/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/210316.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, March 16, 2021, Vol. 25, No. 74 Headlines 232 SEIGEL: Seeks to Hire Offit Kurman as Special Counsel 3G VENTURE: Unsecured Creditors to Get 100% in Plan 53 STANHOPE: Amends Plan to Address Court Denial Order 7 GENERAL CONTRACTING: Ferguson Says Disclosures Insufficient 7 GENERAL: PNC's Joinder in Ferguson's Objection to Disclosure 730 OAKLAND: Seeks to Hire Marcus & Millichap as Real Estate Broker AADVANTAGE LOYALTY: Fitch Assigns BB(EXP) Rating on $7.5-Bil. Debt AADVANTAGE LOYALTY: Moody's Rates New Secured Bank Loans 'Ba2' ALAMO CHANDLER: Unsecureds Will be Paid in Full Under Plan ALAMO DRAFTHOUSE: Expects More Closings as Part of Bankruptcy ALCOA NEDERLAND: Moody's Gives Ba1 Rating on New Unsecured Notes ALIXPARTNERS LLP: Moody's Completes Review, Retains B2 CFR ALKERMES INC: Moody's Gives Ba3 Rating on New Secured Term Loan AMERICAN AIRLINES: Fitch Affirms 'B-' LT IDR, Outlook Negative AMERICAN PUBLIC: Moody's Assigns First Time B1 Corp Family Rating AMN HEALTHCARE: Moody's Affirms Ba2 CFR & Alters Outlook to Stable ARROW BIDCO: Moody's Completes Review, Retains B3 CFR ASBURY AUTOMOTIVE: Moody's Completes Review, Retains Ba2 CFR AUTOKINITON US: Moody's Affirms B2 CFR & Alters Outlook to Positive AVINGER INC: Reports $22.8 Million Net Loss in 2020 AZALEA TOPCO: Moody's Completes Review, Retains B3 CFR BED BATH: Moody's Completes Review, Retains Ba3 CFR BELK INC: Moody's Assigns Caa2 CFR Following Bankruptcy Emergence BELK INC: Seeks Approval to Tap Kirkland & Ellis as Legal Counsel BELK INC: Seeks to Hire Jackson Walker as Conflicts Counsel BELK INC: Seeks to Hire Lazard Freres as Investment Banker BELK INC: Seeks to Tap Alvarez & Marsal as Financial Advisor BETA MUSIC: Get Credit Healthy in Chapter 11 After Revenue Drop BETA MUSIC: Seeks to Hire Markowitz Ringel as Bankruptcy Counsel BL RESTAURANTS: To Seek Confirmation of Wind-Down Plan April 21 BLACKHAWK NETWORK: Moody's Completes Review, Retains B2 CFR BMC ACQUISITION: Moody's Completes Review, Retains B2 CFR BW GAS: Moody's Hikes CFR to B1 on Solid Operating Performance CARBON AND CLAY: Seeks to Tap Langley & Banack as Legal Counsel CARBON AND CLAY: Seeks to Tap LN Accounting Advisor as Accountant CASTEX ENERGY: Seeks Approval to Hire Okin Adams as Counsel CASTEX ENERGY: Unsecureds Get Share in Liquidating Trust CHARLES RIVER: Moody's Gives Ba2 Rating on New Sr. Unsecured Notes CIBT GLOBAL: Moody's Completes Review, Retains Caa2 CFR COMSTOCK MINING: Swings to $14.9 Million Net Income in 2020 CONCISE INC: Unsecureds to Recover Around 20% in Plan COOLSYS INC: Moody's Completes Review, Retains B3 CFR CRED INC: Recovery for Convenience Claims Hiked to 30% in Plan CROCS INC: Moody's Assigns First Time Ba3 Corp Family Rating CROSS FINANCIAL: Moody's Rates Repriced $450MM 1st Lien Loan 'B2' CROSSPLEX VILLAGE: Unsecured Creditors Will Recover 5% in Plan DATA AXLE: Moody's Completes Review, Retains Caa1 CFR DESERT VALLEY: Atlas Says Plan Disclosures Misleading DESOTO OWNERS: Unsecureds to Split At Least $500,000 in Plan DG INVESTMENT 2: Moody's Rates $1.26BB First Lien Loans 'B2' DIAMOND SPORTS: Moody's Lowers CFR to B3, Outlook Negative DIOCESE OF CAMDEN: Century Questions Scope of Abuse Claims DIOCESE OF CAMDEN: Plan Funding Raised to $11.3 Million DW TRIM: Seeks Approval to Hire Lucove Say & Co. as Accountant ENDEAVOR ENERGY: Fitch Hikes LongTerm IDR to BB+, Outlook Pos. ENDEAVOR ENERGY: Moody's Hikes CFR to Ba2 & Alters Outlook to Pos. EVOKE PHARMA: Widens Net Loss to $13.1 Million in 2020 EXSCIEN CORPORATION: Creditors to Get Proceeds From Liquidation FCG ACQUISITIONS: Moody's Assigns First Time B3 Corp Family Rating FERRELLGAS PARTNERS: Court Confirms Prepackaged Plan FLOOR AND DECOR: Moody's Completes Review, Retains Ba3 CFR FURNITURELAND USA: Seeks to Hire GrayRobinson as Special Counsel GALLERIA OF ST. MATTHEWS: Seeks to Hire Real Estate Broker GC EOS BUYER: Moody's Upgrades CFR to B3 on Improved Earnings GIRARDI & KEESE: CA Bar Questions Girardi's Dementia GOGO INC: Incurs $250 Million Net Loss in 2020 GORDIAN MEDICAL: Moody's Assigns B2 CFR, Outlook Stable GRANITE ACQUISITION: Moody's Assigns First Time 'B1' CFR GROUP 1 AUTOMOTIVE: Moody's Completes Review, Retains Ba1 CFR GTT COMMUNICATIONS: Fitch Withdraws All Ratings GUMP'S HOLDINGS: Recovery for Unsecureds Owed $34M Unknown in Plan HARBOR FREIGHT: Moody's Completes Review, Retains Ba3 CFR HEALTHMAX LLC: Seeks to Hire Leiderman Shelomith as Counsel HELIUS MEDICAL: Incurs $14.1 Million Net Loss in 2020 HERALD HOTEL: Gets OK to Tap Substitute Special Labor Counsel HIGHPOINT RESOURCES: Case Summary & 30 Top Unsecured Creditors HIGHPOINT RESOURCES: Files for Chapter 11 to Effect Bonanza Merger HOLLISTER CONSTRUCTION: April 15 Hearing on Settlement-Based Plan HOUTEX BUILDERS: Seeks to Hire Parkins Lee & Rubio as Counsel HSA ENTERPRISES: Gets Court Approval to Hire Accountant HUMANIGEN INC: Widens Net Loss to $89.5 Million in 2020 INOVALON HOLDINGS: Moody's Completes Review, Retains B2 CFR INTERSTATE COMMODITIES: Taps Martin Auction Services as Auctioneer ION CORPORATE: Incremental Debt No Impact of Moody's B2 CFR J-BIRD PROPERTIES: Seeks to Tap Supple Law Office as Counsel JFG HOLDINGS: Unsecured Creditors to be Paid in Full in Plan JFK HEATING: Seeks Approval to Hire Coolidge Wall as Counsel JJE INC: Court Confirms Amended Plan KEN GARFF: Moody's Completes Review, Retains Ba2 CFR KOSMOS ENERGY: Fitch Assigns Final B- Rating on $450MM Notes L.G. STECK: Court Approves Disclosure Statement LAKELAND TOURS: Moody's Completes Review, Retains Caa2 CFR LESLIE'S POOLMART: Moody's Completes Review, Retains B1 CFR LITHIA MOTORS: Moody's Completes Review, Retains Ba1 CFR LS GROUP: Moody's Completes Review, Retains B2 CFR LSF9 ATLANTIS: Moody's Completes Review, Retains B2 CFR LUXURY OUTER: Seeks Court Approval to Hire Bankruptcy Counsel MATTEL INC: Fitch Rates Proposed USD1.2 Billion Unsec. Notes 'BB' MATTEL INC: Moody's Gives Ba2 Rating on New $1.2B Unsecured Bonds MATTEL INC: Moody's Upgrades CFR to Ba2 on Solid Progress MATTHEWS INTERNATIONAL: Moody's Completes Review, Retains Ba3 CFR MEDICAL SOLUTIONS: Moody's Affirms B3 CFR on Continued Improvement MERCY HOSPITAL: Moody's Cuts Rating on 2011 Revenue Bonds to B1 MERCY HOSPITAL: State Faces Demands From Community to Vet Buyer MICHAELS STORES: Moody's Completes Review, Retains Ba3 CFR MISTER CAR: Moody's Completes Review, Retains B3 CFR MOBITV INC: Seeks to Hire Stretto as Claims Agent MY FL MANAGEMENT: U.S. Trustee Unable to Appoint Committee MYOMO INC: Incurs $11.5 Million Net Loss in 2020 NATIONAL SMALL: Seeks Court Approval to Tap Bankruptcy Counsel NEENAH INC: Moody's Affirms Ba2 CFR Amid Global Release Transaction NEONODE INC: Incurs $5.6 Million Net Loss in 2020 NORDAM GROUP: Fitch Lowers LongTerm IDR to 'CCC+' NORWEGIAN AIR: Hits Chapter 15 Bankruptcy in New York OCULAR THERAPEUTIX: Incurs $155.6 Million Net Loss in 2020 OPTION CARE: Incurs $8.1 Million Net Loss in 2020 PACIFIC LINKS: U.S. Trustee Unable to Appoint Committee PACKERS HOLDINGS: Moody's Completes Review, Retains B3 CFR PALMS NL CONDOMINIUM: Seeks Court Approval to Hire CRO PALMS NL CONDOMINIUM: Seeks to Hire Hoffman Larin as Legal Counsel PAPER SOURCE: U.S. Trustee Appoints Creditors' Committee PARKLAND CORP: Fitch Rates Proposed CAD Unsecured Notes 'BB/RR4' PARTY CITY: Moody's Completes Review, Retains Caa1 CFR PBS BRAND: Seeks Approval to Hire CBRE as Real Estate Broker PEOPLE SPEAK: Case Summary & 12 Unsecured Creditors PITNEY BOWES: Moody's Rates New Amended Credit Facilities 'Ba1' POUGHKEEPSIE, NY: Moody's Assigns Ba1 Rating to $5.2MM Bonds PRE-PAID LEGAL: Moody's Completes Review, Retains B2 CFR PROMETRIC HOLDINGS: Moody's Alters Outlook on B3 CFR to Stable QVC GLOBAL: Moody's Hikes 2031 Sr. Exchangeable Debentures to B1 RB ENTERPRISES: Seeks to Hire Bush Kornfeld as Bankruptcy Counsel RESEARCH NOW: Moody's Completes Review, Retains B2 CFR RGN-NEW YORK V: Case Summary & Unsecured Creditor ROCKPORT DEVELOPMENT: To Seek Plan Confirmation on May 20 S-TEK 1: Seeks to Tap Financial Strategy Group as Expert Witness SAVE ON COST: Unsecureds Will Get 100% of Claims from Operation SEADRILL PARTNERS: Parties Extend PSA Milestones SILICONSAGE BUILDERS: CEO Acharya Ends Efforts in Saving Business SINCLAIR TELEVISION: Moody's Affirms Ba3 CFR, Outlook Stable SIRVA WORLDWIDE: Moody's Completes Review, Retains Caa1 CFR SITEONE LANDSCAPE: Moody's Rates $300MM First Lien Loan 'B1' SLM CORP: Fitch Alters Outlook on 'BB+' LT IDRs to Stable SMG US MIDCO 2: Moody's Completes Review, Retains Caa1 CFR SOFT FINISH: Case Summary & 20 Largest Unsecured Creditors SOUTHERN GRAPHICS: Moody's Completes Review, Retains Caa1 CFR SPECIALTY ORTHPODEIC: Hires Lefkovitz & Lefkovitz as Legal Counsel SPENCER SPIRIT: Moody's Completes Review, Retains B1 CFR SPOKANE INT'L: Moody's Gives Ba2 Rating on $19.4MM Revenue Bonds SUNDANCE ENERGY: Latham & Watkins Advises Business in Restructuring SYNAPTICS INC: Fitch Assigns First-Time 'BB' LongTerm IDR SYNAPTICS INC: Moody's Assigns First Time Ba2 Corp Family Rating SYNDIGO LLC: Moody's Completes Review, Retains B3 CFR TCNR LLC: Voluntary Chapter 11 Case Summary TD HOLDINGS: Issues $3.3 Million Unsecured Note to Streeterville TEMPUR SEALY: Fitch Rates Proposed $800MM Unsecured Notes 'BB' THOUGHTWORKS INC: Moody's Completes Review, Retains B2 CFR TRIPLE J PARKING: Hires Hashimoto Forensic as Financial Advisor TRIPLE J PARKING: Seeks to Hire Jones Waldo as Special Counsel US SILICA: Moody's Raises CFR to B3 on Improved Credit Profile VANTAGE POINT: Plan Payments to be Funded by Future Income VBI VACCINES: Partners with CEPI to Develop COVID-19 Vaccines VERICAST CORP: Moody's Lowers CFR to Caa3 on Cancelled Refinancing VILLAS OF WINDMILL: Amends Plan to Resolve Homeowners' Objections VITALIBIS INC: Defers Plan Confirmation Hearing to April 7 WILDBRAIN LTD: Fitch Rates New Secured Credit Facilities 'BB+' WIREPATH LLC: Moody's Completes Review, Retains B3 CFR WYNTHROP PARTNERS: Sale of Assets to Pay Off Claims [^] Large Companies with Insolvent Balance Sheet ********* 232 SEIGEL: Seeks to Hire Offit Kurman as Special Counsel --------------------------------------------------------- 232 Seigel Development LLC and 232 Seigel Acquisition LLC seek approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Offit Kurman, P.A. as their special corporate and litigation counsel. The firm will represent the Debtors in matters related to real estate, litigation and bankruptcy law. The firm's billing rates range from $400 per hour to $750 per hour. Jason A. Nagi, chair of Offit, will charge $575 per hour for his services. Mr. Nagi disclosed in a court filing that his firm and its professionals have no connection with the Debtor, creditors of the Debtor or any other party in interest. The firm can be reached through: Jason A. Nagi, Esq. Offit Kurman, P.A. 590 Madison Ave., 6th floor New York, NY 10022 Tel: 212-545-1900 Fax: 212-545-1656 Email: Jason.Nagi@offitkurman.com About 232 Seigel Acquisition 232 Seigel Acquisition classifies its business as single asset real estate (as defined in 11 U.S.C. Section 101(51B)). It is the owner of a fee simple title to certain real property in Brooklyn, N.Y., having a comparable sale value of $18 million. 232 Seigel Development and its affiliate, 232 Seigel Acquisition LLC, sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 20-22844 and 20-22845) on July 14, 2020. 232 Seigel Acquisition disclosed total assets of $18,000,000 and total liabilities of $7,112,316. The Honorable Robert D. Drain is the case judge. The Debtors tapped Backenroth Frankel & Krinsky, LLP and Offit Kurman, P.A. as its bankruptcy counsel and special counsel, respectively. 