.5x by the end of 2022. S&P said,
"Although we expect MGM's consolidated lease-adjusted leverage to
remain very high (above 10x) in 2021, we believe that the company's
recovery will pick up speed later in 2021 and into 2022, which
should support lease-adjusted net leverage improving below 6.5x by
the end of next year. (We add MGM's $8.4 billion of operating lease
liabilities to our measure of debt and net cash balances in excess
of $500 million, our estimate of required cage cash, against debt
balances.)"
S&P believes MGM's regional portfolio will be the largest
contributor to cash flow in 2021, experiencing a more robust
revenue and EBITDA recovery than Las Vegas and Macau. Regional
casinos are benefitting from customers staying closer to home with
limited other entertainment and travel options. In addition, MGM's
regional portfolio's cash flow should benefit from cost cuts
management implemented while the properties were closed, especially
in labor and marketing, a portion of which S&P believes will be
permanent. In addition, the ongoing closure of many lower-margin or
loss-leading amenities for health and safety reasons is supporting
margin improvement, and these amenities may not reopen for some
time, if at all.
MGM's Las Vegas resorts, which typically represent about half of
property level EBITDAR, will likely remain under significant
pressure until the second half of 2021, when vaccines might be more
widely distributed and further improve visitation to Las Vegas. S&P
said, "The market relies heavily on air travel, international
visitation, and conventions and group meetings--categories that we
believe will be slow to return and may experience more permanent
disruption. We understand group room nights represent 20%-30% of
MGM's typical room nights in a year, and this significant base of
business supports midweek rates and occupancy and allows the
company to achieve a better revenue yield on the remaining rooms to
leisure travelers. We believe group cancellations are occurring in
the first half of this year and will likely extend into the third
quarter given lengthy planning times and uncertainty around the
relaxation of group gathering restrictions and the vaccine rollout.
Nevertheless, we believe bookings for 2022 and 2023 remain intact
for now and are on pace with previous years." However, a
combination of factors, including potential lingering restrictions
on the size of gatherings and safety concerns, lower corporate
travel budgets, and corporate travel restrictions could impair this
segment for an extended period.
S&P said, "As a result of these headwinds, we believe MGM will not
be able to improve leverage below our 5.5x leverage threshold for
the previous 'BB-' rating but that it could improve leverage below
6.5x by the end of 2022. Nevertheless, our 'B+' issuer credit
rating places a heavy reliance on significant cash flow recovery in
2022 and material deleveraging." S&P's forecast and expectations
for MGM's gradual recovery over the next few years include:
-- A widely distributed vaccine by the end of the third quarter of
2021, which could bode well for MGM's recovery in 2022;
-- Very high-quality asset portfolio and its strong brand
identity;
-- Good presence in two of the largest global gaming markets and
our view that visitation to these markets will eventually recover
along with leisure, business, and group travel;
-- A strong portfolio of regional gaming assets that supports cash
flow generation in 2021 because these assets recover closer to 2019
levels faster than Las Vegas and Macau;
-- A good liquidity profile, consisting of sizable cash balances
and revolver availability; and
-- Continued good access to the capital markets to address
maturities in 2022, but the ability to repay that maturity with
cash on the balance sheet under our base case forecast.
MGM has good liquidity to navigate a gradual recovery. MGM ended
2020 with significant cash on the balance sheet and revolver
availability, which should provide the company good liquidity to
navigate a gradual recovery. At its domestic operations, the
company had roughly $5.6 billion of total liquidity. S&P said,
"Under our base case forecast, we believe this level of liquidity,
combined with our domestic EBITDAR forecast, is more than
sufficient to cover sizable rent payments to MGP and to the owners
of the real estate of Bellagio, Mandalay Bay, and MGM Grand,
interest, and capital expenditures and other investment spending.
Further, we believe the company retains good access to capital
markets and will likely refinance its $1 billion senior note
maturity in March 2022 but that it would have sufficient cash and
revolver availability to repay this maturity with cash if needed.
We expect rent payments to MGP from MGM should be sufficient to
cover MGP's operating costs and dividend payments and that the most
likely use for its $2 billion of liquidity might be acquisitions;
however, there are none contracted at this time. In addition, we
believe MGM China's $1.2 billion of liquidity at the end of 2020
should support its spending needs under our assumed gradual
recovery in 2021 and 2022."
S&P said, "We consolidate MGM China and MGP in our analysis of MGM.
MGM is the majority owner of both MGP and MGM China, which gives it
the ability to exercise significant influence over these entities.
As a result, we consolidate both entities into our analysis of MGM,
capping the issuer credit ratings on both MGP and MGM China.
"Although MGM's ownership stake in MGP has fallen to 53% over the
last year, we still consolidate MGP (and its joint venture) in our
rating analysis of MGM given its majority ownership, board seats,
and influence over MGP. In addition, because MGP shares a brand
name with MGM, we believe it is closely linked to MGM's reputation.
We believe the assets that were sold to MGP are an integral part of
MGM's current and future operating strategy in Las Vegas. Despite
the reduction in its ownership over the past year, MGM retains
voting control through its ownership of MGP's single class B share.
This share provides MGM with a majority of the voting power as long
as it retains economic ownership of at least 30%. MGM consolidates
MGP into its financial statements, and we expect it will continue
to do so. Therefore, it is unlikely that we will deconsolidate MGP
until MGM materially reduces its influence over MGP, including its
voting control, economic ownership, and governance.
"We believe MGM China is integral to MGM's identity and future
strategy and is unlikely to be sold. MGM China operates in the same
line of business as MGM, shares a common brand, and represents a
growth vehicle for further international developments, a key focus
of the company. We believe MGM China is closely linked to MGM's
reputation and brand and contributes to and benefits from MGM's M
life loyalty program. In addition, MGM maintains a controlling
ownership position and consolidates MGM China within its financial
statements. MGM China also represents about 20%-25% of our forecast
consolidated property-level EBITDA in 2021 and 2022, which we
believe is meaningful. Furthermore, MGM has the ability to
influence MGM China's dividend policy and historically has been
able to extract cash flows from MGM China in a normal operating
environment."
Environmental, social, and governance (ESG) credit factors for this
credit rating change
-- Health and safety
S&P said, "The negative outlook reflects continued significant
stress on revenue and cash flow in 2021 and our forecast for lease
adjusted net leverage to be very high in 2021. This places heavy
reliance on a significant recovery in cash flow in 2022 to support
leverage improving below 6.5x. The negative outlook further
reflects the potential for continued operating restrictions across
its gaming markets over the coming months until widespread
immunization is achieved and the continued implementation of social
distancing measures that may impair consumer discretionary
spending.
"We could lower the rating if the recovery in revenue and cash flow
in Las Vegas and Macau were slower than we expected, such that we
no longer believed lease-adjusted net leverage would improve below
6.5x in 2022. More specifically, we could lower the rating if
recovery in the second half of 2021 were weaker than expected,
causing us to no longer believe that the company could achieve
these metrics in 2022.
"We could revise the outlook to stable once we believed that
widespread immunization, coronavirus containment, and economic
recovery were robust enough in key markets to enable MGM to improve
lease-adjusted net leverage below 6.5x in 2022. We could raise the
rating if we expected MGM to sustain lease-adjusted net leverage
below 5.5x."
MOBITV INC: Gets Cash Collateral Access on Interim Basis
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
authorized MobiTV Inc. to use cash collateral on an interim basis
in accordance with the DIP Documents and the Budget, subject to the
permitted variances in the DIP Credit Agreement.
The Debtors have an immediate need to obtain the postpetition
financing and to use Cash Collateral to, among other things, permit
the orderly continuation of the operation and maintenance of their
businesses, minimize the disruption of their business operations
and other efforts and activities, and preserve and maximize the
value of the assets of the Debtors' Estates to maximize the
recovery to all creditors of the Estates.
The Debtors are authorized to execute and deliver the DIP Documents
and to immediately borrow, incur, and obtain the DIP Loans, under
the DIP Credit Agreement in an aggregate principal amount of up to
Interim Loan Amount, with draws to be made upon entry of thes
Interim Order and satisfaction or waiver of ther conditions, in the
DIP Credit Agreement, and in accordance with the Budget, and to pay
all interest, costs, fees, and other amounts and obligations
accrued or accruing under the DIP Credit Agreement and the other
DIP Documents.
The DIP Facility consists of a junior secured multi-draw term loan
facility on the terms and conditions substantially in the form of
the Debtor-in-Possession Loan and Security Agreement by and among
the Debtors as Borrowers and TVN Ventures, LLC consisting of a new
money multi-draw term loan facility in an aggregate principal
amount of up to $15,500,000. The Debtor is authorized to make
draws of DIP Loans under the DIP Commitments in the principal
amount of up to $7,500,000 and upon entry of the Final Order and
satisfaction or waiver of the other conditions, the full remaining
amount of the DIP Commitments will be available to the Borrowers,
subject to compliance with the terms, conditions, and covenants
described in the DIP Documents.
As adequate protection for the Debtor's use of cash collateral, the
Prepetition Lender is granted valid and perfected postpetition
replacement security interests in and liens upon the Replacement
Collateral and superpriority administrative expense claims.
A final hearing on the matter is scheduled for March 30, 2021 at 2
p.m.
A copy of the order is available for free at https://bit.ly/3sSXr4J
from PacerMonitor.com.
About MobiTV Inc.
Founded in 2000, MobiTV is the first company to bring live and
on-demand television to mobile devices and is a leader in
application-based television and video delivery solutions. MobiTV
provides end-to-end internet protocol streaming television services
("IPTV") via a proprietary cloud-based, white-label application.
On March 1, 2021, MobiTV Inc. and MobiTV Service Corporation filed
for Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-10457).
MobiTV Inc. estimated at least $10 million in assets and $50
million to $100 million in liabilities as of the filing.
Judge Laurie Selber Silverstein oversees the case.
FTI Consulting, Inc. and FTI Capital Advisors LLC have been
retained as the Company's financial advisor and investment banker
to assist in negotiation of strategic options. Pachulski Stang
Ziehl & Jones LLP and Fenwick & West LLP are serving as the
Company's legal advisors. Stretto is the claims agent,
maintaining
the page https://cases.stretto.com/MobiTV.
MONOTYPE IMAGING: S&P Alters Outlook to Stable, Affirms 'B-' ICR
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
Woburn, Mass.-based font software licensing provider Monotype
Imaging Holdings Inc. and revised the rating outlook to stable from
negative.
S&P aid, "We are assigning our 'B-' issue-level rating to the
incremental first-lien term loan and affirming the existing 'B-'
first-lien facility debt rating. The recovery rating on the first-
lien facilities is a '3'.
"The stable outlook reflects our expectation for potential delays
in new Enterprise sales to be offset by improving new and upsell
pipeline opportunities and continued progress on the company's cost
reduction plan, supporting positive free cash flow generation over
the next 12 months."
Full access to the company's $70 million revolver will alleviate
immediate liquidity concerns; however, the risk of elongated sales
patterns and revenue delays will likely extend into 2021.
S&P said, "Pro forma for the transaction, we estimate that gross
adjusted leverage (S&P basis) will rise to about 7x, from around
6.7x estimated at the close of 2020. Despite the incremental
indebtedness, the transaction eases near-term liquidity issues as
the company will use proceeds to repay existing revolver borrowings
and fund cash for opportunistic M&A. While customer retention has
held steady over the last 12 months, new and upsell Enterprise
sales cycles faced delays in closing deals, and the company's auto
and variable printer-related royalty sales weakened somewhat. We
expect the company could continue to face continued slow sales in
the coming quarters; however, the incremental liquidity from the
term loan raise offers improved flexibility to meet uncertain
demand patterns.
Absent a steady improvement in operating performance over the next
12 to 18 months, mandatory debt amortization step-ups in 2022 could
result in the reliance on revolver borrowings to fund cash deficits
and could result in ratings pressure. Commencing in the second
quarter of 2022 Monotype's mandatory debt amortization schedule
steps up to substantial quarterly payments of 1.25% of its first
lien term loan, from previous quarterly payments of 0.625%. S&P
said, "Accordingly, we view Monotype's ability to improve its free
operating cash flow over the next 12 months as key to retaining its
current rating. We would likely consider lowering our rating if we
come to expect that the company will have to rely on its revolving
line of credit to fund operating or debt servicing needs. Improving
recurring revenue patterns and continued execution on its
aggressive cost reduction plan should support improved cash flow.
Monotype's total cost-reduction initiatives are now up to $29
million in expense reductions--nearly double the originally
identified $15 million that had been originally targeted at the
time of its initial transformation. And, the company continues to
progress on its strategy to reposition itself for increased
recurring Enterprise sales through investments in its sales force,
revenue upsell through the use of its Enterprise-focused font
licensing platforms, and management of its printer-related
contracts which comprise about 80% of fixed-rate deals over
historically volatile royalty-based contracts. Nonetheless, we
continue to view the company's seasonality as a key risk given that
sales are highly concentrated (Monotype typically generates over
one-third of annual revenue in the fourth quarter of the year), and
quarterly sales visibility is somewhat limited and subject to
lumpiness in closing that can cause quarterly margin volatility."
S&P said, "The stable outlook reflects our expectation for
potential delays in new Enterprise sales to be offset by improving
new and upsell pipeline opportunities and continued progress on the
company's cost reduction plan, supporting positive free cash flow
generation over the next 12 months.
"We could lower the rating if we expect sustained quarterly free
cash flow deficits, revenue declines (particularly in the company's
Enterprise segment), or other operational challenges related to the
company's business repositioning and cost transformation plan
stress the company's liquidity position or cause us to view its
capital structure as unsustainable."
S&P would also consider lowering the rating if:
-- S&P expects the company to have to rely on its revolving credit
facility to fund operations;
-- High priced acquisitions result in a sharp decline in the
company's liquidity position; or
-- The company struggles to successfully execute the proposed
liquidity-enhancing transaction.
S&P said, "While unlikely over the next 12 months, we could
consider raising the rating on Monotype if S&P Global
Ratings-calculated debt to EBITDA improved on a sustained basis to
the low-6x area, while free operating cash flow (FOCF) to debt
improved to the mid-single-digit percent area. We would expect the
company's operating margins to improve to the 40% area while its
EBITDA base grows with recurring Enterprise contract wins."
MTPC LLC: Granted Cash Collateral Access on Interim Basis
---------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Tennessee,
Nashville Division, has authorized MTPC, LLC and affiliates to,
among other things, use cash collateral on an interim basis in
accordance with the budget.
The Debtor has requested the use of Cash Collateral in connection
with the Bankruptcy Cases to ensure that the patients are treated,
operations are maintained, and going-concern value is preserved and
maybe maximized for the Debtor's estate and its constituents,
including employees. Without the use of Cash Collateral of at
least $6,394,640 in the aggregate on an interim basis through the
date of the final hearing on the Motion (on or about April 2,2021),
the Debtor would suffer immediate and irreparable harm.
The Debtor is obligated to the Bond Trustee for the benefit of the
beneficial holders of the tax-exempt Bonds authorized and issued by
The Health and Educational Facilities Board of the City of Franklin
for the benefit of the Debtor.
The Issuer issued its $113,660,000 aggregate principal amount of
Revenue Bonds, comprised of $108,660,000; and a series of
subordinate bonds in the aggregate principal amount of $5,000,000
pursuant to the MTPC Master Trust Indenture between the Issuer and
Bond Trustee.
The proceeds of the Series 2017 Nashville Bonds were loaned to MTPC
pursuant to a Loan Agreement dated as of June 1, 2017, between the
Nashville Issuer and MPTC. MTPC used the proceeds of the Series
2017 Nashville Bonds to: (a) refinance certain outstanding debt
that originally was used to acquire, construct and equip the
Nashville Center, (b) finance improvements to the Nashville Center,
(c) finance capitalized interest, (d) fund a debt service reserve
fund, and (e) finance costs of issuance.
Pursuant to the MTPC Master Trust Indenture, the MTPC Loan
Agreement, and the Deed of Trust, Security Agreement, Assignment of
Rents and Leases and Fixture Filing executed and delivered by MTPC,
as Grantor, the MTPC Master Trustee was granted a security interest
in, among other things, all of MTPC's right, title, and interest in
a real property listed therein and all buildings improvements and
fixtures of every kind, and all machinery, equipment and property
that are or will be attached, or be deemed to be fixtures and a
part of the Nashville Real Property.
The MTPC Master Indenture also provides for security interest in
favor of the MTPC Master Trustee in "all receipts, revenues,
rentals, income, insurance proceeds."
On or about April 15,2020, UMB replaced U.S. Bank National
Association, as the MTPC Master Trustee.
As of the Petition Date and prior to accounting for prepetition set
off by the Bond Trustee , there was approximately $108,660,000 in
principal amount outstanding on the Secured Series 2017 Nashville
Bonds: and approximately $5,000,000 in principal amount outstanding
on the Unsecured Series 2017 Nashville Bonds.
The Debtor is authorized to use, as cash collateral, any Gross
Revenues derived by ihe Debtor in the ordinary course of its
business, all accounts receivable held by the Debtor, and all
amounts currently held in the Debtor's operating accounts.
As adequate protection for any diminution in the value of Cash
Collateral and other Prepetition Bond Collateral in aggregate
resulting from the Debtor's cash collateral use, the Bond Trustee
is granted a valid, perfected, and enforceable replacement lien and
security interest in all assets of the Debtor and all other assets
of the Debtor of any kind or nature.
As additional adequate protection, the Bond Trustee will have a
superpriority administrative-expense claim and will be allowed to
access the premises of the Debtor to conduct appraisals, analyses,
and or audits of the Prepetition Bond Collateral and the
Collateral. However due to the COVID-19 pandemic, third-parties
may be restricted from physical access to the Facility and, when
such physical access is not possible, the Debtor may satisfy this
obligation by providing sufficient information to the Bond Trustee
in electronic or hard-copy format, and will otherwise reasonably
cooperate in providing any other financial information reasonably
requested by the Bond Trustee for this purpose.
A continued hearing on the motion is scheduled for March 23, 2021
at 11:00 a.m.
A copy of the order is available for free at https://bit.ly/3sWjVBF
from Stretto, the claims agent.
About MTPC LLC
MTPC LLC is a proton-therapy cancer-treatment center that serves a
multi-state area of the Southeastern United States and began
operations in 2018. It is a freestanding center with three active
treatment rooms including one fixed beam and two gantries. MTPC
is
located in a 43,500-square-foot building adjacent to the campus of
the Williamson Medical Center, in Franklin, Tenn.
MTPC's affiliate, The Proton Therapy Center, LLC, is a Tennessee
limited liability company that was organized in 2010. It is a
freestanding center with three active treatment rooms including one
fixed beam and two gantries. Proton Therapy Center is located in
an 88,000-square-foot building on the campus of the Provision Case
CARES Cancer Center at Dowell Springs, in Knoxville, Tenn., a
comprehensive healthcare campus focusing on cancer treatment,
patient care, research, and education.
PCPT Hamlin, another affiliate of MTPC, is a Florida limited
liability company that was organized in 2018. It includes an
approximately 36,700-square-foot building in the 900-acre Hamlin
planned development in the "Town Center" of the 23,000-acre
"Horizon West" planning area of West Orange County.
MTPC and its affiliates sought Chapter 11 protection (Bankr. M.D.
Tenn. Lead Case No. 20-05438) on Dec. 15, 2020.
As of Aug. 31, 2020, MTPC's unaudited financial statements
reflected total assets of approximately $105.6 million and total
liabilities of approximately $131.2 million. Proton Therapy
Center's unaudited financial statements reflected total assets of
approximately $93.4 million and total liabilities of approximately
$130.2 million. Meanwhile, PCPT Hamlin's unaudited financial
statements reflected total assets of approximately $139.2 million
and total liabilities of approximately $138.5 million.
The Hon. Randal S. Mashburn is the case judge.
The Debtors tapped Waller Lansden Dortch & Davis, LLP and Foley &
Lardner, LLP as bankruptcy counsel, Trinity River Advisors, LLC as
restructuring advisor, and CRS Capstone Partners, LLC as financial
advisor. Stretto is the claims agent.
The U.S. Trustee for Region 8 appointed an official committee of
unsecured creditors on Jan. 8, 2021. The committee is represented
by Sills Cummis & Gross P.C. and Manier & Herod, P.C.
MURPHY OIL: S&P Rates $550MM Senior Unsecured Notes Due 2028 'BB'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level and '3' recovery
ratings to U.S.-based oil and gas exploration and production
company Murphy Oil Corp.'s proposed $550 million senior unsecured
notes due 2028. The '3' recovery rating indicates its expectation
for meaningful (50%-70%; rounded estimate: 65%) recovery of
principal to creditors in the event of a payment default. The notes
will rank equally with the company's outstanding senior unsecured
notes.
Murphy will use proceeds from the debt offering, along with cash on
hand, to redeem all of its 2022 notes outstanding.
S&P's 'BB' issuer credit rating and stable outlook on Murphy are
unchanged.
NCL CORP: S&P Downgrades ICR to 'B' on Prolonged Deleveraging Path
------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on global
cruise operator, NCL Corp. Ltd., by one notch to 'B' from 'B+'. S&P
also lowered all issue-level ratings one notch. S&P removed all
ratings from CreditWatch, where it placed them with negative
implications on Dec. 8, 2020.
S&P said, "The downgrade reflects our forecast for credit measures
and operating cash flow generation through 2021 to be even weaker
and materially more negative than we previously anticipated. We
expect a more protracted return to service for the majority of the
company's fleet and significantly lower occupancy levels than in
2019, particularly for initial sailings, which may not resume until
sometime in the third quarter, especially U.S. sailings. These
weaker measures and the potential for additional delays in the
resumption of operations in 2021, translates, in our view, to
greater risk NCL may not significantly improve its 2022 adjusted
leverage to a more manageable level from the unsustainable leverage
in 2021.
"Nevertheless, and despite what we view as unsustainable credit
measures through 2021, we believe NCL has sufficient liquidity to
weather the ongoing suspension and eventual slow resumption of
sailing this year. Credit measures should improve to more
sustainable levels in 2022, even with our expectation that
performance will remain below 2019 levels.
"Our updated 2021 forecast reflects a longer period of cash burn,
because we now believe operations will resume later and capacity
and occupancy will remain well below 2019
"We updated our forecast to reflect our expectation that U.S.
cruising will resume sometime in the third quarter this year and
that capacity and occupancy will remain below that of 2019,
particularly in the initial months after operations resume. We
believe NCL will reintroduce ships in a phased manner (about a ship
a week) and operate them at lower occupancy because of social
distancing measures and potential consumer apprehension for travel
and leisure until widespread immunization is achieved.
"Our forecast is also notwithstanding the October 2020 expiration
of the Centers for Disease Control and Prevention's (CDC) no-sail
order and the announcement of a conditional sailing framework for
the resumption of cruising. Cruise operators are awaiting technical
instructions for complying with the framework. The framework calls
for a very gradual return to service for U.S.-based cruises.
Operators will first have to bring crew back to the ships and test
them, run multiple test cruises with very minimal levels of
volunteer passengers to ensure health and safety protocols are met
and are effective, and then apply for and receive the CDC's
conditional sailing certificate prior to resuming
revenue-generating passenger operations on a ship-by-ship basis.
"We believe a phased resumption of operations may help cruise
operators better align supply and demand, target easily accessible
homeports, and better manage itineraries. But customers may find
the itineraries less desirable. Destinations and the length of
itineraries operators will offer might be limited due to continued
port closures and local government and health authority
restrictions. Additionally, customers' cruise experience might be
impaired by health and safety measures, such as social distancing,
masks, and testing requirements. This could pressure pricing,
particularly on initial voyages for which pricing will already be
impaired by short booking windows, as tickets will likely be sold
close to sailing.
"As a result, we continue to forecast very weak credit measures
through 2021 after significant deterioration in 2020, when
operations were suspended in mid-March."
S&P revised 2021 forecast now contemplates:
-- Cruising from U.S. ports will resume sometime in the third
quarter.
-- 2021 capacity will be materially below (at least 60%) 2019
levels. This assumes minimal initial capacity and that it ramps up
through the second half.
S&P said, "We believe cruise operators will implement social
distancing and other health and safety measures on ships to reduce
the risk of spread of the virus. We believe these may reduce
maximum potential occupancy, profitability, and cash flow. We also
believe lingering travel fears may depress occupancy, particularly
for initial sailings. Net revenue yield in 2021 is about 30% to 40%
below 2019 levels, driven largely by fewer passenger cruise days.
Total revenue recovers to less than 25% of 2019 levels because of
the assumed gradual resumption of operations, significantly fewer
assumed operating days at reduced occupancy, and lower net yields.
We believe NCL will try to manage expenses to limit its EBITDA loss
particularly while operations are suspended and as it ramps up its
fleet. Until there is a clearer path toward the resumption of
sailings, we believe the company's marketing spending will remain
limited. Once operations are close to resuming, we believe NCL
could maintain reduced marketing and selling expenses, particularly
with fewer ships to market.
Additionally, we believe NCL could manage certain ship level
expenses like fuel, food, and crew payroll to align with potential
reduced ship occupancy.
-- NCL, like others in the industry, may face incremental expenses
to implement health and safety protocols and bring ships back into
service.
-- EBITDA remains materially negative given the assumed cash burn
in the first half of the year, and reduced revenue in the second
half compared to 2019.
S&P Global Ratings believes there remains high, albeit moderating,
uncertainty about the evolution of the coronavirus pandemic and its
economic effects. Vaccine production is ramping up and rollouts are
gathering pace around the world. Widespread immunization, which
will help pave the way for a return to more normal levels of social
and economic activity, looks to be achievable by most developed
economies by the end of the third quarter. However, some emerging
markets may only be able to achieve widespread immunization by
year-end or later. S&P said, "We use these assumptions about
vaccine timing in assessing the economic and credit implications
associated with the pandemic. As the situation evolves, we will
update our assumptions and estimates accordingly."
S&P said, "Our forecast for materially negative EBITDA in 2021 and
the potential for further suspensions heightens the risk that NCL
can significantly reduce adjusted leverage and improve cash flow in
2022.
"We believe substantial uncertainty remains as to NCL's ultimate
recovery path. There could be further suspensions in operations and
uncertainty as to how consumers and health authorities such as the
CDC may respond to continued flare-ups or waves of the virus until,
and even once, consumers get vaccinated. Therefore, risks remain as
to NCL's ability to ramp up its EBITDA generation through 2022 to a
level that would support meaningful deleveraging and drive
sufficient cash flow to help address large calls on cash in 2022,
which include $1.2 billion in debt maturities, maintenance capital
spending across its fleet of ships, and the delivery of the
Leonardo ship (we assume that the delivery of the Oceania Allura is
delayed in 2023). NCL has committed financing for about 80% of the
cost of the ship deliveries.
"We believe, however, that in a scenario where demand begins to
recover in 2022, supporting growth in net yields and occupancy
closer to but still below 2019 levels, capacity is close to 2019
levels, and net cruise costs per capacity day, excluding fuel,
decrease closer to 2019 levels, EBITDA might be supportive of
reducing adjusted leverage to the low-7x area, which would provide
some cushion relative to our 7.5x downgrade threshold. However,
this would require EBITDA recovering to around 85% of 2019 levels.
Although there remains a high degree of forecast uncertainty, we
believe this may be possible because NCL has reported its overall
cumulative booked position for the first half of 2022 is
significantly ahead of 2019 at prices in line with 2019 even
including the dilutive impact of future cruise credits.
"We believe NCL has sufficient liquidity to fund its uses and
manage its cash burn under our 2021 forecast and 2022 recovery
scenario.
"Notwithstanding our forecast that its credit measures will remain
very weak through 2021, we believe NCL has sufficient liquidity
sources to fund its cash needs through 2021, and that the proposed
capital raise, if completed, would further enhance its liquidity."
Pro forma for the contemplated capital raise, NCL will have about
$3.9 billion available cash as of Dec. 31, 2020. Notwithstanding,
S&P believes the company's current liquidity provides sufficient
liquidity runway, combined with additional steps to reduce cash
needs including refinancing amortization payments due under export
credit facilities and senior secured credit facilities and delaying
or deferring capital expenditures (capex), to cover the company's
cash needs, for at least 12 months in a zero-revenue environment.
The resumption of sailings at some level later in 2021 would
further extend NCL's liquidity runway.
NCL's lack of ship deliveries until 2022 and its smaller scale are
an advantage in this operating environment, and may support
leverage improvement through 2022.
.
Despite the anticipated weak operating environment, NCL will
continue to make progress payments for ships on order and will
receive multiple previously committed ship deliveries as they are
completed over the next few years and incur the corresponding
ship-level financing, though there may be some shipyard delays
stemming from the coronavirus pandemic. However, NCL's next
scheduled ship delivery and corresponding debt is in 2022 (as the
delivery of its Allura Class ship has been delayed to 2023), which
is later than and, in the current operating environment, compares
favorably to Carnival's and Royal Caribbean's earlier ship delivery
schedules. We expect that considering the closures and delays at
varying shipyards, delivery of its ships in 2022 is likely to be
delayed by at least a few months. NCL's next ship delivery is not
expected until the third quarter of 2022. In the interim, we expect
NCL will operate at maintenance capex levels until there is a clear
path to normal operations.
NCL is the smallest of the three large global cruise operators with
28 ships, compared to Carnival (over 100 ships in 2019) and Royal
(over 60 ships) which means it incurs less ship operating expenses
each month its ships are laid up and given the phased resumption of
sailings, it is possible that NCL will be able to reach its full
fleet capacity before its competitors.
Environmental, social, and governance (ESG) credit factors for this
credit rating change
-- Health and safety
The negative outlook reflects S&P's expectation for negative
EBITDA, continued cash burn, and very weak credit measures through
2021. It also reflects a high degree of uncertainty as to NCL's
recovery path given the potential for a slower restart of cruises
in many markets, further suspensions even once operations resume,
and that the pandemic may alter long-term demand for travel and
cruising.
S&P could lower the rating at any time if:
-- S&P said, "We believe the recovery will be more prolonged or
weaker than we expect in a manner that impairs NCL's competitive
position relative to other travel alternatives for at least some
period of time. This could occur if 2022 forward bookings weaken,
we no longer believe capacity, occupancy, and pricing will improve
in line with our 2022 base case forecast, or if operations do not
resume in the third quarter of 2021 in a manner that would allow
NCL to have the majority of capacity operating in the fourth
quarter of 2021. We anticipate any strain to NCL's liquidity
position, including less confidence in its ability to access
external financing. We no longer believe NCL is on a path to
improve adjusted leverage well below 7.5x;" or
-- S&P said, "We do not believe NCL can generate positive free
operating cash flow (net of committed ship financing) in 2022. It
is unlikely we will revise our outlook to stable or raise the
rating over the next year given the high uncertainty around when
NCL's operations will resume, how long it will take demand for
travel and cruises to recover, and how it will affect our base-case
recovery assumptions, especially until we have widespread
immunization."
Nevertheless, S&P could:
-- Revise its outlook to stable once S&P believes NCL will be able
to build capacity and occupancy closer to pre-pandemic levels, net
revenue yields recover significantly, net cruise costs per
available passenger per cruise day (APCD), excluding fuel, improve
closer to 2019 levels, and adjusted leverage declines well below
7.5x on a sustained basis; or
-- While unlikely given S&P's forecasted leverage through 2022,
raise its ratings once the company's operations recover if it
expects adjusted leverage to be sustained under 6.5x.
NEELKANTH HOTELS: Seeks to Use Cash Collateral Through Sept. 30
---------------------------------------------------------------
Neelkanth Hotels, LLC asks the U.S. Bankruptcy Court for the
Northern District of Georgia, Atlanta Division, for authorization
to continue using cash collateral through September 30, 2021.
The Debtor was previously allowed to continue using cash collateral
through March 31, 2021, pursuant to the Court's Order Allowing
Continued Interim Use of Cash Collateral, dated January 29, 2021.
The Debtor says U.S. Bank National Association, by and through
Midland Loan Services as Special Servicer, asserts that rents and
receipts from the operation of the Debtor's property at 1302 SE
Green Street, Conyers, Georgia 30012 constitute its Cash Collateral
within the meaning of 11 U.S.C. Section 363(a).
"As shown in the Proposed Budget, normal operating expenses of the
Property include employee wages, food supplies, franchise fees,
accounting services, insurance, utilities, taxes and other expenses
incidental to maintaining the Property. Such expenses are
necessary to maintain and operate the Property, which is essential
to the value and ongoing operating income of the Property and
preservation of the bankruptcy estate. No payments are proposed or
will be paid to insiders," the Debtor contends.
The Debtor's Proposed Budget provides for these total expenses:
April: $156,690.75
May: $154,061.75
June: $156,381.75
July: $163,204.75
August: $143,931.75
September: $142,742.75
A full-text copy of the Motion, dated March 4, 2021, is available
for free at https://tinyurl.com/pjwy3fbx from PacerMonitor.com.
About Neelkanth Hotels LLC
Neelkanth Hotels, LLC is a privately held company in the traveler
accommodation industry. It is a single asset real estate (as
defined in 11 U.S.C. Section 101(51B)).
Neelkanth Hotels filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
20-69501) on August 31, 2020. In the petition signed by Hemant
Thaker, member and manager, the Debtor estimated $1 million to $10
million in both assets and liabilities.
Judge Jeffery W. Cavender oversees the case. Schreeder, Wheeler &
Flint, LLP is the Debtor's legal counsel.
NEUMEDICINES INC: Wants Plan Exclusivity Extended Thru July 14
--------------------------------------------------------------
Debtor Neumedicines, Inc. asks the U.S. Bankruptcy Court for the
Central District of California, Los Angeles Division to extend by
120 days the Debtor's exclusive period to file a Chapter 11 Plan
from March 16, 2021, to July 14, 2021, and to solicit acceptances
from May 15, 2021, to September 12, 2021. This is the Debtor's
second request to extend the Exclusivity Periods.
The Debtor Neumedicines Inc., Karyopharm Therapeutics, Inc. and
Libo Pharma, Inc., have been diligently working on completing the
closing items: the most substantial of which is a complex license
agreement between Karyopharm and Libo. It is anticipated, but not
guaranteed that the closing will take place on or about March 31,
2021. The Debtor believes it is appropriate to wait until the
closing occurs before doing further work on its Plan as the estate
is comprised almost entirely of the consideration from the
Karyopharm sale.
The Debtor is currently working with its professionals on resolving
issues that impact the Plan to enable the Debtor to develop a plan
structure that maximizes the benefit for creditors and shareholders
and is in the best interest of the estate. This work is also
expected to be completed on or about March 31, 2021.
If the Debtor submits a Plan now, it may require significant
amendment after such issues are resolved and cause the restarting
of the Plan process including approval of the Disclosure Statement.
But once the Plan is drafted, the Debtor would like to have the
opportunity to circulate its Plan to the principal constituents of
this estate for comment prior to filling the Plan in an effort to
streamline confirmation. The Debtor anticipated this will require
as much as 30 days to work through such comments and wordsmithing.
Also, the Debtor intends to pay all allowed secured claims upon the
closing. An extension of the Exclusivity Periods will not prejudice
any creditors, equity interest holders, or other interested
parties, but instead, allow the Debtor to avoid filing a Plan which
is likely to require significant amendment and litigation with
creditors or shareholders at added cost to the estate. The Debtor
is timely paring all of its post-petition bills as they come due,
including renewal of its patents, files storage, and information
technology expenses, and has also filed all of its required monthly
operating reports.
In summary, the Debtor is proceeding in good faith and is moving
the process along as expeditiously as possible.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3e1hN7D from PacerMonitor.com.
About Neumedicines Inc.
Neumedicines, Inc. -- https://www.neumedicines.com/ -- is a
clinical-stage biopharmaceutical company in Arcadia, Calif., which
is engaged in the research and development of HemaMax, recombinant
human interleukin 12 (rHuIL-12), for the treatment of cancer in
combination with standard of care (SOC, radiotherapy, chemotherapy,
or immunotherapy) and Hematopoietic Syndrome of Acute Radiation
Syndrome (HSARS) as a monotherapy.
Neumedicines filed a Chapter 11 petition (Bankr. C.D. Cal. Case No.
20-16475) on July 17, 2020. In the petition signed by Timothy
Gallaher, president, Debtor was estimated to have $100,000 to
$500,000 in assets and $1 million to $10 million in liabilities.
Judge Ernest M. Robles presides over the case. The Debtor has
tapped Weintraub & Seth, APC as its bankruptcy counsel and
Sheppard, Mullin, Richter & Hampton, LLP as its special counsel.
NEWELL BRANDS: Fitch Alters Outlook on 'BB' LT IDR to Positive
--------------------------------------------------------------
Fitch Ratings has affirmed Newell Brands Inc.'s Long-Term Issuer
Default Rating (IDR) at 'BB' and the unsecured debt ratings at
'BB/RR4'. The Rating Outlook is revised to Positive from Negative.
The Positive Outlook reflects Fitch's expectation that EBITDA will
remain in the $1.3 billion range, similar to 2019/2020 levels, with
gross debt/EBITDA trending toward 4x in 2021 from 4.4x in 2019 on
continued debt reduction. Fitch expects total revenue to be around
$9.6 billion in 2021 and 2022, modestly lower than the $9.7 billion
in 2019, as categories that were adversely impacted recover through
2021, while growth in categories that benefited from
shelter-in-place activity moderates or declines relative to 2020
levels. Increased confidence in Newell's ability to drive low
single-digit core sales growth once the pandemic impact abates,
EBITDA around $1.3 billion and leverage under 4.0x due to further
debt paydown could lead to an upgrade.
Newell's ratings reflect its diverse portfolio of strong brands
across the learning and development, home solutions, commercial
solutions, appliance and cookware, and outdoor and recreation
category; good geographical presence with a third of its business
coming from international markets; and a strong digital presence,
with digital representing 22% of sales. The ratings also reflect
mid-teens EBITDA margin, projected FCF generation, offset by low
single-digit core sales declines, market share losses in certain
segments and operational challenges over the past few years.
KEY RATING DRIVERS
Mixed Impact from the Pandemic: Consumer products companies showed
disparate results in 2020, given a confluence of factors. Some
segments, including cleaning supplies, home-related products, toys
and personal grooming benefitted from shelter-in-place activity and
attendant changes to consumer behavior, while other segments, such
as cosmetics and office products, saw declines. For some companies,
pandemic-related work stoppages throughout the supply chain
affected the ability to meet orders, somewhat mitigating the
benefits of good consumer demand.
Newell's core sales declined 1.1% in 2020 versus a 1.9% decline in
2019, with growth mainly in the food and commercial business
(collectively 47.2% of 2020 revenue) and flat growth from the
appliance & cookware (18.2%) and baby and parenting business
(11.9%). The remaining businesses -- writing (15.4% of 2020
revenue), home fragrance (9.8%), outdoor & recreation (13.8%), and
connected home and security business (3.8%) -- all saw declines
given changing consumer behavior caused by the coronavirus
pandemic. Core sales declined 9.2% in 1H20 but performance reversed
in the second half, turning positive 6% given the strong
contribution from categories that benefited from pandemic related
demand.
Fitch expects a reversal of some trends in 2021. Categories that
benefitted from consumer behavior changes in 2020 could show muted
growth or even declines against challenging comparisons, while
negatively affected segments are expected to demonstrate topline
improvement as the year progresses. Ultimately, Fitch expects
operational trajectories in most cases to mirror pre-pandemic
levels by YE 2021, with 2022 approaching 2019 levels. Fitch
projects Newell's revenue to be $9.6 billion in 2021 and 2022,
modestly lower than the $9.7 billion in 2019, with 2.3% core sales
growth in 2021 and flat to 1% thereafter. Newell has reported low
single-digit decline in core sales over the past few years, with
market share losses in some of its categories. A renewed focus on
key categories post significant divestitures completed in 2018/2019
and increased brand investments funded by cost reductions could
lead to stabilization in revenue over the next couple of years.
Newell's Learning and Development category (27.2% of 2020 revenue
of $9.4 billion, 38.1% of segment EBIT) declined by 13.5% in 2020
(11.1% decline on a core sales basis), driven by declines in the
writing business related to delayed school opening and office
closures due to the pandemic. This is Newell's most profitable
segment, contributing almost 50% to segment profit in 2019,
although this fell to 38% in 2020 given declines in revenue. This
segment includes baby and parenting sales of $1.1 billion, which
was essentially flat compared with 2019, but writing revenue
declined 21.7% to $1.4 billion. Fitch expects segment revenue to
grow approximately 10% in 2021 as the writing business rebounds,
but still be 5% below 2019 levels.
The Home Solutions category (21.0% of revenue, 27.1% of segment
EBIT) grew by 5.1% in 2020 (8.0% growth on a core sales basis).
This segment includes food sales of $1.1 billion in 2020 which
increased 25.1% driven by increased consumption in the U.S. This
was offset by declines in the home fragrance business of 11.1% to
$0.9 billion, with first half sales impacted by retail store
closures and supply chain disruption although core sales increased
in2H20. Fitch expects this segment to decline approximately 4% in
2021 as the food business begins to lap strong demand in 2H21.
The Commercial Solutions category (19.8% of 2020 revenue, 20.2% of
segment EBIT) grew 4.5% in 2020 (5.6% growth on a core sales basis)
after declining 8% in 2019 and 6% in 2018, driven by strong
consumption in the commercial business. Commercial sales increased
7.1% to $1.5 billion in 2020 while connected home and security
sales declined 5.3% to $0.4 million. Fitch expects this segment to
grow in the low single digits in 2021 with the commercial business
lapping elevated demand beginning 2H21.
The Appliance and Cookware category (18.2% of 2020 revenue, 7.4% of
segment EBIT) grew 0.9% in 2020 to $1.7 billion (5.4% growth on a
core sales basis), driven by strong consumption in domestic and
international markets. The company has struggled to maintain market
share in this category, despite strong pandemic related demand, due
to lack of innovation in this category, with certain lower margin
U.S. brands dampening overall margin. Sales declined 7% in 2019 and
9% in 2018. Fitch expects the segment to decline in the low single
digits in 2021.
The Outdoor and Recreation category (13.8% of 2020 revenue, 7.2% of
segment EBIT) declined by 8.6% in 2020 to $1.3 billion (an 8.7%
decline on a core sales basis), driven by declines in the outdoor
equipment business from pandemic-related disruption in 1H20 and
continued weakness in its beverage and tech apparel businesses.
This segment has been challenged with revenue declines of 7% in
2019 and 11% in 2018. Fitch expects this segment to grow in the low
single-digit range in 2021 as the company laps manufacturing and
retail store closures.
EBITDA Expected to Remain in $1.3 Billion Range: Newell's 2020
EBITDA was $1.32 billion, essentially flat to 2019 levels on a
sales decline of 3.4% due to good expense control which led to a
30bp improvement in operating margin. Fitch expects EBITDA to be in
the $1.3 billion range in 2021 and 2022, with recovery in some its
weaker performing categories being offset by moderating growth in
categories that benefited from stay-at-home activities.
The company has discussed a several-hundred basis point improvement
opportunity in gross margin and operating costs based on industry
benchmarking, with a long-term target of driving sales growth in
the low single digits and operating margin improvement of 50bp
annually. Given the ongoing sales challenges in a number of
categories and investments required to support these brands, Fitch
currently expects core sales growth of flat to 1% beginning 2022
and EBITDA margin to be range bound at 13%-14%.