3G VENTURE: Unsecured Creditors to Get 100% in Plan --------------------------------------------------- 3G Venture II, LLC's Plan of Reorganization as it may be amended or modified, provides for 100% of the Allowed Claims of the Debtor. The Plan will be effectuated by the refinance of the Property located at Lot 4 and Lot 5, Corporate Ridge Filing No. 1, (street numbers: 1565, 1584, 1595, 1615, 1625, and 1605 High Tech Way, Colorado Springs, CO 80907 fka W Garden of the Gods Road) ("Property"). It is anticipated that the refinance will pay the Allowed Secured Claims of the Debtor within 90 days of the effective date. The remaining class of creditors after that time will only be the general unsecured creditor. If the claim is Allowed then the Property will be sold and the claim will be paid in full. There are only three (3) creditors in this case, two (2) are secured and one (1) is unsecured. Attorneys for Debtors: Robertson B. Cohen 1720 Bellaire St; Ste 205 Denver, CO 80222 Phone: (303) 933-4529 Fax: (866) 230-8268 rcohen@cohenlawyers.com A copy of the Plan of Reorganization dated March 8, 2021, is available at https://bit.ly/2PNzrl8 from PacerMonitor.com. About 3G Venture II 3G Venture II, a California bitcoin mining company, sought Chapter 11 protection (Bankr. D. Colo. Case No. 20-17804) on Dec. 8, 2020, disclosing at least $10 million in assets and less than $10 million in liabilities. Cohen & Cohen, P.C. is the Debtor's legal counsel. 53 STANHOPE: Amends Plan to Address Court Denial Order ------------------------------------------------------ 55 Stanhope LLC, 119 Rogers LLC, 127 Rogers LLC, C & YSW, LLC, Natzliach LLC, 106 Kingston LLC, and 167 Hart LLC filed a Joint Second Amended Disclosure Statement. Before filing the Plan and Disclosure Statement, the Jointly Administered Debtors litigated to completion the Jan. 21, 2020 Amended Plan and Amended Disclosure Statement. By bench ruling on Dec. 17, 2020, the Bankruptcy Court denied confirmation without prejudice to further amended plans and disclosure statements. As to the Debtors, the Bankruptcy Court found that the defaults asserted by Brooklyn Lender LLC ("Brooklyn Lender" or "Mortgagee") were not grounds for acceleration. Accordingly, the Debtors have filed the Plan. At the trial of the 2020 Plan, the Bankruptcy Court denied the Debtors' motion to subordinate the Israeli Claims to shareholder status, but found that for Plan purposes, the Claims would be estimated as having no value. The Plan treats claims as follows: * Class 1 - Allowed Secured Claims for New York City real estate taxes and other non-Class 2 Liens. The Debtors estimate the aggregate amount of all Class 1 Claims is approximately $394,914 (as of 1/11/21). * Class 2 - Allowed Secured Claims of the Mortgagee. The Debtors estimate the aggregate of all Class 2 Claims is $11,866,021 (as of 3/31/21). On the Effective Date, pursuant to section 1124 of the Bankruptcy Code, each Debtor shall cure pre-Petition Date and post-Petition Date monetary defaults, if any, and then comply with its obligations under the applicable loan documents through maturity. * Class 4 - Allowed General Unsecured Claims. The Debtors estimate that the aggregate amount of all Class 4 Claims is approximately $18,432 plus the $2,500,000 Claim asserted by Joseph Wagshall against C&YSW and Natzliach. The Debtors assume for Plan feasibility purposes that Joshua Wagshall will elect to receive interests instead of Cash on his Class 4 Claims. Effective Date payments under the Plan will be paid from a cash contribution to be funded by Interest holders. Post-confirmation debt service shall be paid from the Debtors' net operating income. Attorneys for the Debtors: Mark Frankel BACKENROTH FRANKEL & KRINSKY, LLP 800 Third Avenue New York, New York 10022 Tel: (212) 593-1100 A copy of the Joint Second Amended Disclosure Statement is available at https://bit.ly/3cvIMFW from PacerMonitor.com. About 53 Stanhope LLC 53 Stanhope LLC and 17 affiliates are primarily engaged in renting and leasing real estate properties. 53 Stanhope LLC and its affiliates filed voluntary petitions seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-23013) on May 20, 2019. The petitions were signed by David Goldwasser, authorized signatory of GC Realty Advisors. Mark A. Frankel, Esq., at Backenroth Frankel & Krinsky, LLP, represents the Debtors. Each of the Debtors is an affiliate of 73 Empire Development LLC, which sought bankruptcy protection (Bankr. S.D.N.Y. Case No. 19-22285) on Feb. 21, 2019. Its case is not jointly administered with those of the Debtors. Backenroth Frankel also serves as counsel to 73 Empire Development. 7 GENERAL CONTRACTING: Ferguson Says Disclosures Insufficient ------------------------------------------------------------- Creditor Ferguson Enterprises, Inc., objects to the Disclosure Statement filed by Debtor 7 General Contracting, Inc. Ferguson claims that the information provided by Debtor as to the real property leases it intends to assume is inadequate. The Debtor's Disclosure Statement should include far more information as to the leases so that prospective voting entities -- including unsecured creditors -- can make an informed decision. Ferguson points out that the Disclosure Statement fails to provide any information as to the value of the equity of Debtor. Moreover, the Disclosure Statement fails to detail any efforts by Debtor to expose the equity to the market. Ferguson asserts that the Debtor's Disclosure Statement fails to provide any information as to the claims and causes of action that Debtor intends to preserve via the Plan. In addition, neither the Plan nor the Disclosure Statement indicate where any proceeds received from such claims might be distributed. Ferguson further asserts that the Disclosure Statement fails to discuss how the outcome of the pending objection to the claim of the Internal Revenue Service will impact the Plan and claims of unsecured creditors under the Plan. Ferguson states that the Disclosure Statement fails to provide sufficient details about Debtor's business transactions with related entity CPVE, LLC -- which is owned by Debtor's primary officer and owner, Heath Mason. Given CPVE's insider status, more detailed information as to Debtor's pre and post-bankruptcy transactions with CPVE should be provided and highlighted in the Disclosure Statement. A full-text copy of Ferguson's objection dated March 9, 2021, is available at https://bit.ly/2OPvkEL from PacerMonitor.com at no charge. Counsel for Ferguson Enterprises: Stephen B. Porterfield Thomas B. Humphries SIROTE & PERMUTT, P.C. 2311 Highland Avenue South P.O. Box 55727 Birmingham, AL 35255-5727 Tel: (205) 930-5100 Fax: (205) 930-5101 E-mail: sporterfield@sirote.com thumphries@sirote.com About 7 General Contracting 7 General Contracting, Inc., owns a raw land located in Gulfport, Mississippi, having an appraised value of $2.2 million. 