Leverage Could Trend Toward 4x: Newell's 2020 gross debt/EBITDA was
4.2x, compared with 4.4x in 2019, with modest debt paydown of $160
million in 2020. Fitch expects leverage could decline to 4x in
2021, assuming the company pays down upcoming debt maturities of
$463 million in 2021 and $250 million in 2022 with cash on hand.
Newell has a long-term net leverage target of 3x; it ended 2020
with net debt/EBITDA of 3.5x with close to $1 billion in cash.
DERIVATION SUMMARY
Newell's ratings reflect its diverse portfolio of strong brands
across the learning and development, home solutions, commercial
solutions, the appliance and cookware, and outdoor and recreation
category, good geographical presence with a third of its business
coming from international markets and strong digital presence, with
digital representing 22% of sales. The ratings also reflect
mid-teens EBITDA margin, projected FCF generation, offset by low
single-digit core sales declines, market share losses in certain
categories, and operational challenges over the past few years.
The Positive Outlook reflects Fitch's expectation that EBITDA will
remain in the $1.3 billion range, similar to 2019/2020 levels, with
gross debt/EBITDA trending towards 4x in 2021 from 4.4x in 2019 on
continued debt reduction. Fitch expects total revenue to be around
$9.6 billion in 2021 and 2022, modestly lower than the $9.7 billion
in 2019, as categories that were adversely impacted recover through
2021 while growth in categories that benefited from
shelter-in-place activity moderates or declines relative to 2020
levels. Increased confidence in Newell's ability to drive low
single-digit core sales growth once the pandemic impact abates,
EBITDA around $1.3 billion and leverage under 4.0x due to further
debt paydown could lead to an upgrade.
ACCO Brands Corporation's 'BB'/Stable IDR and Outlook reflects
ACCO's consistent FCF and reasonable gross leverage around 3.0x
given ongoing debt repayment after recent acquisitions. The ratings
are constrained by secular challenges in the office products
industry and channel shifts within the company's customer mix, as
evidenced by recent results, along with the risk of further
debt-financed acquisitions.
Spectrum Brands Holdings, Inc. 's 'BB'/Stable IDR and Outlook
reflects the company's diversified portfolio across products and
categories with well-known brands, and commitment to maintaining
net leverage between 3.0x and 4.0x, which equates to a similar
gross debt/EBITDA target, assuming $100 million-$150 million in
cash longer term, compared with approximately $225 million as of
Jan. 3, 2021. The rating also reflects expectations for modest
organic revenue growth over the long term, reasonable profitability
with EBITDA margins near 15%, and positive FCF. These positive
factors are offset by recent profit margin pressures across
segments and the company's acquisitive posture, which could cause
temporary leverage spikes following a transaction.
Central Garden & Pet Company's 'BB'/Outlook Stable rating reflects
the company's strong market positions within the pet and lawn and
garden segments, robust FCF and moderate leverage offset by limited
scale with EBITDA below $400 million, pro forma for recent
acquisitions. Fitch expects modest organic revenue growth over the
medium term supplemented by acquisitions, with EBITDA margins in
the 11% range. Gross leverage (total debt/EBITDA) is expected to
trend in the mid-to-high 3x range, up from 2.6x in fiscal 2020
(ended September) as the company manages leverage in this range
over time.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Revenue increases to $9.6 billion in 2021 from $9.4 billion in
2020, reflecting continued elevated demand for categories that
have benefited from pandemic-related consumer behavior through
1H20, with demand moderating in the second half, and improved
demand for categories that were adversely impacted by the
pandemic. Revenue is expected to be flat to modestly positive
thereafter.
-- Operating EBITDA remains relatively flat around $1.3 billion
with EBITDA margins in the 13%-14% range;
-- Capex around $250 million and dividends at around $400 million
annually;
-- FCF (after dividends) expected to be around $100 million in
2021, assuming some of the working capital benefits in 2020
reverse, and $200 million thereafter assuming neutral working
capital;
-- Total debt/EBITDA declines modestly toward 4x in 2021 from
4.2x in 2020. Fitch assumes the company pays down upcoming
debt maturities of $463 million due in 2021 and $250 million
due in 2022. Gross leverage could trend below 4.0x beginning
2022, assuming modest EBITDA growth and continued debt
reduction.
-- Increased confidence in the above assumptions, including
evidence of Newell's intention to pay down upcoming
maturities, could support an upgrade to 'BB+'.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action could result from increased
confidence in the company's ability to grow core sales in the
low single digits, in turn sustaining EBITDA around $1.3
billion with EBITDA margins in the mid-teens. The company
would also need to generate positive FCF on a sustained basis
and continue to pay down upcoming debt maturities, such that
gross debt/EBITDA is sustained under 4.0x.
-- Fitch could stabilize Newell's Outlook if EBITDA trends and
debt reduction combine to yield gross debt/EBITDA sustained in
the low-4x.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A negative rating action could result from lower-than-expected
debt reduction, due to either weaker FCF generation or a
change in financial policy or slower than expected operating
recovery leading to reduced confidence in Newell's ability to
stabilize its business such that gross debt/EBITDA is
sustained 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: As of Dec. 31, 2020, Newell maintained $981
million cash on hand and a $1.25 billion unsecured revolving credit
facility (RCF) that expires in December 2023. Net availability
under the RCF was approximately $1.2 billion after netting out $20
million outstanding letters of credit. In addition, Newell has a
$600 million accounts receivable securitization facility that
matures in October 2022; as of Dec. 31, 2020, there were no
borrowings under this facility.
The company's upcoming debt maturities include approximately $460
million in 2021 and $250 million in 2022, which could be paid down
with cash on hand and FCF. On Jan. 25, 2021, the company delivered
a notice of redemption for $94 million of the 3.15% senior notes
due April 2020, which it expects to complete on March 1. After this
redemption, the company will only have $370 million of debt
remaining due in 2021.
RECOVERY CONSIDERATIONS
Fitch does not employ a waterfall recovery analysis for issuers
assigned ratings in the 'BB' category. The further up the
speculative grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes.
Newell's capital structure is unsecured, including its revolver and
notes. As a result, Fitch has assigned 'BB'/'RR4' ratings across
Newell's capital structure, indicating average (31%-50%) recovery
prospects.
SUMMARY OF FINANCIAL ADJUSTMENTS
Stock based compensation, restructuring and restructuring related
costs, acquisition amortization & impairment, transaction and
related costs, other items. Adjusted D&A to reflect company
reported normalized D&A.
ESG CONSIDERATIONS
Newell has an Environmental, Social and Governance (ESG) Relevance
Score of '4' for Financial Transparency; this has a negative impact
on the credit profile and is relevant to the rating in conjunction
with other factors. This reflects a number of factors, including:
material weaknesses in internal control over financial reporting in
its 2019 and 2020 10-K filings, related to tax accounting and an
SEC subpoena in January 2020 related to the impairment of goodwill
and other intangibles in 2018. Operating comparability over the
last few years has also been challenging given a number of
reclassifications of continuing versus discontinued operations as
well as business segments over 2018-2020.
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.
NO RUST REBAR: Case Summary & 10 Unsecured Creditors
----------------------------------------------------
Debtor: No Rust Rebar, Inc.
2681 NE 4th Avenue
Pompano Beach, FL 33064
Business Description: No Rust Rebar is engaged in the
manufacturing and sales of composite
reinforcement for concrete.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 21-12188
Judge: Hon. Peter D. Russin
Debtor's Counsel: Kevin Christopher Gleason, Esq.
FLORIDA BANKRUPTCY GROUP, LLC
4121 N 31 Ave
Hollywood, FL 33021
Tel: 954-893-7670
E-mail: bankruptcylawyer@aol.com
Total Assets: $1,763,496
Total Debts: $4,378,630
The petition was signed by Don Smoth, president.
A copy of the Debtor's list of 10 unsecured creditors is available
for free at PacerMonitor.com at:
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/P6YUQ4I/No_Rust_Rebar_Inc__flsbke-21-12188__0001.0.pdf?mcid=tGE4TAMA
NORTH TAMPA ANESTHESIA: Cash Collateral Use OK'd on Final Basis
---------------------------------------------------------------
Judge Catherine Peek McEwen of the U.S. Bankruptcy Court for the
Middle District of Florida, Tampa Division, authorized North Tampa
Anesthesia Consultants, P.A. and HLPG NEWACO, LLC to use cash
collateral on a final basis.
The Debtors are authorized to use cash collateral to pay:
(a) amounts expressly authorized by the Court;
(b) the current and necessary expenses set forth in the budget
attached to the Amended Plan; and
(c) additional amounts as may be expressly approved in writing
by Fifth Third Bank, National Association.
Except as authorized in the Court's Order, the Debtors are
prohibited from using cash collateral through entry of a final
order confirming the Amended Plan.
"Debtors shall continue to make adequate protection payments to
Fifth Third in the amount of $15,000.00, which shall be paid on or
before the first day of each month... Upon the Effective Date of
the Amended Plan, Debtors' obligation to make the Adequate
Protection Payment shall cease and Debtors' shall comply with the
payment terms of the Amended Plan. In addition to its prepetition
liens and security interests, Fifth Third shall have a valid and
perfected first-priority, post-petition lien and security interest
against the cash collateral without the need to file or execute any
document as may otherwise be required under applicable
non-bankruptcy law," Judge McEwen held.
A full-text copy of the Final Order, dated March 4, 2021, is
available for free at https://tinyurl.com/26z9emem from
PacerMonitor.com.
About NTAC and HLPG
North Tampa Anesthesia Consultants, P.A. ("NTAC"), a Florida
professional association, is a medical practice that provides
anesthesia services to various hospitals around the area. It has
been in operations for over 20 years. NTAC has its offices at 1402
W. Fletcher Avenue, Tampa, FL 33612.
NTAC's doctors have historically used helicopters for
transportation purposes. For many years, NTAC's affiliate, HLPG
NEWACO, LLC, owned a helicopter that was used by NTAC's doctors to
quickly and conveniently fly from one location to another to
fulfill NTAC's contractual obligations to provide anesthesia
services. HLPG's most recent helicopter is an Italian make
helicopter-1990 Agusta A109C, U.S. helicopter, U.S. Reg. No.
N109GL, S/N 7623; Rolls Royce 250-C20R/1 Engines, S/N 295559 and
295560; Main Rotor Blades EM0264, EM0301, EM0628, and EM0626
("Aircraft)".
NTAC and HLPG sought Chapter 11 protection (Bankr. M.D. Fla. Case
No. 20-02101 and 20-02102) on March 10, 2020. In the petition
signed by Gabriel Perez, director/practice administrator, NTAC was
estimated to have $1 million to $10 million in both assets and
liabilities. Angelina E. Lim, Esq., at Johnson Pope Bokor Ruppel &
Burns, LLP, serves as bankruptcy counsel to the Debtors. Jennis
Law Firm, is special counsel.
NORTHLAND CORP: Seeks to Extend Plan Exclusivity Until May 24
-------------------------------------------------------------
Debtor Northland Corporation requests the U.S. Bankruptcy Court for
the Western District of Kentucky, Louisville Division to extend the
exclusive periods during which the Debtor may file a Chapter 11
plan and solicit acceptances until May 24, 2021, and July 23, 2021,
respectively.
The Debtor seeks to extend the exclusive periods for filing and
soliciting acceptances of a plan. The Debtor has determined that a
going concern asset sale pursuant to section 363(b)(1) is likely to
yield the most efficient outcome for parties in interest, and is
presently pursuing a "stalking horse" purchase offer from a
prospective buyer. Central Bank & Trust Co., a creditor asserting
an interest in cash collateral, has imposed a deadline of March 2,
2021, for the Debtor to execute an asset purchase agreement with a
prospective buyer.
If a party other than the Debtor proposed a chapter 11 plan during
the Debtor's marketing and sale negotiations, the uncertainty
created would certainly depress the going concern value of the
bankruptcy estate and chill the sale process. Therefore, the Debtor
requests an extension of the exclusivity periods set under §
1121(b) and (c) to enable the debtor in possession to manage a
robust sale process, and, to the extent necessary, develop a
confirmable chapter 11 plan in conjunction with or subsequent to a
sale pursuant to § 363(b)(1).
Consequently, Debtor needs additional time to formulate a chapter
11 plan to the extent that one may be necessary to conclude this
case. Debtor requests an extension of ninety days, and each of the
requested extension dates is within the limits set in Bankruptcy
Code section 1121(d).
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3095sGk from PacerMonitor.com.
About Northland Corporation
Northland Corporation -- http://northlandcorp.com-- is in the
business of drying, sorting, and grading hardwood lumber. From its
headquarters in LaGrange, Kentucky, and lumberyards in Collinwood,
Tennessee, and Blainville, Quebec, the Debtor processes and sells a
variety of lumber species native to central North America and
imports other hardwoods to customers throughout North America and
beyond.
Northland Corporation filed a Chapter 11 petition (Bankr. W.D. Ky.
Case No. 20-31934) on July 27, 2020. In the petition signed by Orn
E. Gudmundsson, Jr., chief executive officer, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities.
Judge Joan A. Lloyd oversees the case. Kaplan Johnson Abate & Bird
LLP serves as Debtor's bankruptcy counsel.
On September 15, 2020, The Office of the U.S. Trustee appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Northland Corporation and named Kenneth Walker, Timothy A.
Girardi, Ronald W. Nentwig as Committee members and serve as
fiduciaries to the general population of creditors they represent.
NRG ENERGY: S&P Affirms 'BB+' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+' issuer credit rating on
independent power producer NRG Energy Inc. The outlook remains
stable.
S&P said, "Our stable outlook reflects a business risk profile of
satisfactory after the Direct Energy transaction close. Our stable
outlook also reflects expectations that adjusted debt to EBITDA
will decrease to about 3.3x on a run-rate basis.
"The impact from Winter Storm Uri is within our estimates. NRG
affirmed its 2021 guidance but cautioned that there could be an
incremental negative impact on cash flow from credit and
counterparties' non-payment as ERCOT provides further data.
Specifically, ERCOT could socialize shortfalls in payments
(allocation of payments not made by defaulting parties). We will
also continue to monitor any impacts of direct counterparty credit
exposure on NRG as it purchases more power in the wholesale market
than its peers. The company could also have uncollectible bills and
bad debts in its commercial and industrial (C&I) retail segment for
indexed products.
"We have factored in higher power purchase costs in our estimates
from delays in construction of the request-for-proposals (RFP)
renewable projects. Our revised estimate of NRG's EBITDA is about
$2.3 billion for 2021. We think that the incremental effects of
storm impacts (loss-to-lower retail margins for two weeks, higher
counterparty related losses, and ERCOT shortfalls) could affect
cash flow by an additional $100 million."
Rolling blackouts inadvertently benefited NRG. With Uri
approaching, NRG aggressively hedged its power and natural gas
requirements and entered the winter event net long megawatt hours
(MWh). It also brought online higher-cost units that typically idle
as physical generation options in the winter. However, three of
NRG's baseload units were affected to various degrees. S&P said,
"We estimate the company was net short generation on two scarcity
days. Our review of the company's daily liquidity suggests that NRG
was able to recover generation by late Wednesday (02/17) and
benefit from scarcity pricing later in the week."
Rolling blackouts in a retailer's area of operation mute its demand
obligations. If the retailer is long power, given reduced load
obligations, it can sell the power at scarcity prices. Conversely,
if lights are on, the retailer had higher load exposure and can be
short power with surging prices. At peak load shedding, only about
55% of CenterPoint Energy Inc.'s customer base in Houston had
power, which would have reduced NRG's retail obligations. While NRG
comes out relatively unscathed, this event exposes a potential
weakness of the generation-lite business model. S&Pe will continue
to assess NRG's business in the context of market reforms in
ERCOT.
The sale of its non-core portfolio does not affect NRG's business
risk profile (BRP). As published in our last research update, S&P
revised NRG's BRP to satisfactory at the close of the Direct Energy
transaction. A successful acquisition of Direct Energy shifts NRG's
aggregate EBITDA to retail power (to 56% from 47%). The transaction
more than doubles the retail mass platform to serve approximately 7
million customers combined, resulting in the improvement in the
BRP.
S&P said, "However, based on our estimates, NRG's legacy business
is about 2 gigawatts (GW) short in ERCOT in the peak summer
periods. Recognizing that need, the company has already made one
request for offer (RFO) for renewable power purchase agreements
(PPAs) and has contracted 1.8 GW. The fallout from the COVID-19
pandemic has delayed much of this generation, currently under
construction. We note that even if PPA contracts for solar
generation are structured as energy-only payments, given the
predictable nature of the resource, generation is also predictable,
making take-and-pay contracts similar to take-or-pay contracts. NRG
has announced a second RFP and is reviewing these bids.
"We factor in meaningful deleveraging in 2021. Given that a retail
business is asset-lite and typically generates high cash flows, NRG
has leveraged up for the Direct Energy acquisition, which has
slowed its credit momentum compared with its stand-alone credit
profile. We expected about $1.15 billion of deleveraging for the
company to get back on the path to potentially higher ratings. This
amount changes somewhat with the sale of its non-core generation
businesses. With 4.8 GW of sales, albeit of assets that were
mid-merit to peaking units, the company expects to repay about
$1,170 million in parent-level debt relating to the acquisition in
2021 and about $500 million for the asset sales, either in the
fourth quarter of 2021 or first quarter of 2022.
"The company has an incentive to deleverage. A business that
requires a high use of margining provisions is operated more
effectively and efficiently with an investment-grade balance sheet.
As a result, we believe the company has an incentive to deleverage
to improve credit quality and stride toward its investment-grade
aspirations.
"The rating reflects our expectation of high cash flow conversion
and an integrated business strategy that results in lower
volatility in cash flow even as the forward curve is in
backwardation. After the acquisition, NRG has higher scale in the
retail business and improving profitability, countered by the
substantial debt-financed transaction that causes leverage to rise
to an estimated 3.8x adjusted debt to EBITDA at the close of the
acquisition (before planned deleveraging). Our stable outlook
reflects expectations that adjusted debt to EBITDA will decrease to
about 3.3x on a run-rate basis. While the transaction increases
overall leverage, an improvement in the company's business risk
profile from higher scale, and expectations of deleveraging through
2021, lessen the impact of the debt-financed transaction on credit
quality.
"A positive outlook could follow if the company paid down its
roughly $1.17 billion debt-reduction target such that adjusted
debt-to-EBITDA ratios declined below 3.25x and trended lower.
Furthermore, investment-grade ratings could follow if the company
were able to extract synergies as expected, or improve margins,
such that debt to EBITDA declined below 3.0x or adjusted FFO to
debt increased to about 30% on a sustained basis.
"We would revise the outlook to negative and lower ratings could
follow should net debt to EBITDA of the pro forma company weaken
above 4x and FFO to debt falls below 22.5%. We expect that this
could happen if the impact of Winter Storm Uri were unanticipatedly
higher still. Cash flows could also be affected should demand fall
and power prices remain depressed such that liquidity demands
increased sharply, thwarting growth, or volatility fall such that
margins in the retail business declined. We could consider a
downgrade if the payments for purchased power resulted in an
increase in NRG's operating leverage or an increase in its
financial leverage from debt imputation because of predictable
payments for the purchased power. The inability of the company to
extract synergies as expected could also result in a revised
outlook."
OCEAN POWER: Incurs $3.15 Million Net Loss in Third Quarter
-----------------------------------------------------------
Ocean Power Technologies, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $3.15 million on $317,000 of revenues for the three
months ended Jan. 31, 2021, compared to a net loss of $2.92 million
on $725,000 of revenues for the three months ended Jan. 31, 2020.
For the nine months ended Jan. 31, 2021, the Company reported a net
loss of $9.56 million on $604,000 of revenues compared to a net
loss of $9.13 million on $1.13 million of revenues for the nine
months ended Jan. 31, 2020.
As of Jan. 31, 2021, the Company had $82.89 million in total
assets, $4.69 million in total liabilities, and $78.20 million in
total stockholders' equity.
"OPT's third quarter brought dramatic change to our company," said
George H. Kirby, OPT's president and chief executive officer. "We
acquired 3Dent Technology, which we believe is an important step
for our long-term growth strategy and expanding our offerings of
autonomous clean ocean energy and data solutions. Additionally, we
planned our first remote installation of a turnkey wave
energy-powered subsea data collection system in Chile, which we
believe offers flexibility and cost-reduction to our customers. We
also welcomed three new directors to our board who bring valuable
expertise in offshore energy, safety, and finance and governance."
Kirby further said, "A key goal for us this year was to bolster our
financial position, improve our liquidity and reduce our capital
risk, and we believe that we've made great strides towards those
efforts. During the fiscal year, the Company has generated $76.1
million in net proceeds through utilization of its ATM Facilities
and Equity Line Common Stock Purchase Agreements, including $66.7
in net proceeds raised during the third quarter, during which we
saw an increase in share price. Additionally, the Company's
liquidity position has improved due to cost cutting measures that
were put in place at the beginning of the year. We believe that
the Company's unrestricted cash balance of approximately $79.8
million as of January 31, 2021, in addition to continued prudent
cost management, will provide us with the capital necessary to fund
ongoing operations as well as the financial flexibility to execute
on our growth strategy, consisting of market expansion, sales cycle
acceleration, development of new products and solutions, and
strategic acquisitions."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1378140/000149315221005464/form10-q.htm
About Ocean Power Technologies
Headquartered in Monroe Township, New Jersey, Ocean Power
Technologies, Inc. -- http://www.oceanpowertechnologies.com-- is a
marine power solutions provider that designs, manufactures, sells,
and services its products while working closely with partners that
provide payloads, integration services, and marine installation
services. Its PowerBuoy solutions platform provides clean and
reliable electric power and real-time data communications for
remote offshore and subsea applications in markets such as offshore
oil and gas, defense and security, science and research, and
communications.
Ocean Power reported a net loss of $10.35 million for the 12 months
ended April 30, 2020, compared to a net loss of $12.25 million for
the 12 months ended April 30, 2019. As of Oct. 31, 2020, the
Company had $18.56 million in total assets, $4.91 million in total
liabilities, and $13.65 million in total stockholders' equity.
KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor
since 2004, issued a "going concern" qualification in its report
dated June 29, 2020, citing that the Company has suffered recurring
losses from operations and has an accumulated deficit that raise
substantial doubt about its ability to continue as a going concern.
OMNIQ CORP: Gets $6.8M Purchase Orders from Specialty Retailer
--------------------------------------------------------------
OMNIQ Corp has received an approximately $6.8 million purchase
agreement from one of the largest specialty retailers in the U.S,
which generates over $2 billion in annual revenue. The agreement
calls for the supply of mobile computerized IoT equipment designed
to support retail automation and inventory control applications, as
well as DC supply chain solutions and a growing e-commerce
business.
OMINQ's customer is a pioneer in implementing the newest
technologies in retail and supply chain operations managing
hundreds of stores across 49 states.
From its Salt Lake City facility, OMNIQ will commission and
distribute advanced mobile computerized solutions including tested
hardware and software, technical support, and warranty services,
enabling the customer to enjoy the most technically advanced
equipment combined with OMNIQ's high quality managed services and
support.
Shai Lustgarten, president & CEO at Quest, commented, "I am more
than excited to announce this $6.8 million new purchase contract
achieving a record of $24 Million of new orders generated in two
months since the beginning of fiscal year 2021. Just after
announcing the $6.1 Million Purchase agreement with a leading food
distributor, the $3.5 Million expanded project with a metal
solutions provider and two AI based Machine - Vision projects for
strategic homeland security and traffic management, the momentum
continues marking a strong beginning of FY 2021 and demonstrates
the strength of our business model based on the quality of our
solutions with the solid loyal customer base that includes fortune
500 customers, Governments, Education Organizations, municipalities
and others. It also highlights how Covid-19 has accelerated the
need to maximize efficiency, automation and touchless Supply Chain
activities. We are proud to have been selected yet again to
further optimize this customer's operational efficiencies and
believe this order proves the value of our comprehensive Hardware,
Software and Technical support solutions. Our portfolio of
mobility products, ranging from voice-picking headsets to barcode
scanners, enables smarter decision-making through effective data
collection and analysis. We look forward to continuing our
relationship with customers of this pedigree, as we strengthen our
offering with advanced AI-based technologies and machine-vision
solutions."
About OMNIQ Corp.
Headquartered in Salt Lake City, Utah, OMNIQ Corp. (OTCQB: OMQS) --
http://www.omniq.com-- provides computerized and machine vision
image processing solutions that use patented and proprietary AI
technology to deliver data collection, real time surveillance and
monitoring for supply chain management, homeland security, public
safety, traffic & parking management and access control
applications. The technology and services provided by the Company
help clients move people, assets and data safely and securely
through airports, warehouses, schools, national borders, and many
other applications and environments.
Omniq reported a net loss attributable to common stockholders of
$5.31 million for the year ended Dec. 31, 2019, compared to a net
loss attributable to common stockholders of $5.41 million for the
year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had
$40.33 million in total assets, $43.49 million in total
liabilities, and a total stockholders' deficit of $3.16 million.
Haynie & Company, in Salt Lake City, Utah, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated March 30, 2020, citing that the Company has a deficit in
stockholders' equity, and has sustained recurring losses from
operations. This raises substantial doubt about the Company's
ability to continue as a going concern.
ONPOINT OIL: Unsecured Creditors to Get 13.76% in 5 Years in Plan
-----------------------------------------------------------------
OnPoint Oil & Gas, LLC, filed with the U.S. Bankruptcy Court for
the Western District of Oklahoma a Plan of Reorganization and a
Disclosure Statement on Feb. 26, 2021.
The Debtor is an Oklahoma limited liability company engaged as the
operator of numerous oil and gas wells in the state of Oklahoma,
primarily in Creek County and Lincoln County, Oklahoma.
Class 1 includes the Allowed Secured Claim of Tony's Oil Field
Service in the amount of $9,182. The holder of a Class 1 Claim
shall be paid deferred cash payments over a period not exceeding
three years after the date of filing equal to the amount of the
Allowed Secured Claim, including an interest component.
Class 2 includes the Allowed Secured Claim of True Well Service in
the amount of $2,570. The holder of a Class 2 Claim shall be paid
deferred cash payments over a period not exceeding three years
after the date of filing equal to the amount of the Allowed Secured
Claim, including an interest component.
Class 3 consists of the Allowed Secured Claim of Bio Tech, Inc. in
the amount of $33,182. The Class 3 Claim will be satisfied with
payment of $22,500 upon confirmation of the Plan. The allowed
attorney fee portion of the Class 3 Claim shall be paid deferred
cash payments over a period not exceeding three years after the
date of filing equal to, with interest to be calculated at 6%, and
which will be in full satisfaction of the attorney fee portion of
the Class 3, at which time Bio Tech, Inc. shall release its liens.
Class 4 consists of the Allowed Secured Claim of Valley National
Bank in the amount of $694,100.00, secured by a first mortgage and
security interest in all assets of the Debtor, and
cross-collateralized by virtue of various loans made to non-debtor
entities. The Class 4 Claim shall be paid outside of the Plan.
Class 5 Unsecured Claims will receive payment of approximately
13.76% of the Allowed Unsecured Claim to be distributed yearly,
over a five-year period, in full and complete satisfaction of such
claim.
The Debtor estimates that its earnings from services rendered will
enable it to make the payments to creditors as required in the
Plan, which are estimated to be approximately $850.00 per month.
A full-text copy of the Disclosure Statement dated Feb. 26, 2021,
is available at https://bit.ly/2MQuUNM from PacerMonitor.com at no
charge.
Attorneys for Debtor:
O. Clifton Gooding, Esq.
Mark B. Toffoli, Esq.
Angela N. Stuteville, Esq.
THE GOODING LAW FIRM
A Professional Corporation
204 North Robinson Avenue, Suite 650
Oklahoma City, OK 73102
Telephone: (405) 948-1978
Facsimile: (405) 948-0864
E-mail: cgooding@goodingfirm.com
mtoffoli@goodingfirm.com
angela@goodingfirm.com
About OnPoint Oil & Gas
Oklahoma City, Okla.-based OnPoint Oil & Gas, LLC is a privately
held company in the oil and gas extraction industry.
OnPoint Oil & Gas sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. WD. Okla. Case No. 20-13383) on Oct. 14,
2020. The petition was signed by Brent Cook, owner. At the time
of the filing, the Debtor had total assets of $129,668 and total
liabilities of $2,840,455. The Gooding Law Firm, P.C., is the
Debtor's legal counsel.
ORIGINCLEAR INC: Files Series T Preferred Stock COD
---------------------------------------------------
Originclear, Inc. filed a certificate of designation of Series T
Preferred Stock with the Secretary of State of Nevada.
Pursuant to the Series T COD, the Company designated 630 shares of
preferred stock as Series T. The Series T has a stated value of
$1,000 per share, and will be entitled to cumulative dividends in
cash at an annual rate of 10% of the stated value, payable monthly.
The Series T will not be entitled to any voting rights except as
may be required by applicable law. The Series T will be
convertible into common stock of the Company pursuant to the Series
T COD, provided that, the Series T may not be converted into common
stock to the extent such conversion would result in the holder
beneficially owning more than 4.99% of the Company's outstanding
common stock. The Company will have the right (but no obligation)
to redeem the Series T at any time while the Series T are
outstanding at a redemption price equal to the stated value plus
any accrued but unpaid dividends.
About OriginClear
Headquartered in Los Angeles, California, OriginClear --
http://www.originclear.com-- is a provider of water treatment
solutions and the developer of a breakthrough water cleanup
technology. Through its wholly owned subsidiaries, OriginClear
provides systems and services to treat water in a wide range of
industries, such as municipal, pharmaceutical, semiconductors,
industrial, and oil & gas.
OriginClear reported a net loss of $27.47 million for the year
ended Dec. 31, 2019, compared to a net loss of $11.35 million for
the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company
had $1.72 million in total assets, $20.56 million in total
liabilities, and a total shareholders' deficit of $24.13 million.
M&K CPAS, PLLC, in Houston, TX, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated May 29,
2020, citing that the Company suffered a net loss from operations
and has a net capital deficiency, which raises substantial doubt
about its ability to continue as a going concern.
ORYX MIDSTREAM: Fitch Alters Outlook on 'B' LT IDR to Positive
--------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of Oryx Midstream Holdings LLC (Oryx) at 'B' and the
company's senior secured term loan at 'B+'/ 'RR3'. The Rating
Outlook has been revised to Positive from Negative.
The revised Outlook for Oryx reflects the improving leverage
profile and resiliency demonstrated by the business despite
industry headwinds in 2020. The company in 2H20 witnessed a swift
recovery of volumes with relatively lower (compared with the
Permian basin as a whole) producer-led volume curtailment
disruption at the height of the pandemic. Based on preliminary FY20
information, Oryx ended 2020 with stronger than expected volumes
and EBITDA than Fitch's prior expectations.
Supported by resumption of new well completions and stronger
volumes, Fitch expects Oryx to continue deleveraging as it utilizes
FCF to accomplish debt repayment, with leverage forecast in the
range of 5.6x-5.9x at YE21. While Fitch currently projects leverage
to be below its positive sensitivity at YE21, the implementation of
management's financial policy toward debt repayment is critical.
Any unexpected setbacks could hamper volume growth and impair
Oryx's future cash flow, slowing its expected deleveraging pace.
Fitch will look to upgrade the IDR based on the pace of debt
reduction and leverage being sustained sub 6.0x.
The rating and Outlook also reflect the favorable production
economics associated with Oryx's footprint in the Permian basin and
the expected cash flow stability under its fixed fee contract
profile. Concerns are largely focused on volumetric risk given that
nearly all cash flows are from acreage dedication.
KEY RATING DRIVERS
Leverage Trending Lower: Fitch believes FCF generated from volume
and EBITDA growth is a key factor to support deleveraging. LTM
leverage as of Sept. 30, 2020 was approximately 7.0x. Based on
preliminary 2020 information, Fitch expects YE20 leverage of
approximately 6.5x, which is lower than Fitch's previous estimate
range between 7.2x-7.5x as a result of stronger than expected
volume rebound off 2Q20 levels and the company's cost reduction
initiatives. Fitch projects modest volume growth in 2021 and
expects that the company shall direct FCF toward debt repayment in
line with management's financial policy, further bolstering
leverage metric between 5.6x-5.9x at YE21. Fitch believes leverage
is critical to Oryx's credit profile with limited business and
geographic diversity.
Volumetric Exposure: Oryx's rating reflects its operational
exposure to volumetric risks associated with the production and
demand for crude oil. Oryx's volumes recovered in 2H20 following an
almost 20% reduction in volumes due to curtailment activities in
the basin in 2Q20 at the height of the pandemic. Fitch expects
producers to remain cautious in ramping up production significantly
in 2021, although expects volumes to be modestly higher in 2021
compared with 4Q20 levels driven primarily by greater-than-previous
DUC (Drilled but Uncompleted Wells) completion by its customers.
Rig activity on dedicated acreage supports some volume growth, but
limited to small number of producers. The company benefits from
acreage dedication with minimal minimum volume commitments (MVCs).
Fitch generally views dedications as being weaker than take or pay
minimum volume commitments, but recognizes that acreage in the
counties served by Oryx is some of the lowest cost producing
counties in the country.
Single-Basin Focused Provider: Oryx is a crude gathering and
transportation services provider that operates predominantly in
Northern and Southern Delaware region of the Permian basin, with
relatively smaller presence in the Midland following the Reliance
Gathering JV interest acquisition (OMOG JV), and is expected to
generate an annual EBITDA of less than $300 million in the near
term. Given its Permian basin focus and lack of business line
diversity, Oryx is subject to outsized event risk should there be
another slowdown in its territories in the basin.
Customer Exposure: Oryx has roughly 30 rigs operating on its
dedicated acreage across approximately 30+ customers with 100%
fixed fee contracts that eliminate direct commodity price exposure.
These contracts vary in length and have a weighted average tenor of
approximately 10 years. Oryx is, however, exposed to customer risk
as the portfolio comprises of significant proportion of its
customers that are non-investment-grade counterparties and private
customers, estimated to contribute approximately 53% of Oryx's 2020
volumes. Fitch views these high-yield E&P companies as lacking
geographic breadth and not having the same downside protection
through hedges compared with their investment-grade peers. Some of
its major shippers are large pure-play Permian players and are
guiding toward flat or improved production activities in the basin,
albeit at a balanced and measured pace. Concerns remain that lower
credit quality customers may face economic pressure and reduce
drilling activity or even curtail production within a single basin.
Fitch also believes that while recent consolidation amongst some of
Oryx's E&P producers improve credit quality, there are
uncertainties surrounding future capital allocation amongst
competing basins until integration of these acquisitions are
complete.
Supportive Sponsor: Oryx's sponsors, Stonepeak Infrastructure
Partners (Stonepeak) and Qatar Investment Authority (QIA) have been
and are expected to remain supportive of the operating profile of
Oryx. Stonepeak committed approximately 60% equity for the purchase
of Oryx in April 2019. The sponsors continue to support Oryx's
growth with equity infusions for the Oryx's OMOG JV investment and
the Targa Outrigger acquisition in 1Q20. Fitch expects the sponsors
to continue providing operational and capital support.
Group Structure Complexity: Oryx has an ESG Relevance Score of 4
for Group Structure and Financial Transparency as private-equity
backed midstream entities typically have less structural and
financial disclosure transparency than public traded issuers. This
has a negative impact on the credit profile, and is relevant in
conjunction with other factors.
DERIVATION SUMMARY
Oryx's ratings are limited by the size and scale of operations of
the company, a single-basin focused crude oil gathering and
transportation service provider operating predominantly in the
Delaware Basin of the Permian, with a relatively small presence in
Midland through its joint venture interest with Rattler Midstream
LP (RTLR; BB+/Stable). Fitch typically views credit profiles of
single-asset/basin focused midstream service providers as more
consistent with a 'B' range IDR.
In addition, Fitch's size and scale concerns about midstream energy
issuers tends to be focused on facilitating access to capital for
meeting funding needs, with larger entities more easily able to
access capital markets. Fitch does not expect Oryx to have any
near-term need to access capital markets until revolver maturity in
2024.
Oryx is a crude gathering and intrabasin transportation service
provider. Navitas Midstream Midland Basin, LLC (B/Stable) is a
natural gas gatherer and processor but both entities are
single-basin focused midstream companies. Relative to Navitas
Midstream where Fitch expects YE21 leverage to be just under 6.0x,
Oryx is slightly larger in size with greater acreage dedication and
generates more cash flow under fixed-fee contracts with more
diverse counterparties. Oryx's producers have higher credit
quality, with roughly 47% of 2020 volumes from investment grade
counterparties.
KEY ASSUMPTIONS
-- West Texas Intermediate (WTI) oil price of $42/bbl in 2021,
$47/bbl in 2022, and $50/bbl in 2023 and the long term;
-- Modest volume growth in 2021 supported by improved drilling
and well completions;
-- No new acreage dedications or new producer customers assumed;
-- No distributions are made;
-- No acquisitions during forecast period;
-- Deleveraging supported by term loan amortization (1% per
annum) and additional debt repayment throughout forecast
period in line with management's financial policy;
The recovery analysis determined that Oryx's highest value comes
from remaining a going-concern after bankruptcy. Fitch has assumed
a standard administrative claim of 10%. The going-concern EBITDA
estimate of $210 million reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which Fitch bases the
valuation of the company. As per criteria, the EBITDA reflects some
residual portion of the distress that caused the default. The
previous recovery exercise in March 2020 assumed an EBITDA in the
range of $170 million.
Fitch used a 6x EBITDA multiple to arrive at Oryx's going-concern
enterprise value. The multiple is in line with recent
reorganization multiples in the energy sector. There have been a
limited number of bankruptcies and reorganizations within the
midstream space, but bankruptcies at Azure Midstream and Southcross
Holdco had multiples between 5x and 7x by Fitch's best estimates.
In Fitch's bankruptcy case study report "Energy, Power and
Commodities Bankruptcies Enterprise Value and Creditor Recoveries,"
published in April 2019, the median enterprise valuation exit
multiplies for 35 energy cases for which this was available was
6.1x, with a wide range of multiples observed. Assuming a full draw
on the revolver results in a recovery corresponding to 'RR3' for
the senior secured term loan.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Increase its size, scale, asset, geographic or business line
diversity, with a focus on EBITDA above $300 million per
annum;
-- Leverage (total debt with equity credit/operating EBITDA) at
or below 6.0x basis on a sustained basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- FFO fixed-charge coverage sustained below 2.5x;
-- Leverage (total debt with equity credit/operating EBITDA)
above 7.0x on a sustained basis;
-- Meaningful deterioration in customer credit quality or a
significant event at a major customer that impairs cash flows;
-- A significant change in cash flow stability profile, driven by
a move away from current majority of revenue being fee based.
If commodity price exposure were to increase above 25%, Fitch
would likely take negative action;
-- An increase in spending beyond Fitch's current expectations or
acquisitions funded in a manner that pressures the balance
sheet.
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: As of Sept. 30, 2020, unrestricted cash balance
was $15 million and $45 million outstanding on its revolving credit
facility. Oryx also had letters of credit issued aggregating $59
million. These letters of credit are backstopped by the revolving
credit facility, thereby reducing availability under the revolver
to $46 million.
Oryx has access to a $150 million Super Priority Secured revolving
credit facility that matures in 2024 in addition to a $1,500
million of senior secured term loan with a manageable maturity of
five years (matures in 2026). These facilities have the option of
being increased by an aggregate amount of $150 million, of which
$25 million can be comprised of incremental revolver borrowings.
The term loan requires a six-month Debt Service Reserve Account
(DSRA), as well as a cash flow sweep and mandatory amortization of
1% per annum. In the latter part of 2020, the mandatory scheduled
amortization was supplemented by a $5 million paydown of the term
loan. As for the DSRA, the instrument that provides back-up
liquidity directed toward term loan holders is in the form of a
letter of credit issued by a bank. The letter of credit is for
approximately $49 million, which represents six months of expected
interest and scheduled principal repayments. The letter of credit
is written in favor of the collateral agent. The obligation to
repay the letter of credit resides with Oryx.
The credit agreement stipulates financial covenant of a DSCR not
less than 1.10x. As of Sept. 30, 2020, Oryx was in compliance with
the covenant. Fitch expects Oryx to maintain compliance over
forecast period.
ESG CONSIDERATIONS
Oryx has an ESG Relevance Score of 4 for Group Structure and
Financial Transparency as private-equity backed midstream entities
typically have less structural and financial disclosure
transparency than public traded issuers. This has a negative impact
on the credit profile, and is relevant in conjunction with other
factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3. ESG issues are credit neutral
or have only a minimal credit impact on the entity, either due to
their nature or the way in which they are being managed by the
entity.
OWENS & MINOR: S&P Assigns 'B-' Rating on 500MM Unsecured Notes
---------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level and '6' recovery
ratings to Owens & Minor Inc.'s (OMI; 'B+/Positive') proposed $500
million unsecured notes. The '6' recovery rating indicates its
expectation for negligible (0%-10%; rounded estimate: 0%) recovery
in the event of a payment default.
OMI plans to issue $500 million in senior unsecured notes, downsize
its revolver capacity to $300 million from $400 million, and upsize
its accounts receivables facility (unrated) to $450 million from
$325 million. The company intends to use the proceeds of the
transaction to (i) repay borrowings under the existing revolver
(ii) refinance the existing term loan B and (iii) pay related fees
and expenses. The transaction is leverage neutral.
S&P said, "We also revised the recovery rating for the senior
secured debt, including the 2024 senior secured notes, to '3' from
'4'. The '3' recovery rating indicates our expectation for
meaningful (50%-70%; rounded estimate: 60%) recovery in the event
of a payment default. The issue-level rating for the secured notes
remains unchanged at 'B+'. We also assigned a 'B+' issue-level
rating and '3' recovery rating (rounded estimate 60%) to the new
revolver to be issued by Owens & Minor Distribution Inc.
"We recently revised the outlook to positive from stable,
reflecting the possibility that it could outperform our EBITDA
projection and manage through the potential normalization of the
supply/demand dynamic of personal protective equipment such that
S&P Global Ratings-adjusted leverage will stay in the 3x-4x range
on a sustained basis."
PALM BEACH: Gets Access to Northern Trust's Cash Collateral
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
West Palm Beach Division, has authorized Palm Beach Brain and
Spine, LLC, Midtown Outpatient Surgery Center, LLC, and Midtown
Anesthesia Group, LLC to use cash collateral on an interim basis to
pay operating expenses, with a 10% variance.
The Northern Trust Company asserts a lien in substantially all the
assets of MOSC, including but not limited to accounts and general
intangibles and the proceeds thereof, pursuant to one or more
promissory note, security agreement, and financing statements since
2014. Northern Trust also asserts its priority lien includes
medical receivables and related "letters of protection" and the
proceeds thereof, including those that may have been sold to
various factors by MOSC, although the factors do not agree with the
bank's contention, and the parties reserve their respective rights
with respect thereto.
PBBS is a party to various agreements with Echelon Medical Capital,
LLC, Momentum Funding, LLC, Well States Healthcare d/b/a Well State
Servicing, Medlink Capital, LLC, Medical Financial Group Holdings,
LLC, and CareCentric Investments I, LLC, wherein PBBS appears to
have sold these factors certain medical receivables and related
"letters of protection" issued by patients of PBBS to the foregoing
factors.
MOSC is a party to various agreements with Echelon, CareCentric and
Momentum, wherein MOSC appears to have sold certain medical
receivables and related "letters of protection" issued by patients
of MOSC to the foregoing factors. Medlink also asserts an interest
in certain medical receivables or related "letters of protection"
of
MOSC.
MAG is a party to various agreements with Echelon, Momentum,
CareCentric and MedAssist Billing Solutions, LLC, wherein MAG
appears to have sold certain medical receivables and related
"letters of protection" issued by patients of MAG to the foregoing
factors. Medlink also asserts an interest in certain medical
receivables or related "letters of protection" of MAG.
The Debtors are authorized to use cash collateral solely to pay the
applicable ordinary operating expenses that become due and are
payable through the date of the next hearing on cash collateral or
as otherwise ordered by the Court. Dr. Amos Dare has agreed to
defer his salary from all three Debtors until such time as there
are available net funds to pay the deferred salary. However, the
Debtor will be required to provide notice to Northern Trust Bank
and the factors that said deferred compensation has or will be paid
to Dr. Amos Dare.
As adequate protection for and to the extent of the Debtors' use of
any "cash collateral" authorized by this Order in which the factors
hold any interest, as well as for any decrease in the value of such
cash collateral as of the Petition Date, or in the event the
Debtors mistakenly or improperly use proceeds of medical
receivables and related "letters of protection" sold and assigned
pre-petition, Echelon, Momentum, Medlink and Well States are
granted with an effective date as of the Petition Date, an
assignment of and replacement lien on sold and assigned medical
receivables and related "letters of protection" of equal or greater
value, to the same extent as any prepetition lien or ownership
interest on a final basis through and including the interim hearing
in the matter.
A final hearing on the use of cash collateral is scheduled for May
25 at 1:30 p.m.
A copy of the Order and the Debtors' budgets through May 21 is
available for free at https://bit.ly/3qjN208 from
PacerMonitor.com.
About Palm Beach Brain and Spine
Palm Beach Brain & Spine -- http://www.pbbsneuro.com/-- is a
medical practice providing neurosurgery, minimally invasive spine
surgery, and treatment for cancer of the brain and spine.
Palm Beach Brain & Spine and two affiliates, Midtown Outpatient
Surgery Center, LLC and Midtown Anesthesia Group, LLC, filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Lead Case No. 19-20831) on Aug. 15, 2019.
The petitions were signed by Dr. Amos O. Dare, manager. Palm Beach
Brain disclosed $13,412,202 in assets and $2,685,278 in
liabilities. Midtown Outpatient disclosed $6,857,558 in assets and
$2,920,846 in liabilities while Midtown Anesthesia listed
$5,081,861 in assets and under $50,000 in liabilities.
Judge Mindy A. Mora is the case judge.
Dana L. Kaplan, Esq. and Craig I. Kelley, Esq., at Kelley Fulton &
Kaplan, P.L. are the
Debtors' counsel.
PAPER SOURCE: Gets Cash Collateral Access on Interim Basis
----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia,
Richmond Division, has authorized Paper Source, Inc. and its
affiliated Debtors to, among other things, use cash collateral on
an interim basis and obtain postpetition financing.
The Debtor needed access to cash collateral and postpetition
financing to preserve and maximize the value of the Debtor's
estates. The Debtor sought to obtain senior secured postpetition
financing on a superpriority basis under a delayed-draw term loan
facility consisting of $7.75 million available upon entry of the
Interim Order and an additional $8.25 million available upon entry
of the Final Order.
The funds will be used to pay the fees, costs and expenses incurred
in connection with the Chapter 11 Cases, fund any obligations
benefitting from the Carve-Out, permit the orderly continuation of
the operation of their businesses, maintain business relationships
with customers, vendors and suppliers, make payroll, and satisfy
other working capital and operational needs.
The Debtor will use the proceeds of the DIP Facility to pay the
principal, interest, fees, expenses and other amounts payable and
reimbursable under the DIP Documents or the Interim Order as such
become due, make permitted adequate protection payments, and
provide financing for working capital and other general corporate
purposes.
As of the Petition Date, the Debtors have approximately
$103,188,208.08 in aggregate principal amount outstanding of funded
debt obligations.
Paper Source, Inc., as borrower, Pine Holdings, Inc. as guarantor,
MidCap Financial Trust, as administrative agent, the term loan
lenders party thereto from time to time, are party to a Credit and
Guaranty Agreement, dated as of May 22, 2019, which provides for a
first lien secured credit facility consisting of (a) a term loan
commitment, which is scheduled to mature on May 22, 2024, (b) a
delayed draw term loan commitments, which matured on February 26,
2021, and (c) a revolving credit commitment, which is scheduled to
mature on May 22, 2024. The obligations under the First Lien
Credit Agreement are secured, subject to certain exceptions, by a
first priority lien on the Debtors' assets. As of the Petition
Date, $72,806,000 is outstanding under the First Lien Credit
Agreement.
Paper Source, Inc., as borrower, Pine Holdings, Inc. as guarantor,
Victory Park Management, LLC, as administrative agent, and certain
financial institutions as lenders, are party to a Credit and
Guaranty Agreement, dated as of May 22, 2019. The obligations
under the Prepetition Second Lien Term Loan Agreement are secured,
subject to certain exceptions, by a second priority lien on the
Debtors' assets.
As adequate protection for the Debtor's use of cash collateral, the
Prepetition First Lien Agent, for the benefit of the Prepetition
First Lien Secured Parties are granted continuing valid, binding,
enforceable and perfected postpetition replacement liens,
administrative superpriority expense claims in each of the Chapter
11 Cases, junior and subordinate only to the Carve-Out and the DIP
Obligations monthly reimbursement payments of the Prepetition First
Lien Secured Parties' respective reasonable fees and expenses,
including the professional fees of Proskauer Rose LLP, Tavenner &
Beran PLC, and Carl Marks & Co., Inc., and payment in kind of
monthly interest, calculated at the non-default rate under the
Prepetition First Lien Credit Agreement and added to the principal
amounts of the Prepetition First Lien Secured Parties' allowed
secured claims.
As adequate protection for any Diminution of the Prepetition Second
Lien Secured Parties' interest in the Prepetition Collateral
resulting from the subordination of the Prepetition Second Liens to
the DIP Liens, the Carve-Out, and the First Lien Replacement Liens,
the Prepetition Second Lien Agent will receive, for the benefit of
the Prepetition Second Lien Secured Parties, continuing valid,
binding, enforceable and perfected postpetition replacement liens
and administrative superpriority expense claims in each of the
Chapter 11 Cases.
At the Final Hearing, the Debtors will seek final approval of the
proposed postpetition financing and use of Cash Collateral
arrangements pursuant to a proposed final order.
The final hearing on the matter is scheduled for March 25, 2021 at
1:00 p.m.
A full-text copy of the Order is available for free at
https://bit.ly/3qolTt0 from PacerMonitor.com.
About Paper Source, Inc.
Paper Source, Inc., operates as lifestyle brand and retailer of
premium paper products, crafting supplies and related gifts,
including custom invitations, greeting cards and personalized
stationery and stamps. It sells fine and artisanal papers, wedding
paper goods, books and gift wrap through its 158 domestic stores
and its e-commerce website. The Company's administrative
headquarters is in Chicago.
Paper Source, Inc., and Pine Holdings, Inc., sought Chapter 11
protection (Bankr. E.D. Va. Case No. 21-30660) on March 2, 2021.
Paper Source estimated assets and debt of $100 million to $500
million as of the bankruptcy filing.
The Hon. Keith L. Phillips is the case judge.
The Debtors tapped WILLKIE FARR & GALLAGHER LLP as bankruptcy
counsel; WHITEFORD TAYLOR & PRESTON LLP as bankruptcy co-counsel;
M-III ADVISORY, LP as restructuring advisor; and SSG CAPITAL
ADVISORS, LLC, as investment banker. A&G REAL ESTATE PARTNERS is
the real estate advisor. EPIQ CORPORATE RESTRUCTURING, LLC, is the
claims agent.
PAPER SOURCE: Sets Bid Procedures for Substantially All Assets
--------------------------------------------------------------
Paper Source, Inc., and debtor affiliates ask the U.S. Bankruptcy
Court for the Eastern District of Virginia to authorize bidding
procedures in connection with the sale of substantially all assets
to MidCap Funding Investments XI LLC, subject to overbid.
The Stalking Horse Purchaser will acquire the Purchased Assets for,
among other things, a credit bid equal to (a) the full amount of
the obligations under the DIP Facility in the expected aggregate
principal amount of $16 million and (b) up to the full amount of
the obligations under the Prepetition First Lien Facility in the
aggregate principal of roughly $72.8 million as of the Petition
Date.
a credit bid equal to (a) the full amount of the obligations under
the DIP Facility in the expected aggregate principal amount of $16
million and (b) up to the full amount of the obligations under the
Prepetition First Lien Facility in the aggregate principal of
roughly $72.8 million as of the Petition Date.
The Debtors commenced these chapter 11 cases to facilitate a timely
and efficient sale process of all or substantially all of their
business. The cornerstones of this strategy are twofold.
First, following a comprehensive and thorough prepetition marketing
process, the Debtors seek to conduct an additional, postpetition
marketing process lasting approximately 50 days. This process will
supplement the thorough and extensive pre-petition marketing
process that the Debtors launched in December 2020 whereby by they
-- with assistance from their investment banker at the time --
contacted nearly 140 potential acquirers.
Second, the Debtors have entered into the Stalking Horse Agreement
with the Stalking Horse Purchase. The Stalking Horse Purchaser is
an acquisition entity designated by (a) MidCap Financial Trust in
its capacity as administrative agent and collateral agent for the
DIP Lenders, and (b) MidCap in its capacity as administrative agent
and collateral agent for the Prepetition First Lien Lenders.
The Stalking Horse Agreement provides for the Stalking Horse
Purchaser's acquisition of the Purchased Assets in consideration
for, among other things, a credit bid equal to (a) the full amount
of the obligations under the DIP Facility in the expected aggregate
principal amount of $16 million and (b) up to the full amount of
the obligations under the Prepetition First Lien Facility in the
aggregate principal of roughly $72.8 million as of the Petition
Date.
The Debtors believe the Stalking Horse Agreement will help to
generate significant interest in the Assets from third party
buyers, and best position the Debtors to maximize creditor
recoveries and continue as a going concern.
The Debtors believe that the proposed Bidding Procedures and
corresponding timeline will allow them to build off the significant
progress made prepetition to market and sell them as a going
concern. Beginning in November 2020, they began working exploring
a sale of all or substantially all of their assets. Both the
Bidding Procedures and the Stalking Horse Agreement are designed to
maximize the likelihood of generating value for the benefit of
enterprise-wide stakeholders as expeditiously as possible.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: April 16, 2021, at 5:00 p.m. (ET)
b. Initial Bid: Any Qualified Bidder's initial Overbid and
each subsequent Overbid will be at least a $250,000 increase in
cash or cash equivalents, over the previous price.
c. Deposit: 10% of the aggregate Purchase Price of the Bid
d. Auction: If the Debtors receive more than one Qualified
Bid, the Debtors will conduct the Auction to determine the
Successful Bidder. The Auction will take place on April 21, 2021.
The Auction will take place (i) by videoconference, or (ii) on such
other date and/or at such other location or by other virtual means
as determined by the Debtors.
e. Bid Increments: $250,000
f. Sale Hearing: April 30, 2021
g. Closing: May 26, 2021
Within three business days after the entry of the Bidding
Procedures Order, or as soon thereafter as practicable, the Debtors
will cause the Sale Notice to be served upon the Notice Parties.
Similarly, within three business days after entry of the Order, or
as soon as practicable thereafter, the Debtors will cause the Sale
Notice to be published once in the national edition of USA Today or
another newspaper with national circulation.
After the conclusion of the Auction, the Debtors will file on the
docket, but not serve except with respect to each counterparty to a
Proposed Assumed Contract, the Notice of Successful Bidder.
The Debtors have executed the Stalking Horse Agreement with the
Stalking Horse Purchaser. Pursuant to the Stalking Horse
Agreement, the Stalking Horse Purchaser will serve as the Stalking
Horse Purchaser for the Purchased Assets for consideration in the
form of the Credit Bid plus assumption of the Assumed Liabilities.
Importantly, the terms of the Stalking Horse Agreement do not
require the Debtors to pay any break-up fee, expense reimbursement,
or other forms of protections benefiting the Stalking Horse
Purchaser. The Debtors believe that this important concession from
MidCap will help foster increased interest in their business and
aid them in maximizing value.
The Debtors are not seeking to assume the Stalking Horse Agreement
pursuant to 11 U.S.C. Section 365 unless and until the Stalking
Horse Purchaser is selected as the Successful Bidder. By the
Motion, the Debtors ask authority to assume the Stalking Horse
Agreement if it is the Successful Bid (as defined in the Bidding
Procedures). To the extent it is later determined to be necessary,
the Debtors also ask approval under Section 280G(b)(5) of the
Internal Revenue Code of payments that could constitute "excess
parachute payments" within the meaning of Section 280G of the
Internal Revenue Code.
In connection with any Sale, the Debtors propose to assume and
assign to the Successful Bidder the applicable Proposed Assumed
Contracts. Within 10 days after entry of the Bidding Procedures
Order, they will file with the Court, serve on the Notice Parties,
and cause to be published on the Case Website, the Potential
Assumption and Assignment Notice. The Cure Objection Deadline is
no later than 5:00 p.m. (ET) on the date that is 14 days following
service of the Potential Assumption and Assignment Notice. The
Adequate Assurance Objection Deadline is no later than 12:00 p.m.
(ET) on the date prior to the Sale Hearing.
The Debtors submit that the Stalking Horse Purchaser will not, and
other bidders are unlikely to, consummate the Sale absent the
ability to purchase the Assets free and clear of all interests.
Accordingly, they ask that the Assets be sold free and clear with
such interests attaching to the proceeds of the Sale, subject to
any rights and defenses of the Debtors and other parties in
interest with respect thereto.
Pursuant to Bankruptcy Rules 6004(h) and 6006(d), the Debtors ask a
waiver of any stay of the effectiveness of the Sale Order. As set
forth, the relief sought is necessary and appropriate to maximize
the value of their estates for the benefit of their economic
stakeholders. Accordingly, the Debtors submit that ample cause
exists to justify the waiver of the 14-day stay imposed by
Bankruptcy Rules 6004(h) and 6006(d), to the extent that each Rule
applies.
A copy of the Bidding Procedures is available at
https://tinyurl.com/dctcvtbp from PacerMonitor.com free of charge.
The Purchaser:
MIDCAP FUNDING INVESTMENT XI LLC
c/o MidCap Financial Trust
c/o MidCap Financial Services, LLC, as servicer
7255 Woodmont Avenue, Suite 300
Bethesda, MD 20814
Attn: General Counsel
Facsimile: (301) 941-1450
E-mail: legalnotices@midcapfinancial.com
The Purchaser is represented by:
PROSKAUER ROSE LLP
Eleven Times Square
New York, NY 10036
Telephone: (212) 969-3000
Facsimile: (212) 969-2900
Attn: Charles A. Dale, Esq.
James P. Gerkis, Esq.
Kristian M. Herrmann, Esq.
Email: cdale@proskauer.com
jgerkis@proskauer.com
kherrmann@proskauer.com
About Paper Source
Paper Source, Inc., operates as lifestyle brand and retailer of
premium paper products, crafting supplies and related gifts,
including custom invitations, greeting cards and personalized
stationery and stamps. It sells fine and artisanal papers,
wedding
paper goods, books and gift wrap through its 158 domestic stores
and its e-commerce website. The Company's administrative
headquarters is in Chicago.
Paper Source, Inc., and Pine Holdings, Inc., sought Chapter 11
protection (Bankr. E.D. Va. Case No. 21-30660) on March 2, 2021.
Paper Source estimated assets and debt of $100 million to $500
million as of the bankruptcy filing.
The Hon. Keith L. Phillips is the case judge.
The Debtors tapped WILLKIE FARR & GALLAGHER LLP as bankruptcy
counsel; WHITEFORD TAYLOR & PRESTON LLP as bankruptcy co-counsel;
M-III ADVISORY, LP as restructuring advisor; and SSG CAPITAL
ADVISORS, LLC, as investment banker. A&G REAL ESTATE PARTNERS is
the real estate advisor. EPIQ CORPORATE RESTRUCTURING, LLC, is
the
claims agent.
PAUL F. ROST: Allegheny Oppose Subordination of Real Estate Taxes
-----------------------------------------------------------------
The County of Allegheny filed a limited objection to Paul F. Rost
Electric, Inc.'s Amended Chapter 11 Small Business Disclosure
Statement and Amended Chapter 11 Small Business Plan dated January
29, 2021.
The County points out that the Debtor's Amended Chapter 11 Small
Business Disclosure Statement and Amended Chapter 11 Small Business
Plan provide that in the event that the Debtor obtains financing by
pledging the Debtor's real estate as collateral for such financing,
then any real estate taxes owed to the County at that time would be
subordinate to the lender's lien associated with such financing.
The County objects to any language in the Amended Disclosure
Statement and Amended Plan that provides the County's real estate
taxes to be subordinated to any financing obtained by the Debtor.
Counsel for County:
Jeffrey R. Hunt, Esquire
GRB Law
Pa. I.D. #90342
Frick Building, 14th Floor
437 Grant Street
Pittsburgh, PA 15219
Tel: (412) 281-0587
jhunt@grblaw.com
About Paul F. Rost Electric
Paul F. Rost Electric, Inc. sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Pa. Case No. 20-20344) on Jan. 30,
2020. At the time of the filing, the Debtor had estimated assets
of less than $50,000 and liabilities of between $500,001 and $1
million. Judge Jeffery A. Deller oversees the case. Dennis J.
Spyra & Associates is the Debtor's legal counsel.
PAUL F. ROST: McKeesport Objects to Subordination of Tax Liens
--------------------------------------------------------------
McKeesport Area School District and the City of McKeesport filed a
limited objection to Paul F. Rost Electric, Inc.'s Amended
Disclosure Statement and Plan of Reorganization.
Movants point out that in the Amended Disclosure Statement and Plan
of Reorganization, the Debtor repeatedly references its assumption
and/or intention to subordinate the taxing authorities' tax liens
to any post-confirmation financing necessary to complete the Plan.
The City of McKeesport and McKeesport Area School District object
to any attempt by Debtor to subordinate the tax liens.
Counsel for Movants:
Amanda L. Mulheren, Esquire
Kratzenberg, Lazzaro, Lawson & Vincent
546 Wendel Road
Irwin PA 15642
Tel: (724) 978-0333
E-mail: service@kl-law.com
About Paul F. Rost Electric
Paul F. Rost Electric, Inc., sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Pa. Case No. 20-20344) on Jan. 30,
2020. At the time of the filing, the Debtor had estimated assets
of less than $50,000 and liabilities of between $500,001 and $1
million. Judge Jeffery A. Deller oversees the case. Dennis J.
Spyra & Associates is the Debtor's legal counsel.
PEARL 53: Unsecureds to Recover 25% to 50% in Settlement Plan
-------------------------------------------------------------
Pearl 53 LLC submitted an Amended Plan and a Disclosure Statement
on March 1, 2021.
The Plan, at its core, implements a settlement reached by the
Debtor with 177 Water Limited Partnership ("Seller") as the owner
of the subject property located at 53 Pearl Street, Brooklyn, NY.
The Settlement resolves litigation over the pre-petition
termination of the Debtor's rights under a contract to acquire the
Property . Initially, the Debtor sought Chapter 11 relief to
challenge the Seller's pre-petition termination of the Original
Contract. During bankruptcy, the Debtor commenced an adversary
proceeding against the Seller, seeking, inter alia, a declaratory
judgment relating to the central issue of whether a default was
properly declared by the Seller pre-petition. The Seller
counterclaimed against the Debtor to enforce the pre-petition
default, replete with forfeiture of the deposits. Over the Debtor's
opposition, the Seller obtained summary judgment pursuant to a
Judgment and Order of the Bankruptcy Court dated Aug. 14, 2020,
finding that the Seller's declaration of default was valid, and
extinguishing the Original
Contract.
The Debtor appealed the ruling and, in the context of appellate
proceedings before the District Court, ultimately reached the
Settlement with the Seller to purchase the Property under the
Revised Sale Contract. The Settlement effectively salvaged the
situation, and contemplates that the Debtor's designee, ZB Pearl
LLC, a New York limited liability company, shall purchase the
Property for a reduced purchase price of $8,533,000, including
credit for $895,000 of the prior deposits, plus a new deposit by
the Reorganized Debtor of $853,000.
The Seller has set an outside closing date of April 21, 2021, and
the new investor group is hoping to close by March 31, 2021, to
take advantage of certain rights under Section 1031 of the Internal
Revenue Code that will assist in facilitating plan funding, as
discussed below. Under the Plan, the new investor group and the
Debtor's existing equity holders are contributing equally to the
funding of the monies needed to discharge the Debtor's obligations
under the Plan, and pay (i) the Allowed Administrative Expenses for
Professional Fees of the Debtor's counsel which have been
voluntarily capped by such counsel in the net amount of $75,000
after deduction of the unused retainer paid to such counsel; (ii)
the establishment of a general creditor fund in the amount of
$25,000 established for a pro rata distribution to Allowed General
Unsecured Claims; and (iii) payment of US Trustee Fees due pursuant
to 28 U.S.C. Sec. 1930.
The Plan also contemplates that certain acquisition/mortgage
financing will be obtained relating to the purchase of the
Property, which is defined as the "Exit Facility", and which will
be used to close on the Revised Sale Contract on a
post-confirmation basis.
Under the Plan, the Class 2 Claim of the Seller will receive the
balance of the purchase price pursuant to the Revised Sale Contract
(subject to adjustments and apportionments under the contract), on
the Effective Date from the Reorganized Debtor, based upon new
capital, equity contributions, and the Exit Facility.
On the Effective Date, the holders of Allowed Class 4 General
Unsecured Claims will receive a pro rata distribution from the
General Creditor Fund of $25,000 to be established on the
Effective Date. Although the Debtor scheduled general unsecured
claims in the total amount of approximately $434,000, many of the
amounts scheduled were based on anticipated services that have not
yet been performed and may not be needed. The Debtor intends to
amend its schedules on notice to all unsecured creditors prior to
confirmation, pursuant to separate application. The Debtor
anticipates that the final allowed general unsecured claims will
total approximately $50,000 to $100,000, and the Debtor currently
projects that Class 4 Claimants will receive a pro rata dividend of
between 25% to 50%.
Attorneys for the Debtor:
Kevin J. Nash, Esq.
GOLDBERG WEPRIN FINKEL
GOLDSTEIN LLP
1501 Broadway, 21st Floor
New York, NY 10036
A copy of the Disclosure Statement is available at
https://bit.ly/3sRz3k2 from PacerMonitor.com.
About Pearl 53 LLC
Pearl 53 LLC is engaged in activities related to real estate. The
Company has a contract to purchase real property at 53 Pearl
Street, Brooklyn, NY, having a current value of $9.85 million.
Pearl 53 LLC sought Chapter 11 protection (Bankr. E.D.N.Y. Case No.
20-41911) on April 28, 2020. The Debtor disclosed total assets of
$13,029,500 and total liabilities of $9,434,104 as of the
bankruptcy filing. The Hon. Carla E. Craig is the case judge.
GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP, led by Kevin J. Nash, is the
Debtor's counsel.
PEELED INC: Healthy Snacks Maker Files Subchapter V Case
--------------------------------------------------------
Healthy snacks maker Peeled Inc. has sought Chapter 11 protection,
saying a significant drop in foot traffic during the COVID-19
pandemic at airports, hotels and schools hurt business.
The Debtor has elected for the case to proceed under Subchapter V
of Chapter 11 of the Bankruptcy Code. Its aggregate non-contingent
liquidated secured and unsecured debts are less than $7.5 million
as of the Petition Date.
The Debtor is a pioneer in providing healthy snacking options to
consumers, catering to a wide variety of dietary preferences. It
develops recipes for on-the-go snack products, works with third
parties (co-packers) to manufacture them, and then sells them to
retailers and foodservice channels (i.e., its direct customers)
who, in turn, sell them to consumer end-users (i.e., its
consumers). The Debtor's products are sold under the brand name
"Peeled Snacks".
In 2020, the Debtor's business suffered immense disruption as a
result of the COVID-19 pandemic. Many of the Debtor's most
important sales channels (such as airports and schools) were
shuttered completely or otherwise subjected to capacity
restrictions, creating a precipitous drop in consumer traffic, and
thus sales. The Debtor's revenues dropped over 40%, from
approximately $14.6 million in 2019, to just $8.6 million in 2020.
In May 2020, Villa Andina S.A.C. filed a lawsuit against the Debtor
in the United States District Court for the District of Rhode
Island under case number 20-cv-00229. Villa Andina alleged breach
of contract and related claims against the Debtor, seeking damages
of $1.09 million. On Sept. 11, 2020, Villa Andina obtained an
amended default judgment against the Debtor in the amount of $1.03
million. The District Court then entered an order staying
execution of the default judgment and referring the Villa Andina
Litigation to mediation. At mediation, the Debtor and Villa Andina
were unable to resolve the Villa Andina Litigation, and the
litigation remains open and unresolved.
To maintain its business through the pandemic, the Debtor
terminated its lease for a facility in Cumberland, Rhode Island,
terminated all of its employees, and engaged in negotiations with
creditors in an effort to manage costs.
The Debtor applied for and obtained two rounds of PPP loans.
Entering 2021, the Debtor was running out of cash, could not
restart full operations, and was faced with increasing pressure
from vendors and customers. These stresses combined with the
pressures of the Villa Andina Litigation to create a situation that
made the Debtor clearly unable to pay its debts as they ordinarily
come due and one in which -- absent a restructuring -- no prospect
of being able to do so. Moreover, given its overall state, its
going concern value no longer comes anywhere close to being able to
support its current debt levels.
The Debtor ultimately determined that the only viable means of
saving its business's going-concern value and the only way its
general unsecured creditors may receive any payment on their claims
was to seek protection under Subchapter V of Chapter 11. The
Debtor's goal for the case is to reorganize its business through a
combination of cost-savings, obtaining debtor-in-possession
financing, and confirming a chapter 11 plan of reorganization to
facilitate exit financing to recapitalize the business.
As of the Petition Date, the terms of the DIP Loan and exit
financing are still being negotiated, but the Debtor anticipates
the DIP Loan will provide it sufficient working capital to restart
regular operations, and the exit financing will be sufficient to
fund a plan and otherwise sufficiently recapitalize the business
and position the Company for long-term viability.
Prepetition Capital Structure
As of the Petition Date, the Debtor's capital structure consists
of:
(a) Secured debt of approximately $2.98 million in connection
with a revenue-based loan made to the Debtor by Decathlon Alpha IV,
L.P.;
(b) Unsecured debt of approximately $1 million in connection
with an unsecured loan made to the Debtor by B3 Trust, an Illinois
Trust ("B3");
(c) Unsecured trade debt of nearly $2.78 million;
(d) Unsecured debt of slightly less than $172,000 in connection
with unsecured loans made to the Debtor by its former CEO, John
Kalina; and
(e) Other contingent and unliquidated debt of $834,000 in
connection with two Payment Protection Program loans.
About Peeled Inc.
Peeled Inc. -- https://peeledsnacks.com -- is a manufacturer of
"healthy" snacks offering organic, gluten-free, vegan, kosher
options.
On March 3, 2021, Peeled Inc. filed a bankruptcy petition under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Case No. 21-10513).
The Debtor estimated assets and debt of $1 million to $10 million
as of the bankruptcy filing.
SUGAR FELSENTHAL GRAIS & HELSINGER LLP is the Debtor's counsel.
ARCHER & GREINER, P.C., is the co-counsel.
PLAYTIKA HOLDING: S&P Alters Outlook to Positive, Affirms BB- ICR
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' issuer credit rating on
Playtika Holding Corp. and revised the outlook to positive from
stable.
S&P said, "We are also assigning our 'BB' issue-level rating and
'2' recovery rating to the proposed first-lien term loan facility.
We are assigning our 'B' issue-level rating and '6' recovery rating
to the proposed senior unsecured notes.
"The positive outlook reflects our view that post-IPO governance
risk will improve as Playtika increases its board diversification
and implements controls typically required in U.S. publicly listed
companies. The outlook also reflects our expectation that operating
performance will continue to improve, with sustained adjusted
leverage below 3x.
"The outlook revision reflects our view that post-IPO, we expect
Playtika's governance risk to improve over the next 12 months
through greater transparency and increased oversight in internal
decision making through an expanded and diversified board of
directors. Most of the company's seven-person board will be
independent directors, including its audit committee that oversees
related party transactions. While control is still concentrated
with Giant Interactive Group chairman Yuzhu Shi, we expect the
regulatory controls typical in publicly listed companies in the
U.S., including minority interest rights and the expanded board
composition, to mitigate some of these risks."
The company's IPO and proposed refinancing materially improves
Playtika's liquidity position. Its cash flow generation and overall
liquidity profile will improve through lower interest expense and
mandatory annual amortization payments. Furthermore, the company
received about $470 million in proceeds from primary issuances. S&P
said, "We expect Playtika will prioritize its strong liquidity for
acquisitions, internal investments, and development over material
debt repayment in the intermediate term. We continue to expect
Playtika's operating performance to drive deleveraging over the
next 12 months, with continued growth in the core mobile games
business at or above a mid-single-digit percent rate."
Playtika continues to benefit from secular growth trends in the
video game industry and especially in the fast-expanding mobile
segment. Consumers increasingly use entertainment as they spend
more time on smartphones and other mobile computing devices. In
S&P's view, companies that can convert free users to paid users,
effectively engage users with frequent updates, and increase
average revenues per user through continued innovation are best
positioned to succeed. Playtika has a good record of engaging users
and improving monetization. It identifies acquisition targets that
meet its thresholds for longevity and user-base loyalty. The
acquisition is then integrated into its service platform to
increase user engagement and monetization through player
segmentation, loyalty programs, and other services. This strategy
has proven very successful, demonstrated in the strong growth
trajectory of acquisitions after integration.
Although Playtika has nine of the top-grossing mobile video games,
it still generates over 60% of its revenue from its top three games
in 2020 (an improvement from 65% in 2019). The title concentration
likely leads to an even higher percentage of earnings and cash flow
as bigger games generally have better margin profiles than smaller
games have. The revenue concentration elevates risk if user
engagement and monetization decline because of increased
competition or lack of content innovation. User stagnation would
likely compress margins as Playtika would need to increase spending
on customer acquisition/retention and content, which could pressure
credit metrics.
A higher concentration of paying users versus console and PC video
game users creates potential volatility and need for greater
investment. Console and PC games tend to have more paying users
than mobile video games have. The broader paying base tends to
create more revenue visibility and predictability, especially for
video game developers with leading franchises. Playtika's games and
other mobile video games tend to have larger user bases, but a much
smaller percentage of players that pay to play. These paying users
tend to spend at rates equal to or above what a console or PC user
will annually spend on a specific title. However, the higher
concentration of revenue per paying user for mobile titles creates
the potential for more revenue and earnings volatility, depending
on the level of paying user churn. These dynamics can increase
customer-acquisition costs and content investment to maintain user
engagement and attract new players. Playtika has navigated this
volatile landscape with its core games increasing revenue and
maintaining its place in the top 100 revenue-generating mobile
games for several years.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Risk management and internal controls
S&P said, "The positive outlook reflects our view that post-IPO
governance risk would improve as Playtika takes steps to increase
its board diversification and implement governance controls
typically required in a U.S. publicly-listed company. The outlook
also reflects our expectation that operating performance will
continue to improve and keep adjusted leverage below 3x on a
sustained basis."
S&P could raise its ratings within the next 12 months if:
-- Playtika establishes a track record as a public company,
particularly in financial policy and the effectiveness of board
oversight; and
-- Operating performance continues to improve in line with the
overall mobile video gaming industry, with adjusted leverage
remaining below 3x on a sustained basis.
S&P could revise its outlook on Playtika back to stable if it
expects adjusted leverage to rise and remain above 3x on a
sustained basis. This could happen under these scenarios:
-- The company adopts a more aggressive financial policy that
results in material debt-financed shareholder returns; and
-- User engagement and monetization metrics in one or more of its
core games are substantially weaker. This could lead to flat to
declining revenue, margin compression, and weaker cash flow
generation, raising leverage above 3x on a sustained basis.
PRECIPIO INC: Appoints Richard Sandberg as Board Chairman
---------------------------------------------------------
Precipio, Inc. appointed Richard Sandberg as chairman of the board
of directors. Dr. Douglas Fisher will step down as chairman and
maintain his role as a director on the company's board.
"Precipio is capitalizing on a unique opportunity to develop better
diagnostic technology in support of its university-based pathology
partnerships and to bring that technology to physician offices in
the US and abroad. I am pleased and fortunate to have the chance
to contribute to a company with so many opportunities to grow," Mr.
Sandberg said.
Mr. Sandberg has been involved with Precipio since its inception
and has acted in various advisory roles. In 2019 he joined the
company's Board of Directors and has been a significant contributor
to helping the company formulate strategy and execute on its
plans.
Mr. Sandberg is a seasoned diagnostics executive with a substantial
track record in the field of diagnostics. As the founder,
chairman, chief executive officer and chief financial officer of
Dianon Systems, Inc., a diagnostics company that was acquired in
2002 by LabCorp for $650M, Mr. Sandberg has direct experience
relevant to Precipio's business, the industry, and the challenges a
growth company faces. Mr. Sandberg also serves as a director of
Poplar Healthcare, LLC, a privately owned anatomical pathology
laboratory with which the company entered into a joint venture in
2020.
From 2008 to 2019, Mr. Sandberg also served as chairman of the
board of Oxford Immunotec, which is being acquired by Perkin Elmer
for over $550M, Mr. Sandberg also serves as chief executive officer
of Resolys Bio, Inc, a pharmaceutical company which is developing a
treatment for long-term, chronic traumatic brain injury.
"I have been fortunate to have Dick Sandberg in my corner
throughout the years as the company navigated the challenges of
developing its business model and executing on its vision, and his
counsel has been invaluable to myself and my team," said Ilan
Danieli, chief executive officer of Precipio. "I am honored to
have Dick assume the role as chairman of the board and continue to
be a driving force within the company's leadership."
Mr. Fisher said he is pleased that Dick has agreed to be chairman.
"It has been a pleasure to work with him as an independent
director. His experience in the field uniquely qualifies him for
this role, and I'm glad he is ready to step into it," Mr. Fisher
said.
Mr. Fisher joined Precipio's board in 2017 and assumed the role of
chairman in December 2019. During those years and under Doug's
leadership, the company completed the transition following its
merger with Transgenomic; erased past liabilities and has developed
a business model that combines diagnostic services and products
that have already begun to significantly impact the company's
value. Mr. Fisher will continue to play a significant role as a
director and will remain a contributing member of the board.
About Precipio
Omaha, Nebraska-based Precipio, formerly known as Transgenomic,
Inc. -- http://www.precipiodx.com-- is a cancer diagnostics
company providing diagnostic products and services to the oncology
market. The Company has developed a platform designed to eradicate
misdiagnoses by harnessing the intellect, expertise and technology
developed within academic institutions and delivering quality
diagnostic information to physicians and their patients worldwide.
Precipio operates a cancer diagnostic laboratory located in New
Haven, Connecticut and has partnered with the Yale School of
Medicine.
Precipio, Inc., reported a net loss of $13.24 million for the year
ended Dec. 31, 2019, compared to a net loss of $15.69 million for
the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company
had $20.72 million in total assets, $6.85 million in total
liabilities, and $13.86 million in total stockholders' equity.
Marcum LLP, in Hartford, CT, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated March
27, 2020 citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
PRECIPIO INC: Ron Andrews Joins Board of Directors
--------------------------------------------------
Ron Andrews has joined Precipio, Inc.'s board of directors.
Mr. Andrews brings a wealth of experience in the diagnostics world,
and specifically in the areas of product development &
commercialization. Some of Mr. Andrews' past experiences includes
chief commercial officer at Roche Molecular; president of Genetic
Science Division at Thermo Fisher Scientific; president of the
Medical Sciences Venture at Life Technologies Corporation; and
chief executive officer of Clarient, which was acquired by GE
Healthcare for $580M in 2010.
"My life's work in oncology has focused on democratizing important
academic capabilities to empower community oncologists and
pathologists with diagnostic tools that enable accurate, rapid
delivery of important information allowing them to provide the best
care for their patient," Mr. Andrews said. "I am excited to join
the Precipio board as the team embarks on that same mission for
physicians managing patients with various forms of blood cancers.
HemeScreen is a tremendous opportunity for the company, and I look
forward to advising Ilan and team as they execute on their
vision."
Precipio CEO Ilan Danieli said he is delighted to have Mr. Andrews
as part of the team.
"The significance and timing of Mr. Andrews joining the board
cannot be understated. At a time when the company is growing its
products business and sees it as a key driver of revenue and
profitability, having Ronnie on our board will provide invaluable
support to management," Mr. Danieli said.
Mark Rimer, a partner at Kuzari Group and one of the first backers
and supporters of Precipio since its inception 10 years ago, will
be stepping down from his role as a director, and will remain as a
board observer.
"The work that Precipio is doing today to build valuable diagnostic
products that will continue to drive the core mission of
eradicating medical misdiagnosis demonstrates enormous progress
from the early days yet is perfectly in line with the original
vision for the company when we first invested in this team ten
years ago," Mr. Rimer said. "I am proud to have worked with Ilan
and the Precipio management team as well as all our committed
partners at the universities, and I am thrilled that Ron is ready
to bring his commercial experience to Precipio at the start of the
company's next phase of growth."
About Precipio
Omaha, Nebraska-based Precipio, formerly known as Transgenomic,
Inc. -- http://www.precipiodx.com-- is a cancer diagnostics
company providing diagnostic products and services to the oncology
market. The Company has developed a platform designed to eradicate
misdiagnoses by harnessing the intellect, expertise and technology
developed within academic institutions and delivering quality
diagnostic information to physicians and their patients worldwide.
Precipio operates a cancer diagnostic laboratory located in New
Haven, Connecticut and has partnered with the Yale School of
Medicine.
Precipio, Inc., reported a net loss of $13.24 million for the year
ended Dec. 31, 2019, compared to a net loss of $15.69 million for
the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company
had $20.72 million in total assets, $6.85 million in total
liabilities, and $13.86 million in total stockholders' equity.
Marcum LLP, in Hartford, CT, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated March
27, 2020 citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
PUBLIC FINANCE AUTHORITY, WI: S&P Cuts Bond Rating to 'D (sf)'
--------------------------------------------------------------
S&P Global Ratings lowered its long-term ratings to 'D (sf)' from
'CCC (sf)' on the Public Finance Authority, Wis.' senior 2016
series A and subordinate 2016 series B multifamily housing revenue
bonds, issued on behalf of the borrowers, Ellsworth Apartments Penn
LLC and Covenant Manor OH LLC, for the Ellsworth Parkview
Apartments and Covenant Manor Apartments Project.
"The rating action follows announcement by the trustee, Wilmington
Trust, of the immediate acceleration of the series 2016 bonds, and
the initiation of foreclosure proceedings on the Ellsworth Parkview
mortgage, in a disclosure report posted to Electronic Municipal
Market Access on Feb. 26, 2021," said S&P Global Ratings credit
analyst Daniel Pulter. Accordingly, the trustee has declared the
series 2016 bonds immediately due and payable and anticipates
foreclosing on the Covenant Manor mortgage in the future. We
understand that there is no cure period for the acceleration, and
have confirmed with the trustee that payment has not been made."
The announcement follows several uncured covenant defaults under
the under the loan agreement. According to transaction documents,
the borrowers' defaults under the loan agreement constitute events
of default under the trust indenture.
In accordance with S&P's policies, it will withdraw its ratings
after 30 days.
QUAD/GRAPHICS INC: Moody's Alters Outlook on B1 CFR to Stable
-------------------------------------------------------------
Moody's Investors Service changed Quad/Graphics, Inc.'s outlook to
stable from negative and affirmed the company's B1 corporate family
rating, B1-PD probability of default rating, Ba3 rating on the
company's senior secured bank credit facilities and B3 senior
unsecured notes rating. The speculative grade liquidity rating was
maintained at SGL-2.
"The outlook was changed to stable because the company is expected
to maintain good liquidity and leverage around 4x through the next
12 to 18 months despite ongoing pressures in its business", said
Peter Adu, Moody's Vice President and Senior Analyst.
Ratings Affirmed:
Corporate Family Rating, B1
Probability of Default Rating, B1-PD
Senior Secured Bank Credit Facilities, Ba3 (LGD3)
Senior Unsecured Notes, B3 (LGD5)
Rating Unchanged:
Speculative Grade Liquidity, SGL-2
Outlook Action:
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
Quad's B1 CFR is constrained by: (1) high business risk from
continuing decline in revenue and profitability due to digital
substitution; (2) execution risks as the company transforms itself
from a commercial printer focused on retail inserts, magazines and
catalogues, into an integrated marketing solutions provider to
mitigate secular pressures in commercial printing; and (3)
refinancing risk in 2024 when about $1.2 billion of debt (revolver
and term loan A) come due. The rating benefits from: (1) good
market position and scale; (2) moderate leverage (adjusted
Debt/EBITDA) and Moody's expectation that leverage will be
sustained around 4x through the next 12 to 18 months (4.2x for
2020); (3) the company's focus on debt repayment from free cash
flow and asset sale proceeds; (4) continued cost reduction, which
partially mitigates the pressure on EBITDA; and (5) good liquidity,
including its ability to generate positive free cash flow despite
ongoing business pressures.
Quad has moderate environmental risk. Although there have been no
recent material environmental liabilities, the company has exposure
to hazardous substances and could face material remediation costs
of contaminated manufacturing facilities should that occur.
Quad has high social risk tied to the coronavirus pandemic and data
breaches. The company's revenue was negatively impacted in 2020
because of the pandemic, and Moody's expects continued headwinds in
2021. Due to digital substitution, Quad is transforming its
business model towards integrated marketing services, which exposes
the company to increasing data security and customer privacy risk.
The shift to digital will require a continuing focus on cost
reduction for Quad.
Quad has moderate governance risk. The company's financial policy
is conservative, characterized by a publicly stated conservative
leverage target and management's attention to debt repayment rather
than shareholder-friendly actions. In response to the coronavirus
pandemic, Quad suspended its dividend payments in order to conserve
liquidity.
Quad has good liquidity (SGL-2). Sources exceed $600 million with
no debt maturities in the next four quarters as Quad's term loan
has been prepaid through Q3/2022. Liquidity is supported by $55
million of cash and $461 million of availability under Quad's $500
million revolving credit facility (which matures in January 2024)
at year end 2020, and Moody's expected free cash flow of about $90
million over the next 12 months. The company is subject to total
net leverage (with step downs), senior leverage, and interest
coverage covenants; cushion should exceed 10% on the tightest
covenant (total net leverage) through the next four quarters. Quad
has limited ability to generate liquidity from asset sales.