7 General Contracting, Inc., based in Loxley, AL, filed a Chapter 11 petition (Bankr. S.D. Ala. Case No. 20-10172) on Jan. 17, 2020. In the petition signed by Charlie Heath Mason, president, the Debtor disclosed $2,442,634 in assets and $11,581,296 in liabilities. The Hon. Henry A. Callaway presides over the case. Robert M. Galloway, Esq., at Galloway Wettermark & Rutens, LLP, serves as bankruptcy counsel. 7 GENERAL: PNC's Joinder in Ferguson's Objection to Disclosure -------------------------------------------------------------- PNC Bank, N.A., joins in Ferguson Enterprises, Inc.'s objection to the Disclosure Statement filed by the Debtor 7 General Contracting, Inc., and further states as follows: * PNC holds a $537,913.45 unsecured claim against the Debtor which filed a proof of claim as an unsecured creditor for this sum on April 7, 2020. * Pursuant to the terms of the filed Plan the Debtor proposes to pay unsecured creditors a total of $273,000.00 over a period of 63 months, $225,000.00 of which is paid at end of the Plan, assuming the Debtor is still in operation. * The absolute priority rule requires that, if holders of unsecured claims in a designated class receive less than payment in full on account of their claims, no holders of claims or equity interests in a junior class may receive property under the plan on account of such junior claims or interests. * Notwithstanding the miniscule distribution to unsecured creditors, pursuant to Section 5.9 of the Plan, Charlie Heath Mason proposes to retain all of the equity in the Debtor, while further making seemingly unnecessary distributions through property leases to an insider, CPVE, LLC. * PNC requires additional information regarding these leases, together with the additional information pointed out by Ferguson, in order to make an informed decision regarding the Plan. A full-text copy of PNC's objection dated March 9, 2021, is available at https://bit.ly/3vqg0PF from PacerMonitor.com at no charge. Attorney for Creditor: Alto Lee Teague, IV Engel, Hairston & Johanson, P.C. P.O. Box 11405 Birmingham, AL 35202 205-328-4600 About 7 General Contracting 7 General Contracting, Inc., owns a raw land located in Gulfport, Mississippi, having an appraised value of $2.2 million. 7 General Contracting, Inc., based in Loxley, AL, filed a Chapter 11 petition (Bankr. S.D. Ala. Case No. 20-10172) on Jan. 17, 2020. In the petition signed by Charlie Heath Mason, president, the Debtor disclosed $2,442,634 in assets and $11,581,296 in liabilities. The Hon. Henry A. Callaway presides over the case. Robert M. Galloway, Esq., at Galloway Wettermark & Rutens, LLP, serves as bankruptcy counsel. 730 OAKLAND: Seeks to Hire Marcus & Millichap as Real Estate Broker ------------------------------------------------------------------- 730 Oakland LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Marcus & Millichap Real Estate Investment Services of North Carolina, Inc. as its real estate broker. The firm will be advising the Debtor in connection with the marketing of its property located at 730 N. Oakland St., Arlington, Va., and the consummation of any sales contracts. The firm will receive as compensation 3.5 percent of the gross purchase price, except that if the gross purchase price exceeds $4 million, then the commission would be 3.75 percent thereof. Millichap is a disinterested person within the meaning of Section 327 of the Bankruptcy Code, according to court filings. The firm can be reached through: John M. Zupancic III Marcus & Millichap Real Estate Investment Services 999 Waterside Drive, Suite 2525 Norfolk, VA 23510 Phone: (757) 777-3737 Fax: (757) 493-3953 About 730 Oakland 730 Oakland LLC classifies its business as single asset real estate (as defined in 11 U.S.C. Section 101(51B)). 730 Oakland filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Case No. 21-10040) on Jan. 12, 2021. Raymond C. Schupp, managing member, signed the petition. In its petition, the Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. Judge Brian F. Kenney oversees the case. Steven B. Ramsdell, Esq., at Tyler, Bartl & Ramsdell, P.L.C. serves as the Debtor's counsel. AADVANTAGE LOYALTY: Fitch Assigns BB(EXP) Rating on $7.5-Bil. Debt ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB(EXP)' rating with a Negative Outlook to the approximately $7.5 billion in financing to be co-issued by AAdvantage Loyalty IP Ltd. (AAdvantage IP) and American Airlines, Inc. (American). The rating considers a maximum program capacity of $10 billion. AAdvantage IP is a special purpose vehicle (SPV) incorporated under the laws of the Cayman Islands for the purpose of this transaction. AAdvantage IP is an indirect wholly owned subsidiary of American Airlines. The proceeds of the issuance will be used to pay down the loan with the U.S. Treasury under the CARES Act and to fund the reserve account. AAdvantage IP will in turn use net proceeds to make an intercompany loan to American, where net proceeds would be used for general corporate purposes, which may include the repayment of other indebtedness. The term loan and notes, referred