The stable outlook reflects Moody's expectation that Quad will
maintain good liquidity (including generating positive free cash
flow) and sustain leverage around 4x as the company manages its
cost structure in line with revenue decline through the next 12 to
18 months. Moody's expects that the majority of proceeds from any
asset sale would be used to repay debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if the company generates sustainable
positive organic growth in revenue and EBITDA (single digit
declines expected post coronavirus pandemic) and sustains leverage
below 3.5x (4.2x for 2020).
The rating could be downgraded if the company is not able to
successfully execute its transformation away from commercial
printing. Quantitatively this would reflect Moody's expectations of
ongoing revenue and EBITDA declines (single digit declines expected
post coronavirus pandemic) or if leverage is sustained above 4.5x
(4.2x for 2020). Weak liquidity could also cause a downgrade.
The principal methodology used in these ratings was Media Industry
published in June 2017.
Headquartered in Sussex, Wisconsin, Quad/Graphics, Inc. is a
leading North American commercial printing company. Revenue for the
year ended December 31, 2020 was $2.9 billion.
R. INVESTMENTS: Seeks Authority to Use Cash Collateral
------------------------------------------------------
R. Investments, RLLP asks the U.S. Bankruptcy Court for the
District of Colorado for authorization to use the cash collateral
of prepetition secured lender DS VI, LLC.
On November 7, 2017, the Debtor made, executed and delivered its
18% Senior Secured Note Due November 1, 2019 to DS VI, LLC. The
Senior Secured Note evidenced a loan to Debtor in the principal
amount of up to $3,879,000. The Loan is secured by a security
interest in substantially all of the Debtor's assets including, but
not limited to, accounts, inventory, and software. DS perfected
its security interest in the DS Collateral when it filed its UCC-1
with the Colorado Secretary of State on February 16, 2018 as Filing
No. 20182015391. The Loan matured by its terms on November 1, 2019.
Although the Loan has matured, DS has taken no steps to enforce
its rights under the Senior Secured Note. As of January 1, 2021,
the Debtor asserts that the obligations due and owing under the
Senior Secured Note are $5,021,040.41 consisting of: (i)
$3,529,000.00 in principal; and (ii) $1,492,040.41 in capitalized
interest.
The Debtor contends that these parties may claim a secured
interest:
(a) Connexion Asset Group, LLC, claims a secured interest in
the Debtor's membership interest in 10701 Pecos Street Partners,
LLC, by virtue of that UCC-1 filed with the Colorado Secretary of
State on February 27, 2014, at Filing No. 20142018826. The Debtor
asserts: (i) this UCC-1 has lapsed; and (ii) it no longer has the
particular membership interest.
(b) AMDC Holdings, LLC, claims a secured interest in the
Debtor's membership interest in 1840 McCullough Avenue, LLC, by
virtue of those UCC-1s filed with the Colorado Secretary of State
on October 31, 2016, at Filing No. 20162098643 and 20162098711.
The Debtor asserts: (i) this membership interest is worthless as
1840 McCullough Avenue, LLC, no longer owns any property; and (ii)
AMDC has been paid in full.
(c) AMDC Holdings, LLC, claims a secured interest in the
Debtor's membership interest in R.I. Roselawn, LLC, by virtue of
the UCC-1s filed with the Colorado Secretary of State on October
31, 2016, at Filing No. 20162098648 and 20162098701. The Debtor
asserts: (i) this membership interest is worthless as R.I.
Roselawn, LLC, no longer owns any property; and (ii) AMDC has been
paid in full.
(d) Specialty Credit Holdings, LLC claims a secured interest
in the Debtor's membership interest in UC Tower, LLC, by virtue of
that UCC-1 filed with the Colorado Secretary of State on September
25, 2017, at Filing No. 20172089439.
(e) AMDC Holdings, LLC, claims a secured interest in the
Debtor's membership interest in CAG/R Investments-Phoenix I, LLC,
by virtue of that UCC-1 filed with the Colorado Secretary of State
on September 4, 2015, at Filing No. 20152082366. The Debtor
asserts: (i) this membership interest is worthless as CAG/R
Investments-Phoenix I, LLC, no longer owns any property; (ii) AMDC
has been paid in full, and (iii) the particular UCC-1 has lapsed.
"Without the use of Cash Collateral, the Debtor is unable to
continue its normal operation of its business during the Chapter 11
case. The Debtor anticipates being able to subsist on cash
collateral for the initial 13 weeks while it determines how best to
restructure its debts and propose a confirmable Chapter 11 plan.
Therefore, the Debtor seeks authority to use Cash Collateral, on an
interim basis, pending entry of a final order. The Debtor's
immediate access to Cash Collateral is necessary to preserve and
maximize the value for the benefit of all parties in interest.
Additionally, in order to ease the strain on the Debtor's use of
Cash Collateral and to meet any shortfalls from the generation of
Cash Collateral, the equity holders of the Non-Debtor Affiliates,
who are also the same equity holders of the Debtor, have agreed to
lend all of the Non-Debtor Affiliates' net income, to which they
would otherwise be entitled to such income, to the Debtor's
reorganization in this chapter 11 case through a
debtor-in-possession loan. The combination of both Cash Collateral
and proceeds from the debtor-in-possession loan will enable the
Debtor to successfully operate in Chapter 11 in order to propose
and confirm a Chapter 11 plan," the Debtor tells the Court.
The Debtor proposes to pay, in accordance with a 13-week budget,
various items in the ordinary course of business, including
employee salaries, employee benefits, and other payments that, in
the judgment of the Debtor's management, provide the essential
services needed to operate and maintain the Debtor's business. In
addition, the Debtor requires the use of Cash Collateral to retain
and pay costs of professionals and advisors who will enable the
Debtor to operate in Chapter 11 which will help maximize value for
the Debtor's estate and creditors. After considering its
alternatives, the Debtor has concluded that the use of Cash
Collateral . . . represents the best option available to interested
parties," the Debtor further tells the Court.
A full-text copy of the Debtor's Motion, dated March 4, 2021, is
available for free at https://tinyurl.com/53fz8uzk from
PacerMonitor.com.
About R. Investments
R. Investments, RLLP sought protection under Chapter 11 of the
Bankruptcy Code on March 4, 2021 (Bankr. D. Colo. Case No.
21-11011). At the time of the filing, the Debtor estimated its
assets at $500,000 to $1 million and liabilities at $10 million to
$59 million. The petition was signed by William Travis Steffens,
CEO.
The Debtor is represented by Patrick R. Akers, Esq., at Moye White
LLP.
RAYBURN COUNTRY ELECTRIC: S&P Places 'CC' ICR on Watch Negative
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating (ICR) to 'CC'
from 'A-' on Rayburn Country Electric Cooperative Inc. (RCEC),
Texas, a generation and transmission (G&T) rural electric
cooperative based in Rockwall, and placed the rating on CreditWatch
with negative implications.
"The rating action is based, on our view, that RCEC will be unable
to meet its financial obligations as they come due. RCEC is facing
significant bills that will be due within days from the Electric
Reliability Council of Texas (ERCOT) that far exceed budgeted
expenses of procuring electricity and natural gas during the week
of Feb. 14," said S&P Global Ratings credit analyst Scott Sagen.
S&P said, "Based on discussions with management, we believe the
utility lacks sufficient balance-sheet liquidity to meet these
obligations and its access to external liquidity is severely
constrained, which could frustrate the cooperative's capacity to
meet its financial obligations. The 'CC' rating and CreditWatch
placement reflect our view that a default is a virtual certainty.
We will lower the rating to 'D' if the utility defaults on its
financial obligations to ERCOT."
RCEC had $290 million in total debt outstanding as of Dec. 31,
2019, including $120 million in short-term debt. During 2020 and in
recent weeks, the utility has added significant additional
short-term debt. Rayburn is not a Rural Utilities Service borrower
and its long-term debt is placed with various lenders.
While the Texas winter storm was unprecedented and exceeded ERCOT's
own peak winter demand projections, it nevertheless highlights the
utility's credit exposure to this environmental risk. RCEC relies
on purchased power arrangements and market purchases to complement
its owned generation and, in S&P's view, these arrangements
ultimately left it exposed to unforeseeable and unmanageable costs
following the winter storm.
RENTPATH HOLDINGS: Agrees to $52-Mil. Settlement From Costar
------------------------------------------------------------
Malak Saleh of Bloomberg News reports that RentPath says a
settlement agreement has been reached with CoStar Group, fully
resolving the litigation in the United States Bankruptcy Court of
the District of Delaware regarding CoStar's obligation to pay
RentPath a $58.7 million break-up fee under the terms of their
terminated transaction agreement. Under the terms of the
settlement agreement, which were approved by the Court, CoStar will
pay RentPath $52 million which is 88.5% of the break-up fee, within
two business days of the Court's approval.
About RentPath Holdings
RentPath is a digital marketing solutions company that empowers
millions nationwide to find apartments and houses for rent. On the
Web: http://www.rentpath.com/
RentPath Holdings, Inc., and 11 affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-10312) on Feb. 12,
2020.
RentPath Holdings was estimated to have $100 million to $500
million in assets and $500 million to $1 billion in liabilities as
of the bankruptcy filing.
Weil, Gotshal & Manges LLP and Richards Layton & Finger are serving
as legal counsel, Moelis & Company LLC is serving as a financial
advisor, and Berkeley Research Group, LLC is serving as
restructuring advisor to RentPath. Prime Clerk LLC is the claims
agent.
RENTPATH HOLDINGS: Seeks Plan Exclusivity Extension Thru June 30
----------------------------------------------------------------
RentPath Holdings, Inc. and its affiliates request the U.S.
Bankruptcy Court for the District of Delaware to extend the
exclusive periods during which the Debtors may file a plan and
solicit acceptances to and including June 30, 2021, and August 28,
2021, respectively. This is the Debtors' third request for an
extension of the Exclusive Periods.
The Debtors, with the support of almost all stakeholders, confirmed
the Plan on an expedited timeline. The request comes approximately
12 months into these chapter 11 cases, 10 of which the Debtors
spent trying to obtain regulatory approval of the Stalking Horse
APA. Unfortunately, in November and December 2020, the Federal
Trade Commission commenced actions to block the sale contemplated
by the Stalking Horse APA and, in light thereof, the Debtors
terminated the same.
Following termination of the Stalking Horse APA, the Debtors
diligently and efficiently evaluated all options and determined
that the Third Party Sale Transaction presented the most
value-maximizing transaction possible in light of the Debtors'
prepetition and post-petition sale processes. The Debtors executed
the Third Party APA and require additional time to amend the Plan
to reflect the same and seek the necessary approvals thereof. The
Debtors are requesting an extension of the Exclusive Periods so
that they may emerge from these chapter 11 cases as promptly as
possible without the distraction of another party potentially
filing a competing chapter 11 plan.
Although the Debtors have already proposed, solicited votes on, and
obtained confirmation of the Plan which provides for a viable
alternative to the Stalking Horse APA—the Credit Bid APA—the
Debtors believe that the Third Party Sale Transaction will provide
greater value to stakeholders than the Credit Bid APA and intend to
seek approval thereof pursuant to the Plan as modified to reflect
the same. The Debtors intend to move expeditiously toward approval
of the amended Plan and Third-Party Sale Transaction and will
provide the Court and parties in interest with further updates with
respect thereto in due course.
The Debtors continue to manage their properties as debtors in
possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code. Also, the Debtors continue to pay all ongoing, ordinary
course expenses and remain focused on assuring that all
administrative expenses are paid on time. The Debtors are making
this request for an extension to allow for sufficient time to seek
approval of and consummate the Third-Party Sale Transaction.
A copy of the Debtors' Motion to extend is available at
https://bit.ly/3kOXlbj from primeclerk.com.
About RentPath Holdings
RentPath is a digital marketing solutions company that empowers
millions nationwide to find apartments and houses for rent.
RentPath operates the Rent.com and ApartmentGuide.com, and
Rentals.com online rental listing platforms.
RentPath Holdings, Inc., and 11 affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-10312) on February 12,
2020.
RentPath Holdings was estimated to have $100 million to $500
million in assets and $500 million to $1 billion in liabilities as
of the bankruptcy filing.
The cases are assigned to Judge Brendan Linehan Shannon. Weil,
Gotshal & Manges LLP and Richards Layton & Finger are serving as
legal counsel, Moelis & Company LLC is serving as a financial
advisor, and Berkeley Research Group, LLC is serving as
restructuring advisor to RentPath. Prime Clerk LLC is the claims
agent.
* * *
RentPath signed a deal to sell its business to real-estate data
provider CoStar Group Inc. for $600 million but was forced to
terminate the deal in December 2020 after the deal was blocked by
federal antitrust regulators.
REVERE POWER: S&P Affirms 'B+' Senior Debt Rating, Outlook Negative
-------------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' senior secured debt rating on
Revere Power LLC based on minimum DSCR of 1.18x over the life of
the project. S&P's '2' recovery rating is unchanged.
The negative outlook reflects the possibility that Revere will
underperform its base case in the near term and fail to sweep the
levels of excess cash that we expect against its term loan B
balance.
Revere is a project-financed entity that wholly owns and controls
three combined-cycle gas plants in New England, with a combined
winter capacity of 1,143 megawatts (MW). The Bridgeport, Tiverton,
and Rumford plants sell all their output on a merchant basis within
the ISO-New England (ISO-NE) independent system operator
jurisdiction.
S&P said, "We expect Revere to generate solid DSCRs in the near
term, with excess cash flow used to pay down about $82 million of
term loan B debt between now and maturity in March 2026, resulting
in a minimum DSCR of 1.18x in the post-refinance period. Our
forecast update includes improved forward power prices in NE-ISO
and the results of the recent forward capacity auction, both of
which slightly improve our expectations for debt paydown; these are
somewhat offset a higher debt balance at the start of the forecast
than previously expected.
"We expect Revere's term loan B will have about $320 million
outstanding at refinancing in 2026. We expect Revere will have
slightly less debt outstanding when its term loan B matures in 2026
than in our previous analysis, when we considered $330 million
outstanding at maturity. Forward NE-ISO power prices have improved
somewhat after reaching a low point in 2020 due to declining
forecast demand, particularly in the commercial and industrial
sectors, related to COVID-19. We now expect weighted spark spreads
over the life of the term loan to be about $0.5/MW-hour higher than
in our previous analysis; this improvement equates to roughly $15
million of incremental energy margin between now and maturity and
is responsible for most of the difference in the expected term loan
B balance at maturity."
Offsetting much of the benefit from forward power price
improvements and despite good operating performance, Revere lagged
our debt paydown expectations in 2020 by about $10 million. This
estimate is based on Revere's reported term loan prepayments and
our expectations for full-year results. S&P previously forecasts
Revere to end 2020 with about $428 million of term loan B debt and
now forecast this amount to be $438 million. S&P said, "Much of
this difference is explained by the project's retention of more
cash than previously expected; while we recognize preserving cash
increases liquidity, we generally view debt paydowns as more
supportive to credit than cash retention."
NE-ISO's recent forward capacity auction came in as expected.
Following a disappointing print in last year's capacity auction,
which largely contributed to our lowering of Revere's rating in
April 2020, the results of NE-ISO's Forward Capacity Auction 15 for
the 2024/2025 period came in as expected. The ISO split into three
capacity zones, with Northern New England clearing at $2.48 per
kilowatt per month (kW-month), Southeast New England clearing at
$3.98/kW-month, and the Rest of Pool (ROP) clearing at
$2.61/kW-month. While Revere has one plant in each zone, the bulk
of its generation comes from its Bridgeport facility, which cleared
capacity at the ROP price. Based on our expectations for capacity
factors in 2024 and 2025, we derive a portfolio generation weighted
average cleared capacity price of $2.97/kW-month. This compares to
our prior forecast for capacity prices of $2.75/kW-month across
NE-ISO; however, this improvement represents a small increase in
forecast gross margin over the term loan's life.
S&P said, "We continue to forecast an ISO-wide capacity price of
$3.50/kW-month in 2025/2026. We also continue to expect capacity
revenues to represent an important, although declining, share of
Revere's total gross margin, particularly over the near term, with
such revenues representing about 60% of Revere's total gross margin
in 2021 before falling to about 40% in 2025. Less reliance on
capacity prices, however, is almost entirely due to future declines
in cleared capacity prices from 2021 levels, rather than higher
energy margins. As such, the project retains a healthy amount of
price risk from future auction results, which could deviate
materially from our expectations.
"We expect weak DSCRs after refinancing. We forecast weak DSCRs in
the post-refinance period. Given our forecast for $320 million of
debt at maturity in 2026, we calculate a DSCR of 1.18x over the
tenor of the project's refinanced debt. We assume that Revere's
debt will be repaid by 2035--five years before the end of its
plants' useful lives, which we estimate will end in 2040--and use a
sculpted amortization approach to forecast principal repayment of
the refinanced amount over 10 years, from 2026 to 2035. Our
negative outlook is partly due to the 1.18x forecast DSCR from 2026
to 2035, which is comparatively low for Revere's rating level.
While the rating is supported by robust liquidity, which should
provide protection in our downside scenario, the relatively low
minimum DSCR leaves the project susceptible to events which would
lower our forecast for cash flow available for debt service
(CFADS), such as lower capacity auction results, unplanned outages,
higher-than-expected maintenance costs, or lower-than-expected
power prices due to a slowdown in the recovery from COVID-19."
S&P Global Ratings believes there remains high, albeit moderating,
uncertainty about the evolution of the coronavirus pandemic and its
economic effects. Vaccine production is ramping up and rollouts are
gathering pace around the world. Widespread immunization, which
will help pave the way for a return to more normal levels of social
and economic activity, looks to be achievable by most developed
economies by the end of the third quarter. However, some emerging
markets may only be able to achieve widespread immunization by
year-end or later. S&P said, "We use these assumptions about
vaccine timing in assessing the economic and credit implications
associated with the pandemic. As the situation evolves, we will
update our assumptions and estimates accordingly."
Revere should continue to generate solid DSCRs in the near term.
Revere should continue to generate DSCRs of 1.30x-1.65x over the
next two years, during which the project's cash flows will remain
weighted towards fixed capacity payments, leaving them relatively
less exposed to spot power prices in ISO-NE. The project will also
benefit from low interest expenses owing to low LIBOR rates
(Revere's term loan has a 0% LIBOR floor) in the near term.
S&P said, "We also expect flows relating to Revere's major
maintenance reserve account (MMRA) will be a net positive to CFADS
through 2022. Revere must maintain an MMRA equal to the next three
years of planned major maintenance; this requirement introduces
some volatility to the project's CFADS. However, following planned
major maintenance later this year, we expect the tempo of
maintenance to be relatively low in 2023 and 2024, resulting in net
outflows of the MMRA from current levels through 2022, which
benefit DSCRs in the near-term." As the project nears the end of
its useful life, major maintenance will cease, thus the MMRA will
go to zero; this will contribute roughly $40 million to our CFADS
calculation through 2035.
The negative outlook reflects that Revere may underperform and
sweep less cash than expected over the next several quarters, which
could result in a higher outstanding debt balance and lower DSCRs
over the portfolio's useful asset life. S&P currently expects debt
at maturity to be $320 million and a minimum DSCR of 1.18x after
refinancing.
S&P said, "We could lower the rating if the project fails to sweep
enough cash over the next several quarters such that our forecast
outstanding term loan B balance at maturity is greater than $350
million. This could stem from the deterioration of energy margins,
or if unexpected operational issues require an extensive unforced
outage. We could also consider a lower rating if we believe that
Revere no longer compares well to peers at the current rating or if
the evolving regulatory landscape impairs the competitive position
of fossil fuel plants in New England.
"We could revise the outlook to stable if Revere delevers through
its cash flow sweep mechanism over the next several quarters such
that we forecast a minimum DSCR of 1.25x or greater over the life
of the project. This is most likely to stem from secular
improvement in power and future capacity prices in ISO-NE."
ROBERT F. TAMBONE: Private Sale of Jupiter Property for $750K OK'd
------------------------------------------------------------------
Judge Janet E. Bostwick of the U.S. Bankruptcy Court for the
District of Massachusetts authorized Robert F. Tambone's private
sale of the real property located at 1003 Captains Way #1003, in
Jupiter, Florida, to Jay R. Beaulieu and Linda M. McLaughlin or
their nominee for $750,000 on the terms of their Purchase and Sale
Agreement.
The Debtor's right, title and interest in the Unit will be
delivered to the Purchasers in "as is, where is" "how is" condition
except as expressly set forth in the Sale Agreement. The sale of
the Unit will be free and clear of all existing liens, claims,
encumbrances, and interests, with such liens, claims, encumbrances
and interests to attach to the net proceeds of the sale.
Until the Debtor's bankruptcy case is closed, and notwithstanding
any language to the contrary in the Sale Agreement and/or the Sale
Motion, any disputes with respect to the Sale Agreement or the
Private Sale will be brought, in the first instance, in the Court.
The Debtor is authorized, pursuant to the Bankruptcy Code, to:
a. Execute any and all deeds, conveyances, assignments,
agreements, instruments, amendments, schedules and other documents
necessary to assume and effectuate the sale of his interest in the
Unit;
b. Pay $45,000 to Anthony Orrico and the firm of Loggerhead
Realty as the broker's commission from the gross sale proceeds of
the Unit; and
c. Pay the usual and ordinary costs and expenses arising in
connection with the Private Sale from the gross proceeds of the
Unit, including ordinary closing costs in the following approximate
amounts (subject to adjustments): (i) $2,099.40 in county taxes for
the first quarter of 2021; (ii) $5,250 in state tax stamps; (iii)
$3,825 in title policy charges; (iv) $525 in title company fees;
and (v) $200 in wire fees, search fees and courier fees.
The net sale proceeds of the Unit after payment of the broker's
commission and costs and expenses, (estimated at approximately
$693,000 before further adjustments), will be divided one half to
Mimi V. Tambone for her interest in the Unit and one half to the
Debtor for his interest in the Unit.
Robert F. Tambone sought Chapter 11 protection (Bankr. D. Mass.
Case No. 20-11378) on June 22, 2020. The Debtor tapped Kathleen
Cruickshank, Esq., as counsel.
ROMANS HOUSE: Unsecured Creditors Get 1.2% to 2.4% in Pender Plan
-----------------------------------------------------------------
Pender Capital Asset Based Lending Fund I, LP, transferee of and
successor in interest to Pender West Credit 1 REIT, L.L.C.,
submitted a proposed PLan of Reorganization and Disclosure
Statement for Romans House, LLC.
RH Debtor, the subject of this Disclosure Statement and the
accompanying Plan, is a Texas limited liability company. RH Debtor
is the fee owner of the land and the improvements located thereon
commonly known as 2601 Tandy Avenue, Fort Worth, Texas 76103, and
consisting of an assisted living facility operating under the name
"Tandy Village Assisted Living".
Pender, through certain of its affiliates, is a direct commercial
bridge lending company with an emphasis on originating and
servicing short-term commercial real estate (CRE) loans, secured by
first lien positions of the underlying real estate as collateral.
Pender is owned and operated by a team of seasoned commercial real
estate professionals with direct investment experience in more than
$2.1 billion in commercial real estate and investment banking
transactions.
Under the Plan, Class 3 Senior Lender Claims totaling $9,450,000
are impaired. The Holders of the Senior Lender Claims or such
Holders' respective designees each will receive on the Effective
Date or as soon as reasonably practicable thereafter their Ratable
Share of 100% of the New LLC Interests. In addition, the Holders
of the Senior Lender Claims shall be authorized to retain any and
all Adequate Protection Payments and Holdover Payments received by
such Holder or such Holder's predecessor in interest during the
Bankruptcy Cases.
Class 4 Trade Claims totaling $81,466 to $97,759 are impaired.
Creditors will recover 46% to 50% of their claims. Each Holder of
an Allowed Trade Claim on the applicable Distribution Date shall
receive payment in Cash equal to the lesser of 50% of the Allowed
amount of such Allowed Trade Claim and its Ratable Share of the
Trade Claims Payment.
Class 5 Other General Unsecured Claims totaling $1,696,784 to
$3,360,925 will recover 1.2% to 2.4% of their claims. Each Holder
of an Allowed Other GUC shall receive on each applicable
Distribution Date its Ratable Share of the Other GUC Fund.
Counsel to Pender Capital Asset Based Lending Fund I, LP:
Judith W. Ross
Frances A. Smith
ROSS AND SMITH, P.C.
Plaza of the Americas
700 N. Pearl Street, Suite 1610
Dallas, Texas 75201
Telephone: (214) 377-7879
E-mail: judith.ross@judithwross.com
frances.smith@judithwross.com
Michael J. Barrie
Gregory W. Werkheiser
Kevin M. Capuzzi
BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP
1313 N. Market St., Suite 1201
Wilmington, Delaware 19801
Telephone: (302) 442-7010
E-mail: mbarrie@beneschlaw.com
gwerkheiser@beneschlaw.com
kcapuzzi@beneschlaw.com
A copy of the Disclosure Statement is available at
https://bit.ly/3uVdWiz from PacerMonitor.com.
About Romans House
Based in Forth Worth, Texas, Romans House, LLC operates Tandy
Village Assisted Living, a continuing care retirement community and
assisted living facility for the elderly in Fort Worth, Texas.
Affiliate Healthcore System Management, LLC, operates Vincent
Victoria Village Assisted Living, also an assisted living facility
for the elderly.
Romans House, LLC, and Healthcore System sought Chapter 11
protection (Bankr. N.D. of Tex. Case No. 19-45023 and 19-45024) on
Dec. 9, 2019. Romans House was estimated to have $1 million to $10
million in assets and liabilities while Healthcore was estimated to
have $1 million to $10 million in assets and $10 million to $50
million in liabilities.
The Hon. Edward L. Morris is the case judge.
Demarco Mitchell, PLLC, is the Debtors' legal counsel. Levene,
Neale, Bender, Yoo & Brill L.L.P., serves as their co-bankruptcy
counsel.
SABLE PERMIAN: Graves, Dougherty Represents Multiple Parties
------------------------------------------------------------
In the Chapter 11 cases of Sable Permian Resources, LLC, et al.,
pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Graves, Dougherty, Hearon & Moody, P.C., provided
notice that it is representing Marian Noelke Atcheson Trust, Ann
Gretchen Noelke, Montgomery B. Noelke Jr. Estate, Catherine Eckert
Bruff, Patricia Baker Eckert, Lyn E. Hills, Elisabeth Noelke,
Rebecca Lynn Noelke Richey, J R Woodworth, Jackson H. Woodworth,
Catherine Atcheson, Carol Atcheson-Spooner, James Atcheson, Deborah
Ella Bloxom, Individually and as Trustee of the Deborah Bloxom 2012
Child's Trust and Tom Bloxom, Individually and as Trustee of the
Tom S. Bloxom Child's Trust No. 2.
GDHM is counsel to the Client Parties. The Client Parties are
royalty interest owners under various Leases with Debtors.
The Client Parties retained GDHM to assist them in the
above-captioned chapter 11 case.
GDHM currently represents, and has previously represented, certain
Client Parties in connection with matters wholly unrelated to the
Debtors and this chapter 11 case.
GDHM does not own, nor has it ever owned, any claim against the
Debtors, nor any equity securities of the Debtors.
While the claims of the Client Parties are similar in nature, these
parties do not form a committee, and there is no reason to believe
that they will become a committee.
Counsel for Client Parties can be reached at:
Brian T. Cumings, Esq.
Guillermo A. Alarcon, Esq.
Graves, Dougherty, Hearon & Moody, P.C.
401 Congress Avenue
Suite 2700
Austin, TX 78701
Telephone: 512.480.5626
Facsimile: 512.536.9926
E-mail: bcumings@gdhm.com
galarcon@gdhm.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3c7BgRq
About Sable Permian Resources
Sable Permian Resources, LLC, is an oil and natural gas company
focused on the acquisition, exploration, development, and
production of unconventional oil, natural gas, and natural gas
liquid reserves in the Permian Basin of West Texas.
Sable Permian Resources, LLC, and its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case
No. 20-33193) on June 25, 2020. At the time of the filing, Sable
Permian Resources disclosed assets of between $1 billion and $10
billion and liabilities of the same range. Judge Marvin Isgur
oversees the cases.
The Debtors tapped Latham & Watkins, LLP and Hunton Andrews Kurth
LLP as legal counsel, Alvarez & Marsal North America LLC as
financial advisor, Evercore Group LLC as investment banker, and
M-III Advisory Partners, LP, as financial advisor. Mohsin Y.
Meghji of M-III Advisory Partners is Debtors' chief restructuring
officer. Hilco Valuation Services, LLC, Hilco Real Estate
Appraisal, LLC, and Hilco Fixed Asset Recovery, LLC, are tapped as
liquidation analysis and valuation experts and sage-popovich, inc.
as a valuation expert.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on July 17, 2020. The committee has tapped Paul Hastings
LLP and Mani Little & Wortmann, PLLC, as its legal counsel, Conway
MacKenzie LLC as financial advisor, and Miller Buckfire & Co. LLC
and Stifel, Nicolaus & Co. Inc. as investment banker.
SALEM MEDIA: Incurs $54.06 Million Net Loss in 2020
---------------------------------------------------
Salem Media Group, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$54.06 million on $236.24 million of total net revenue for the year
ended Dec. 31, 2020, compared to a net loss of $27.84 million on
$253.90 million of total net revenue for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $524.57 million in total
assets, $389.29 million in total liabilities, and $135.28 million
in total stockholders' equity.
Salem Media said, "Given the decreases in revenue caused by the
COVID-19 pandemic, we assessed a variety of factors, including
media industry forecasts, expected operating results, forecasted
net cash flows from operations, future obligations and liquidity,
and capital expenditure commitments. We concluded that the
potential that we could incur a considerable decrease in operating
income and the resulting impact on our ability to fund interest
payments on our debt, were probable conditions which gave rise to a
need for an assessment of whether substantial doubt existed of our
ability to continue as a going concern.
"We reforecast our anticipated results extending through March
2022. Our reforecast includes the impact of certain cost-cutting
measures associated with reductions in staffing, reductions in
commissions and royalty expenses based on lower revenue forecasts,
reductions in travel and entertainment expenses due to stay-at-home
mandates, reductions in event costs, company-wide pay cuts,
furloughs of certain employees, and the temporary suspension of the
company 401(k) match. Based on our current assessment, we believe
that we have the ability to meet our obligations as they come due
for one year from the issuance of the financial statements."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1050606/000119312521069290/d49322d10k.htm
About Salem Media Group
Irving, Texas-based Salem Media Group -- http://www.salemmedia.com
-- is a multimedia company specializing in Christian and
conservative content, with media properties comprising radio,
digital media and book and newsletter publishing.
* * *
As reported by the TCR on April 21, 2020, S&P Global Ratings
lowered its issuer credit rating on Salem Media Group Inc. to 'CCC'
from 'B-'. "We do not believe Salem will have sufficient sources
of liquidity to cover its cash uses over the next year. Salem has
historically operated with minimal cash on its balance sheet ($0.1
million as of Dec. 31, 2019). Given its limited cash generation,
the company relies on its $30 million asset-based lending (ABL)
revolving credit facility (unrated) to provide it with liquidity,"
S&P said.
In March 2020, Moody's Investors Service downgraded Salem Media
Group, Inc.'s corporate family rating and senior secured notes
rating to Caa1 from B3. The downgrade reflects weaker than
expected performance that Moody's projects will persist in the next
few quarters.
SALLY BEAUTY: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S.-based beauty supply
retailer and distributor Sally Beauty Holdings Inc. (SBH) to stable
from negative and affirmed its ratings on the company, including
its 'BB-' issuer credit rating.
S&P said, "The stable outlook reflects our expectation that SBH
will begin to recover sales lost in the pandemic in the third
quarter of 2021 while maintaining gross margins, leading to a ratio
of funds from operations (FFO) to debt sustainably in the high-20%
area.
The company should have sufficient headroom in its financial
metrics to absorb anticipated volatility without deterioration in
credit metrics. SBH ended the first quarter with S&P Global
Ratings-adjusted last-twelve-months (LTM) leverage of 3.2x and FFO
to debt of 22.3%. This represents an improvement of 0.3x in
leverage and 3.5 percentage points in FFO to debt from the third
quarter of fiscal 2020 (ending June 2020), which was severely
impacted by closures and restrictions related to the pandemic.
Improvement was due in part to a paydown of $400 million of
borrowings under the company's asset-based lending (ABL) facility,
which was drawn to provide additional liquidity through the
pandemic. In addition, it saw S&P Global Ratings-adjusted EBITDA
margins improve to 19%-20%, returning quarterly EBITDA generation
to roughly pre-pandemic levels.
Furthermore, in the first quarter the company used excess cash to
repay the outstanding balance of $213 million under its fixed-term
loan, and recently announced a redemption of its 5.5% senior notes
due 2023 ($197 million outstanding) to occur on April 1, ahead of
our expectations. In our view, the debt paydown demonstrates the
company's commitment to maintaining a conservative balance sheet,
and we now forecast leverage below 3x and FFO to debt in the
mid-20% area at fiscal year-end 2021 (September 2021). S&P believes
SBH has experienced the worst impacts from the pandemic and as a
result think there is minimal risk that credit metrics will
deteriorate to the levels highlighted when it puts the company on
negative outlook (FFO to debt of below 20%), even with anticipated
volatility through this fiscal year.
That said, sales performance should remained pressured through the
second fiscal quarter, before improving, leading to consolidated
sales growth in the low- to mid-single-digit range for fiscal 2021.
Performance at Sally remained under pressure through the first
quarter of 2021, with a consolidated sales decline of 4.5%. This
reflects negative comparable sales at both Sally Beauty stores and
Beauty Systems Group (BSG) locations, primarily driven by temporary
store closures at both segments in Europe and Latin America. The
company noted that Sally Beauty stores in the U.S. and Canada were
down less than 1% in the quarter.
S&P said, "We anticipate sales pressure will continue through the
second quarter before sales turn positive as closures and capacity
restrictions are reduced and vaccines are distributed, and
consumers begin visiting salons in greater numbers. However, the
potential for volatility remains as the pandemic continues to
affect people's daily lives. We believe the potential for
volatility will persist until herd immunity is reached in the
geographies where SBH operates (U.S., Canada, Europe, and Latin
America)."
SBH is behind retail competitors on its omnichannel and technology
initiatives, and execution risks remain as the company modernizes
its operations. As of the first quarter, e-commerce across the
business remains small at roughly 7% of total sales, with growth of
48% year over year having been accelerated by the pandemic. SBH is
in the process of launching and refining "buy online, pick up in
store" (BOPIS) capacity, as well as ship-from-store and same day
delivery. In addition, the company is re-platforming the BSG
storefront to improve ordering for salon professionals, rolling out
private-label rewards credit cards to both Sally Beauty and BSG
with the goal of improving its retention of retail and professional
customers, and wrapping up the rollout of a new merchandising and
supply platform. S&P believes the company has a good niche as the
largest retailer of professional hair color in the U.S. with a
significant penetration of higher-margined exclusive and owned
brands. However, modernized technology allowing customers to shop
easily both in-store and online at both segments will be critical
for the company to maintain its competitive position. To the extent
the company falters in implementing these capabilities, S&P
believes performance would be weakened and competitors would have
openings to capture some of SBH's market share.
The stable outlook reflects S&P's expectation that SBH will begin
to recover sales and EBITDA lost during the pandemic in the third
quarter, leading to debt/EBITDA sustained below 3x and FFO/debt
comfortably maintained in the 20%-30% range.
S&P could raise the rating if:
-- S&P forecasts leverage will be sustained in the mid-2x area and
FFO/debt of greater than 30%; and,
-- SBH demonstrates clear success in its digital transformation,
leading to continued growth in e-commerce sales at both segments
and sustained positive same-store sales.
S&P could lower the rating if:
-- SBH's performance does not recover in line with its
expectations, such that it forecasts leverage will increase to the
high-3x area and FFO/debt declines below 20%.
-- SBH falters in its digital transformation, leading to market
share loss and a weakening of its competitive position. This would
be evidenced by sustained negative same-store sales at Sally Beauty
Supply and Beauty Systems Group.
SANG H. SHIN: Seeks to Hire Milledge Law as Legal Counsel
---------------------------------------------------------
Sang H. Shin DMD PC seeks approval from the U.S. Bankruptcy Court
for the Southern District of Texas to employ The Milledge Law Firm,
PLLC as its legal counsel.
The firm will provide these services:
a. advise the Debtor concerning its powers and duties in the
continued operation of its business and management of its
property;
b. prepare pleadings;
c. negotiate and submit potential plan of arrangement
satisfactory to the Debtor and its estate and creditors; and
d. perform all other legal services necessary to administer the
Debtor's Chapter 11 case.
Milledge Law Firm will be paid at these rates:
Samuel Milledge, Sr., Esq. $400 per hour
Associates $150 to $200 per hour
Law Clerks/Legal Assistants $60 to $75 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
Milledge Law Firm received from the Debtor a retainer in the amount
of $21,738, of which $1,738 was used to pay the filing fee.
Samuel Milledge, Sr., Esq., a partner at Milledge Law Firm,
disclosed in a court filing that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Samuel L. Milledge, Sr., Esq.
The Milledge Law Firm, PLLC
2500 East T.C. Jester Blvd. Suite 510
Houston, TX 77092
Tel: (713) 812-1409
Fax: (713) 812-1418
Email: milledge@milledgelaw.com
About Sang H. Shin DMD PC
Sang H. Shin DMD PC, which conducts business under the name Shiny
Dental, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. S.D. Texas Case No. 21-30554) on Feb. 11, 2021. Sang H.
Shin, president, signed the petition. In the petition, the Debtor
disclosed up to $500,000 in assets and up to $1 million in
liabilities.
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.
The Milledge Law Firm, PLLC is the Debtor's legal counsel.
SCARISBRICK LAND: Allowed to Use Cash Collateral Until May 14
-------------------------------------------------------------
Judge Paul M. Black of the U.S. Bankruptcy Court for the Western
District of Virginia, Roanoke Division, authorized Scarisbrick Land
Holdings, LLC to use cash collateral on an interim basis until May
14, 2021.
The Debtor was directed to:
(1) continue segregating and accounting for all Cash
Collateral that comes into its possession, custody or control. All
Cash Collateral shall be deposited immediately upon the Debtor's
receipt thereof into the Debtor in Possession Operating Account;
(2) maintain and provide complete and accurate records of all
post-petition income and provide written reports to First Bank &
Trust Company and to LCB1 Trust on a monthly basis, when it files
its reports with the United States Bankruptcy Court;
(3) permit representatives of the creditor full and free
access to the Debtor's books, records and place of business to
verify the existence, condition and location of property in which
said creditor holds a lien.
The Debtor was permitted to use Cash Collateral to pay expenses as
set out in the cash collateral budget, as being necessary to the
continuation of the Debtor's business. The Debtor was also
directed to make monthly payment to First Bank and Trust in the
amount of $17,347.76.
As additional adequate protection for the use of the Cash
Collateral, First Bank & Trust Company was granted a first position
lien and LBC1 Trust is granted a second lien position in all rents
received from the collateral of these two creditors generated by
the Debtor post-petition.
Further hearing on the Debtor's Cash Collateral Motion is scheduled
for May 13, 2021 at 10:30 a.m.
A full-text copy of the Continued Preliminary Order, dated March 4,
2021, is available for free at https://tinyurl.com/8sf7db from
PacerMonitor.com.
The United States Trustee is represented by:
Margaret Garber, Esq.
OFFICE OF THE UNITED STATES TRUSTEE
210 First Street, S.W., Suite 505
Roanoke, VA 24011
Telephone: 540-857-2806
Email:Margaret.K.Garber@usdoj.gov
Paula Beran, the Subchapter V Trustee, may be reached at:
Paula S. Beran, Esq.
TAVENNER & BERAN, PLC
20 North Eighth Street, Second Floor
Richmond, VA 23219
Telephone: 804-783-8300
Email: pberan@tb-lawfirm.com
LBC1 Trust is represented by:
Steven L. Higgs, Esq.
STEVEN L. HIGGS, P.C.
9 Franklin Road, S.W.
Roanoke, VA 24011-2403
Telephone: 540-400-7990
Email: higgs@higgslawfirm.com
First Bank and Trust Company is represented by:
David J. Hutton, Esq.
HUTTON & ASSOCIATES, P. C.
131 East Valley Street
Abingdon, VA 24210
Telephone: 276-628-3133
Email: dhutton@abingdon-law.com
About Scarisbrick Land Holdings
Scarisbrick Land Holdings, LLC filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Va.
Case No. 20-71134) on Dec. 18, 2020. In the petition signed by Jon
Bowerbank, sole member and manager, the Debtor disclosed $5,498,205
in assets and $2,338,323 in liabilities.
Judge Paul M. Black oversees the case.
Scot S. Farthing Attorney at Law, PC represents the Debtor as
counsel.
Paula Beran is the Subchapter V Trustee.
SCP EYE CARE: S&P Assigns B- Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
Ophthalmology-focused practice management SCP Eye Care Services LLC
(operating as EyeSouth Partners). At the same time, S&P assigned
its 'B-' issue-level and '3' recovery ratings to the company's
first-lien debt.
S&P said, "Our stable outlook reflects our expectations for volume
increases from expanded capacity, supported by organic growth in
the high-single-digit-percent area in 2021, and EBITDA margin
increasing to the low-teens-percent area as a result of improved
operating leverage. We expect this growth to result in adjusted
debt leverage of about 10x, and modest positive free operating cash
flow in 2021.
"Our ratings reflect the company's small scale, narrow business
focus, and high leverage of around 10x in 2021, partially offset by
the company's leading position in the highly fragmented
ophthalmology market. Our rating reflects EyeSouth's small scale
with projected revenue of about $450 million in 2021 and its narrow
niche focus on ophthalmology. It manages ophthalmology practices
that treat a variety of eye diseases such as cataracts, glaucoma,
retinal disease, cornea disease, and optic nerve conditions. It
depends on optometrists and general practitioners as referral
sources. EyeSouth has 124 ophthalmologists and 69 medical
optometrists in its network and benefits from a high average
physician retention rate of 98%. It also operates 13 ambulatory
surgical centers (ASCs) that allow physicians to provide a full
suite of medical services, including optical surgical procedures.
Despite its small scale and niche focus, we estimate the company
has about 2%-3% of the market share in the ophthalmology space.
"We expect high, stable organic revenue growth driven by an aging
population and the recession-resilient nature of its services,
partially offset by pricing and reimbursement headwinds. We expect
ophthalmology to remain recession-resilient due to its
nondiscretionary and nondeferrable nature. We estimate the
ophthalmology market in the U.S. to be about $16 billion in size
and growing at a mid-single-digit-percent rate, driven by the aging
population and increased prevalence of eye diseases. It is also
highly fragmented with over 90% of independent ophthalmologists. We
estimate EyeSouth to have about 2%-3% of market share in this
highly fragmented ophthalmology space, similar to close peer
EyeCare Partners (B/Negative/--), although EyeCare Partners is a
larger company due to its retail optometry business.
"We estimate EyeSouth's payer mix includes about 60% exposure to
Medicare and Medicare Advantage, about 35% commercial payer, and 5%
patient self-pay. On Dec. 1, 2020, the Centers for Medicare &
Medicaid Services (CMS) released its final fee schedule for 2021
that results in an overall 6% cut to ophthalmology. Although
Medicare's ASC fees increase and other commercial payer contracts'
fee increases can likely offset CMS' Medicare cut to ophthalmology,
we view the significant exposure to Medicare reimbursement as one
of the major risks.
"We project EyeSouth's leverage will remain high at around 9x-10x
as its debt-funded expansion strategy drives above-industry-average
revenue growth. We expect adjusted leverage in the mid-10x area in
2021 and the high-9x area in 2022. Our adjusted leverage
calculation includes about $108 million of preferred shares, which
we treat as debt, adding about 1.5x-2x to our adjusted leverage
calculation. While we expect the company to generate some free
operating cash flow, we expect the amount to be modest. EyeSouth
relies on an acquisition-driven growth strategy and will likely
remain very active on the acquisitions front, given the
fragmentation in the ophthalmology space. Its acquisition pace
temporarily slowed down during the 2020 pandemic but we expect it
to resume in 2021 with an average of about seven to eight
affiliations expected for each year. Although we project that in
2021 the company will be able to partially fund its expansion
strategy with cash on hand and the delayed-draw term loan, we think
it will start issuing new debt to fund its expansion in 2022 and
beyond, given our expectations for relatively modest projected cash
flow generation. With these acquisitions, we project that EBITDA
margin will increase by 300 basis points (bps) in 2021 to the
low-teens-percent area because of the improved operating leverage.
However, we still project adjusted debt leverage will remain high
over the next few years.
"Our stable outlook reflects our expectations for volume increases
from expanded capacity, supported by organic growth in the
high-single-digit-percent area in 2021,and EBITDA margin increasing
to the low-teens-percent range as a result of improved operating
leverage. We expect this growth to result in adjusted debt leverage
of about 10x, and modest positive free operating cash flow in
2021.
"We could lower the rating if the company's operating performance
deteriorates or it experiences acquisition-related integration
issues that result in EBITDA margins that are 250 bps below our
base-case projection, leading to discretionary cash flow deficits.
Under this scenario, we would expect leverage to be sustained above
12x. We could also lower the rating if the company pursues a more
aggressive acquisition strategy than expected that causes adjusted
leverage to remain above 12x.
"We could consider an upgrade if the company's sales and EBITDA
margin expands to the extent that allows it to finance most of its
growth spending through internally generated cash flow. We estimate
this scenario would also result in an adjusted leverage reduction
to 8x or below."
SDI PROPERTIES: Seeks to Hire Gabriel M. Wureh as Accountant
------------------------------------------------------------
SDI Properties, LLC seeks approval from the U.S. Bankruptcy Court
for the District of Maryland to employ Gabriel Wureh, an accountant
practicing in Bowie, Md.
Mr. Wureh's services include:
a. preparing and filing tax returns for the Debtor for the tax
years 2018, 2019 and 2020;
b. preparing consolidated financial statements for 2018, 2019,
and 2020;
c. preparing monthly operating reports; and
d. performing all other accounting services for the Debtor.
Mr. Wureh will be paid based upon his normal and usual hourly
rates, and a retainer in the amount of $2,500. He will also be
reimbursed for out-of-pocket expenses incurred.
In court papers, Mr. Wureh disclosed that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Mr. Wureh can be reached at:
Gabriel M. Wureh
9204 Myrtle Avenue
Bowie, MD 20720
Tel: (301) 262-3875
About SDI Properties
SDI Properties, LLC filed a petition under Chapter 11 of the
Bankruptcy Code (Bankr. D. Md. Case No. 20-20650) on Dec. 8, 2020.
In the petition signed by Trevor Sie-Duke, managing member, the
Debtor was estimated to have $1 million to $10 million in assets
and $10 million to $50 million in liabilities.
Judge Lori S. Simpson oversees the case.
The Debtor tapped the Law Offices of Richard B. Rosenblatt, PC as
its legal counsel and Gabriel Wureh, an accountant practicing in
Bowie, Md.
SEQUOIA INFRASTRUCTURE: S&P Assigns Prelim 'BB-' Rating on E Notes
------------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to Sequoia
Infrastructure Funding I Ltd./Sequoia Infrastructure Funding I
LLC's floating-rate notes.
The note issuance is a CLO securitization backed by broadly
syndicated speculative-grade (rated 'BB+' and lower) senior secured
term loans that are governed by collateral quality tests.
The preliminary ratings are based on information as of March 2,
2021. Subsequent information may result in the assignment of final
ratings that differ from the preliminary ratings.
The preliminary ratings reflect S&P's view of:
-- The diversification of the collateral pool;
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization;
-- The experience of the investment advisor's team, which can
affect the performance of the rated notes through collateral
selection, ongoing portfolio management, and trading; and
-- The transaction's legal structure, which is expected to be
bankruptcy remote.
Preliminary Ratings Assigned
Sequoia Infrastructure Funding I Ltd./Sequoia Infrastructure
Funding I LLC
Class A, $138.00 million: AAA (sf)
Class B, $36.80 million: AA (sf)
Class C (deferrable), $13.80 million: A (sf)
Class D (deferrable), $11.50 million: BBB (sf)
Class E (deferrable), $9.20 million: BB- (sf)
Subordinated notes, $24.00 million: Not rated
SEVEN AND ROSE: Flexspace 360 Buying Charleston Property for $3M
----------------------------------------------------------------
Seven and Rose, LLC, filed with the U.S. Bankruptcy Court for the
District of South Carolina a notice of its proposed sale of the
commercial real estate located at 198 East Bay Street, in
Charleston, South Carolina 29401, County of Charleston, consisting
of Suites 200, 201, and 300, further being shown and designated as
PIN: 458-05-04-019, 458-05-04-020, and 458-05-04-021, to Flexspace
360, LLC and/or its assigns for $3.025 million, subject to higher
and better bids.
Suites 200 and 201 may be referred to as the Second Floor, and
Suite 300 may be referred to as the Third Floor.
The title owner of Suite 201 is MICFO, LLC. Michelle L. Vieira, in
her capacity as Chapter 7 Trustee for Amir Golestan, also known as
Amir Golestan Parast, Bkr. Case No. 19-05657-dd, has the rights and
powers of the sole member of both the Debtor and Micfo. As sole
member of Micfo, Vieira is authorized to sell Suite 201 pursuant to
its operating agreement, and will sell Suite 201 to such buyer as
is authorized by the Court pursuant to the sale notice and/or as
further may be authorized by the Bankruptcy Court.
Vieira is simultaneously filing an application in the Golestan
Bankruptcy for authorization to sell Suite 201 in her capacity as
the holder of the rights of sole member of Micfo, which membership
interest is property of the Golestan Bankruptcy estate.
The Debtor does not have a current appraisal but is informed and
believes that the Property is worth more than the current offer
price and that, if the market were not depressed, the value would
be in excess of $3.5 million. However, the pandemic has had a
negative effect on the ability to sell in a timely manner, thereby
affecting the price.
The Buyer is Flexspace 360, or such higher bidder as may be
approved by the Court. The Debtor has executed Letter of Intent.
If the parties are unable to reach a final, executed sale contract
then the Property will proceed under the auction provisions.
The closing will take place within 30 days after the end of the due
diligence period. The due diligence period will expire on April
28, 2021.
The sales agent is James Maybank, c/o Carriage Properties, LLC, 19
Exchange Street, Charleston, SC 29401; (843) 478-1093. The
commission will be 5% if the sale is to the Buyer designated
herein, which commission is to be split between James Maybank and
the Buyer's agent. If the property is sold to another bidder
without a buyer's agent, no commission will be paid to a buyer's
agent, and the total commission to the Debtor's agent will be 4% of
the gross sale price.
These are the liens, mortgages, and security interests encumbering
the Property:
a. TBG Funding, LLC is a secured creditor by virtue of a
mortgage on the Second Floor. This mortgage will be paid in full
at closing.
b. South State Bank is a secured creditor by virtue of a
mortgage on the Third Floor. This mortgage will be paid in full at
closing.
c. Charleston County Treasurer is a secured creditor for
property taxes owed on each Suite, and will be paid its secured
claim in full at closing.
d. 198 East Bay Regime Association is a secured creditor by
virtue of regime fees owed on each Suite, and will be paid its
secured claim in full at closing.
e. Ascentium Capital LLC claims a lien on Suite 201 by virtue
of a judgment recorded and unsatisfied against Micfo, LLC. This
creditor will be paid the net proceeds of sale attributed to the
Micfo suite (Suite 201), if any, up to its lien amount, in
accordance with the allocations as set forth in the Debtor's
Disclosure Statement, as amended, including allocations relating to
administrative expenses. This creditor is not expected to be paid
its lien balance in full. Preliminary calculations estimate that
Ascentium will receive approximately $16,000 as a secured creditor.
This creditor has consented to the sale on the terms set forth,
and reserves the right to review and approve the allocation to
Suite 201 pursuant to the allocation percentages as provided in the
Disclosure Statement, as amended.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: April 5, 2021
b. Auction: If one or more submissions are received, the
Debtor will hold an auction on April 7, 2021 at 9:00 a.m. via video
or telephonic means. The Debtor's attorney will provide call-in or
video link instructions to interested parties upon request.
c. Bid Increments: At auction, the Debtor will receive bids on
the combined property consisting of both the Second and Third
floors together (Suites 200, 201, and 300), and will receive bids
on the Second Floor (Suites 200 and 201) and Third Floor (Suite
300)
separately. Minimum bidding increments of $50,000 will be required
for the combined suites, with minimum bidding increments of $25,000
for the separate floors. Except for credit bids, the opening bid
for the Second Floor must be a minimum of $1.5 million. Except for
credit bids, the opening bid for the Third Floor must be a minimum
of $1.525 million. When auctioned together, the opening bid for
the Second and Third Floors together must be a minimum of $3.025
million.
d. Break-up Fee: $25,000
e. If a secured creditor is the successful bidder by virtue
of its credit bid, no real estate commission will be due upon the
sale to such secured creditor. Such secured creditor will be
responsible for costs of sale, to include costs to preserve the
property; deed stamps and deed recording fees; and satisfaction of
outstanding property taxes and regime fees secured by the Suite(s)
purchased.
The sale price will be allocated between and among the three Suites
as set forth in the Debtor's Disclosure Statement, as amended. It
is estimated and anticipated that the sale price will cover all
costs of sale (to include deed stamps, pro-rated taxes and regime
fees, 5% real estate commission), and payment of all liens, except
that the claimed lien of Ascentium on Suite 201 is not expected to
be paid in full. It is antipated that the sale will realize
sufficient net proceeds to the estate to adequately fund the
Debtor's Plan of Reorganization, as amended.
The Debtor seeks authority to pay the following expenses upon the
sale:
Vieira Reimbursements for preservation of estate:
Chapter 11 Filing Fee: $1,717
Cost to Change Locks: $371
Mileage for site checks: $505 plus (5 round trips to-date, may
increase if additional trips are required)
UST 2020 Q4 Fees: $325
UST 2021 Q1 Fees: $325
Sale Notice Filing Fee: $188
Plus, any professional expenses that have been approved at the
time of sale.
The Debtor does not request waiver of the 14-day stay with regard
to the order authorizing the sale.
It is informed and believes that it would be in the best interests
of its estate to sell the Property by private sale pursuant to the
best offer as set forth. Applicant also believes that the funds to
be recovered from the sale of the said Property justify its sale
and the filing of the application.
The Debtor requests the Court issues an order authorizing sale of
said Property free and clear of all liens, claims, encumbrances,
and other interests, and such other and further relief as may be
proper.
About Seven and Rose
Seven and Rose LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.S.C. Case No. 20
03757)
on Oct. 5, 2020. At the time of the filing, the Debtor disclosed
assets of between $1 million and $10 million and liabilities of
the
same range. Judge John E. Waites oversees the case. Barton
Brimm,
PA, led by Christine E. Brimm, Esq., serves as the Debtor's legal
counsel.
SHD LLC: Plan and Disclosures Due March 8
-----------------------------------------
Judge Rebecca B. Connelly entered an order extending the deadline
for SHD, LLC, to file a disclosure statement and plan through and
including March 8, 2021.
If the Debtor fails to timely file a Disclosure Statement and Plan,
the Debtor shall appear and show cause why the case should not be
converted or dismissed on MARCH 18, 2021, at 11:00 a.m. via Zoom.
About SHD LLC
SHD, LLC filed a voluntary petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Va. Case No. 20-50831) on Nov. 30,
2020. Robert E. Ladd, manager, signed the petition. At the time
of the filing, the Debtor disclosed assets of between $1 million
and $10 million and liabilities of the same range. Woods Rogers
PLC and Elmore Hupp & Company, P.L.C., serve as the Debtor's legal
counsel and financial advisor, respectively.
SIGNIFY HEALTH: S&P Assigns 'B' ICR Following IPO, Outlook Positive
-------------------------------------------------------------------
S&P Global Ratings assigned 'B' issuer rating to Dallas-based
healthcare platform service provider Signify Health Inc.
(previously known as Cure TopCo LLC), the new entity formed during
the corporate restructuring concurrent with the IPO. The rating is
the same as for the predecessor company, Cure Topco. S&P will
withdraw the current 'B' issuer rating on Cure TopCo LLC now that
the restructuring and IPO have closed.
S&P said, "The positive outlook reflects our view that the use of
IPO proceeds for acquisitions could potentially lower leverage and
improve cash flow.
"We expect Signify Health to use IPO proceeds for acquisitions.
Because we view the company as a young, growing company, the use of
IPO proceeds to fund acquisitions compared with incurring debt is
positive for credit quality. Depending on the characteristics of
any assets Signify Health ultimately acquires, it now has the
potential to reduce leverage and improve cash flow.
"The base business is well situated as we expect significantly more
conversions to Medicare Advantage plans from traditional Medicare.
The company has stable relationships with seven of the top 10
Medicare Advantage plans and serves about half of the bundled
payments market (via Episodes of Care Services). Moreover, the
company is not subject to traditional reimbursement risks because
it derives revenue from insurance companies, which primarily pay
them on a fee-for-service basis. However, the company has
significant customer concentration, with the top-three and top-10
customers representing about 50% and 70% revenue, respectively.
Signify's Home & Community Services segment deals with much larger
healthcare plan clients (such as Humana, Aetna, and Wellcare) that
manage beneficiaries under Medicare Advantage plans. These health
plans operate on a significantly larger scale, and we believe they
will try to push health reimbursement arrangement (HRA) rates down,
because they have high bargaining power against smaller service
providers. Moreover, there is always a risk that these large health
plans can insource some of the health assessment services.
Signify's Episodes of Care Services segment, on the other hand,
generates most of its revenue from the Centers for Medicare and
Medicaid Services (CMS). While participation in the bundled
payments model is not inevitable, we see a significant trend of
healthcare participants moving toward bundled payments and episode
care, especially with the recent push for CMS making bundled
payments mandatory by 2024. While we see little probability of CMS
changing policies (including risk adjustment methodology) and a
strong trend of outsourcing HRA services, any potential changes in
policies or insourcing of HRA services will significantly disrupt
the company's business.
"Despite the adverse impact of the pandemic, we expect
profitability to be back on track. During 2020, the company has
introduced virtual health assessments to alleviate some of the
pandemic impact and increased headcount to support future growth.
We expect margins in 2021 to return to our prior estimate of about
20% as business returns to a normal state. Rising margins benefit
from the company's growing scale, cross selling opportunities, and
expansion into new areas such as commercial bundled payments. There
is some risk to this margin assumption depending on what
acquisitions the company completes.
"The positive rating outlook on Signify reflects our view that the
company would grow significantly in 2021 using the IPO proceeds for
acquisitions, resulting in improvement in both cash flow generation
and leverage. It also reflects our expectation that CMS will
continue to use data generated from in-home or virtual health
assessments to calculate risk adjustment. However, this does not
rule out the fact that regulatory changes could affect Signify's
business model.
"We could revise the outlook to stable if the company does not
achieve its acquisition goals such that it cannot sustainably
reduce leverage below 4x and if discretionary cash flow remains
below $40 million.
"We would consider raising the rating if Signify continues to grow,
using IPO proceeds for acquisitions, maintains leverage below 4x,
and generates discretionary cash flow of more than $40 million.
This would likely require 44% revenue growth, in addition to margin
improvement by more than 250 basis points (bps) from 2020."
SINALOENCE FOOD: Seeks to Hire JMLIU CPA as Accountant
------------------------------------------------------
Sinaloence Food Products & Services, Inc. seeks approval from the
U.S. Bankruptcy Court for the Central District of California to
employ JMLIU CPA Accountantcy Corp. as its accountant.
The Debtor requires the firm's assistance to set up Quickbooks
account system, provide data necessary for interim statements and
operating reports, and prepare financial reports, income and
expense reports, financial statements, and monthly operating
reports.
The firm will be paid at an hourly rate of $250 and will be
reimbursed for out-of-pocket expenses incurred.
The firm received a retainer in the amount of $5,000 from the
Debtor's principal, Gloria Burgos.
Jennifer Liu, a partner at JMLIU CPA, disclosed in a court filing
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
JMLIU CPA can be reached at:
Jennifer Mm Liu
9454 Wilshire Blvd., Suite 628
Beverly Hills, CA 90212
Tel: (310) 801-2479
Fax: (310) 861-0928
Email: jmliucpa©gmall.com
About Sinaloence Food Products& Services
Sinaloence Food Products & Services, Inc. is a single asset real
estate (as defined in 11 U.S.C. Section 101(51B)).
Sinaloence Food Products & Services filed its voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D.
Cal. Case No. 21-10255) on Jan. 14, 2021. At the time of filing,
the Debtor estimated $1 million to $10 million in assets and
$500,000 to $1 million in liabilities.
Judge Sheri Bluebond oversees the case.
Joanne P. Sanchez, Esq., at JD Law, serves as the Debtor's legal
counsel.
SIRIUS XM: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on Sirius
XM Radio Inc.
The stable outlook reflects S&P's expectation that Sirius XM's
leverage will remain in the mid-3x area over the next year as the
company returns all of its free operating cash flow to
shareholders. S&P expects EBITDA will be flat in 2021 as certain
operating costs that were reduced in 2020, particularly during the
early stages of the pandemic, return in 2021.
S&P said, "We consider Sirius XM to be insulated from Liberty
Media. Despite Liberty Media's (unrated) increasing ownership
stake, institutional investors still hold a key stake in Sirius XM
and the company has a fiduciary obligation to act in their best
interest. In our view, this limits Liberty Media's ability to take
actions that could weaken Sirius XM's financial profile. We believe
Sirius XM's recent tax-sharing agreement with Liberty Media
supports our view since the agreement was negotiated by a group of
independent directors on Sirius XM's board and it will not have any
negative effect on the company." The two companies entered into the
tax-sharing agreement in February 2021 to determine the allocation
of U.S. income tax liabilities once Liberty Media's stake in Sirius
XM increases to 80% (the threshold for tax consolidation).
Additionally, Sirius XM's practice has been to have a substantial
majority of its directors be independent from Liberty Media and its
management (Liberty Media has two executives and one director on
Sirius XM's 14-member board). Sirius XM is also incorporated as a
separate legal entity with its own capital structure and it does
not commingle funds. Further, there are no cross-default provisions
or guarantees, and the company maintains separate operations,
financials, and branding from Liberty Media. S&P said, "We believe
these provisions provide sufficient insulation to support the 'BB'
issuer credit rating on Sirius XM. While we do not rate Liberty
Media, we estimate that it has weaker credit characteristics than
Sirius XM with a highly leveraged capital structure."
S&P said, "We expect leverage will remain in the mid-3x area over
the next few years. We expect ongoing share repurchases will
prevent Sirius XM from materially reducing leverage (3.4x at
year-end 2020). We estimate the company will spend around $1.8
billion on dividends and share repurchases in 2021, increasing
borrowings under its revolving credit facility. As a result, we
expect adjusted net debt to EBITDA will remain in the mid-3x area
in 2021. We believe the company could also acquire additional audio
platforms or capabilities following its acquisitions of podcasting
companies Simplecast and Stitcher in 2020 and streaming music
platform Pandora in 2019. We believe the company is willing to
tolerate leverage between 3.5x-4x to support acquisitions.
"Subscription revenue provides relatively stable cash flow. Sirius
XM generates nearly 80% of its revenue from subscription fees (with
the remainder mostly coming from advertising). We view subscription
revenue more favorably than volatile advertising revenue, which is
cyclical (since expectations for consumer spending drive
advertising budgets). While Sirius XM's advertising revenue
declined 4% in 2020 due to the U.S. recession brought on by the
coronavirus pandemic, its subscription revenue increased 3%. The
company has shown relatively stable monthly subscriber churn of
1.7%-1.8% over the past few years and was 1.7% in 2020.
"Sirius XM's subscriber base tends to skew older and wealthier than
that of other audio entertainment subscription platforms (such as
Spotify), which we believe makes it more resilient to economic
pressures. Additionally, Sirius XM is successful at curating and
sourcing content, some of which is exclusive (such as the Howard
Stern Show) and differentiates its platform from terrestrial and
streaming radio alternatives. The company also added digital access
for the majority of customers in 2019, allowing them to access
Sirius XM outside the car. We believe this helped support customer
retention in 2020, particularly in the first half of the year when
customers were mostly at home.
"The stable outlook reflects our expectation that Sirius XM's
leverage will remain in the mid-3x area over the next year as the
company returns all of its free operating cash flow to
shareholders. We expect EBITDA will be flat in 2021 as certain
operating costs that were reduced in 2020, particularly during the
early stages of the pandemic, return in 2021.
"We could lower the rating if leverage increases above 4x on a
sustained basis due to debt-funded acquisitions or shareholder
returns. Alternatively, we could lower the rating if increased
competition from other entertainment platforms causes subscriber
churn to increase and the company's leverage to rise above 4x.
"We view an upgrade as unlikely because we believe the company is
willing to tolerate leverage between 3.5x-4x to support
shareholder-friendly activities. However, we could consider an
upgrade if management publicly articulates a financial policy that
keeps leverage below 3.5x on a sustained basis. An upgrade would
also require our expectation that the company's subscriber base,
EBITDA margin, and free operating cash flow will remain stable."
SLIDEBELTS INC: Gets Cash Collateral Access Thru July 4
-------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of California
has authorized Slidebelts Inc. to, among other things, use cash
collateral on a final basis until the effective date of the
Debtor's Plan of Reorganization or July 4, 2021.
The Debtor is authorized, but not required, to use cash collateral
including the proceeds of sales of its inventory, in accordance
with the approved Budget. The Debtor will be deemed in compliance
with this requirement so long as the Debtor does not exceed the
Budget by up to 15% on average across all expenditures during any
four-week period.
The Debtor is directed to make these adequate protection payments
in the amount of interest accruing on the Secured Claims held by
the Debtor's Secured Creditors, First U.S. Community Credit Union
and Amazon Lending or Amazon Capital Services, Inc.:
a. Monthly payment to First U.S. Community Credit Union -
$2,180 payable in the first week of every month.
b. Monthly payment to Amazon Lending - $1,673
The Secured Creditors are granted replacement liens in the same
priority, with respect to the same collateral, and to the same
extent, whether valid or not, as the Secured Creditor's security
interests attached before the Petition Date.
A copy of the order is available at https://bit.ly/38fZMP8 from
PacerMonitor.com.
About SlideBelts Inc.
SlideBelts, Inc. is an El Dorado Hills, Calif.-based belt company
founded in 2004. Visit https://slidebelts.com for more
information.
SlideBelts sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Cal. Case No. 20-24098) on Aug. 25, 2020. At the
time of filing, Debtor disclosed up to $10 million in both assets
and liabilities.
Judge Frederick E. Clement oversees the case.
Reynolds Law Corporation is the Debtor's legal counsel.
SLIM DOLLAR: Deadline for Amended Disclosures Moved to April 1
--------------------------------------------------------------
Slim Dollar Realty Associates, LLC, won from the Bankruptcy Court
an order granting an extension of the pending deadlines and
continuing the hearing on the adequacy of the Debtor's Amended
Disclosure Statement.
At the Debtor's behest, the Court ordered that
* The Debtor's deadline to file its Amended Disclosure Statement
and Plan is extended to April 1, 2021 and the deadline for filing
objections to the Debtor's Amended Disclosure Statement to April 8,
2021.
* The hearing on the Adequacy of the Debtor's Amended Disclosure
Statement from March 10, 2021 at 1:30 p.m. is continued to April
21, 2021 at 2:00 p.m.
In seeking an extension, the Debtor explained that it has been in
contact with the Tax Collector for the Town of Bow to finalize an
agreement for a payment plan for the outstanding real estate taxes
on the Debtor's real estate. An extension will allow the Debtor to
finalize its payment plan with the Town of Bow and amend its
disclosure statement accordingly.
About Slim Dollar Realty Associates
Slim Dollar Realty Associates, LLC is a single asset real estate
(as defined in 11 U.S.C. Section 101(51B)). Its principal assets
are located at 19 Woodhill Hooksett Road Bow, N.H.
Slim Dollar Realty Associates filed a voluntary petition under
Chapter 11 of the Bankruptcy Code (Bankr. D.N.H. Case No. 20 10761)
on Aug. 24, 2020. Charles R. Sargent, Jr., manager, signed the
petition. At the time of filing, the Debtor estimated $500,000 to
$1 million in assets and $1 million to $10 million in liabilities.
Judge Bruce A. Harwood oversees the case. Victor W. Dahar, P.A.
serves as Debtor's legal counsel.
SMWS GROUP: Court Approves Disclosure Statement
-----------------------------------------------
Judge Maria Ellena Chavez-Ruark has entered an order approving the
Amended Disclosure Statement of SMWS Group, LLC, and setting a
hearing to consider confirmation of the Debtor's Plan for April 20,
2021 at 10:00 a.m. via Zoom.
April 12, 2021, is fixed as the last day of filing written
acceptances or rejections of the Amended Plan, and the last day for
filing and serving written objections to confirmation of the
Amended Plan.
As reported in the TCR, the Debtor's Plan will be funded by the
proceeds from the sale of the Debtor's Real Property and from the
settlement of litigation
against Jaswant Deol, represented by Geico Insurance resulting from
an automobile accident into the Debtor's Property, and the recovery
of funds from the litigation against Taste of New Orleans Taste of
New Orleans and Ashfaq Shah.
A full-text copy of the Amended Disclosure Statement dated Feb. 25,
2021, is available at https://bit.ly/3bSxT0z from PacerMonitor.com
at no charge.
About SMWS Group
SMWS Group LLC is a lessor of real estate based in Germantown,
Maryland. The company filed for chapter 11 bankruptcy protection
(Bankr. D. Md. Case No. 19-12941) on March 6, 2019, with estimated
assets of $1 million to $10 million and estimated liabilities at
$500,000 to $1 million. The petition was signed by Asia Shah,
managing member.
Gary A. Rosen was appointed as Chapter 11 Trustee on Oct. 16, 2019.
SORENSON COMMUNICATIONS: S&P Rates New 1st-Lien Credit Facility B+
------------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level rating and '2'
recovery ratings to Sorenson Communications LLC's proposed $25
million first-lien revolver and $600 million first-lien term loan,
which both mature in 2026. The '2' recovery rating indicates its
expectation for substantial (70%-90%; rounded estimate: 85%)
recovery of principal in the event of a payment default.
The company plans to use the proceeds from the new term loan to
refinance its existing first-lien debt and pay down a portion of
its second-lien payment-in-kind (PIK) loan. S&P said, "Our ratings
on Sorenson' proposed first-lien credit facility reflect the
substantial decrease in the amount of subordinated debt in its
capital structure pro forma for the transaction relative to our
assumed enterprise value at default. Therefore, we do not expect
the company's first-lien lenders to benefit from a very high
recovery in a hypothetical default."
S&P said, "We view Sorenson's use of the proceeds to pay down
roughly $215 million of its PIK loan as credit positive because it
will reduce the accreting PIK interest on its debt burden. Pro
forma for the transaction, we expect the company to maintain S&P
Global Ratings-adjusted leverage in the mid-2x area in 2021 with
free operating cash flow to debt in the 20% area. Sorenson's
leverage is low, though we believe it (along with its cash flow
metrics) is substantially exposed to the uncertainty surrounding
future declines in the U.S. Federal Communication Commission's
(FCC) reimbursement rates, which have been on a downward trend over
the past several years. Our highly leveraged assessment of the
company's financial risk also incorporates its financial-sponsor
ownership, which leads us to believe that it may pursue an
aggressive financial strategy through leveraging transactions if
the opportunity arises.
"Our 'B' issuer credit rating and stable outlook on Sorenson are
unchanged, which reflects our expectation that its leverage will
remain in the mid-2x area over the next year as its planned debt
repayment offsets its falling EBITDA generation due to scheduled
rate declines and the lower utilization of its services relative to
2020.
"We could raise our rating on Sorenson over the next 12 months if
we believe the future billing rates for CaptionCall and VRS will
stabilize over the next two years and the company will reduce its
leverage to the low-2x area or below and sustain it at this level.
"We could lower our rating on Sorenson if we become convinced that
its revenue and EBITDA will decline dramatically over the next two
to three years because of worse-than-expected rate declines at
CaptionCall or lower-than-expected minutes growth. In this
scenario, we would expect the company's leverage to increase to the
high-3x area. Although less likely, sudden and dramatic attrition
in the company's customer base or declines in its minutes volumes
due to increased competition could also cause us to lower our
rating."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a default
occurring in 2024 due to a significant decline in FCC reimbursement
rates for both CaptionCall and VRS combined with increased
competition for its niche product and service offerings.
-- S&P believes the company's lenders would pursue a
reorganization rather than a liquidation in a hypothetical default
due to its favorable brand recognition and the good client
penetration of its CaptionCall and VRS product and service
offerings.
-- Sorenson's proposed capital structure comprises a $600
first-lien secured term loan maturing in 2026, a $25 million
first-lien secured revolving credit facility maturing in 2026, and
a second-lien PIK term loan facility maturing in 2025 ($45 million
outstanding pro forma for the transaction).
-- Sorenson Communications LLC is the borrower of the company's
proposed first-lien credit facility. The debt is secured by a lien
on the borrower's, its parent guarantor's, and its subsidiary
guarantors' tangible and intangible property, including a pledge of
capital stock (limited to 65% of the capital stock of first-tier
foreign subsidiaries that are not subsidiary guarantors).
-- Other default assumptions include an 85% draw on the revolving
credit facility, LIBOR is 2.5%, and all debt amounts include six
months of prepetition interest.
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA at emergence: About $87 million
-- EBITDA multiple: 5x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): About
$415 million
-- First-lien senior secured debt: About $475 million
--Recovery expectations: 70%-90% (rounded estimate: 85%)
SOUTHLAND ROYALTY: Seeks April 19 Plan Exclusivity Extension
------------------------------------------------------------
Debtor Southland Royalty Company LLC asks the U.S. Bankruptcy Court
for the District of Delaware to extend the Debtor's exclusive
period to file a Chapter 11 plan and to solicit acceptances through
and including April 19, 2021.
During its exclusive period, including previous extensions, the
Debtor has made substantial progress on its chapter 11 case,
culminating in an agreement to sell substantially all of its
remaining assets and the filing of a plan to implement the sale, a
global resolution of claims and the distribution of the Debtor's
assets to creditors. In addition to consummating the sale of its
exploration and production ("E&P") assets in the San Juan Basin in
New Mexico, the Debtor litigated to decision its disputes with
Wamsutter LLC ("Williams") regarding the legal attributes of the
Debtor’s most material midstream contracts. After the Court
issued its decision, the Debtor, in consultation with its major
creditor constituents, negotiated the Sale Transaction, whereby the
Debtor will sell its E&P assets in the Wamsutter field in Wyoming
to an affiliate of Williams.
Through the Sale Motion, the Debtor sought authority to sell its
leasehold and mineral interests in approximately 745,000 networking
interest acres across both the Wamsutter field of the Greater Green
River Basin in southwestern Wyoming and the San Juan Basin in
southwestern Colorado and northwestern New Mexico (the "San Juan
Assets"), including approximately 150,000 networking interest
mineral acres in the Wamsutter field. However, due to certain
disputes and uncertainty relating to the midstream agreements
gathering and transportation agreements associated with the
Wamsutter Assets, the Debtor subsequently limited the relief sought
in the Sale Motion to the San Juan Assets.
In summary, the Debtor has achieved significant progress during its
time operating in chapter 11. Since the Petition Date, the Debtor
and its professional advisors successfully consummated the San Juan
Sale in May, prosecuted the Williams Litigation, and have now
reached an agreement on a sale of the Wamsutter Assets to an
affiliate of Williams. Promptly after finalizing the agreement with
Williams, the Debtor finalized and filed its Plan and Disclosure
Statement. The Williams sale and the Plan put the Debtor on a path
to exit chapter 11 in a short time.
Amidst the negotiation and drafting of the sale of the Wamsutter
assets to Williams, the Debtor and its professionals have also
continued to undertake significant efforts in evaluating and
litigating the various security interests asserted by the M&M
Claimants. The M&M Claimants asserted statutory liens on certain of
the Debtor's properties in relation to services performed for
drilling and other operations. To resolve disputes over the scope
and priority of these liens, the Debtor filed the M&M Lien
Adversary Proceedings and prosecuted the Summary Judgment Motion.
The Debtor and its professionals are working diligently to narrow
the issues in the M&M Adversary Proceedings by reaching settlements
where possible and preparing to seek estimation or a trial on the
remaining M&M Claims. Collectively, these tasks required a
significant expenditure of time and effort on the part of the
Debtor's operator and professional advisors.
At the same time, the Debtor and its advisors are preparing to
close the Williams sale and objecting to and resolving claims.
Simultaneously, the Debtor also addresses administrative issues
attendant to the chapter 11 case, including, but not limited to:
(a) responding to various creditor inquiries;
(b) addressing vendor relationships; and
(c) preparing monthly operating reports. Accomplishing these tasks
has been a labor-intensive process, which fully occupied the
Debtor's representatives and professionals.
Also, the Debtor continues to make timely payments on its
undisputed post-petition obligations. Thus, the Debtor requests an
approximately 60-day extension of its exclusive right to propose,
broker the negotiation of, and solicit a chapter 11 plan. Although
the filing of the Plan prevents the exclusive period from expiring,
the current solicitation period will expire on the voting deadline
for the Plan, as currently proposed by the Debtor. Accordingly, the
Debtor seeks to extend exclusivity out of an abundance of caution
to ensure that the Debtor and creditors do not experience
complications and distractions from exclusivity expiring when the
Debtor is on the doorstep of Confirmation.
The Objection Deadline is scheduled on March 5, 2021, at 4:00 pm
(ET), and the Hearing Date scheduled on March 23, 2021, at 11:00
a.m. (ET)
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3bMAbyw from epiq.com.
About Southland Royalty
Southland Royalty Company LLC -- http://www.southlandroyaltyco.com/
-- is a privately held independent exploration and production
company engaged in the acquisition and development of
hydrocarbons.
Headquartered in Fort Worth, Southland Royalty Company conducts its
business across four states, with the majority of operations in
Wyoming and New Mexico. Southland Royalty Company was formed
principally to produce and extract hydrocarbons in the Wamsutter
field of the Green River Basin and in the San Juan Basin.
Southland Royalty Company sought Chapter 11 protection (Bankr. D.
Del. Case No. 20-10158) on January 27, 2020. In the petition signed
by CRO Frank A. Pometti, the Debtor was estimated to have $100
million to $500 million in assets and $500 million to $1 billion in
liabilities.
The Debtor tapped Shearman & Sterling LLP as bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as Delaware counsel; AP
Services, LLC as interim management services provider; PJT Partners
Inc. as investment banker; and Epiq Corporate Restructuring, LLC as
claims and noticing agent.
STA TRAVEL: Files for Chapter 11 to Wind Down Business
------------------------------------------------------
STA Travel Inc., the U.S. unit of Switzerland-based travel
operator, filed a bankruptcy petition under Subchapter V of Chapter
11 of the Bankruptcy Code on March 3, 2021, citing the COVID-19
pandemic, which caused travel disruptions worldwide.
Its parent, STA Travel Holding AG (Switzerland), is in Swiss
administration. Other foreign affiliates in, among other
jurisdictions, the United Kingdom and Australia are in insolvency
proceedings.
The STA Travel group of companies started in Switzerland in 1979 as
a travel company primarily marketed to students, young people, and
high school and university-affiliated travel abroad programs. At
its peak, the STA Travel group of companies employed over 2,000
employees at approximately 200 locations worldwide. The Debtor was
incorporated in Delaware in 1981 to provide operations in the
United States.
The Debtor formerly maintained its headquarters in an office
located in Tempe, Arizona. The Debtor also operated a storefront
location at 722 Broadway, New York, NY. The Debtor's gross revenue
for 2019 was $61.2 million. Before the shutdowns and limitations
on travel imposed internationally because of the COVID-19 pandemic,
STA employed 57 people in New York and Tempe.
In early 2020, the COVID-19 pandemic commenced. As governments
responded to this international public health crisis by imposing
severe restrictions on travel, learning institutions shuttered and
travel abroad programs were canceled, and the Debtor's business
operations were severely disrupted and effectively ceased. The
cessation of normal business operations has deprived the Debtor of
vital cash flow, without which the Debtor is incapable of meeting
its financial obligations in the ordinary course, including
obligations to employees, its Tempe landlord, vendors, suppliers,
and other creditors and claimants.
STA decided to seek protection under Subchapter V of Chapter 11 to
implement an orderly liquidation of its assets and maximize
recoveries to creditors, the majority of whom are travelers to whom
refunds are owed for travel that could not be completed because of
the COVID-19 pandemic.
The Debtor commenced the case with the goal of preserving and
maximizing the value of its assets and maximizing recoveries to its
customers and other creditors. The Debtor possesses sufficient
assets to administer this case without the need to borrow funds.
Among other things, the Debtor possesses approximately $1,000,000
in cash bonds, and a lease for its New York retail location that it
believes to be significantly below market value and that may
generate significant funds for creditor recoveries.
As of its bankruptcy filing in the U.S., STA has no employees.
As of the Petition Date, the Debtor had no secured debt, $3,684,492
in unsecured debt, and $2,504,965 in assets.
First Day Motions
The Debtor is filing various motions and applications necessary for
the administration of this case. Specifically, the Debtor is
filing applications to retain Cozen O'Connor as its bankruptcy
counsel, Omni Agent Solutions as both its claims and noticing
agent, and administrative agent CBRE as its real estate advisor.
The Debtor also has filed a motion to reject its Tempe, Arizona
real estate lease, and a motion to set the form and manner of
noticing in this case.
About STA Travel
STA Travel Inc., the U.S. unit of Switzerland-based STA Travel
Holding AG, operates as a travel company. It operated a storefront
location at 722 Broadway, New York, NY.
On March 3, 2021, STA Travel filed a bankruptcy petition under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Case No. 21-10511).
STA Travel estimated $1 million to $10 million in assets and
liabilities as of the bankruptcy filing.
COZEN O'CONNOR, led by Thomas M. Horan, is the Debtor's counsel.
CBRE, INC., is the real estate advisor. OMNI AGENT SOLUTIONS is
the claims agent.
SUMMIT MIDSTREAM: Swings to $189.08 Million Net Income in 2020
--------------------------------------------------------------
Summit Midstream Partners, LP filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing net
income of $189.08 million on $383.47 million of total revenues for
the year ended Dec. 31, 2020, compared to a net loss of $393.73
million on $443.52 million of total revenues for the year ended
Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $2.49 billion in total assets,
$1.48 billion in total liabilities, $89.66 million in mezzanine
capital, and $922.89 million in total partners' capital.
Management's Comments
Heath Deneke, president, chief executive officer and chairman,
commented, "Summit's fourth quarter financial results were in line
with expectations, and adjusted EBITDA was $2 million ahead of
third quarter results. Our full year results fell within our
guidance range of $250 million to $260 million that we established
in July 2020, to reflect the implications of the global COVID-19
pandemic, lower commodity prices and a slowdown of upstream
activity behind our systems. The strong performance of our Utica
Shale and Ohio Gathering segments drove overall
quarter-over-quarter increases in adjusted EBITDA and volume
throughput. On an aggregate basis, these two segments contributed
an incremental $2.6 million of quarterly adjusted EBITDA relative
to the third quarter of 2020, and each segment had quarterly volume
throughput growth of more than 20%. Additionally, with the return
of substantially all shut-in production behind the Ohio Gathering
system in November, we no longer have any material amount of
production that is temporarily shut-in for economic purposes behind
any of our assets."
"We executed a number of liability management transactions in the
fourth quarter, including the repurchase of $95.6 million face
value of our 2025 notes, a cash tender for $75.1 million of our
Series A Preferred Units, and the closing of the transformational
GP Term Loan Restructuring. In total, since closing the GP Buy-In
in May 2020, we have eliminated more than $625 million of recourse
fixed capital obligations at SMLP, including the $180.8 million
DPPO, and we extinguished our GP's $155.2 million term loan, all at
substantial discounts to par. As a result of these actions, our
organizational structure and capital structure have been
significantly simplified. In December 2020, we completed an
amendment to our revolving credit facility that provides additional
flexibility to support the next phase of our liability management
initiatives. The newly added $400 million junior lien debt basket
can be utilized to address our 2022 bond maturities and the
increased total leverage covenant of 5.75x provides SMLP with
additional cushion to mitigate future uncertainty."
"We continue to make great progress on the Double E project, having
received all necessary approvals to proceed with construction, and
securing bank financing commitments. Now that we have received the
Notice to Proceed from the FERC, we have initiated construction
activities and we expect to bring the project online during the
fourth quarter of 2021. We continue to expect that Double E will
be completed at or below the current $425 million capital budget,
of which, approximately $35 million currently remains in
unidentified project contingency. In the fourth quarter of 2020,
SMLP contributed approximately $6.6 million of cash for its 70%
share of Double E capital contributions, resulting in SMLP funding
approximately $20 million during the calendar year 2020, and
approximately $131 million of total funding from the project's
inception through the end of 2020. In 2021, we expect to finance
SMLP's estimated $150 million share of Double E capital
expenditures with funds from the $175 million of new, non-recourse
senior secured credit facilities which have been committed by
leading commercial banks."
"In 2020, we successfully executed a robust set of liability
management transactions that strengthened the balance sheet and
created financial flexibility to offset the potential for a
prolonged challenging macro environment, while generating long term
value for our unitholders. We expect that 2021 will be a trough
year for Summit, as many of our customers have significantly
reduced drilling and completion activities behind our systems,
particularly during the first half of the year. As a result, we
expect approximately 45 to 75 new well connections in 2021, which
is materially less than the 104 and 262 wells connected in 2020 and
2019, respectively. We also anticipate MVC shortfall payment
step-downs of approximately $10 million in 2021, relative to 2020,
primarily from customers in the Piceance and Williston segments.
Accordingly, we issued our 2021 adjusted EBITDA guidance range of
$210 million to $230 million, which includes a moderate amount of
risking to our customer-provided development plans and volume
forecasts at the midpoint of the range, Further risking of these
plans reflect the low end of the range and if our customers achieve
their stated plans, we would expect our financial results to be at
the high end of the range."