to as the financing or debt facilities, are pari passu and supported by the same collateral and security package; the co-issuer and debt facilities are rated 'BB(EXP)' with a Negative Outlook. DEBT RATING ---- ------ American Airlines Loyalty Program Senior Secured Class A Notes LT BB(EXP) Expected Rating Senior Secured Class B Notes LT BB(EXP) Expected Rating Senior Secured Term Loan LT BB(EXP) Expected Rating TRANSACTION SUMMARY The transaction is backed by license-payment obligations from American and cash flow generated by the AAdvantage Loyalty program. As part of the financing structure, the intellectual property (IP) assets associated with the AAdvantage loyalty program and AAdvantage agreements, including co-branded agreement with Citibank, N.A. and Barclays Bank Delaware, related to AAdvantage program are transferred to the bankruptcy-remote IP SPV, AAdvantage IP. AAdvantage IP grants a worldwide license to American and its subsidiaries to use the IP to operate the loyalty program. In return, the licensee, American, will in return pay a monthly license fee equivalent to all the cash collections generated by the sale of miles to American as governed through an Intercompany Agreement. Additionally, certain third-party agreements will be assigned to AAdvantage IP and payment for the purchase of AAdvantage miles from certain third parties will be remitted directly to a collection account held at Wilmington Trust, National Association in the name of AAdvantage IP. These third-party agreements include the co-brand agreements with Citi and Barclays, the two largest third-party partners of AAdvantage. The debt facilities will be guaranteed, on a joint and several basis, by the parent, American Airlines Group Inc, and certain subsidiaries of the parent, American, namely AAdvantage Holdings 1, Ltd. (HoldCo 1) and AAdvantage Holdings 2, Ltd (HoldCo 2). The issuers also grant additional security to the lenders/bondholders, including a first-priority-perfected security interest in cash flows from the AAdvantage program, a pledge of all rights under contracts/agreements related to the AAdvantage program, and a pledge of the transaction accounts (including the collection, payment and reserve accounts) and a pledge over the equity interests in AAdvantage IP, HoldCo1 and HoldCo2. Fitch's rating addresses timely payment of interest and repayment of scheduled principal when due and by the final legal maturity date. KEY RATING DRIVERS Credit Quality of American: Cash flows backing the transaction will primarily come from payment obligations from American under the licensing agreement related to IP owned by the IP SPV and cash flows received from third-party partners related to miles issued to the card holders. Therefore, the Issuer Default Rating (IDR) of American acts as the starting point for the analysis. American is rated at 'B-'/Outlook Negative by Fitch. Performance Risk and GCA Score: Timely payment on the debt facilities depends on the ongoing performance of the licensee, American. American 's going concern assessment (GCA) score of '2' acts as a cap for the transaction rating. The GCA score provides an indication of the likelihood that American continues to operate in the event of default and Chapter 11 bankruptcy. The GCA score of '2' allows for a four-notch rating differential depending on American 's IDR and the issuance's default rating. Strategic Nature of Assets (Likelihood of License Agreement Affirmation): The affirmation factor, which measures the likelihood that American would view this obligation as strategic and would affirm the license in the event of a Chapter 11 bankruptcy, is considered high by Fitch. The strategic importance of the IP assets to American 's operations, coupled with the structural incentives in place, supports this assessment. The assessment of high allows the transaction to obtain up to a four-notch uplift from American's current IDR of 'B-'/Outlook Negative. The $10 billion issuance is approximately 20% of American's total liabilities, and this ratio is considered small enough to differentiate the transaction rating from the IDR of American. Furthermore, in its DSCR calculations, Fitch considers the rebound from the current low air-traffic level caused by the coronavirus outbreak to be 96% for its base case by YE 2023. The DSCR based on the maximum debt service is estimated to be approximately 1.94x, considering an even tranche split, which is subject to change prior to closing. Additionally, during the amortization period, an average DSCR of 3x is estimated for years three through eight. Overall, Fitch estimates cash flows to be sufficient to meet debt service obligations. Coronavirus Risk Included in Affirmation Factor: Fitch has made assumptions about the spread of the coronavirus and the economic impact of the related containment measures. As far as this transaction is concerned, the time to return to, or near, pre-crisis levels is the main consideration. In particular, Fitch designed a base case scenario in which a full recovery occurs by YE 2023, and a downside scenario, characterized by a more severe and prolonged period of stress. Both these scenarios will mainly affect the affirmation factor, as the utility from a loyalty program may decline if global travel remains sluggish indefinitely. Fitch estimates cash flow to be more than sufficient to meet debt service obligations in both the baseline and downside scenario it has tested. Asset Isolation and Legal Structure: Fitch assesses the legal protections present in the U.S. bankruptcy code, as well as the structural features incorporated into the transaction. In addition to having the IP assets and the AAdvantage agreements legally conveyed, lenders/bondholders have a first-perfected security interest in the contractual obligations due from American and third-party partners. The legal structure incentivizes American to continue to make payments on the license. Creditors would also benefit from other structural features, including potential liquidated damages and a three-month interest liquidity reserve. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action include: -- Fitch does not anticipate developments with a high likelihood of triggering an upgrade. If American's IDR is upgraded, Fitch will consider whether the same uplift could be maintained or if it should be further tempered in accordance with criteria. Factor that could, individually or collectively, lead to negative rating action include: -- The rating is sensitive to changes in the credit quality of American Airlines, Inc., which acts as licensee under the IP license agreement. Any change in IDR can lead to a change on the rating. Additionally, a reassessment of GCA score and the affirmation factor from high to medium will lead to a change in the ratings. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. AADVANTAGE LOYALTY: Moody's Rates New Secured Bank Loans 'Ba2' -------------------------------------------------------------- Moody's Investors Service assigned Ba2 ratings of American Airlines, Inc.'s ("American") AAdvantage loyalty program financing. American and its co-borrower/co-issuer, newly-created, bankruptcy-remote Cayman Islands entity, AAdvantage Loyalty IP Ltd. ("Loyalty Co." and together with American, "co-issuers"), plan to raise at least $7.5 billion across a new senior secured term loan and new senior secured notes. Moody's also affirmed its debt ratings of American Airlines Group Inc. ("Parent") and American, including the B2 corporate family rating, Ba3 senior secured and Caa1 senior unsecured ratings. Moody's ratings of American's enhanced equipment trust certificates and SGL-3 speculative grade liquidity rating are unchanged. The rating outlook is negative. The new debt instruments will be secured on a pari passu first lien basis by the AAdvantage loyalty program ("Program"), including AAdvantage Agreements, substantially all Program cash receipts and cash accounts and Program intellectual property. American will also pledge its equity interests in its wholly-owned Cayman Islands intermediate holding company subsidiaries created as part of the transaction, AAdvantage Holdings 1, Ltd. and AAdvantage Holdings 2, Ltd. The Program licenses and sub-license that will be created to facilitate the transaction will also be part of the security package. These bankruptcy-remote entities, along with Parent, will guarantee the performance and obligations of the co-issuers. American will receive the net proceeds of the new debt via intercompany loans from the new Cayman entities. It will use the proceeds for general corporate purposes, including the retirement of the $550 million secured loan from the US Treasury obtained pursuant to the Coronavirus Aid, Relief and Economic Security ("CARES") Act. This loan is presently secured by the AAdvantage program. American may also use some of the net proceeds for repayment of other debt. The affirmation of the B2 CFR reflects the company's still sufficient liquidity twelve months into the coronavirus pandemic. The Payroll Support Program Extension ("PSP2") of the Consolidated Appropriations Act, 2021 enacted in late December 2020, provides about $3 billion, effectively funding the about $3 billion of cash burn for Q1 2021 to which American previously guided. Moody's expects liquidity of approximately $15 billion at the end of Q1. Anticipation of increasing travel demand in upcoming months to levels that will significantly reduce daily cash burn further supports the ratings affirmations. The negative outlook considers Moody's opinion that the timing of the start of a bonafide and sustained recovery of passenger demand remains uncertain, notwithstanding the increasing vaccination volumes in and outside the US. RATINGS RATIONALE The B2 CFR reflects the strain of the coronavirus on American because of its increased financial leverage heading into 2020, the related higher debt service burden compared to those of its closest US peers and its larger size. However, the company has raised sufficient amounts of capital during the pandemic to mitigate liquidity risk, well into 2022. The company has raised approximately $2.5 billion of new equity so far, or $3.5 billion including the unsecured convertible notes issued in June 2020. With the most recent At-the-Market equity offering for $1.1 billion announced January 29th, additional new equity could come into the capital structure, if needed. American's scale and competitive position as the world's second largest airline based on revenue in 2019 currently mitigates downwards rating pressure. It's larger domestic network than those of Delta Air Lines, Inc. or United Airlines Holdings, Inc. will drive quicker gains in traffic during the early stages of the recovery in passenger demand through 2021. Moody's expects American and its oneworld partner, British Airways, Plc to retain their lead between New York and London Heathrow as international travel ramps up with a few months lag versus US domestic and regional travel demand. With the B2 CFR, Moody's also recognizes that notwithstanding its size, American has, for years, sustained an inferior operating margin relative to the industry, which has constrained its operating cash flow. The Ba2 rating assigned to the AAdvantage loyalty financing reflects the importance of the Program to American's franchise, operations and cash flows. In Moody's opinion, this lowers the probability of default of the financing relative to that of American's other senior secured obligations rated Ba3. Moody's expects that the program's cash flows will remain sufficient to meet the transaction's debt service obligations because of the recurring use of the co-branded credit cards over the economic cycle. This will sustain purchases of miles by program partners, even if American's credit quality further weakens. In the event of a Chapter 11 reorganization by American, Moody's expects that the company would quickly apply to the bankruptcy court to affirm the transaction's sub-license of intellectual property, as the transaction's terms require. This would result in no interruption in the program's cash flows. Without the sub-license remaining in place, American would not be able to use the program and related cash flows would cease. Such a scenario would greatly diminish the company's cash flows, straining its then current operations and reorganization value. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if American's bookings do not begin to materially increase by mid-2021, from the recent trough in January and February 2021. Moody's expectation of cash and revolver availability falling below $8 billion after exhausting remaining alternate sources of liquidity could also lead to a downgrade. The inability to strengthen its financial profile through 2023 would also pressure the B2 CFR. For example, debt-to-EBITDA sustained above 6.5x, funds from operations plus interest-to-interest remains below 2.5x, or EBIT margin remains below 7.5%. There will be no upwards pressure on the ratings until after passenger demand and revenues substantially increase to near pre-coronavirus levels. Stronger credit metrics, including EBITDA margins above 14%, debt-to-EBITDA approaching 5x and funds from operations plus interest-to-interest above 3.25x could support an upgrade. LIST OF AFFECTED RATINGS: Issuer: AAdvantage Loyalty IP Ltd. Assignments: Senior Secured Bank Credit Facility, Assigned Ba2 (LGD2) BACKED Senior Secured Regular Bond/Debenture, Assigned Ba2 (LGD2) Outlook Actions: Outlook, Assigned Negative Issuer: American Airlines Group Inc. Affirmations: LT Corporate Family Rating, Affirmed B2 Probability of Default Rating, Affirmed B2-PD BACKED Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5) Outlook Actions: Outlook, Remains Negative Issuer: American Airlines, Inc. Affirmations: BACKED Senior Secured Bank Credit Facility, Affirmed Ba3 (LGD3) BACKED Senior Secured Regular Bond/Debenture, Affirmed Ba3 (LGD3) Senior Secured Bank Credit Facility, Affirmed Ba3 (LGD3) Outlook Actions: Outlook, Remains Negative Issuer: Pennsylvania Economic Dev. Fin. Auth. Affirmations: Senior Unsecured Revenue Bonds, Affirmed Caa1 (LGD5) PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Passenger Airline Industry published in April 2018. COMPANY PROFILE American Airlines Group Inc. (NASDAQ: AAL) is the holding company for American Airlines, Inc. Together with regional partners, operating as American Eagle, the airlines operated an average of nearly 6,800 flights per day to more than 365 destinations in 61 countries before the coronavirus pandemic. The company reported $17.3 billion of revenue for 2020, down from $45.8 billion for 2019. ALAMO CHANDLER: Unsecureds Will be Paid in Full Under Plan ---------------------------------------------------------- Alamo Chandler, LLC, Alamo Gilbert, LLC and Alamo Tempe, LLC, submit to the Court and creditors of the Debtors' Estates a Second Amended Joint Plan of Reorganization Dated March 10, 2021. This Plan is being proposed by the Debtors to reorganize their liabilities, so as permit continued operations from which Creditors and Interest Holders can be paid, and avoid the disastrous effects of a liquidation. Class 5-A – Allowed Unsecured Claims will be paid from the Projected Disposable Income of the Debtor against which each creditor has an allowed claim. As set forth in the Projections, the net Projected Disposable Income to be generated by Alamo Gilbert in the three years following the Effective Date is expected to be $69,559. As set forth in the Projections, the net Projected Disposable Income to be generated by Alamo Chandler in the three years following the Effective Date is expected to be $9,010. As set forth in the Projections, the net Projected Disposable Income to be generated by Alamo Tempe in the three years following the Effective Date is expected to be $25,158. Any payments required to be paid to the Trustee after the Effective Date shall be paid from the implicated Debtor's Projected Disposable Income, and reduce the extent of the payments to which the holders of Claims in Class 5-A would otherwise be entitled. With respect to Class 6-A – Allowed Interests, on the Effective Date, PAH will transfer a portion of its Allowed Interest in each Debtor to the Hold Cos., so that each Hold Co. owns a 50.1% majority and controlling interest in each of the Reorganized Debtors. The Plan will be funded through the Reorganized Debtors' continued operations. The Reorganized Debtors shall also have the ability, at any time, to enter into any sale, merger, or other transaction, so long as, upon the closing of any such transaction, the Secured Claims relating to any assets to be transferred, and the payments yet to be made to Unsecured Creditors holding Claims against the implicated Reorganized Debtor under Class 5-A of the Plan, are paid in full. Attorneys for the Debtors: Wesley D. Ray Philip R. Rudd SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Telephone: 480.425.2600 Facsimile: 480.970.4610 E-mail: Wesley.Ray@SacksTierney.com Philip.Rudd@SacksTierney.com A copy of the Second Amended Joint Plan of Reorganization is available at https://bit.ly/2Q0vw4L from PacerMonitor.com. About Alamo Chandler Alamo Tempe LLC, Alamo Gilbert LLC,and Alamo Chandler LLC are Alamo Drafthouse franchisees, owning three theatre locations in Phoenix. Craig Paschich of Paschich Alamo Holdings LLC is the majority owner of these franchises. Alamo Drafthouse Cinema is an American cinema chain founded in 1997 in Austin, Texas and famous for serving dinner and drinks during the movie. Alamo Chandler LLC, Alamo Tempe LLC, and Alamo Gilbert LLC sought Chapter 11 protection (Bankr. D. Ariz. Lead Case No. 20-05017) on May 13, 2020. In the petitions signed by Craig Paschich, member of Paschich Alamo Holdings, Alamo