"Although we are expecting softened customer activity in 2021, we
expect to generate sufficient cash, after interest expense and
capital expenditures, to reduce outstanding indebtedness by
approximately $130 million to $150 million due to the resiliency of
our business model. While it is too early to provide guidance for
2022, we foresee several tailwinds that we believe will support
increased customer activity behind our systems, including an
improving outlook on oil and gas prices, more constructive capital
markets and the potential for additional consolidation activity in
the upstream sector, all of which should further strengthen
customer balance sheets. In the meantime, we will remain focused
on maximizing free cash flow, further de-levering the balance sheet
and implementing plans to address our upcoming 2022 debt
maturities."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1549922/000156459021011012/smlp-10k_20201231.htm
About Summit Midstream
Summit Midstream Partners is a value-driven limited partnership
focused on developing, owning and operating midstream energy
infrastructure assets that are strategically located in
unconventional resource basins, primarily shale formations, in the
continental United States. SMLP provides natural gas, crude oil and
produced water gathering services pursuant to primarily long-term
and fee-based gathering and processing agreements with customers
and counterparties in six unconventional resource basins: (i) the
Appalachian Basin, which includes the Utica and Marcellus shale
formations in Ohio and West Virginia; (ii) the Williston Basin,
which includes the Bakken and Three Forks shale formations in North
Dakota; (iii) the Denver-Julesburg Basin, which includes the
Niobrara and Codell shale formations in Colorado and Wyoming; (iv)
the Permian Basin, which includes the Bone Spring and Wolfcamp
formations in New Mexico; (v) the Fort Worth Basin, which includes
the Barnett Shale formation in Texas; and (vi) the Piceance Basin,
which includes the Mesaverde formation as well as the Mancos and
Niobrara shale formations in Colorado. SMLP has an equity
investment in Double E Pipeline, LLC, which is developing natural
gas transmission infrastructure that will provide transportation
service from multiple receipt points in the Delaware Basin to
various delivery points in and around the Waha Hub in Texas. SMLP
also has an equity investment in Ohio Gathering, which operates
extensive natural gas gathering and condensate stabilization
infrastructure in the Utica Shale in Ohio. SMLP is headquartered in
Houston, Texas.
* * *
As reported by the TCR on Jan. 18, 2021, S&P Global Ratings raised
its issuer credit rating on Summit Midstream Partners L.P. (SMLP)
to 'CCC+' from 'SD' (selective default). S&P said, "It is unlikely
we would consider a stable outlook at this time given the
heightened refinancing risk for multiple maturities."
SUNOPTA INC: Swings to US$77.5M Net Earnings for Year Ended Jan. 2
------------------------------------------------------------------
Sunopta Inc. filed with the Securities and Exchange Commission its
Annual Report on Form 10-K disclosing net earnings of US$77.52
million on US$789.21 million of revenues for the year ended Jan. 2,
2021, compared to a net loss of US$758,000 on US$721.59 million of
revenues for the year ended Dec. 28, 2019.
As of Jan. 2, 2021, the Company had US$585.61 million in total
assets, US$252.68 million in total liabilities, $87.30 million in
series A preferred stock, $27.59 million in series B-1 preferred
stock, and $218.03 million in total equity.
Fourth Quarter 2020:
* Revenues of $205.6 million from continuing operations for the
fourth quarter of 2020 compared to $186.1 million in the
fourth
quarter of 2019, an increase of 10.4%.
* Gross margin increased 360 basis points to 15.5% from 11.9% in
the prior year.
* Earnings attributable to common shareholders were $70.2
million
or $0.78 per share in the fourth quarter of 2020, compared to
a
loss attributable to common shareholders of $7.6 million or
$0.09 per share in the fourth quarter of 2019. This includes
earnings from continuing and discontinued operations.
* Adjusted earnings attributable to common shareholders were
$1.2
million or $0.01 per diluted common share in the fourth
quarter
of 2020, compared to a loss of $5.6 million or $0.06 per
diluted common share in the fourth quarter of 2019. This
includes earnings from continuing and discontinued
operations.
* Adjusted EBITDA from continuing operations of $20.6 million,
or 10.0% of revenues for the fourth quarter of 2020, versus
$11.2 million or 6.0% of revenues in the fourth quarter of
2019.
During the fourth quarter of 2020, cash generated by operating
activities of continuing operations was $19.8 million compared to
$33.2 million during the fourth quarter of 2019. Investing
activities of continuing operations used $11.2 million of cash in
the fourth quarter of 2020 versus $7.9 million in the prior year,
primarily due to the settlement of the foreign currency contract
economically hedging the Tradin Organic cash consideration.
"The fourth quarter was another strong quarter, capping off a
transformational year for SunOpta. We delivered 10.4% revenue
growth, 15.5% gross margins and 10.0% EBITDA margins in Q4
reflecting the fundamental strength of the business," said Joe
Ennen, chief executive officer. "The 84% increase in Adjusted
EBITDA for the go-forward business during the fourth quarter was on
top of a 649% increase a year earlier. We had more Adjusted EBITDA
in the fourth quarter of 2020 from continuing operations than in
the entire 2019 fiscal year. In the fourth quarter, we again
delivered solid growth in both Plant-Based and Fruit-Based segments
coupled with substantial margin improvements including a 19.4%
gross profit margin in plant-based and a 10.1% gross profit margin
in fruit-based. In addition, we significantly strengthened our
balance sheet ensuring the flexibility and capacity to continue
investing in core growth initiatives. We remain well positioned in
favorable, on-trend categories with a strong pipeline of new
business opportunities, particularly in plant-based foods and
beverages. I am very proud of our execution and the responsiveness
of the entire organization to the many challenges we faced
throughout 2020 and we are optimistic we will carry this momentum
into 2021."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/351834/000106299321002279/form10k.htm
About SunOpta Inc.
Headquartered in Ontario, Canada, SunOpta Inc. is a global company
focused on plant-based foods and beverages, fruit-based foods and
beverages, and organic ingredient sourcing and production. SunOpta
specializes in the sourcing, processing and packaging of organic,
natural and non-GMO food products, integrated from seed through
packaged products; with a focus on strategic vertically integrated
business models.
* * *
This concludes the Troubled Company Reporter's coverage of SunOpta
Inc. until facts and circumstances, if any, emerge that demonstrate
financial or operational strain or difficulty at a level sufficient
to warrant renewed coverage.
SUPERIOR INDUSTRIES: S&P Alters Outlook to Stable, Affirms 'B' ICR
------------------------------------------------------------------
S&P Global Ratings revised its outlook on Wheel manufacturer
Superior Industries International Inc. to stable from negative and
affirmed its 'B' issuer credit rating.
S&P said, "At the same time, we are affirming our 'B' issue-level
rating on Superior's term loan and our 'B-' issue-level rating on
its unsecured notes. Our '3' recovery rating on the term loan and
'5' recovery rating on the unsecured notes remain unchanged.
"The stable outlook reflects our expectation that the company's
cost-reduction efforts and more-profitable global product mix will
likely support steady cash flow adequacy metrics in 2021 and 2022,
albeit with limited headroom for an underperformance."
The company's structural cost reductions and improved product mix
will likely lead to a slight increase in its EBITDA margins in
2021-2022. Superior's profits are likely to be down in 2020 because
of reduced industry volumes in North America and Europe due to the
coronavirus pandemic-related production shutdowns in the first half
of the year. S&P expects the company to report a sequential
improvement in its EBITDA margins in the second half of 2020 due to
the recovery in its volumes, its improved product mix, and reduced
manufacturing costs in North America as it substantially eliminated
the profitability gap relative to its European operations.
S&P said, "Over the next two years, we expect Superior's operating
performance to improve modestly as it continues to benefit from the
elevated demand for larger and more-profitable large diameter and
premium wheels, management's ongoing cost reduction, and higher
fixed-cost absorption as industry volumes recover. We expect the
company to sustain its more-profitable product mix (nearly 70%
light trucks and 30% passenger cars) into 2021 as consumers spend
greater sums on vehicles with more features and higher content
(including larger wheels). For instance, wheels greater than or
equal to 19 inches in diameter accounted for approximately 40% of
Superior's portfolio in 2020 and the company estimates this
proportion could rise to nearly 50% by 2024. In addition, we
believe the demand for its products is agnostic to the industry's
transition to electric vehicles because Superior supplies wheels
for both traditional and battery-electric-vehicle models."
Superior's steady cash flow prospects will offset its elevated debt
leverage. S&P said, "Despite using its internal cash flow for
modest debt reduction, we expect Superior's debt to EBITDA at the
end of 2020 would exceed 7.0x, though we expect this ratio to
improve toward 5.0x by 2022. Superior's FOCF generation exceeded
our prior expectations in 2019 and we expect the same in 2020 (FOCF
to debt of over 12% compared with our forecast for 2%-5%) because
of its improved working capital management, including improved
terms with its aluminum suppliers, reduced inventory, and a lower
level of capital investment in 2020. Additionally, the company
suspended its common share dividends in September 2019, which is
likely to improve discretionary cash flow (DCF) with our
expectations for DCF to debt of about 10% in 2020 after its payment
of preferred dividends."
S&P said, "Given our expectation for higher year-over-year working
capital investments and increased capital expenditure (capex) in
2021 and 2022 relative to 2020, we forecast Superior's cash flow
metrics will weaken but remain in line with our expectations for
the current rating (i.e. FOCF to debt of over 5% and DCF to debt of
more than 2%). However, absent additional debt reduction in 2021
and 2022, the cushion in the company's financial metrics will
remain weak relative to those of some other tier-1 auto suppliers
we rate in the 'B' category, especially given our downgrade
threshold of over 5.0x. We treat the company's redeemable preferred
stock as a debt-like obligation."
The company's elevated customer concentration amid the softer
conditions in its end markets and the high level of global
uncertainty remains the major risk factors. Ford Motor Co., General
Motors Co., and Volkswagen AG together typically account for over
50% of Superior Industries International Inc.'s sales. Most of the
company's contracts with these original equipment manufacturers
(OEMs) range in length from one year to the total lifetime of the
vehicle model (usually three to five years) and are typically
nonexclusive. S&P said, "We expect new product launches at its key
customers will enable the company to expand at a faster rate than
the overall market. However, a significant decrease in consumer
demand for certain key models at its large OEM customers adds some
risk at a time when the magnitude of the recoveries in its North
American (typically around 50% of sales) and European auto markets
(the remaining 50% of its sales) remain uncertain given the uneven
rollout of the COVID-19 vaccine across its end markets.
Additionally, potential production disruption at its customers due
to a shortage of semiconductor chips could limit the recovery in
its volume in 2021. We believe Superior's limited scale, coupled
with the relative fragmentation of the supplier base (especially in
Europe) and product commoditization, will lead to continual pricing
pressure from its customers. In addition, the company continues to
face heavy competition from products imported from Asia. While the
EU has tariffs on imports to protect its domestic wheel industry
for the next couple of years, the U.S. market does not have any
such protections. Though not an assumption in our base-case
forecast, a further intensification of ongoing trade wars could
raise Superior's manufacturing costs in Mexico, Germany, and Poland
depending on how automakers respond to the tariffs or other
restrictions imposed by the U.S."
S&P said, "The stable outlook on Superior reflects our expectation
that its cost-reduction efforts and more-profitable global product
mix will likely support steady cash flow adequacy metrics in 2021
and 2022, albeit with limited headroom for an underperformance.
"We would lower our ratings on Superior if we believe it is
unlikely that its debt to EBITDA will fall well below 6x by 2022 or
its DCF to debt declines below 2% on a sustained basis. This could
occur because of weaker demand for cars in the U.S. or Europe and
decreased penetration for the company's wheels on its main
platforms or if the company's operational costs rise, leading to a
decline in its EBITDA margins from recent levels.
"Though unlikely over the next 12 months, we would raise our
ratings on Superior if it pays down a significant amount of debt
such that its debt to EBITDA approaches 4.0x with DCF to debt of
about 5%. As a tier-1 auto supplier, this would provide adequate
cushion for underperformance over the next downturn and lead to an
improved cash flow adequacy assessment."
SUPERIOR PLUS: Moody's Affirms 'Ba2' CFR & Rates New Notes 'Ba3'
----------------------------------------------------------------
Moody's Investors Service affirmed Superior Plus LP's Ba2 corporate
family rating, Ba2-PD probability of default rating, and Ba3 senior
unsecured notes rating. The SGL-2 speculative grade liquidity
rating remains unchanged and the outlook remains stable. Moody's
also rated Superior's proposed US$500 million senior unsecured
notes Ba3. The notes will be used to redeem the US$350 million 2026
notes and repay revolver drawings.
"The affirmation of Superior's rating reflects our view that the
company will accelerate propane acquisitions in 2021 and 2022 and
regain the lost EBITDA from the sale of its chemicals business",
said Paresh Chari a Moody's analyst. "We also expect leverage to
remain around 4x in 2021 and 2022."
Affirmations:
Issuer: Superior Plus LP
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD4)
Assignments:
Issuer: Superior Plus LP
Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD4)
Outlook Actions:
Issuer: Superior Plus LP
Outlook, Remains Stable
RATINGS RATIONALE
Superior's Ba2 CFR is supported by: 1) debt to EBITDA of around 4x
in 2021 and 2022; 2) a market leading position in the Canadian
propane business; 3) geographic diversity: Canada, Eastern U.S. and
some international; and 4) a track record of successfully
integrating acquisitions and achieving cost efficiencies.
Superior's credit profile is challenged by: 1) the continuing
secular demand decline of the propane industry; 2) demand that is
dependent on weather which has become more abnormal due to climate
change, leading to increased cash flow volatility; 3) the need to
make acquisitions in order to grow; 4) relatively small size when
compared to similarly rated corporate peers, and 5) low margins
compared to propane peers, largely driven by lower residential
volumes in Canada.
The US$500 million senior unsecured notes are rated Ba3, or one
notch below the Ba2 CFR, reflecting their subordinated claim to the
company's assets relative to the secured $750 million revolving
credit facility due 2024.
Superior's liquidity is good (SGL-2). At December 31, 2020, and pro
forma for the February 2021 chemicals disposition and March 2021
US$500 million unsecured note issuance, Superior will have about
C$400 million of cash and about C$709 million available (after C$41
million in letters of credit) under its C$750 million revolving
credit facility maturing May 2024. Moody's expects modestly
negative free cash flow in 2021. Moody's assumes Superior's
liquidity will deplete as it makes propane acquisitions in 2021 and
2022. Moody's expects the company to remain in compliance with its
two financial covenants through this period. Superior could readily
sell assets without impairment if it needed additional liquidity.
The stable outlook reflects Moody's expectation that debt to EBITDA
will be about 4x in 2020 and 2021, with the company continuing to
successfully integrate acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if debt/EBITDA falls below 3.5x (4.1x
at LTM Q4/20) and the company improved on its existing size and
scale, with EBITDA moving above C$700 million (C$494 million LTM
Q4/20).
The ratings could be downgraded if debt/EBITDA rises above 4.5x
(4.1x at LTM Q4/20) or if there is sustained and significant
negative free cash flow.
Superior Plus LP is a wholly-owned subsidiary of Superior Plus
Corp. a publicly traded company located in Toronto, Canada.
Superior Plus LP is an energy distributor segment primarily buying
and selling propane in Canada and the US.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SYNIVERSE HOLDINGS: S&P Places 'CCC+' ICR on CreditWatch Positive
-----------------------------------------------------------------
S&P Global Ratings placed the ratings on U.S.-based global mobile
transactions processor Syniverse Holdings Inc., including the
'CCC+' issuer credit rating, on CreditWatch with positive
implications.
S&P said, "The CreditWatch placement reflects our view that these
transactions will likely reduce Syniverse's debt and improve its
overall credit profile, although the potential for a one-notch
upgrade depends on the extent of debt repayment, leverage
reduction, and our view of the longer term sustainability of its
capital structure."
The CreditWatch placement follows Syniverse's announcement that it
will receive up to a $750 million cash investment from Twilio. The
company will use proceeds along with additional financings
primarily to repay existing debt and pay related fees and expenses
as part of a planned refinancing of its capital structure. S&P
believes these transactions, if consummated, could eliminate a
substantial portion of Syniverse's debt, significantly reduce
leverage, and improve its liquidity position, likely resulting in a
one-notch upgrade. Syniverse had approximately $1.9 billion of debt
outstanding as of Nov. 30, 2020.
As part of the agreement, Syniverse will enter into a wholesale
agreement with Twilio to process application-to-person (A2P)
messages between Twilio's customers and mobile network operators.
Separate from the Twilio investment, Syniverse plans to raise
additional equity through a public market transaction or from
private equity sources. Terms have not been disclosed. The closing
of the Twilio investment is contingent on the simultaneous
completion of the additional financing transactions.
Its partnership with Twilio does not meaningfully alter S&P's view
of Syniverse's business profile, which is challenged by secular
pressures in its carrier segment from advances in mobile technology
and the increased usage of over-the-top messaging apps. Also, the
ongoing impact of the coronavirus pandemic on global travel and
roaming volumes sharply decreased revenue and EBITDA in fiscal year
2020. However, the partnership will increase its A2P messaging
volumes and revenue generated from enterprise customers over time
and help Syniverse enhance its mobile communications offerings.
The CreditWatch reflects the potential for a one-notch upgrade,
depending on the extent of debt repayment and leverage reduction.
S&P intends to resolve the CreditWatch upon close of the Twilio
transaction (likely before the end of 2021) when S&P has more
clarity around the pro forma capital structure.
TAILORED BRANDS: Men's Wearhouse Gets Fresh Funds After Ch.11 Exit
------------------------------------------------------------------
Katherine Doherty of Bloomberg News reports that Men's Wearhouse
owner Tailored Brands Inc. secured $75 million of new money from
its existing shareholders and lenders three months after it emerged
from bankruptcy protection.
The retailer arranged $50 million of convertible notes and $25
million in additional senior secured debt, according to a statement
Friday, March 5, 2021. The company had "severely underperformed"
compared to the projections in its Chapter 11 reorganization plan
and needed roughly $75 million by the beginning of March to avoid a
default, according to court papers.
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formal wear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com/ Its brands include Men's Wearhouse, Jos.
A. Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, Tailored Brands
had $2.42 billion in total assets, $2.52 billion in total
liabilities, and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900).
As of July 4, 2020, Tailored Brands disclosed $2,482,124,043 in
total assets and $2,839,642,691 in total liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; Deloitte &
Touche LLP as auditor, and A&G Realty Partners, LLC as the real
estate consultant and advisor. Prime Clerk LLC is the claims agent.
TED & STAN'S: Gets OK to Hire Martin Claire as Appraiser
--------------------------------------------------------
Ted & Stan's Towing Services, Inc. received approval from the U.S.
Bankruptcy Court for the Southern District of Florida to employ
Martin Claire & Co., LLC as its appraiser.
The firm will prepare a valuation of the Debtor's commercial
vehicle inventory and provide expert testimony related to the
appraisal to the extent necessary.
The firm will be paid a flat fee of $1,000 for its services.
Martin Claire, a partner at Martin Claire & Co., 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.
The firm can be reached at:
Martin Claire
Martin Claire & Co., LLC
1835 E. Hallandale Beach Blvd., Suite 357
Hallandale, FL 33009
Tel: (954) 558-4582
Email: marty@martinclaire.com
About Ted & Stan's Towing Services
Ted & Stan's Towing Service, Inc. is a provider of towing services
in Florida.
Ted & Stan's Towing Service sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-10663) on Jan.
26, 2021. Ted & Stan's President Edwyn Martinez signed the
petition. In the petition, the Debtor disclosed assets of $970,481
and liabilities of $1,718,592.
Judge Jay A. Cristol oversees the case.
Agentis PLLC is the Debtor's legal counsel.
TENNECO INC: Fitch Alters Outlook on 'B+' LongTerm IDR to Stable
----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of Tenneco Inc. (TEN) at 'B+'. In addition, Fitch has
affirmed TEN's secured revolving credit facility, secured term loan
and senior secured note ratings at 'BB'/'RR2' and its senior
unsecured note ratings at 'B-'/'RR6'.
Fitch has also assigned a rating of 'BB'/'RR2' to TEN's proposed
issuance of $800 million in senior secured notes due 2029. Proceeds
from the proposed notes will be used to refinance the company's
existing senior secured notes due 2024.
Fitch's ratings apply to a $1.5 billion secured revolving credit
facility, $3.2 billion in secured term loans, $1.3 billion in
senior secured notes (following the proposed refinancing) and $725
million in senior unsecured notes.
The Rating Outlook has been revised to Stable from Negative.
KEY RATING DRIVERS
Rating Outlook Revision: The revision of TEN's Outlook to Stable
from Negative reflects Fitch's expectations that the most negative
effects of the coronavirus pandemic on TEN's credit profile have
passed and that the company's credit profile will strengthen over
the next several years as global auto production recovers. In
addition, TEN outperformed Fitch's expectations in 2020 despite a
precipitous decline in revenue and a weakening of the company's
credit metrics. Revenue, earnings and FCF were all stronger than
anticipated. The stronger FCF allowed the company to end 2020 with
less debt than Fitch had expected as TEN repaid the amounts it had
drawn on its revolver during the worst part of the downturn.
Fitch expects TEN's margins and FCF to improve, in part due to
benefits from the company's Accelerate+ program, which targets $265
million in run-rate cost savings by YE 2021. The company had
already achieved $165 million of costs savings and $250 million of
working capital improvements as part of Accelerate+ by YE 2020.
Rating Overview: TEN's IDR continues to reflect the company's
elevated leverage, which increased substantially following its
acquisition of Federal-Mogul LLC (FM) in 2018. Following the
acquisition, Fitch had expected leverage to decline as the company
prioritized debt repayment, but several setbacks, including the
coronavirus pandemic, slowed the pace of debt reduction and
resulted in leverage remaining at an elevated level for a longer
period than Fitch had anticipated.
Also incorporated into the IDR are the inherent risks and
cyclicality of the global auto supply industry, including risks of
longer-term technological change, as about 40% of the company's
value-added revenue is related to light vehicle internal combustion
engine products. Fitch still expects demand for those product lines
to remain relatively solid for at least the next several years,
while the cash they generate will provide the company with
resources to invest in growth technologies, such as advanced
suspension technologies and noise, vibration and harshness (NVH)
products. Fitch also expects demand for emission control equipment
to grow in the global commercial vehicle and off-highway sectors as
emission regulations for covering those engines continue to
tighten.
Proposed Notes Refinancing: Proceeds from the proposed notes will
be used to redeem the company's existing 5.0% Euro-denominated
senior secured notes due 2024 and floating rate Euro-denominated
notes due 2024. Based on Euro/U.S. Dollar exchange rate in effect
on Dec. 31, 2020, the principal value of the notes equated to $794
million. The proposed notes will be secured by the same collateral
that secures TEN's existing senior secured notes and its senior
secured credit facility. The latter consists of a revolver, term
loan A and term loan B. As such, the proposed notes will rank pari
passu with the company's existing first lien secured debt and
senior to the company's senior unsecured notes. The refinancing of
the senior secured notes will help to de-risk TEN's balance sheet
by shifting an intermediate term maturity further into the future
while having a minimal effect on the company's leverage.
Stronger FCF: TEN generated considerably stronger FCF in 2020 than
Fitch had expected. Fitch had expected FCF to be negative in 2020,
but a combination of stronger-than-expected FFO and cash from
working capital, as well as lower-than-expected capex, resulted in
$274 million of actual FCF (according to Fitch's calculations) and
a solid 1.8% FCF margin.
Fitch expects FCF to remain positive over the next several years
due to improved cash earnings, ongoing working capital management
activities and lower capex. As part of its Accelerate+ program, TEN
has achieved $250 million of working capital improvements by YE
2020, due, in part, to a focus on inventory management. Fitch also
expects capex to run at a relatively lower level going forward as
the company focuses on improved capital utilization. As a result of
these initiatives, Fitch expects capex, as a percentage of revenue,
to run in the 2.5% to 3.0% range over the next several years. Fitch
expects FCF margins to run in the 1.5% to 2.5% range, which is
relatively solid for an auto supplier.
Declining Leverage: TEN's leverage spiked in 2020 as a result of
the coronavirus pandemic. However, actual leverage at Dec. 31, 2020
was lower than Fitch had expected, largely due to TEN's
stronger-than-expected FCF performance in the latter half of the
year, which allowed the company to repay all of its revolver
borrowings prior to YE 2020. Fitch expects TEN's leverage will now
decline over the next several years, driven by a combination of
higher earnings and FCF, as well as declining debt. In addition to
the regular amortization on TEN's secured term loans, Fitch expects
TEN will use a portion of available cash to accelerate debt
reduction, as reducing leverage is a top priority of the company.
Fitch expects gross EBITDA leverage (debt, including off-balance
sheet factoring/Fitch-calculated EBITDA) to decline toward 5.0x by
YE 2021 and below 4.5x by YE 2022. Likewise, Fitch expects gross
FFO leverage to decline toward the mid-6x range by YE 2021 and to
the mid-5x by YE 2022. Fitch expects the reduction in FFO leverage
to take longer than the reduction in EBITDA leverage, in part due
cash costs related to implementing the Accelerate+ program.
Planned Separation Delayed: A key component of TEN's strategy
following its acquisition of FM was to split the combined company
into two separate firms by spinning off its aftermarket and
ride-performance businesses into a new company called DRiV. TEN
originally targeted the spin to occur in late 2019 but later
delayed the target to mid-2020. However, a prerequisite for
completing the spinoff is to lower net leverage to below 3.0x,
compared with actual net leverage of 4.3x at YE 2020 (as calculated
by the company). Most of the synergies targeted at the time of the
acquisition have been achieved, and the company appears ready to
separate operationally, but with elevated leverage and fallout from
the coronavirus pandemic, the separation appears to be off the
table for now.
With the separation timing currently unclear, TEN is also
considering other options, including the potential sale of a
portion of the business. Work on potential divestitures was largely
put on hold over the past year as a result of the pandemic, but it
could ramp up again once the pandemic subsides. Fitch expects TEN
would use a substantial portion of any proceeds from a sale would
for debt reduction.
Antitrust Investigations: In 2014, antitrust authorities in various
jurisdictions began investigating possible violations of antitrust
laws by multiple automotive parts suppliers, including TEN. The
European Commission (EC) closed the case without penalty in April
2017, and the U.S. Department of Justice (DOJ) granted TEN
conditional leniency through the Antitrust Division's Corporate
Leniency Policy.
TEN established a $132 million reserve in 2017 for settlement costs
to resolve its antitrust matters, which primarily involved the
resolution of civil suits and related claims. Through Dec. 31,
2020, TEN had paid $112 million to resolve various claims related
to the investigation, and it had released an additional $11 million
from the reserve after reaching resolution on certain other claims.
As of Dec. 31, 2020, less than $1 million remained in the reserve
related to the antitrust investigations. As a result of the
resolution of nearly all the claims, Fitch no longer views the
antitrust investigations as a material credit risk for TEN.
DERIVATION SUMMARY
TEN has a relatively strong competitive position focusing on
powertrain, clean air and ride performance technologies for
original equipment manufacturers (OEMs) of passenger vehicles,
commercial vehicles and off-road equipment. It also has a large
presence in branded automotive aftermarket parts and components.
The company's Tier 1 technologies are likely to grow in demand over
the intermediate term as OEMs increasingly focus on ways to improve
powertrain fuel efficiency, reduce emissions and improve vehicle
ride quality. At the same time, the company's aftermarket business
insulates it somewhat from the heavier cyclicality of the Tier 1
business while providing growth opportunities as the on-road
vehicle fleet ages in both developed and developing markets.
Although the company's clean air and powertrain businesses will
likely be pressured over the longer term as the global auto
industry increasingly focuses on electrification, in the
intermediate term, tightening emissions regulations will likely
drive increased demand for TEN's emission control products for
internal combustion engines. At the same time, growing demand for
increasingly sophisticated suspensions is likely to result in
higher demand for the ride control business' more profitable active
suspension systems. However, compared with auto suppliers that
focus on high-technology, software-based vehicle safety and
automation systems, such as Aptiv PLC (BBB/Stable) or Visteon
Corporation, TEN's business remains more tied to engine and
suspension products that affect vehicle performance
characteristics.
TEN is among the largest U.S. auto suppliers, but it is smaller
than the largest global auto suppliers, such as Continental AG
(BBB/Stable), Magna International Inc. or Robert Bosch GmbH (F1+).
Over the intermediate term, Fitch expects TEN's margins to be
roughly consistent with issuers in the 'BB' range, although they
will be pressured in the near to intermediate term by weaker macro
conditions. Fitch expects TEN's credit protection metrics,
particularly leverage and coverage, will be more consistent with a
'B'-range IDR for an extended period.
TEN had planned to split into two separate companies by mid-2020:
an aftermarket and ride performance business (DRiV) and a
powertrain technologies business (New Tenneco). The timing of that
separation is now unclear, and TEN has been looking at other
options, such as potential asset sales, in addition to its original
plans to split the company. Fitch's ratings on TEN are based on the
company's current organizational structure and do not incorporate
any potential separation of the business.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Global auto production rises by 6% in 2021, including an 8%
increase in U.S.;
-- Global aftermarket part demand increases in the mid-single
digit range over the next several years;
-- Capex runs at about 2.5%-3.0% of revenue over the next several
years as the company focuses on capital efficiency;
-- FCF is positive, in part due to working capital improvements,
with FCF margins generally running in the 1.5%-2.5% range;
-- The company applies excess cash toward debt reduction;
-- The company maintains a solid liquidity position, including
cash and credit facility availability over the next several
years.
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes that TEN would be reorganized as
a going-concern in bankruptcy rather than liquidated.
-- Fitch has assumed a 10% administrative claim.
Going-Concern (GC) Approach
TEN's recovery analysis estimates a going concern EBITDA at $1.18
billion, which reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which the valuation of the
company would be based following a hypothetical default. The
sustainable, post-reorganization EBITDA is for analytical valuation
purposes only and does not reflect a level of EBITDA at which Fitch
believes the company would fall into distress. The going concern
EBITDA considers TEN's customer supply agreements with most major
global OEMs, with its products embedded in the powertrains and
suspension systems of many global vehicles; the critical nature of
its emission control technologies; and the less-cyclical nature of
its branded aftermarket products. The $1.18 billion ongoing EBITDA
assumption is about 6% below Fitch's forecast of $1.26 billion in
EBITDA (according to Fitch's calculations) for TEN in 2021.
Fitch has used a 6.0x multiple to calculate a post-reorganization
valuation. According to the "Automotive Bankruptcy Enterprise
Values and Creditor Recoveries" report published by Fitch in
January 2021, about 48% of auto-related bankruptcies had exit
multiples above 5.0x, with about 29% in the 5.0x to 7.0x range.
However, the median multiple observed across 21 issuers was only
5.0x. Within the report, Fitch observed that 87% of the bankruptcy
cases analyzed were resolved as a going concern. Automotive issuers
in bankruptcy were typically weighed down by capital structures
that became untenable during a period of severe demand weakness,
due either to economic cyclicality or the loss of a significant
customer, or they were subject to significant operational issues.
While TEN has a highly leveraged capital structure, Fitch believes
the company's business profile is stronger than most of those
included in the automotive bankruptcy observations.
Fitch utilizes a 6.0x EV multiple based on TEN's strong global
market position, including its position as a supplier to a number
of top global vehicle platforms, and the non-discretionary nature
of its aftermarket products. For comparison, Brookfield Business
Partners' acquisition of Clarios Global LP in 2019 valued the
company at an EV over 8x, while BorgWarner Inc.'s acquisition of
Delphi Technologies PLC valued the company at 6.4x preliminary 2019
adjusted EBITDA (in both cases excluding expected post-acquisition
cost savings). All of TEN's rated debt is guaranteed by certain,
primarily domestic, subsidiaries.
Consistent with Fitch's criteria, the recovery analysis assumes
that $956 million in off-balance-sheet factoring is replaced with a
super-senior facility that has the highest priority in the
distribution of value. Fitch also assumes a full draw on the
company's $1.5 billion secured revolver. The revolver, secured term
loans and secured notes receive second priority in the distribution
of value after the factoring. As such, the first lien secured debt,
excluding factoring, totals about $6.0 billion, which results in a
Recovery Rating of 'RR2' with an expected recovery in the 71%-90%
range.
The $725 million of senior unsecured notes have the lowest priority
in the distribution of value. This results in a Recovery Rating of
'RR6' with an expected recovery in the 0%-10% range, owing to the
significant amount of secured debt positioned above it in the
hierarchy.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A sustained value-added FCF margin of 1.0% on a consistent
basis;
-- Sustained decline in EBITDA leverage to 3.5x or lower;
-- Sustained decline in FFO leverage to 4.0x or lower;
-- Sustained increase in FFO interest coverage of 3.5x or higher.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A sustained value-added FCF margin of breakeven or below;
-- Sustained EBITDA leverage above 4.5x over the intermediate
term;
-- Sustained FFO leverage above 5.0x over the intermediate term;
-- Sustained FFO interest coverage below 2.5x over the
intermediate term.
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 TEN to maintain adequate
liquidity going forward. As of Dec. 31, 2020, the company had $798
million in unrestricted cash and cash equivalents (excluding
Fitch's adjustments for not readily available cash) and nearly full
availability on its $1.5 billion secured revolver. The company has
no significant debt maturities until 2023, when its revolver and
the bulk of its term loan A mature.
According to its criteria, Fitch has treated $320 million of TEN's
cash and cash equivalents as not readily available for purposes of
calculating net metrics. This is based on Fitch's estimate of the
amount of cash the company needs to keep on hand to cover
seasonality in its business.
Debt Structure: TEN's debt structure primarily consists of
borrowings on its secured credit facility (which includes the term
loan A, term loan B and revolver), senior secured notes, senior
unsecured notes and off-balance sheet factoring that Fitch treats
as debt.
TEN's off-balance sheet factoring includes the effect of
supply-chain financing programs that the company has with some of
its aftermarket customers to whom the company has entered into
extended payment terms. If the financial institutions involved in
these programs were to curtail or end their participation, TEN
might need to borrow from its revolver to offset the effect, but it
could also mitigate at least a portion of the effect by exercising
its contractual right to shorten the payment terms with these
particular aftermarket customers.
ESG CONSIDERATIONS
TEN has an ESG Relevance Score of '4[+]' for GHG Emissions & Air
Quality due to the company's positioning as a top supplier of
products that reduce vehicle emissions from internal combustion
engines, which has a positive impact on the credit profile and is
relevant to the ratings in conjunction with other factors.
TEN has an ESG Relevance Score of '4' for Management Strategy due
to the complexity of the company's strategy to merge with FM and
then split into two companies, which has a negative impact on the
credit profile and is relevant to the ratings in conjunction with
other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
TENNECO INC: S&P Assigns 'B' Rating on New $800MM Senior Sec. Notes
-------------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level and '3' recovery
ratings to auto parts maker Tenneco Inc.'s proposed $800 million
senior secured notes due 2029. The '3' recovery rating indicates
its expectation for meaningful (50%-70%; rounded estimate: 55%)
recovery in the event of a payment default. Tenneco will use the
proceeds from these notes to redeem its existing 300 million Euro
senior secured floating rating notes and 350 million Euro senior
secured 5% notes due 2024.
S&P said, "We view the transaction as leverage neutral, thus it
does not affect our 'B' issuer credit rating or positive outlook on
Tenneco. The positive outlook reflects the progress the company is
making in reducing structural costs and our expectations that free
operating cash flow to debt will remain higher than 3% over the
next 12 months."
Issue Ratings - Recovery Analysis
Key analytical factors
S&P's simulated default scenario models a default in 2024, assuming
a combination of the following hypothetical stress factors:
-- A sustained economic downturn that reduces customer demand for
new automobiles, intense pricing pressure from competitive actions
by other auto suppliers and/or raw material vendors, and the
potential loss of one or more key customers.
-- S&P expects these conditions would reduce volumes, revenues,
gross margins, and net income, reducing liquidity and operating
cash flow.
-- S&P anticipates EBITDA at emergence of about $933 million based
on the company's capital structure, our assumed increase in
borrowing costs, and other adjustments.
-- S&P believes that if Tenneco defaulted, a viable business model
would remain because of the company's credible customer base and
global footprint. Therefore, S&P believes debtholders would achieve
the greatest recovery value through reorganization rather than
through liquidation. Tenneco generates about 32% of its EBITDA in
the U.S. and is a Delaware incorporated entity. As such, S&P
expects the company would file for reorganization in the U.S.
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA at emergence: $933 million
-- EBITDA multiple: 5x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $4.2
billion
-- Valuation split (obligors/nonobligors): 32%/68%
-- Priority claims: $916 million
-- Value available to first-lien debt claims
(collateral/noncollateral): $2.35 billion/$0
-- Secured first-lien debt claims: $5.4 billion
--Recovery expectations: 50%-70% (rounded estimate: 55%)
-- Total value available to unsecured claims: $876 million
-- Senior unsecured debt/pari passu unsecured claims: $744
million/$3.5 billion
--Recovery expectations: 10%-30% (rounded estimate: 20%)
All debt amounts include six months of prepetition interest.
Collateral value equals assets pledged from obligors after priority
claims plus equity pledged from nonobligors after nonobligor debt.
TEXAS SOUTH: Delays Filing of 2020 Annual Report
------------------------------------------------
Texas South Energy, Inc. filed with the Securities and Exchange
Commission a Form 12b-25 notifying the delay in the filing of its
Annual Report on Form 10-K for the year ended Dec. 31, 2020. The
Company was unable to complete its preparation of its Form 10-K in
a timely matter because of working capital issues.
The Company's Form 10-Q's for the periods ended June 30, 2019,
Sept. 30, 2019, March 31, 2020, June 30, 2020, Sept. 30, 2020 and
the 10-K for Dec. 31, 2019 have not yet been filed.
About Texas South
Headquartered in Houston, Texas, Texas South Energy, Inc. is
engaged in the oil and gas business, generating or acquiring oil
and gas projects, drilling and operating the wells, and producing
the oil and gas reserves.
Texas South reported a net loss of $3.11 million for the 12 months
ended Dec. 31, 2018, following a net loss of $3.84 million for the
12 months ended Dec. 31, 2017. As of March 31, 2019, the Company
had $14.73 million in total assets, $9.19 million in total
liabilities, and $5.53 million in total stockholders' equity.
LBB & Associates Ltd., LLP, in Houston, Texas, the Company's
auditor since 2013, issued a "going concern" qualification in its
report dated April 1, 2019, citing that the Company's absence of
significant revenues, recurring losses from operations, and its
need for additional financing in order to fund its projected loss
in 2019 raise substantial doubt about its ability to continue as a
going concern.
THOMAS ANTON: Wants to Use Cash Collateral
------------------------------------------
Thomas Anton & Associates, A Law Corporation, asks the U.S.
Bankruptcy Court for the Eastern District of California for
authorization to use cash collateral.
The Debtor says it incurred debt in its business before it filed
its Chapter 11 case, which included secured claims of $200,967.67,
priority unsecured claims of $1,065.42, and general unsecured
claims of $458,818.01.
The Debtor tells the Court the Internal Revenue Service has a
secured claim in the amount of $191,201.57. The Debtor further
tells the Court the IRS' Collateral consists of the Debtor's
personal property, including deposit accounts, accounts receivable
and other personal property. The Debtor adds its money on deposit,
in the amount of $484.12, and prepetition accounts receivable, in
the amount of $51,676.47, constitute cash collateral. The Debtor
contends that the value of IRS' Collateral is $241,876.13.
The Debtor expects to generate $30,000 per month through
confirmation of its Plan of Reorganization. The Debtor alleges the
amount of cash collateral to be used through the confirmation of
its Plan of Reorganization is $27,640 per month.
The Debtor proposes to provide the IRS with a replacement lien on
post-petition assets and make adequate protection payments of
$4,000 to the latter. The Debtor will also pay its postpetition
tax obligations pending confirmation of a Plan of Reorganization.
The Debtor says it cannot operate its business or conduct its
reorganization without the use of the Cash Collateral.
The hearing on the Debtor's Motion is scheduled for March 17, 2021,
at 9:30 a.m.
A full-text copy of the Motion, dated March 4, 2021, is available
for free at https://tinyurl.com/2cew5z33 from PacerMonitor.com.
About Thomas Anton & Associates
Thomas Anton & Associates, A Law Corporation, filed a Chapter 11
bankruptcy petition (Bankr. E.D. Calif. Case No. 21-10308) on Feb.
9, 2021. At the time of the filing, the Debtor had estimated
assets of less than $50,000 and liabilities of between $50,001 and
$100,000.
Judge Jennifer E. Niemann oversees the case. The Debtor is
represented by the Law Offices of Leonard K. Welsh.
TIDEWATER ESTATES: $120K Sale of 30-Acre Hancock Property Withdrawn
-------------------------------------------------------------------
Judge Katharine M. Samson of the U.S. Bankruptcy Court for the
Southern District of Mississippi approved the withdrawal of
Tidewater Estates, Inc.'s sale of approximately 30 acres South of
Kiln-Delisle Road, in Hancock County, Mississippi, identified on
the 2020 Appraisal as Tract 5, plus 13 acres in irregular shape on
the South end of Parcels 3 and 4, to Roxanne Ladner for $120,000
cash, free and clear of all liens, under the terms of their
Contract for the Sale and Purchase of Real Estate, dated Nov. 20,
2020.
The matter came before the Court upon the Debtor's Motion, the U.S.
Trustee's Response, and Gregory E. Bertucci's Objection, brought on
for hearing on Feb. 26, 2021. The Debtor has announced in open
Court and on the record that the Motion would be withdrawn.
About Tidewater Estates, Inc.
Tidewater Estates, Inc. filed its voluntary petition for relief
under CHapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case
No.
20-50955) on June 9, 2020. In the petition signed by Emile A.
Bertucci, III, director, secretary/treasurer, the Debtor estimated
$1 million to $10 million in assets and $500,000 to $1 million in
liabilities. The Debtor is represented by Patrick Sheehan, Esq. at
SHEEHAN AND RAMSEY, PLLC.
TITAN INTERNATIONAL: Incurs $65.08 Million Net Loss in 2020
-----------------------------------------------------------
Titan International, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$65.08 million on $1.26 billion of net sales for the year ended
Dec. 31, 2020, compared to a net loss of $51.52 million on $1.45
billion of net sales for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $1.03 billion in total assets,
$830.62 million in total liabilities, $25 million in redeemable
noncontrolling interest, and $176.26 million in total equity.
Management's Comments
"The new year is already looking like a completely different story
compared to 2020," stated Paul Reitz, president and chief executive
officer. "The confidence of U.S. farmers is at record levels with
the tailwinds from strong commodity prices and healthy government
payments received last year. Dealers are hungry for inventory as
channels have been depleted to the lowest levels seen in the past
20 years. As seen in our fourth quarter results, the momentum is
building and 2021 is off and running in a very positive direction.
Last year is thankfully over and amidst the challenges of dealing
with the COVID-19 pandemic, the Titan team remained focused on the
imperative to improve our financial position. The success of our
efforts has been evidenced as our 2023 bonds have been trading
around par in recent months, allowing us an opportunity to explore
the potential of a refinancing prior to their maturity.
"We finished the year with strong momentum as the results of our
fourth quarter reflect the continued improvement in our financial
position. We finished the year with a significant turnaround
during Q4, as demand from many of our customers, particularly in
the agriculture markets, continued to strengthen as the quarter
progressed. Our continued cost reduction and cash preservation
measures positioned us well heading into 2021 as evidenced by our
strengthening cash position, net debt and margins. With cash at
$117 million and net debt at $347 million, we have now reached
levels not achieved since the end of 2017. The adjusted gross
margin percentage of 11.8% achieved during Q4 was our strongest
margin achieved over the previous ten quarters and reflects an
incremental of nearly 33% over Q3. Adjusted EBITDA of $17.3
million was the highest since the first quarter of 2019. We have
also delivered our sixth consecutive quarter with positive
operating and free cash flow.
"The positive trends that we saw late in 2020 have only increased
during the first few months of 2021. We expect this favorable
trend in South America to continue along with North America demand
accelerating through 2021 due to strong farmer income and commodity
prices combined with low levels of inventory in many channels.
Along with market improvements, we are seeing an improved pricing
environment. In the first quarter of 2021, we have increased
prices to offset rising raw material costs. We will continue to
increase prices to offset higher production costs, and as the year
progresses, we expect to improve our pricing leverage to manage our
gross margins. With the business trending positively in many ways,
we are looking toward a noticeable EBITDA improvement in 2021. The
market has shifted positively so quickly in a relatively short time
period making it difficult to provide a reasonable full-year 2021
forecast for sales and EBITDA. We do expect our 2021 capital
expenditures to be in the range from $35 million to $40 million
with continued flexibility based upon cash flow. With continued
working capital focus and similar interest levels as 2020, we
expect the full year to end cash flow positive. We also expect
that we can improve our payment terms with customers to offset the
impact on working capital from the growth in sales.
"The recent surge in agricultural demand, coming off the tail of
the global pandemic, has created a high degree of volatility for
our customer base and for Titan. We are rapidly hiring and
training people to meet this growing demand, while in the midst of
restrictions and challenges in the marketplace. Titan has a long
history of being flexible to adjust to market volatility, and we
have created robust production capabilities to meet the needs of
our customers. Flexibility and scalability is a strength at Titan,
and we expect to earn a good return on providing this to customers.
The breadth of our wheel tooling at our Quincy, Illinois operation
is one shining example of Titan's capabilities. We are currently
in discussions with major OEM's on long-term supply agreements that
would be a win-win for both sides in today's ever changing world,
and time is of the essence for everyone.
"Our entire global Titan team has worked tirelessly in order to
continue to operate throughout the pandemic. Due to their efforts
and diligence, we feel that we are now in position to be able to
meet the growing needs of our customers. Again, I want to thank
our Titan team for their efforts in safely navigating plant
operations through this extraordinary time over this past year and
protecting our employees throughout. Our 2020 performance
positively reflects the strength and resiliency of our people and
our products."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/899751/000089975121000006/twi-20201231.htm
About Titan
Titan International, Inc. -- http://www.titan-intl.com-- is a
global manufacturer of off-highway wheels, tires, assemblies, and
undercarriage products. Headquartered in Quincy, Illinois, the
Company globally produces a broad range of products to meet the
specifications of original equipment manufacturers (OEMs) and
aftermarket customers in the agricultural,
earthmoving/construction, and consumer markets.
* * *
As reported by the TCR on June 23, 2020, S&P Global Ratings
affirmed its ratings on Titan International Inc., including the
'CCC+' issuer credit rating. S&P expects weak demand to lower
Titan's profitability, causing negative free operating cash flow
(FOCF) generation in 2020.
As reported by the TCR on May 11, 2020, Moody's Investors Service
downgraded its ratings for Titan International, including the
company's corporate family rating to 'Caa3' from 'Caa1'. The
downgrades reflect expectations for challenging industry conditions
through 2020 to pressure Titan's earnings and cash flow, resulting
in the company's capital structure remaining unsustainable with
excessive financial leverage above 10x debt/EBITDA likely into 2021
and a weak liquidity profile reliant on external and alternative
funding sources.
TOWER HEALTH: S&P Lowers Bond Rating to 'BB-', Outlook Neg.
-----------------------------------------------------------
S&P Global Ratings lowered its rating on the taxable and tax-exempt
bonds outstanding issued for Tower Health, Pa. by two notches to
'BB-' from 'BB+'. The outlook is negative.
"The two-notch downgrade reflects our view of Tower Health's
continued significant operating losses through the interim period
ended Dec. 31, 2020, which have been higher than expected, coupled
with recent resignations of members of the senior management team,"
said S&P Global Ratings credit analyst Anne Cosgrove.
S&P said, "We could lower the rating if Tower Health fails to
reduce operating losses meaningfully or if liquidity further
weakens. As we believe that Tower Health's ability to improve
performance and overall credit health is likely dependent on
finding a partner or being able to sell underperforming assets, we
could lower the rating if the system is unsuccessful in these
areas, resulting in a continued weakening financial profile." The
rating could also be lowered if Tower Health violates its debt
service coverage covenant under the MTI.
The outlook could be revised to stable if management is able to
improve operating performance and liquidity. If Tower Health is
able to find a potential buyer with a stronger credit profile, this
could also result in a positive rating action. Similarly, if Tower
Health is able to successfully unwind its underperforming assets
and improve operating performance, S&P could revise the outlook to
stable.
TRIANGLE FLOWERS: Can Use Cash Collateral Until March 25
--------------------------------------------------------
Judge Stephani W. Humrickhouse of the U.S. Bankruptcy Court for the
Eastern District of North Carolina, Raleigh Division, authorized
Triangle Flowers of Distinction, Inc. to use cash collateral until
March 25, 2021.
The Debtor and First First National Bank of Pennsylvania have
agreed upon the terms of the Debtor's use of cash collateral.
The Debtor and FNB are parties to:
(1) a Loan Agreement, dated November 22, 2013, executed by and
between the Debtor and Capstone Bank (predecessor in interest to
FNB);
(2) a Promissory Note issued by the Debtor, dated November 22,
2013, in the original principal amount of $460,000;
(3) a Security Agreement, dated November 22, 2013;
(4) a Loan Agreement, dated July 19, 2016, executed by and
between the Debtor and Yadkin Bank (predecessor in interest to
FNB);
(5) a Promissory Note issued by the Debtor dated as of July
19, 2016 in the original principal amount of $85,200; and
(6) a Security Agreement, dated July 19, 2016.
As security for the indebtedness under the Loan Documents, the
Debtor entered into a Security Agreement granting FNB a first
priority lien and security interest in all of Debtor’s personal
property, including: "All equipment, inventory, accounts,
instruments and chattel paper whether now owned or hereafter
acquired together with all replacements, accessories, proceeds and
products."
The Debtor believed that FNB's lien on the Collateral is duly
perfected by the filing of a financing statement on or about
February 13, 2020 as required by law. The Debtor said it is not
aware of any other liens or security interests against accounts
receivable or inventory, the proceeds of which would constitute
"cash collateral" as that term is defined in the Bankruptcy Code.
FNB was granted a continuing post-petition lien on the Collateral
to the same extent and with the same priority as existed
immediately prior to the filing of the Debtor's petition pursuant
to 11 U.S.C. Section 552(b)(1), and the proceeds thereof, whether
acquired pre-petition or post-petition.
The Debtor was prohibited from using cash collateral except to pay
its ordinary, necessary and reasonable post-petition operating and
administrative expenses necessary for the administration of this
estate, including reasonable attorneys' fees and trustee's fees as
approved by the Court.
The approved March 2021 Budget provided for total expenses in the
amount of $39,794.
The Debtor was directed to pay FNB the sum of $1,750 per month as
adequate protection payments pursuant to 11 U.S.C. Sections 361,
362 and 363. Adequate protection payments are to be made on or
before the 10th of each month for the payment of adequate
protection for the preceding month.
The Court's Order will remain in full force and effect until the
earlier of:
(a) entry of an Order by the Court modifying the terms of the
use of cash collateral or the adequate protection provided to FNB;
(b) entry of an order by the Court terminating the Order for
cause, including but not limited to breach of its terms and
conditions; or
(c) upon filing of a notice of default.
These constitute events of default:
(a) If the Debtor fails to make the adequate protection
payments;
(b) If the Debtor fails to comply with any of the terms and
conditions of the Court's Order;
(c) If the Debtor uses cash collateral in a manner other than
as agreed in the Order; or
(d) Conversion of the case to a proceeding under Chapter 7 of
the Bankruptcy Code.
The Debtor was directed to pay all state, federal and ad valorem
taxes as they become due and will make all tax deposits and file
all state and federal returns on a timely basis.
A further hearing on the Debtor's cash collateral motion is
scheduled for March 25, 2021 at 10 p.m.
The First National Bank of Pennsylvania is represented by:
William Walt Pettit, Esq.
HUTCHENS LAW FIRM
6230 Fairview Road, Suite 315
Charlotte, NC 28210
Telephone: 704-362-9255
Email: walt.pettit@hutchenslawfirm.com
The Subchapter V Trustee is represented by:
Jennifer K. Bennington, Esq.
BEAMAN & BENNINGTON, PLLC
PO BOX 1907
Wilson, NC 27894
Telephone: 252-237-9020
Email: jbennington@beamanlaw.com
A full-text copy of the Tenth Interim Order, dated March 4, 2021,
is available for free at https://tinyurl.com/e2h7tdy9 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.
TRIPLE J PARKING: Case Summary & 8 Unsecured Creditors
------------------------------------------------------
Debtor: Triple J Parking, Inc.
d/b/a Park n' Jet
2200 W North Temple
Salt Lake City, UT 84116
Business Description: Park n' Jet is a family owned Utah based
business providing shuttle service to and
from the Salt Lake International Airport.
Chapter 11 Petition Date: March 5, 2021
Court: United States Bankruptcy Court
District of Utah
Case No.: 21-20800
Judge: Joel T. Marker
Debtor's Counsel: George B. Hofmann, Esq.
COHNE KINGHORN, P.C.
111 E. Broadway, 11th Floor
Salt Lake City, UT 84111
Tel: 801-363-4300
Fax: 801-363-4378
E-mail: ghofmann@ck.law
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Elizabeth Woods, president.
A copy of the Debtor's list of eight unsecured creditors is
available for free at:
https://www.pacermonitor.com/view/P3H3IRY/Triple_J_Parking_Inc__utbke-21-20800__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/P64E6NA/Triple_J_Parking_Inc__utbke-21-20800__0001.0.pdf?mcid=tGE4TAMA
TTK RE ENTERPRISE: Selling Egg Harbor Township Property for $272K
-----------------------------------------------------------------
TTK RE Enterprises, LLC, filed with the U.S. Bankruptcy Court for
the District of New Jersey a notice of its proposed private sale
and conveyance of the real estate located at 192 Steelmanville
Road, in Egg Harbor Township, New Jersey, to Marvin Juarez for the
sum of $272,900.
A hearing on the Motion is set for March 30, 2021, at 11:00 a.m.
If written opposition is not timely filed and served the Motion
will be deemed uncontested and the relief requested may be granted
without the need for a hearing.
The Debtor owns approximately 48 residential properties in southern
New Jersey. Among the rental units owned by Debtor is the
Property. The Debtor's business consists of acquiring and leasing
of residential real properties.
The Property is a four-bedroom and two and one-half bathroom,
single family home. Exhibit A is the copy of a Comparative Market
Analysis dated Feb. 12, 2021 setting the value of the Property at
$279,900.
As of the Petition Date, the Debtor was indebted to Fay Servicing,
LLC, as servicer for U. S. Bank Trust National Assn., in its
capacity as trustee of HOF I Grantor Trust 5 ("Loan Funder") in the
original amount of $4,405,943.70 (Proof of Claim #1-1). The Loan
Funder Claim was secured by a commercial mortgage against 28 of the
Debtor's real properties, including the Property as of the Petition
Date. The Loan Funder mortgage against the Property dated May 14,
2019 was recorded on June 4, 2019 in the Atlantic County Clerk’s
Office in Instrument #2019027956. The Loan Funder Claim is also
secured by the rents from the real properties against which Loan
Funder possesses a mortgage(s), including the Property.
According to the Title Report, the Property is also subject to tax
sale certificate No. 19-00570 in favor of FNA DZ, LLC f/b/o WSFS,
dated Dec. 17, 2019, recorded Jan. 29, 2020, in Instrument No.
2020005942 in the amount of $4,700 and Loan Funder UCC-1 Financing
Statement filed on June 3, 2019, as #2019027821.
The balance owed to Loan Funder and secured by the Loan Funder
Mortgage UCC-1 Financing Statement against the Property is far in
excess of the value of the Property.
The Property has been listed for sale with the Debtor's Court
approved realtor, Century 21 Alliance, 1333 New Road, Suite 1,
Northfield, NJ, and has been actively marketed by Century 21. As
the result of the efforts of Century 21, the Debtor has entered
into a Contract for Sale of the Property with the Purchaser for the
sum of $272,900 ($279,900 less $7,000 Seller's concession), subject
to the approval of the Court, which would entitle Century 21 to a
commission of 5% of the gross sale price, or $13,645.
The Debtor believes the $272,900 purchase price for the Property is
the highest and best offer which it will receive for the Property
and that it is in its best business judgment to proceed with the
sale of the Property to the Purchaser.
By the Motion, the Debtor asks the entry of an order approving the
sale of the Property to the Purchaser, free and clear of Liens,
which such Liens to attach to the proceeds of such sale pursuant to
the terms of the Contract for Sale, and for the net proceeds of the
sale of the Property, after normal costs attendant with closing and
any specific items as set forth in the Motion and proposed form of
Order, to be paid to Loan Funder on account of the Loan funder
Mortgage in exchange for Loan Funder's release of the Loan Funder
Mortgage against the Property.
t the time of closing on the sale of the Property, the normal costs
of closing, the Tax Sale Certificate, real estate commissions, and
the additional outstanding real estate taxes will be paid in full,
with all remaining net proceeds to be paid to Loan Funder on
account of the Loan Funder Mortgage and Loan Funder UCC-1 Financing
Statement in exchange for Loan Funder's release of the Loan Funder
Mortgage and Loan Funder UCC-1 against the Property.
Except for all transfer Taxes associated with the sale or as
otherwise provided for in the Agreement, all costs relating to the
sale and settlement of the Property, including all searches and
title search fees, all survey fees, all title company settlement
charges and title insurance costs, will be the obligation of the
Purchaser at the time of closing.
All property taxes, all public utility charges, rents and like
charges, if any, relating to the Property will be pro-rated as of
Closing. Settlement at Closing will be made on proration of
estimates of such taxes and charges with net balances payable by
either Party at the time of closing.
The Parties recognize that the Debtor will be conveying title to
the Property, as a bankruptcy trustee acting in its capacity as DIP
nd that there is a full exemption in the New Jersey Realty Transfer
Fee under N.J.S.A. 46:15-5 et seq and N.J.A.C. 18:12-2.2 for deeds
given by a trustee in bankruptcy.
The Debtor submits that at the time of closing the proceeds of the
sale of the Property should be paid as follows: (i) normal costs
attendant with closing on the sale of the Property (real estate,
taxes, utilities, et.); (ii) the Tax Sale Certificate and any
additional outstanding real estate taxes; (iii) 5% of the Purchase
Price ($13,645) to Century 21, to be split equally with any
participating/cooperating broker in connection with the sale of the
Property; and (iv) all remaining proceeds to Loan Funder on account
of the Loan Funder Secured Claims (Loan Funder Mortgage and Loan
Funder UCC-1) against the Property).
Finally, the Debtor asks that the stay of an order granting the
Motion under Bankruptcy Rule 6004(h) be waived for cause because
the Purchaser intends to close as soon as practical after an Order
Approving Sale is entered, and the Debtor is concerned that the
Purchaser will refuse to close if he cannot do so as soon as
possible after the entry of an Order Approving Sale is entered.
A copy of the Contract is available at https://tinyurl.com/29eujsk6
from PacerMonitor.com free of charge.
About TTK RE Enterprise
TTK RE Enterprise LLC is a privately held company in Somers Point,
New Jersey. The Company is the 100% owner of 48 real estate
properties in New Jersey having a total current value of
$9,265,000.
TTK RE Enterprise sought Chapter 11 protection (Bankr. D.N.J. Case
No. 19-30460) on Oct. 29, 2019 in Camden, New Jersey. In the
petition signed by Emily K. Vu, president, the Debtor disclosed
total assets of $9,269,950, and total liabilities of $6,432,457.
Judge Jerrold N. Poslusny Jr. oversees the case. FLASTER
GREENBERG
PC - CHERRY HILL is the Debtor's counsel.
TWILIO INC: S&P Assigns 'BB' Rating on New Senior Unsecured Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issuer credit rating to
U.S.-based provider of communications platform-as-a-service (CPaas)
Twilio Inc., reflecting the company's strong growth prospects and
market-leading position in the customer engagement platform space.
At the same time, S&P is assigning its 'BB' issue-level and '3'
recovery ratings to the $1 billion senior unsecured notes.
S&P said, "The stable outlook reflects our expectation that despite
persistent low margins in the near term, Twilio will sustain
substantial revenue growth and maintain modest free operating cash
flow (FOCF) generation, with further support from a sizable cash
balance.
Growing CPaaS space and market-leading position will support
revenue growth in the 30% area in the next few years. The CPaaS
market has grown rapidly in recent years as firms increasingly rely
on digital channels to drive customer engagement channels. The
communications platforms space is fragmented with legacy solution
providers focused on a single channel, software companies that
provide prepackaged contact center platforms, and service providers
with their own CPaaS offerings. However, Twilio is the largest
pure-play provider of communications application programming
interfaces (APIs), with a broad portfolio offering channel APIs
across voice, SMS, email, video, as well as solutions including
programmable contact center, two-factor authentication tools, and
email marketing products. Channel APIs allow developers to easily
embed different forms of communications into applications with
various use cases including customer service enhancement, providing
notifications, and marketing automation. The company has
experienced minimal impact in the COVID-19 pandemic, as slowdown in
heavily affected verticals (such as travel and hospitality) was
offset by customers across industries increasingly prioritizing
investment in digital customer engagement tools.
Profitability will remain low with exposure to regulatory costs and
high investments to fuel continued growth. Twilio relies on third
parties, primarily wireless phone network operators, to carry out
message delivery to consumers around the world. This dependency
exposes the firm to institutional or regulatory fees and continues
to constrain gross margins. While Twilio's product mix has become
less reliant on cellular carriers through product development and
acquisitions (such as the acquisition of Sendgrid in 2019 that
resulted in its email API offering), revenues from the messaging
segment represented nearly half of total revenues as of fiscal year
2020 (ended December) and has seen growth reaccelerating. S&P said,
"We expect continued strong growth in the messaging segment to
limit gross margin expansion in the near term. The company's
predominantly usage-based model, per-message pricing model has
allowed it to pass much of the incremental per-message costs to its
customers, but we see a risk that this may change over time if
competition increases. We also note that Twilio has shared volume
discounts with customers to date, suggesting a limit to the firm's
pricing power." Furthermore, Twilio's growing international
presence exposes it to higher fees as foreign countries may have
more stringent regulatory policies than those of the U.S.
Twilio's developer-centric and usage-based business model allows
for an efficient sales and marketing approach as developers are
onboarded through a low-cost, self-service pricing mechanism.
However, we expect continued investment in headcount, research and
development, and systems and processes in order to support high
growth over the next few years. This, coupled with the
aforementioned gross margin headwinds, will suppress S&P Global
Ratings' adjusted EBITDA margins to the low- to
mid-single-digit-percentage range in the coming years.
Strong liquidity with sizable cash balance at transaction close
will support acquisitive strategy to bolster competitive advantage.
Following the proposed debt issuance and the $1.8 billion public
offering of Class A common stock completed in February 2021, Twilio
will have about $5.8 billion of cash on hand. The company has been
acquisitive in the past, with the most recent being the all-stock
acquisition of customer data platform Segment for $3.2 billion. S&P
said, "We expect the acquisition of Segment, completed in November
2020, to enhance Twilio's API offerings through providing
high-value customer insight. The company has also announced up to
$750 million investment in Syniverse Holdings Inc., expected to
close in 2021, which is aimed to strengthen Twilio's supply chain
relationship with network service providers. As the CPaaS space
becomes more complex with more entrants, we expect Twilio to pursue
opportunities for growth as well as ways to secure its market
position. We expect the company to preserve ample cash on hand to
support future transactions."
S&P said, "The stable outlook on Twilio reflects our expectation
that the company will grow revenues in the 30% area through
successful customer acquisition and expansion of existing customer
base. We expect the company to maintain continued growth and
forecast modest FOCF generation in the $100 million-$200 million
range over the next 12-24 months. We also expect it to maintain
strong liquidity with substantial cash on hand to fund potential
acquisitions."
S&P could lower the rating if:
-- Twilio fails to maintain growth or if margins deteriorate such
that low profitability leads to sustained negative FOCF generation;
or
-- Large debt-funded acquisitions or shareholder returns result in
S&P Global Ratings' FOCF to debt declining below mid-single-digit
percentage.
While unlikely over the next 12 months, S&P could raise the rating
on Twilio if:
-- The company continues to expand its market position and
maintains growth trajectory;
-- Generates consistent positive FOCF; and
-- Achieves margin expansion through shift in product mix and
operating leverage.
TWIN PINES: Seeks Cash Collateral Access Thru June 30
-----------------------------------------------------
Twin Pines, LLC asks the U.S. Bankruptcy Court for the District of
New Mexico for authority to use cash collateral on an interim basis
from April 1, 2021 to June 30, 2021 in accordance with its proposed
budget.
The Debtor requires the use of cash collateral to continue the
operation of its business. Use of cash collateral is necessary
for, among other things, equipment, payroll, payroll taxes, gross
receipts taxes, insurance, materials and supplies, other expenses
incurred in the ordinary course of the Debtor's business, and
professional fees and expenses incurred in connection with the
case.
The Debtor collects rents from tenants residing in its multi-unit
residential rental property under long-term leases and payments
from customers who bring their vehicles to its car wash for
cleaning. These rents and payments may constitute cash
collateral.
Twin Pines entered into a loan agreement with First National Bank
pursuant to which Twin Pines may have granted First National Bank a
security interest in its "cash collateral."
The Debtor proposes these as adequate protection for First National
Bank:
a. The Debtor will make monthly adequate protection payments
to First National Bank of $2500 per month on the first business day
of April, May, and June of 2021.
b. First National Bank will continue to have a security
interest upon, and the Debtor's obligations to First National Bank
and will be secured by, a security interest in all assets in which
Bank had a lien or security interest as of the Petition Date, in
the same order of priority that existed at that time, which will be
subject to the same defenses and avoidance powers (if any) as
existed on the Petition Date. In addition, First National Bank
will be granted a lien against property of the same type as the
Pre-Petition Collateral acquired by the Debtor post-petition, to
the extent of any reduction or diminution in the value of First
National Bank's collateral.
c. The Replacement Lien will be deemed valid and perfected as
of the Petition Date, without further filing or recording under any
applicable law, to the same extent as the liens in the Pre-Petition
Collateral were valid and perfected at that time and will have the
same priority as their liens and security interests in the
Pre-Petition Collateral of the same type. The Replacement Lien will
be retroactive to the Petition Date.
d. Furthermore, the Debtor proposes as an additional adequate
protection requirement to
(1) maintain accurate records of operating revenues and
expenses and provide such information to First National Bank upon
reasonable written request;
(2) timely pay all post-petition payroll taxes,
unemployment taxes, and New Mexico CRS taxes incurred
post-petition; and
(3) maintain insurance as required by the United States
Trustee and as otherwise required by First National Bank.
A copy of the motion is available at https://bit.ly/38eroEi from
PacerMonitor.com.
About Twin Pines LLC
Twin Pines LLC, a New Mexico limited liability company, provides
automotive repair and maintenance services. Twin Pines owns condos
valued at $523,618, and a commercial property valued at $741,908,
in Ruidoso, New Mexico.
Twin Pines LLC sought Chapter 11 protection (Bankr. D.N.M. Case No.
19-10295) on Feb. 12, 2019, in Albuquerque, N.M. At the time of
filing, the Debtor disclosed $1,361,978 in assets and $1,338,629 in
liabilities.
Judge Robert H. Jacobvitz oversees the case.
William F. Davis & Assoc., P.C. is the Debtor's legal counsel.
UNITI GROUP: Swings to $718.8 Million Net Loss in 2020
------------------------------------------------------
Uniti Group Inc. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $718.81
million on $1.06 billion of total revenues for the year ended Dec.
31, 2020, compared to net income of $10.91 million on $1.05 billion
of total revenues for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $4.73 billion in total assets,
$6.80 billion in total liabilities, and a total shareholders'
deficit of $2.07 billion.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1620280/000156459021011266/unit-10k_20201231.htm
About Uniti
Headquartered in Little Rock, Arkansas, Uniti --
http://www.uniti.com-- is an internally managed real estate
investment trust. It is engaged in the acquisition and
construction of mission critical communications infrastructure, and
is a provider of wireless infrastructure solutions for the
communications industry. As of Dec. 31, 2020, Uniti owns over
123,000 fiber route miles, approximately 6.9 million fiber strand
miles, and other communications real estate throughout the United
States.
* * *
In March 2020, S&P Global Ratings placed all ratings on U.S.
telecom REIT Uniti Group Inc., including the 'CCC-' issuer credit
rating, on CreditWatch with positive implications. The CreditWatch
placement follows the company's announcement it reached an
agreement in principle with its largest tenant Windstream Holdings
Inc. to resolve all legal claims it asserted against Uniti in the
context of Windstream's bankruptcy proceedings.
US FARATHANE: Moody's Assigns B2 Rating to New First Lien Loan
--------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to U.S. Farathane,
LLC's proposed first lien senior secured term loan due 2024, and
upgraded certain ratings including the company's corporate family
rating to B3 from Caa3 and probability of default rating to B3-PD
from Caa3-PD. The ratings outlook has been changed to stable from
negative.
USF's plan to address debt maturities with an announced refinancing
is the basis for the CFR upgrade. USF intends to use proceeds from
the proposed $308 million first lien term loan along with a new
$175 million second lien term loan (unrated) to be used to repay
the senior secured term loan due December 2021. Upon close, Moody's
will withdraw the Caa3 rating on U.S. Farathane's existing senior
secured term loan facility.
The following rating actions were taken:
Upgrades:
Issuer: U.S. Farathane, LLC
Corporate Family Rating, Upgraded to B3 from Caa3
Probability of Default Rating, Upgraded to B3-PD from Caa3-PD
Assignments:
Issuer: U.S. Farathane, LLC
Senior Secured Bank Credit Facility, Assigned B2 (LGD3)
Outlook Actions:
Issuer: U.S. Farathane, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
US Farathane's B3 CFR reflects the company's moderately high
financial leverage given its exposure to automotive production,
modest scale with significant customer concentration and adequate
liquidity. US Farathane benefits from its strong capabilities in
producing interior and exterior plastic components for light
vehicles at good margins relative to peers and its presence on many
top selling truck and SUV platforms in the US. The company's high
mix towards trucks and SUVs has supported its ability to outperform
total vehicle sales for the broader US market, and this trend is
expected to continue in 2021 despite first-half production
challenges relating to semiconductor chip shortages at automotive
manufacturers.
US Farathane's EBITA margins are expected to improve in 2021 to
above 10% as production volumes increase. However, the company's
earnings are susceptible to volatile movements in raw material
pricing, specifically resin, as well as increasing labor costs.
Moody's anticipates US Farathane to improve its financial leverage,
from mid-6x debt/EBITDA at the end of 2020 to below 5x by the end
of 2021 should the company effectively manage its cost structure.
US Farathane's liquidity profile is adequate, however limited by
Moody's expectation for very modest cash and low availability under
its $110 million asset-based revolving credit facility due 2023
because of collateral used for the A/R factoring. Over the course
of 2020, US Farathane increased its utilization of A/R factoring
relationships to support its liquidity, and Moody's expects this
funding source to continue. The proposed term loan refinancing
includes a resetting of the company's gross leverage covenant,
which Moody's expects the company to maintain adequate cushion.
The stable outlook reflects Moody's expectation for US Farathane to
restore its margin profile to at least 10% EBITA margin and
generate sufficient cash flow to support capital investments and
required debt service.
US Farathane's role in the automotive industry exposes the company
to material environmental risks arising from increasing regulations
on carbon emissions. The company's product portfolio is relatively
agnostic to the drivetrain shift from internal combustion engines
to more electrified powertrains, and Moody's expects US Farathane
to focus on adequately securing product placement on electrified
platforms as they are developed.
The proposed first lien B2 rating, one notch above the company's B3
CFR, reflects the repayment priority above the proposed second lien
term loan and support provided by unsecured liabilities in the
company's debt structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if US Farathane is able to improve
its liquidity with free cash flow to debt above 7% and a
combination of meaningful cash on the balance sheet and revolver
capacity to ensure sufficient liquidity to manage in turbulent auto
markets. An upgrade could occur if Moody's expects the company to
maintain its EBITA margin above 12% and sustain debt/EBITDA below
5x.
The ratings could be downgraded if US Farathane's liquidity
deteriorates, including weak free cash flow generation and limited
revolver availability, or the company is unable to maintain an
EBITA margin in excess of 10%. Debt-financed acquisitions or
dividend payments to equity owners contributing to debt/EBITDA
above 6x and operating weakness as a result of customer or platform
losses, production cuts or pricing pressures could also put
downward pressure on the rating.
U.S. Farathane, LLC, headquartered in Auburn Hills, Michigan, is a
manufacturer and supplier of functional black plastic, and interior
and exterior plastic components to North American automotive
Original Equipment Manufacturers (OEMs). The company operates 18
manufacturing facilities in the United States, Mexico and China.
USF's customers include General Motors, Ford, Chrysler and, to a
much lesser extent, several other large global OEMs and Tier
suppliers. Net sales for the twelve months ended December 2020 was
approximately $709 million.
The principal methodology used in these ratings was Automotive
Supplier Methodology published in January 2020.
US GLOVE: Seeks to Hire Vaughn CPA as Accountant
------------------------------------------------
U.S. Glove, Inc. seeks approval from the U.S. Bankruptcy Court for
the District of New Mexico to employ Vaughn CPA as its accountant.
The firm will assist the Debtor in filing its tax returns and
providing other accounting services necessary to finalize the
Debtor's taxes.
The firm will be paid at these rates:
James Vaughn (co-managing member) $250 per hour
Shirley Vaughn (co-managing member) $250 per hour
Ron Frink (staff associate) $125 per hour
Daniil Ribalka (staff associate) $120 per hour
Clerical Support Staff $60 per hour
As disclosed in court filings, Vaughn is a "disinterested person"
within the meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
James Vaughn, CPA
Vaughn CPA
6605 Uptown Blvd NE Suite 370
Albuquerque, NM 87110
Phone: +1 505-828-0900
About U.S. Glove Inc.
U.S. Glove, Inc. is a New Mexico Corporation with its headquarters
located at 6801 Washington St. NE, Albuquerque, N.M. It
manufactures hand and wrist support products for gymnastics and
cheerleading, and a variety of other ancillary products.
U.S. Glove sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.N.M. Case No. 21-10172) on Feb. 14, 2021.
At the time of the filing, the Debtor had estimated assets of less
than $500,000 and liabilities of between $1 million and $10
million.
Judge David T. Thuma oversees the case.
The Debtor tapped Michael Best & Friedrich LLP as its bankruptcy
counsel and Walker & Associates, PC as its local counsel.
USF HOLDINGS: S&P Upgrades ICR to 'B' on Proposed Refinancing
-------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on USF Holdings
LLC to 'B' from 'CCC'. At the same time, S&P assigned its 'B'
issue-level and '3' recovery ratings to the proposed first-lien
term loan B; S&P will not rate the proposed second-lien term loan.
The rating on the existing term loan will be withdrawn once it's
paid off.
The negative outlook reflects declining discretionary cash flows
(DCF) over the next few years, despite our expectation for
continued deleveraging.
S&P said, "We are raising our rating on USF based on the company's
proposed refinancing, which extends upcoming debt maturities and
raises covenant headroom. We anticipate the company will use
proceeds from the proposed refinancing to repay its existing term
loan B in a leverage-neutral transaction, and has established a
second receivables factoring facility for additional liquidity. The
transaction extends the company's debt maturities by about three
years and raises the maximum leverage covenant terms, providing
ample headroom over the next 12 months.
"The negative outlook reflects declining DCF over the next few
years, despite our expectation for continued deleveraging.
"We could lower our ratings on USF if the DCF-to-debt ratio
declines below 2% on a sustained basis. This could occur if sales
volumes remain low from a resurgence of the coronavirus pandemic or
if labor costs pressure EBITDA margins.
"We could revise our outlook to stable if leverage remains below 5x
and discretionary cash flow to debt approaches 5% on a sustainable
basis. This could occur through the continued recovery in sales
volumes and improvement of EBITDA margins."
VALARIS PLC: Exclusive Plan Filing Period Extended to April 16
--------------------------------------------------------------
Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern
District of Texas, Houston Division, extended Valaris PLC and its
affiliated Debtors' exclusive periods to file a chapter 11 plan
through April 16, 2021.
The Debtors were also given until June 15, 2021 to solicit
acceptances to their plan.
The Court found that the extensions were in the best interests of
the Debtors' estates, their creditors, and other parties in
interest.
About Valaris PLC
Valaris plc (NYSE: VAL) -- http://www.valaris.com/-- provides
offshore drilling services. It is an English limited company with
its corporate headquarters located at 110 Cannon St., London.
On Aug. 19, 2020, Valaris and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 20-34114). The Debtors
had total assets of $13,038,900,000 and total liabilities of
$7,853,500,000 as of June 30, 2020.
The Debtors tapped Kirkland & Ellis LLP and Slaughter and May as
their bankruptcy counsel, Lazard as investment banker, and Alvarez
& Marsal North America LLC as their restructuring advisor. Stretto
is the claims agent, maintaining the page
http://cases.stretto.com/Valaris
Kramer Levin Naftalis & Frankel LLP and Akin Gump Strauss Hauer &
Feld LLP serve as legal advisors to the consenting noteholders
while Houlihan Lokey Inc. serves as their financial advisor.
VALLEY FARM: Court OKs Deal on Cash Collateral Access
-----------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Northern Division, has authorized Valley Farm Supply, Inc. to use
cash collateral on an interim basis.
Before the continued hearing held on March 3, 2021, a third
stipulation for interim use of cash collateral among the Debtor,
Community Bank of Santa Maria, and Simplot AB Retail, Inc. was
filed.
The Third Stipulation was approved and will be be effective
immediately upon expiration of the second stipulation on April 11,
2021 at 11:59 pm.
The Debtor was directed to submit a supplemental budget to secured
creditors no later than May 26, 2021 and any objection to the
continued use of cash collateral must be filed no later than June
2, 2021.
A further continued hearing on the matter is scheduled for June 9,
2021 at 11:30 a.m.
A copy of the order is available at https://bit.ly/3c208tX from
PacerMonitor.com.
About Valley Farm Supply, Inc.
Valley Farm Supply, Inc., a wholesaler of farm product raw
materials based in Nipomo, California, filed its voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D.
Cal. Case No. 20-11072) on September 2, 2020. The petition was
signed by Peter Compton, president. At the time of filing, the
Debtor disclosed total assets of $3,711,542 and total liabilities
of $8,460,250.
Judge Deborah J. Saltzman oversees the case.
The Debtor tapped Beall & Burkhardt, APC as counsel; Terence J.
Long as restructuring consultant; and McDermott & Apkarian, LLP as
accountant.
Community Bank of Santa Maria, as secured creditor, is represented
by Sandra K. McBeth, Esq.
Simplot AB Retail, Inc., as secured creditor, is represented by
Hagop T. Bedoyan, Esq.
VERTIV GROUP: S&P Assigns 'B+' Rating on New Sr. Secured Term Loan
------------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level and '3' recovery
ratings to Vertiv Group Corp.'s ('B+/Stable') proposed $2.184
billion senior secured term loan due 2027.
S&P said, "The '3' recovery rating indicates our expectation for
meaningful recovery (50%-70%; rounded estimate: 50%) in the event
of default. The company will use the net proceeds repay the amount
outstanding on its existing term loan and to reduce the applicable
margin on the debt at least 25 basis points, which we estimate
would save it roughly $5.5 million in annual interest expense.
"We published a bulletin on Feb. 25, 2021, pertaining to this
transaction under the assumption that the new tranche of the loan
was fungible with the existing loan. That is not the case. Although
it is being established via an amendment to the facility, the new
tranche is not fungible with the previous loan. It will also carry
a new CUSIP. Therefore, we are assigning a new rating, leaving the
existing ratings unchanged. We will discontinue our rating on the
prior loan tranche upon execution of the pending transaction."
Issue Ratings - Recovery Analysis
Key analytical factors
-- Vertiv's proposed $2.184 billion senior secured term loan due
2027 is rated 'B+' with a '3' recovery rating, indicating S&P's
expectation for meaningful (50%-70%; rounded estimate: 50%)
recovery in the event of a payment default.
-- The $455 million asset-based lending (ABL) revolving credit
facility due 2025 is unrated.
--S&P's simulated default scenario contemplates a default
occurring in 2025 due to a deep global recession that sharply
reduces the company's sales volume. It assumes pricing pressures
exacerbate the distress and cause Vertiv to face cash shortfalls
that lead to a default.
-- S&P assesses the company's recovery prospects based on a gross
reorganization value of approximately $1.46 billion, which reflects
its $266 million emergence EBITDA estimate and 5.5x multiple.
Simulated default assumptions
-- Year of default: 2025
-- Emergence EBITDA: $266 million
-- EBITDA multiple: 5.5x
-- Gross recovery value: $1.46 billion
Simplified waterfall
-- Net recovery value for waterfall after administrative expenses
(5%): $1.39 billion
-- Priority claims (ABL): $258 million
-- Value available from collateral: $863 million
-- Value available from deficiency: $267 million
-- Total value available to secured term loan claims: $1.13
billion
-- Estimated senior secured claims*: $2.15 billion
--Recovery expectations: 50%-70% (rounded estimate: 50%)
*The estimated senior secured term loan claim reflects payment of
scheduled amortization of 1% per year through 2027. All estimated
debt claims include about six months of accrued but unpaid interest
outstanding at default.
VISION MACHINE: Seeks to Hire Darby Law as Legal Counsel
--------------------------------------------------------
Vision Machine Products, Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Nevada to employ Darby Law
Practice, Ltd. as its legal counsel.
The firm will render these services:
a. advise the Debtor of its rights, powers and duties in the
continued operation of its business and management of its
properties;
b. take all necessary actions to protect and preserve the
Debtor's estate, including the prosecution of actions on the
Debtor's behalf, the defense of any actions commenced against the
Debtor, the negotiation of disputes in which the Debtor is
involved, and the preparation of objections to claims filed against
the estate;
c. prepare legal papers;
d. attend meetings and negotiations with the Subchapter V
trustee, representatives of creditors, equity holders, prospective
investors or acquirers and other parties in interest;
e. appear before the bankruptcy court, any appellate courts and
the Office of the United States Trustee;
f. pursue confirmation of a plan of reorganization and approval
of the corresponding solicitation procedures and disclosure
statement; and
g. perform all other necessary legal services in connection with
the Debtor's Chapter 11 Subchapter V case.
Darby Law Practice will be paid at hourly rates ranging from $400
to $450 and will be reimbursed for out-of-pocket expenses
incurred.
The retainer fee is $5,000.
Kevin Darby, Esq., a partner at Darby Law Practice, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Kevin A. Darby, Esq.
Darby Law Practice, Ltd.
4777 Caughlin Parkway
Reno, NV 89519
Tel: (775) 322-1237
Fax: (775) 996-7290
About Vision Machine Products
Vision Machine Products, Inc. filed a Chapter 11 bankruptcy
petition (Bankr. S.D. Texas Case No. 21-50124) on Feb. 11, 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 Bruce T. Beesley oversees the case.
The Debtor hired Darby Law Practice, Ltd. as its legal counsel.
VS HOLDING: S&P Upgrades ICR to 'B' on Strong 2020 Performance
--------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
data protection solutions provider VS Holding I Inc.'s (dba Veeam
Software Corp.) to 'B' from 'B-'. At the same time, S&P raised its
rating on Veeam's first-lien debt to 'B' from 'B-'. The recovery
rating remains '3'.
The stable outlook reflects S&P's expectation for
double-digit-percent revenue growth in fiscal 2021 and 2022, which
will allow Veeam to sustain leverage below 8x, and maintain free
operating cash flow (FOCF) to debt above 10%.
S&P said, "Veeam has demonstrated its ability to maintain robust
growth while generating strong cash flow, key factors underpinning
our ratings upgrade. S&P Global Ratings' adjusted leverage declined
to the high-7x area as of year-end 2020, which is better than our
previous forecast and below the 8x upside threshold we established
for the company. In fiscal 2021, we anticipate Veeam will continue
to grow its top line in the double-digit-percentage area, as we
expect additional market share gains and the implementation of a
modest price increase. We expect this revenue growth to further
benefit profitability and credit metrics, with S&P Global Ratings'
adjusted EBITDA margins increasing to the low-30% area and adjusted
leverage declining to approximately 6.5x in fiscal 2021. In
addition, we forecast Veeam to generate FOCF of at least $230
million (with FOCF to debt of greater than 10%), while maintaining
adequate liquidity with cash balances of more than $600 million.
Our FOCF expectations over the next two years continue to increase
thanks to stronger-than-expected revenue growth and further margin
expansion (partially lifted by an expected price increase).
"We continue to believe that Veeams' products remain compellingly
positioned compared to competitors, although uptake in larger
enterprises remains limited. Veeam has consistently outperformed
the broader data protection and recovery software market over the
last five years, with the company growing at an impressive
five-year compound annual growth rate (CAGR) of approximately 21%.
The robust growth rates for the company are reflective of the
increasing market share gains against the larger and
higher-capitalized players such as Dell, IBM, and Veritas. We
believe these market share gains are partially driven by its
greater ease of implementation, as Veeam's products and services
support hybrid cloud deployments of any kind and are more effective
in managing complex workloads. Nevertheless, we think that Veeam
may begin to face headwinds to its further growth trajectory unless
it can successfully dislodge legacy vendors from their position
protecting the most sensitive workloads at the largest enterprises,
particularly in heavily regulated sectors."
$900 million of payment-in-kind (PIK) debt growing at 11% annually
and financials sponsor ownership remain constraints to a higher
rating. Veeam's capital structure comprises 40% of PIK debt, which
is priced at 11% per annum and will step up to 13% per annum by the
end of fiscal 2024. While the large proportion of PIK debt in the
capital structure boosts free cash flow through lower cash interest
expense, it adds nearly $100 million of incremental debt to the
balance sheet each year. This deferral of interest expense limits
the potential of substantial deleveraging (absent any significant
prepayments) as the growing debt balance will partially offset any
leverage reductions achieved through EBITDA growth. Additionally,
financial sponsor Insight Partners continues to hold a majority
ownership in the company (approximately 95%) and controls many
aspects of Veeam's financial decision-making, which constrains
potential ratings upside for Veeam.
S&P said, "The stable outlook reflects our expectation that
financial sponsor ownership and a balance of growing PIK debt will
lead to sustained high leverage, despite Veeam's meaningful cash
flow generation and top-line growth. We anticipate Veeam will
maintain its strong recurring revenue growth profile, which
represents approximately 80% of revenue, and that it will continue
to carry significant cash on its balance sheet.
"We could lower the rating if competitive threats increase, the
company fails to launch compelling products, or
weaker-than-expected margin performance leads to leverage sustained
above 8x or if there is a deterioration of cash generation to
break-even territory. We could also downgrade Veeam if its sources
of cash are not sufficient to cover its uses and we view its
liquidity as less than adequate.
"Given Veeam's existing leverage of over 6x, its financial
sponsor-ownership and outstanding PIK, an upgrade is unlikely over
the next 12 months. Over the longer term, we would consider an
upgrade if Veeam is able to sustain leverage below 5x, and/or
generates FOCF/debt of above 10%. In addition to the aforementioned
financial metrics, we would be unlikely to upgrade Veeam without a
material share of public ownership, as we believe that its current
ownership structure will preclude sustained deleveraging."
W&T OFFSHORE: Posts $37.8 Million Net Income in 2020
----------------------------------------------------
W&T Offshore, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing net income of
$37.79 million on $346.63 million of total revenues for the year
ended Dec. 31, 2020, compared to net income of $74.08 million on
$534.89 million of total revenues for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $940.58 million in total
assets, $115 million in total current liabilities, $625.28 million
in long-term debt, $375.51 million in assets retirement obligations
(less current portion), $32.94 million in other liabilities,
$128,000 in deferred income taxes, and a total stockholders'
deficit of $208.28 million.
Tracy W. Krohn, W&T's chairman and chief executive officer, stated,
"I am quite pleased with our response to the extraordinary
challenges that 2020 presented. We managed through a global
pandemic, commodity price declines and a record number of named
storms in the Gulf of Mexico. We have continued to take steps to
protect our employees and contractors during the pandemic and,
to-date, our people and our operations have not been materially
impacted by COVID-19. In the fourth quarter, our operations team
did an excellent job of returning our properties to production
ahead of schedule which helped us exceed our guidance. In
addition, we were able to keep our operating and overhead costs low
despite the additional operational work required to restore
production."
"Despite the difficulties we faced in 2020, we continued our focus
on delivering free cash flow. By adjusting quickly to the changing
environment early in 2020 and reducing our planned capital
expenditures, we were able to generate $76.0 million in Free Cash
Flow in 2020 compared with $74.0 million in 2019. We utilized a
portion of our 2020 Free Cash Flow to retire $72.5 million of our
senior notes for $23.9 million, with the added benefit of saving
over $7.1 million in annualized interest and preserving long-term
capital. Additionally, we recently completed the consolidation of
our two natural gas treatment facilities that serve the Mobile Bay
area into a single facility with more than enough capacity for our
current operations as well as production from future natural gas
drilling projects in the area. The consolidation of these
facilities is expected to result in approximately $5 million per
year in savings, beginning in 2021, as well as lower our Scope 1
emissions."
"It is my pleasure to announce that W&T Offshore's inaugural
Environment, Social and Governance ("ESG") report will be coming
out shortly with our annual report and include key metrics for the
past three years. We founded W&T nearly 40 years ago with the same
core values we have today that have guided our success and provided
the foundation for W&T to grow into a trusted operator. We believe
that every employee has a responsibility to ensure that we operate
with the highest regards toward ESG and we have empowered our
management to allocate resources and tools necessary to create a
working environment focused on accomplishing our ESG objectives."
"Entering 2021, while market and pricing conditions are improving,
our strategy remains unchanged. We have assembled a premier
portfolio of conventional, low-declining producing properties that
generate a solid foundation of cash flow with significant upside.
While we have a substantial inventory of drilling opportunities
with potentially high rates of return, we are not devoting all of
our free cash flow to drilling, rather we are maximizing financial
flexibility. The current price environment should allow us to
generate meaningful free cash flow which we can use to reduce debt
or potentially fund additional opportunities. Accordingly, our
capital spending in 2021 is expected to be in the range of $30 to
$60 million. The timing of our capital spending will be weighted
to late 2021, which should benefit production in 2022. As a
result, our 2021 production guidance of 38,000 to 42,000 Boe/d is
modestly lower than our full year 2020 average, but higher than the
fourth quarter of 2020. The lower decline profile of our
conventional asset base allows for reductions in capital
expenditures without significantly impacting near-term production
levels. The energy industry is cyclical and we have faced
adversity many times in the past, but our success over nearly 40
years has been because of our unwavering strategic focus that has
positioned W&T to create value," concluded Mr. Krohn.
For the fourth quarter of 2020, W&T reported a net loss of $8.9
million, or $0.06 per share. Excluding primarily an $11.5 million
unrealized commodity derivative loss, a $6.9 million non-cash tax
benefit, and a $2.7 million credit related to a settlement with the
U.S. Bureau of Safety and Environmental Enforcement ("BSEE"), the
Company's Adjusted Net Loss was $6.7 million, or $0.05 per share.
In the fourth quarter of 2019, W&T reported net income of $9.6
million, or $0.07 per share, and Adjusted Net Income of $24.4
million or $0.17 per share. In the third quarter of 2020, W&T
reported a net loss of $13.3 million, or $0.09 per share. For that
same period, Adjusted Net Loss was $19.9 million or $0.14 per
share.
Adjusted EBITDA totaled $35.3 million for the fourth quarter 2020,
which represents an increase of 81% compared to $19.5 million in
the third quarter of 2020 driven by increased pricing and
production, and a decrease of 55% compared to $79.0 million in the
fourth quarter of 2019 driven by lower realized pricing and lower
production.
Free Cash Flow for the fourth quarter of 2020 totaled $14.2 million
compared with $26.8 million in the same period in 2019 and $5.9
million in the third quarter of 2020.
Total liquidity on Dec. 31, 2020 was $174.3 million, consisting of
cash and cash equivalents of $43.7 million and $130.6 million of
availability under W&T's revolving bank credit facility. At
Dec. 31, 2020, the Company had $80.0 million in borrowings on its
$215 million revolving credit facility and $4.4 million of letters
of credit outstanding. Total long-term debt, including $80.0
million in revolving credit facility borrowings, was $625.3
million, net of unamortized debt issuance costs.
In early 2020, W&T purchased in the open market $72.5 million of
its Senior Second Lien Notes for $23.9 million, reducing the
liability associated with the notes to $552.5 million, which
resulted in annualized interest savings of $7.1 million.
In January 2021, W&T's bank group completed its regularly scheduled
semi-annual borrowing base redetermination and the borrowing base
was set at $190 million. As of March 3, 2021, the borrowings
against the facility in the ordinary course of business have been
reduced by $32 million to $48 million. The next regularly
scheduled redetermination is in the spring of 2021. W&T is
currently in compliance with all applicable covenants of the Credit
Agreement and the Senior Second Lien Notes indenture.
In March 2020, due to the uncertain commodity outlook in light of
the COVID-19 pandemic, W&T suspended drilling and completion
activities and significantly reduced its 2020 capital expenditure
budget to $15 million to $25 million from its prior level of $50
million to $100 million. Per the Statement of Cash Flows, capital
expenditures in the fourth quarter of 2020 (excluding acquisitions)
were $3.0 million. Capital expenditures for full year 2020 totaled
$17.6 million.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1288403/000143774921005032/wti20201231_10k.htm
About W&T Offshore
W&T Offshore, Inc. -- http://www.wtoffshore.com-- is an
independent oil and natural gas producer with operations offshore
in the Gulf of Mexico and has grown through acquisitions,
exploration and development. The Company currently has working
interests in 43 producing fields in federal and state waters and
has under lease approximately 737,000 gross acres, including
approximately 527,000 gross acres on the Gulf of Mexico Shelf and
approximately 210,000 gross acres in the Gulf of Mexico deepwater.
A majority of the Company's daily production is derived from wells
it operates.
* * *
As reported by the TCR on July 23, 2020, S&P Global Ratings raised
the issuer credit rating on U.S.-based exploration and production
(E&P) company W&T Offshore Inc. to 'CCC+' from 'SD' (selective
default). "We expect W&T Offshore's financial measures to improve,
but financial measures will remain elevated and susceptible to a
fall in crude oil prices," S&P said.
In April 2020, Moody's Investors Service downgraded W&T Offshore,
Inc.'s Corporate Family Rating to Caa2 from B3. "The downgrade of
W&T's ratings reflects the negative impact from the weak oil and
gas price environment on credit quality, increased refinancing
risks as debt maturities approach and a high cost of capital which
elevates risks of restructuring and default," Jonathan Teitel,
Moody's Analyst, said.
W. KENT GANSKE: Purchase Price of Monona Property Reduced to $275K
------------------------------------------------------------------
W. Kent Ganske and Julie L. Ganske filed with the U.S. Bankruptcy
Court for the Eastern District of Wisconsin a notice of their
motion to amend their motion to sell the real property located at
5212 McKenna Road, in Monona, Wisconsin, to Nathan C. Rasmussen for
$275,000.
The Motion to Amend asks authorization to amend and reduce the
final purchase price of the Property from $290,000, as originally
proposed in the Debtors' Sale Motion, to $275,000 based on an
inspection report citing costly repairs. The Motion to Amend
additionally asks authorization to amend the Sale Motion to include
the provision that the Debtors will provide a Basic UHP Home
Warranty for the Buyer at closing at a cost of $525. But for this
reduction of the final purchase price of the Property and
additional purchase provision, all other provisions described in
the Sale Motion are unaffected by the Motion to Amend.
The Debtors have filed contemporaneously with the Motion to Amend a
Motion to Shorten Notice requesting that the Court shortens notice
of the Motion to Amend, requiring any objection to the Motion to
Amend to be received no later than March 5, 2021. The Objection
Deadline was March 5, 2021.
W. Kent Ganske and Julie L. Ganske sought Chapter 11 protection
(Bankr. E.D. Wisc. Case No. 20-21042) on Feb. 11, 2020.
W. KENT GANSKE: Rasmussen Buying Monona Property for $275K
----------------------------------------------------------
W. Kent Ganske and Julie L. Ganske ask the U.S. Bankruptcy Court
for the Eastern District of Wisconsin to authorize the sale of the
real property located at 5212 McKenna Road, in Monona, Wisconsin,
to Nathan C. Rasmussen for $275,000.
On Oct. 1, 2020, the Debtors filed Notice and Application to Employ
Stark Company Realtors [Monona Property], which the Court granted
on Oct. 28, 2020. The Application was supported by the Declaration
of Unke. Attached as Exhibit A to the Unke Declaration was a WB-1
Residential Listing Contract setting forth a list price for the
Property of $315,900 and a 6% commission to Stark Company Realtors,
half of which to be shared with cooperating firms, if any.
The Application and Unke Declaration additionally provide that 1%
of the gross selling price, taken from the Applicant's commission
of 6% of the gross selling price, will be paid to W. Kent Ganske,
as a licensed real estate agent, who would provide services and
assist with the marketing and selling of the Property. Any
commission earned by W. Kent Ganske will become income to the
estate.
The Debtors have sole ownership interest in the Property, as
evidenced by a Quit Claim Deed, recorded as Document No. 1776101 in
the Dane County Register of Deeds on April 20, 1983. They had a
verbal residential lease with the mother of Julie L. Ganske to
occupy the Property. They have chosen to sell the Property, as
Julie L. Ganske's mother passed away.
After listing the Property, and through continued marketing, the
Debtors received an offer from the Buyer to purchase the Property
for $285,000. A $290,000 counteroffer with certain contingencies
was accepted, which is fair value for the Property, pursuant to
their WB-11 Residential Offer to Purchase. The closing on the sale
of the Property is scheduled to take place on March 12, 2021,
subject to Court approval, or at a different date upon mutual
agreement of the parties.
The Debtors seek authority to pay from the closing proceeds any and
all closing costs incurred, including the broker commission and
commission to W. Kent Ganske, title insurance, transfer fees,
prorated real estate taxes, any delinquent real estate taxes, and
any other usual costs of closing incurred with the sale of the
Property.
The sale will be free and clear of liens, with liens to attach to
the proceeds of sale. All remaining net proceeds after Closing
Costs will be paid to United Cooperative, which holds a properly
perfected first priority lien, with a mortgage recorded in Dane
County, Wisconsin Register of Deeds on May 26, 2017 as Document No.
5328786.
Pursuant to the Employment Order, the Applicant is entitled to a
commission of 6% of the gross selling price of the Property, to be
paid from the proceeds of a Court approved sale at the time of
closing, and is authorized to share the proceeds with a cooperating
broker and W. Kent Ganske as provided for in the Application and
Listing Contract and will be disbursed at closing.
The Debtors ask that the stay of the order provided in F.R.B.P.
6004 be waived, in order to allow the sale to proceed as scheduled.
Since the date of filing of the Motion to Sell, after an inspection
of the Property, performed at the request of the Buyer, cited
costly repairs, the Debtors and the Buyer have amended the offer to
purchase, such that the final purchase price of the Property is
changed from $290,000 to $275,000, and the provision that the
Debtors will provide a Basic UHP Home Warranty for the Buyer at
closing is added to the sale at a cost of $525. The parties have
executed their WB-40 Amended Offer to Purchase.
The Debtors believe that a final purchase price of $275,000 is
within the range of fair value of the Property. But for the
Amendments, the details of the sale of the Property described in
the Motion to Sell remain unchanged by the Amended Offer to
Purchase.
By the Motion the Debtors ask authority to amend the Motion to Sell
to reflect a reduced final purchase price of the Property of
$275,000 and the added provision that the Debtors will provide a
Basic UHP Home Warranty for the Buyer at closing.
W. Kent Ganske and Julie L. Ganske sought Chapter 11 protection
(Bankr. E.D. Wisc. Case No. 20-21042) on Feb. 11, 2020.
WALL010 LLC: Tamamoi & FDRE Oppose to Disclosure Statement
----------------------------------------------------------
Tamamoi, LLC, a Delaware limited liability company, and FDRE, Inc.,
an Oregon corporation, object to the Disclosure Statement filed by
debtor WALL010, LLC.
* The Debtor's Disclosure Statement does not contain adequate
information to permit creditors to make an informed decision to
accept or reject the Plan. Accordingly, the Court should deny the
Debtor's request to approve the Disclosure Statement.
* The Disclosure Statement should not be approved because it
fails to provide adequate information that would enable the Movant
-- or any other creditor -- to make an informed judgment as to
whether to vote in favor of the Plan as required by Sec. 1125 of
the Bankruptcy Code.
* The Disclosure Statement does not provide adequate
information regarding the proposed funding of the Plan. The
Disclosure Statement fails to disclose how crucial the loan is to
its ability to have a feasible plan and what will happen if the
Debtor is unable to obtain the $1,000,000 loan.
* The Disclosure Statement lacks specifics relating to
Debtor's operations. There is no explanation regarding the actual
current operations nor Debtor's plans for business operations on a
go-forward basis.
A full-text copy of the objection dated Feb. 26, 2021, is available
at https://bit.ly/38fsyjb from PacerMonitor.com at no charge.
Attorneys for Tamamoi and FDRE:
Behrooz P. Vida
Carla Reed Vida
Helenna Bird
THE VIDA LAW FIRM, PLLC
3000 Central Drive
Bedford, Texas 76021
Tel: (817) 358-9977
Fax: (817) 358-9988
About WALL010 LLC
WALL010, LLC, based in Dallas, TX, filed a Chapter 11 petition
(Bankr. N.D. Tex. Case No. 21-30016) on Jan. 4, 2020. In the
petition signed by Tim Barton, president, the Debtor estimated $1
million to $10 million in both assets and liabilities. The Hon.
Harlin Dewayne Hale presides over the case. JOYCE W. LINDAUER
ATTORNEY, PLLC, serves as bankruptcy counsel to the Debtor.
WATLOW ELECTRIC: S&P Assigns 'B' ICR, Outlook Stable
----------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Watlow
Electric Manufacturing Co., a global designer and manufacturer of
industrial thermal systems and components such as heaters, sensors,
controls and thermal system software.
S&P said, "At the same time, we are assigning our 'B' issue-level
rating and '3' recovery rating to the company's proposed revolving
credit facility and first-lien term loan.
"The stable outlook reflects our view that the company will
continue to improve its profitability and generate moderately
positive free cash flow, enabling it to reduce its S&P Global
Ratings-adjusted debt leverage toward 5x over the next 12 to 18
months.
"We believe Watlow's substantial demand exposure to the recovering
semiconductor end market will support close to $115 million of S&P
Global Ratings-adjusted EBITDA in 2021. Current semiconductor
industry dynamics are favorable as chip manufacturers struggle to
meet current demand. We expect that new product development during
2020 and 2021 will further support revenue and profitability
growth." With that said, the company's semiconductor end market as
well as the general industrial and energy end markets are cyclical
and could result in significant reduction in profitability during
an industry downcycle. As a partial offset, the company serves the
medical, foodservice and refrigeration, and power generation
markets which are typically less cyclical.
S&P said, "Watlow's products and systems are highly engineered and
upfront testing requirements generally carry high switching costs
which we believe provide some barriers to entry for its
competitors." The company's top-l0 largest customers hold
considerable bargaining power as they account for a significant
portion of Watlow's sales, but this is partially offset by the
long-standing relationships Watlow has built with these companies.
Furthermore, the company is the sole-source provider for most of
its customers and a growing proportion of its offerings are highly
engineered "spec'd in" products, which reduces the customers'
incentive to make decisions solely on price. As a result, the
company maintains leading positions with its customers.
S&P said, "We project Watlow will generate healthy S&P Global
Ratings-adjusted EBITDA margins in the low-20% area in 2021, a
significant improvement over prior two years' margin. We expect
the company's good EBITDA margins will benefit from its highly
variable cost structure as well as the realization of cost savings
from shifting its production to Mexico." The company made
significant investments over the past several years to transfer a
meaningful portion of its manufacturing capacity and labor from the
U.S. to Mexico, and the majority of the transition is complete.
S&P said, "Our base-case forecast estimates moderate free operating
cash flow (FOCF) generation and S&P adjusted debt to EBITDA of
about 5.7x in 2021 that improves to about 5x in 2022. Our S&P
Global Ratings-adjusted debt leverage includes about $110 million
of preferred equity that we view as debt-like. In addition, our
assessment of the company's financial risk incorporates its
financial sponsor ownership and resulting relatively high leverage.
While we do not expect Tinicum to pursue debt-funded dividends
given its track record with other investments, we expect that the
company will opportunistically pursue acquisitions.
"The stable outlook reflects our view that the economic recovery
and Watlow's improving EBITDA margins will enable the company to
generate moderate free cash flow and reduce its S&P Global
Ratings-adjusted leverage to about 5.7x in 2021 and further to
about 5x in 2022."
S&P could lower the rating if:
-- Watlow's S&P Global Ratings-adjusted debt to EBITDA does not
improve and leverage is trending above 6.5x on a sustained basis,
which could happen if the semiconductor market meaningfully
contracts;
-- The company is unable to generate positive FOCF; or
-- The company pursues a more aggressive financial policy such as
a debt-funded dividend to its financial sponsors, though we see
this route as less likely in the near term.
Although unlikely over the next 12 months given our expectation for
end-market cyclicality and its ownership by a financial sponsor,
S&P could raise its ratings on Watlow if:
-- The company meaningfully increases its scale and scope and
reduces its reliance on the semiconductor manufacturing industry;
-- Stronger-than-expected operating performance reduces its
leverage metric below 5x; and
-- The company's financial sponsors commit to maintaining leverage
at less than 5x throughout the business cycle.
WC SOUTH CONGRESS: Lender Says Disclosure Inadequate
----------------------------------------------------
510 South Congress Lender LLC filed an objection to WC South
Congress Square LLC's Disclosure Statement.
The Lender asserts that the Debtor's Disclosure Statement does not
contain "adequate information" as required by Section 1125 of the
Bankruptcy Code. Several key areas of disclosure are lacking.
These areas include: (i) information regarding the current assets
and operations of the Debtor; (ii) the projected performance of the
Reorganized Debtor under the Plan, particularly as it relates to
treatment of Lender's claim; (iii) the specific treatment of
Lender's claim under the Plan; (iv) the financial information,
data, valuations or projections relevant to Lender's decision to
accept or reject the Chapter 11 plan; (v) information relevant to
the risks posed to Lender under the plan; and (vi) disclosure of
the Reorganized Debtor's post-Effective Date management by Natin
Paul, and risks related to such management. Given the lack of
adequate information, the Disclosure Statement should not be
approved by the Bankruptcy Court.
Counsel for 510 South Congress Lender LLC:
Kell C. Mercer
KELL C.MERCER, P.C.
1602 E. Cesar Chavez Street
Austin, Texas 78702
Tel: (512)627-3512
Fax: (512)597-0767
E-mail: kell.mercer@mercer-law-pc.com
About WC South Congress Square
Based in Austin, Texas, WC South Congress Square LLC is primarily
engaged in renting and leasing real estate properties.
WC South Congress Square sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-11107) on Oct. 6,
2020. The petition was signed by Natin Paul, manager of general
partner.
At the time of the filing, the Debtor had estimated assets of
between $50 million and $100 million and liabilities of between $10
million and $50 million.
Fishman Jackson Ronquillo PLLC is the Debtor's legal counsel.
WEISS BUSH: Amends Contract on Sale of Assets to Oltman & Shea
--------------------------------------------------------------
Weiss Bush Collision Center, LLC, filed with the U.S. Bankruptcy
Court for the Western District of Wisconsin a supplement to their
proposed sale of assets involved in the operation of its business
to Michael Oltman and Nicole Shea for $411,789, subject to change
on sale date with amendment, to supply additional information in
response to a limited objection filed by the US Trustee.
The Buyer and the Seller included contradictory language regarding
certain tax obligations and certain daily bills/obligations. They
have agreed to remove those paragraphs in full from the agreement
to eliminate any contradictory information. The amendment to the
purchase agreement is attached and submitted with the supplement.
A copy of the Amended Agreement is available at
https://tinyurl.com/53bby97n from PacerMonitor.com free of charge.
About Weiss Bush Collision Center
Weiss Bush Collision Center filed a Chapter 11 petition (Bankr.
W.D. Wis. Case No. 20-12710) on Oct. 29, 2020. The petition was
signed by William Bush, owner. At the time of the filing, the
Debtor had estimated assets of less than $50,000 and liabilities
of less than $50,000.
Judge Catherine J. Furay oversees the case.
Greg P. Pittman, Esq., at Pittman & Pittman Law Offices, LLC,
serves as the Debtor's legal counsel.
WMG ACQUISITION: Term Loan Add-on No Impact on Moody's Ba3 CFR
--------------------------------------------------------------
Moody's Investors Service said WMG Acquisition Corp.'s plan to
upsize its existing $820 million senior secured term loan G due
2028 by $325 million to $1,145 million has no impact on Acquisition
Corp.'s Ba3 Corporate Family Rating, Ba3-PD Probability of Default
Rating, Ba3 senior secured term loan rating, Ba3 senior secured
notes rating, B2 senior unsecured notes rating and stable outlook.
Acquisition Corp. is an indirect wholly-owned subsidiary of Warner
Music Group Corp. ("WMG" or the "company"), which is the ultimate
parent and financial reporting entity. Net proceeds from the add-on
will be used to fully repay the $325 million 5.5% senior unsecured
notes due 2026. The upsize will be a fungible add-on to the
existing term loan facility, share the same collateral package and
bear the same CUSIP as the term loan.
The refinancing transaction is leverage neutral because WMG's total
debt quantum and financial leverage will remain unchanged with pro
forma total debt to EBITDA at 31 December 2020 staying at roughly
4.5x (as calculated by Moody's). Moody's views the transaction
favorably given the expected annual interest expense savings and
debt maturity extension. Upon full extinguishment of the 5.5%
senior unsecured notes, Moody's will withdraw the rating.
Acquisition Corp.'s credit profile is supported by: (i) WMG's
position as the world's third largest music company with steady
market shares bolstered by its extensive recorded music and music
publishing assets, which drive recurring revenue streams that
remained fairly resilient during the COVID-19 pandemic; (ii) the
global music industry's long-term secular growth as listeners
increasingly subscribe to on-demand music streaming services, and
streaming platforms and social media apps grow their demand to
license WMG's content; (iii) WMG's business model in which only a
small percentage of revenue depends on recording artists and
songwriters without an established track record, with the bulk of
revenue generated by proven artists or its music catalog; (iv) an
attractive catalog with good geographic diversity and monetization
characteristics; and (v) investment in new artist and talent
development to institutionalize a pipeline of recurring hit songs
to help moderate recorded music volatility.
Factors that weigh on the profile include: (i) WMG's historically
seasonal recorded music revenue (about 85% of total revenue),
albeit increasingly less cyclical in large digital streaming
markets, coupled with low visibility into results of upcoming
release schedules; (ii) anticipated weakness in certain revenue
sub-segments resulting from the lingering impact of the pandemic;
(iii) potential headwinds from the slow transition to digital among
a few large countries; (iv) the music industry's challenges that
prevent full monetization of content value to WMG's songwriters and
rights holders due to piracy and user-uploaded videos; and (v)
potential for increasing competition from Universal Music Group,
which is planning to spin out of its parent, Vivendi SA.
Moody's expects that WMG will maintain good liquidity supported by
cash levels of at least $150 million (cash balances were $566
million at December 31, 2020), access to the $300 million revolving
credit facility maturing April 2025 (currently unrated with $10
million of outstanding letters of credit) and free cash flow (FCF)
generation in the range of $275-$375 million over the next twelve
months ending December 2021. FCF is defined as cash flow from
operations less capex less dividends and excludes potential music
publishing and catalog asset purchases.
Headquartered in New York, NY, WMG Acquisition Corp. is an indirect
wholly-owned subsidiary of Warner Music Group Corp., a publicly
traded company and leading music content provider operating
domestically and overseas in more than 70 countries. WMG has a
library of over 1 million copyrights from more than 80,000
songwriters and composers across a diverse range of music genres.
Revenue totaled $4.5 billion for the twelve months ended 31
December 2020.
YARBROUGH HOSPITALITY: To Seek Plan Confirmation on April 7
-----------------------------------------------------------
Judge Robert H. Jacobvitz has entered an order conditionally
approving the Disclosure Statement of Yarbrough Hospitality, LLC.
The deadline for filing and serving written objections to the
Disclosure Statement and for filing and serving written objections
to confirmation of the Plan is shortened to a fixed date of March
26, 2021.
March 26, 2021, at 5:00 p.m. MDT, is fixed as the last day to
submit written acceptances or rejections of the Plan to the
Debtor's attorney.
A hearing to consider final approval of the Disclosure Statement
and confirmation of the Plan will be held before the Honorable
Robert H. Jacobvitz on April 7, 2021, at 1:30 p.m., in the Gila
Courtroom, Fifth Floor, Pete V. Domenici Federal Building and
United States Courthouse, 333 Lomas Blvd. NW, Albuquerque, New
Mexico. Counsel, parties, and witnesses may appear in person at
the final hearing or by Zoom video.
About Yarbrough Hospitality
Yarbrough Hospitality, LLC was incorporated in January of 2020
under the laws of the State of New Mexico. It is a single-member
limited liability company owned by Hitendra Bhakta. Gateway is a
single-use entity created to purchase a motel property in El Paso,
Texas.
Yarbrough Hospitality, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. D.N.M. Case No. 20-10881) on April 29, 2020. The Debtor
tapped Michael K. Daniels, as counsel.
[*] Claims Trading Report - February 2021
-----------------------------------------
At least 327 claims changed hands in these Chapter 11 corporate
cases in February 2021:
No. of Claims
Debtor Transferred
------ -----------
Century 21 Department Stores LLC 60
Diamond Offshore Drilling, Inc. 34
The Hertz Corporation 30
LATAM Airlines Group S.A. 24
Frontier Communications Corporation 18
Le Tote, Inc. 18
Lehman Brothers Holdings Inc. 14
RTW Retailwinds, Inc. 11
RCCI Wind Down Company, Inc. 10
Neiman Marcus Group LTD LLC, et al. 8
RFA Frontino LLC 6
CFO Management Holdings, LLC 5
Forever 21, Inc. 5
South Coast Behavioral Health, Inc. 5
Wave Computing, Inc. 5
Diamond Offshore Drilling (UK) Limited 4
Francesca's Holdings Corporation 4
RentPath Holdings, Inc. 4
Bouchard Transportation Co., Inc. 3
Fansteel Foundry Corporation 3
Monarch Group LLC 3
OLD OB, LLC 3
Briggs & Stratton Corporation 2
CARLOS ROBLES TILE & STONE INC 2
Diamond Offshore General Company 2
Garrett Motion Inc., et al. 2
Grupo Aeromexico, S.A.B. de C.V. 2
Randolph Hospital, Inc. 2
Z & J, LLC d/b/a Appeal Tech 1
A GREAT HOTEL COMPANY, ARIZONA, LLC 1
A GREAT HOTEL COMPANY, LLC 1
Alpha Entertainment LLC 1
ARO Liquidation, Inc. 1
BAHATI, LLC 1
BBGI US, Inc. 1
Cred Inc. 1
Ditech Holding Corporation 1
Earth Energy Renewables, LLC 1
Elite Infrastructure, LLC 1
ESSEX REAL ESTATE PARTNERS, LLC 1
FBI Wind Down, Inc. 1
Furla (U.S.A.), Inc. 1
GGG Foundation & Trusts 1
Healthcore System Management, LLC 1
Highland Capital Management, L.P. 1
Leadville Corporation 1
Lehman Brothers Special Financing Inc. 1
Luna Developments Group, LLC 1
Mallinckrodt plc 1
Payless Holdings LLC 1
Pierce Williams & Read, Inc 1
PS HOTEL OXYGEN MIDTOWN, I, LLC 1
PS HOTEL OXYGEN PALM SPRINGS, LLC 1
PS OXYGEN HOSPITALITY GROUP, INC 1
Romans House, LLC 1
SCHULTE PROPERTIES LLC 1
Skyfuel, Inc. 1
Stein Mart, Inc. 1
Teknia Networks & Logistics, Inc. 1
Tonka International Corporation 1
Trident Holding Company, LLC 1
Tuesday Morning, Inc. 1
Veterinary Care, Inc. and TVET Management LLC 1
W.F. Grace Construction, LLC 1
Notable claim purchasers for the month of February are:
A. In Century 21's case:
Argo Partners
12 West 37th Street, Ste. 900
New York, NY 10018
Phone: (212) 643-5446
Contrarian Funds, LLC
411 WEST PUTNAM AVE., SUITE 425
Greenwich, CT 06830
ATTN: ALPA JIMENEZ
Tel: 203-862-8259
Fax: 203-485-5910
Email: tradeclaimsgroup@contrariancapital.com
Fair Harbor Capital, LLC
Ansonia Finance Station
P.O. Box 237037
New York, NY 10023
B. In Diamond Offshore's case:
Bradford Capital Holdings, LP
P.O. Box 4353
Clifton New Jersey
Brian L. Brager
E-mail: bbrager@bradforcapitalmgmt.com
Fair Harbor Capital, LLC
Ansonia Finance Station
P.O. Box 237037
New York, NY 10023
CRG Financial LLC
100 Union Ave
Cresskill, NJ 07626
C. In The Hertz Corp.'s case:
ASM Capital
7600 JERICHO TURNPIKE, SUITE 302
WOODBURY, NY 11797
Tel: (516) 422-7100
D. In LATAM Airlines' case:
Opeak LLC
Star V Partners LLC
Olympus Peak Cav Master LP
Leah Silverman
745 Fifth Avenue, Suite 1604
New York, NY 10151
Tel: 212-272-1189
E. In Frontier Communications' case:
Fair Harbor Capital, LLC
Ansonia Finance Station
P.O. Box 237037
New York, NY 10023
G. In Le Tote, Inc.'s case:
TRC Master Fund LLC
Attn: Terrei Ross
P.O. Box 633
Woodmere, NY 11598
Tel: (516) 255-1801
[] Expiring Debt Cap Will Limit Small Firms' Fast Bankruptcy Filing
-------------------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that the expiring debt
cab will limit small companies' bankruptcy fast lane.
A temporary Covid-era measure that lets small businesses with up to
$7.5 million in debt file Chapter 11 under a new, streamlined
process is set to expire this March 2021, stirring attorneys'
anticipation that more companies will declare bankruptcy before the
window closes.
Businesses that meet the current debt threshold qualify for
expedited bankruptcies as outlined in Subchapter V of the
bankruptcy code. The debt cap was $2.7 million until Congress
raised it via temporary legislation last year to allow more
struggling business owners to use bankruptcy protection measures to
deal with the pandemic's economic fallout. The threshold is set to
drop back to the original cap March 27, 2021 unless lawmakers
extend it.
If they don't, distressed companies with more than $2.7 million in
debt will be looking at a longer, more expensive Chapter 11
process, attorneys say.
Many small businesses that piled on debt during the pandemic could
file for bankruptcy at the last minute if they think they won't
qualify after March 27, 2021, said Donald L. Swanson, a bankruptcy
attorney and shareholder at Koley Jessen in Omaha, Neb.
"Everybody is terrified that if Congress doesn't act, there's going
to be a wave" of Subchapter V filings, Swanson said.
Bipartisan legislation (S. 473) recently introduced by Sens.
Richard Durbin (D-Ill.) and Charles Grassley (R-Iowa) would extend
the $7.5 million threshold for another year. The bill is still in
committee.
Companies have taken advantage of the increased debt limit, data
indicate. A Bloomberg Law analysis of Subchapter V filings in
Delaware through October 2020 showed that 20% of filers listed debt
loads between $2.7 million and $7.5 million.
The looming March expiration date is starting to spark increased
Subchapter V filings, said Bloomberg Law legal analyst Teadra
Pugh.
More than 40 new cases were filed in the last week of February
2021, compared to 75 filings for all of January 2021, she said.
Still, Pugh cautioned that pandemic uncertainties have made
bankruptcy filings difficult to predict. "Covid has blown all the
rules out of window."
Greater Availability
Subchapter V of the bankruptcy code, which went into effect in
February 2020, eliminates many expenses of a traditional Chapter
11. The process doesn’t require companies to file a disclosure
statement, pay U.S. Trustee fees, or form an official committee of
unsecured creditors.
The subchapter also allows a debtor to pay off debts and attorneys'
fees gradually over three to five years, and retain equity in the
business even if creditors aren't paid in full.
Some creditors might not support extending the higher threshold
because that would open up the debtor-friendly process to more
companies, said James D. Silver, a partner at Kelley Kronenberg in
Fort Lauderdale, Fla.
Unlike some other forms of bankruptcy, Subchapter V doesn't allow
creditors to force amendments to a confirmed plan if the debtor's
circumstances later improve, Silver said. "There's no vehicle to
come back and change things," he said.
For small businesses in distress, however, it's "critical" that
Congress extend the $7.5 million threshold, said James Bailey, a
restructuring attorney and partner at Bradley Arant Boult Cummings
LLP in Birmingham, Ala.
The increased limit has made Subchapter V available to a host of
businesses that wouldn’t have qualified otherwise.
Sunglasses retailer Solstice Marketing Concepts LLC squeaked in
under the threshold with $7.259 million in qualifying debt when it
filed for bankruptcy Feb. 18, 2021. The company said in its filing
that it’s trying to get through its Subchapter V bankruptcy
quickly before the increased debt ceiling expires.
'Small' Businesses Qualify
Distressed companies are torn between whether to file for
bankruptcy or wait and see if they can get help from the recently
passed American Rescue Plan Act, said Alan Crane of Furr & Cohen PA
in Boca Raton, Fla.
Subchapter V is still new, so many companies may not even know that
it exists, or that the $7.5 million threshold is about to sunset,
he said.
Business owners also may not know that they qualify for Subchapter
V, said Bethany Simmons, a bankruptcy attorney and senior counsel
at Loeb & Loeb LLP in New York. A company actually can have more
than $7.5 million in total debt obligations and still take
advantage of the streamlined process, she said.
That's because the debt limit only applies to "noncontingent
liquidated" debt, such as money owed to trade vendors or payments
due on a bank loan. But other contingent debts—certain debt
obligations that may come due in the future—aren’t included in
the threshold, Simmons said.
Courts have found that contingent debt excluded from Subchapter V's
limit includes future rent payments under a lease and Paycheck
Program Program loans, Simmons said. Money owed to insiders and
business affiliates also doesn’t count toward the debt limit, she
said.
Limits on the types of debt included in the threshold allowed
Greylock Capital Associates LLC, the parent of hedge fund Greylock
Capital Management LLC, to use Subchapter V to cancel an expensive
Manhattan lease. The company, which has invested in more than 100
countries on six continents, was able to show that it had less than
$7.5 million in debt because the majority of overall debt belonged
instead to non-bankrupt affiliates.
Companies in financial distress should look at Subchapter V and
consider filing "sooner rather than later," Simmons said. "A
well-organized filing doesn't happen overnight," she said.
[^] BOND PRICING: For the Week from March 1 to 5, 2021
------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
BPZ Resources Inc BPZR 6.500 3.017 3/1/2049
Basic Energy Services Inc BASX 10.750 19.250 10/15/2023
Basic Energy Services Inc BASX 10.750 20.179 10/15/2023
Becton Dickinson and Co BDX 3.125 102.202 11/8/2021
Briggs & Stratton Corp BGG 6.875 8.625 12/15/2020
Bristol-Myers Squibb Co BMY 3.250 105.039 2/20/2023
Bristow Group Inc/old BRS 6.250 6.250 10/15/2022
Bristow Group Inc/old BRS 4.500 0.001 6/1/2023
Buffalo Thunder
Development Authority BUFLO 11.000 50.000 12/9/2022
Celgene Corp CELG 3.250 105.123 2/20/2023
Dean Foods Co DF 6.500 2.000 3/15/2023
Dean Foods Co DF 6.500 1.925 3/15/2023
Dell Inc DELL 4.625 99.922 4/1/2021
Diamond Offshore Drilling DOFSQ 7.875 17.000 8/15/2025
Diamond Offshore Drilling DOFSQ 3.450 21.500 11/1/2023
ENSCO International Inc VAL 7.200 10.088 11/15/2027
EnLink Midstream Partners LP ENLK 6.000 60.350 N/A
Energy Conversion Devices ENER 3.000 7.875 6/15/2013
Energy Future Competitive
Holdings Co LLC TXU 0.985 0.072 1/30/2037
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 31.912 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 32.205 7/15/2023
FMC Technologies Inc FTI 3.450 102.654 10/1/2022
Federal Home Loan Banks FHLB 0.625 99.849 3/9/2021
Fleetwood Enterprises Inc FLTW 14.000 3.557 12/15/2011
Frontier Communications Corp FTR 10.500 57.250 9/15/2022
Frontier Communications Corp FTR 8.750 54.563 4/15/2022
Frontier Communications Corp FTR 7.125 54.375 1/15/2023
Frontier Communications Corp FTR 9.250 51.500 7/1/2021
Frontier Communications Corp FTR 6.250 52.750 9/15/2021
Frontier Communications Corp FTR 10.500 58.570 9/15/2022
Frontier Communications Corp FTR 10.500 58.570 9/15/2022
GNC Holdings Inc GNC 1.500 1.250 8/15/2020
GTT Communications Inc GTT 7.875 18.364 12/31/2024
GTT Communications Inc GTT 7.875 18.389 12/31/2024
Global Eagle Entertainment GEENQ 2.750 0.010 2/15/2035
Goodman Networks Inc GOODNT 8.000 22.500 5/11/2022
Goodman Networks Inc GOODNT 8.000 23.000 5/31/2022
Hi-Crush Inc HCR 9.500 0.680 8/1/2026
Hi-Crush Inc HCR 9.500 0.680 8/1/2026
High Ridge Brands Co HIRIDG 8.875 1.500 3/15/2025
High Ridge Brands Co HIRIDG 8.875 1.135 3/15/2025
HighPoint Operating Corp HPR 7.000 55.771 10/15/2022
J Crew Brand LLC /
J Crew Brand Corp JCREWB 13.000 53.851 9/15/2021
LSC Communications Inc LKSD 8.750 8.250 10/15/2023
LSC Communications Inc LKSD 8.750 12.875 10/15/2023
Liberty Media Corp LMCA 2.250 47.625 9/30/2046
MAI Holdings Inc MAIHLD 9.500 16.500 6/1/2023
MAI Holdings Inc MAIHLD 9.500 16.500 6/1/2023
MAI Holdings Inc MAIHLD 9.500 16.500 6/1/2023
MF Global Holdings Ltd MF 6.750 15.625 8/8/2016
MF Global Holdings Ltd MF 9.000 15.625 6/20/2038
Mashantucket Western
Pequot Tribe MASHTU 7.350 15.750 7/1/2026
Men's Wearhouse LLC/The TLRD 7.000 1.750 7/1/2022
Men's Wearhouse LLC/The TLRD 7.000 1.264 7/1/2022
NWH Escrow Corp HARDWD 7.500 28.754 8/1/2021
NWH Escrow Corp HARDWD 7.500 28.754 8/1/2021
National Retail Properties NNN 3.300 104.989 4/15/2023
Navajo Transitional Energy NVJOTE 9.000 65.500 10/24/2024
Neiman Marcus Group LLC/The NMG 7.125 4.345 6/1/2028
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 4.863 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 27.250 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 4.863 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 27.250 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 4.863 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 4.863 10/25/2024
Nine Energy Service Inc NINE 8.750 49.446 11/1/2023
Nine Energy Service Inc NINE 8.750 49.259 11/1/2023
Nine Energy Service Inc NINE 8.750 48.769 11/1/2023
Northwest Hardwoods Inc HARDWD 7.500 28.559 8/1/2021
Northwest Hardwoods Inc HARDWD 7.500 28.559 8/1/2021
OMX Timber Finance
Investments II LLC OMX 5.540 1.690 1/29/2020
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 90.000 6/1/2021
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 90.000 6/1/2021
PNM Resources Inc PNM 3.250 99.932 3/9/2021
Post Holdings Inc POST 5.000 104.201 8/15/2026
Post Holdings Inc POST 5.000 104.024 8/15/2026
Pride International LLC VAL 6.875 7.250 8/15/2020
Pride International LLC VAL 7.875 10.858 8/15/2040
Renco Metals Inc RENCO 11.500 24.875 7/1/2003
Revlon Consumer Products REV 6.250 31.678 8/1/2024
Rolta LLC RLTAIN 10.750 1.729 5/16/2018
SG Structured Products Inc SOCGEN 3.362 98.998 3/18/2021
Sears Holdings Corp SHLD 8.000 1.410 12/15/2019
Sears Holdings Corp SHLD 6.625 6.110 10/15/2018
Sears Holdings Corp SHLD 6.625 2.479 10/15/2018
Sears Roebuck Acceptance SHLD 7.500 0.807 10/15/2027
Sears Roebuck Acceptance SHLD 6.750 0.687 1/15/2028
Sears Roebuck Acceptance SHLD 7.000 0.663 6/1/2032
Sears Roebuck Acceptance SHLD 6.500 0.768 12/1/2028
Sempra Texas Holdings Corp TXU 5.550 13.500 11/15/2014
Summit Midstream Partners LP SMLP 9.500 50.000 N/A
TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019
Transworld Systems Inc TSIACQ 9.500 30.000 8/15/2021
United States Steel Corp X 12.000 119.684 6/1/2025
ViacomCBS Inc VIAC 2.900 104.730 6/1/2023
ViacomCBS Inc VIAC 2.900 104.575 6/1/2023
ViacomCBS Inc VIAC 2.900 104.558 6/1/2023
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 52.250 8/15/2021
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 51.938 8/15/2021
*********
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