Chandler disclosed total assets of $2,790,300, and total liabilities of $2,961,665; Alamo Gilbert listed total assets of $2,040,234 and total liabilities of $1,732,004; and Alamo Tempe LLC disclosed total assets of $1,023,326 and total liabilities of $836,730. Wesley D. Ray, Esq., at Sacks Tierney P.A., serves as bankruptcy counsel to the Debtors. ALAMO DRAFTHOUSE: Expects More Closings as Part of Bankruptcy ------------------------------------------------------------- Alex Wolf of Bloomberg Law reports that dine-in movie theater Alamo Drafthouse Cinemas Holdings LLC anticipates closing more locations as part of its bankruptcy reorganization and sale. The Austin, Texas-based company expects to reject some additional theater leases as part of a restructuring deal, Alamo said Thursday in a court filing. A group of affiliates of Fortress Investment Group and Altamont Capital Partners has offered to buy Alamo's remaining business with a credit bid covering a $60 million bankruptcy loan. And the group and Alamo continue to review which of 18 theater leases should be included in the sale, Alamo said. 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. ALCOA NEDERLAND: Moody's Gives Ba1 Rating on New Unsecured Notes ---------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Alcoa Nederland Holding B.V.'s (ANHBV) new senior unsecured notes, guaranteed by Alcoa Corporation (Alcoa) and subsidiaries. All other ratings, including the Speculative Grade Liquidity Rating remain unchanged. The proceeds of the notes along with balance sheet cash will be used to repay the outstanding amount of the 6.75% senior unsecured notes due 2024, contribute approximately $500 million to the U.S. defined benefit pension plans and pay the associated fees and expenses. Assignments: Issuer: Alcoa Nederland Holding B.V. Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD4) RATINGS RATIONALE Moody's views the repayment of $750 million notes due 2024 and the $500 million prefunding of the U.S. pension plan as credit positive. The transaction will effectively lead to lower Moody's-adjusted leverage, extend the debt maturity profile and reduce exposure to the volatility risk associated with pension obligations, while allowing the company to maintain its excellent liquidity position. Additionally, the pension contribution is expected to eliminate the U.S. pension funding requirement for about 3 years, enhancing the company's financial flexibility. The Ba1 CFR at ANHBV considers its parent's (Alcoa) position as a leading producer of bauxite, alumina and aluminum (including cast products), geographical and aluminum product diversity, and operational quality. Alcoa is well positioned within its products and markets served. Additionally, the company has a good cost production profile, driven by the continued refocusing of its refining and smelting system, reducing operating costs and streamlining the organizational structure, selling non-core assets, curtailing its higher cost facilities or working to reposition them lower on the global cost curve where possible. Although Alcoa has 3rd party sales in both its bauxite and alumina segments, the CFR considers the company's exposure to essentially a single metal commodity -- aluminum - as the demand for bauxite and alumina is directly correlated to the demand for aluminum. Additionally, the alumina and aluminum markets exhibit volatility driven by global growth expectations and industrial production levels. Further considerations include industry overcapacity, particularly given the continued growth in China's smelting capacity, which has further exacerbated the supply/demand imbalance in 2020 leading to the widening of the surplus in the aluminum market. The sharp rebound in Aluminum prices (LME) from the multi-year lows seen in early 2020 to above the pre-pandemic levels, has been driven by improving fundamentals, rebound in automotive production, recovery in China's aluminum demand and output in part due to significant infrastructure and construction stimulus programs, as well as the investment fund positioning. However, Moody's expects that aluminum prices will moderate from currently high levels. Continued aluminum production growth in China in 2021 is expected to partially offset the anticipated increase in global aluminum consumption, leading to a more moderate but still significant market surplus in 2021. Alcoa generated about $1.1 billion in Moody's-adjusted EBITDA in 2020, lower than in the prior 3 years, mainly due to the impact of coronavirus on global economy and aluminum demand, particularly in 1H2020. Weaker earnings combined with higher absolute levels of debt resulted in debt/EBITDA ratio, as adjusted by Moody's, climbing to 3.9x at the year-end from 2.3x in 2019. While the leverage is currently high for the rating, the repayment of 2024 notes and higher projected EBITDA generation in 2021 is expected improve the leverage to the range of 2.0-2.5x by the end of 2021. The stable outlook incorporates Alcoa's excellent liquidity position at December 31, 2020 and anticipates that the company will remain focused on its cash generation and completing its asset portfolio review to improve its financial and operating performance. Moody's expect Alcoa will benefit from increased higher aluminum and alumina prices relative to 2020, cost reduction measures and asset portfolio optimization initiatives. Additionally, relatively low fuel input costs and benefits from depreciated currencies in countries where Alcoa operates will provide some mitigation. The SGL-1 speculative grade liquidity rating acknowledges the company's excellent liquidity as evidenced by its cash position of $1.6 billion at December 31, 2020 and its $1.5 billion secured revolving credit facility (RCF -unrated) at Alcoa Nederland, guaranteed by Alcoa and maturing in November 2023. We expect Alcoa to generate free cash flow in the next 12 months. The revolver had about $1.49 billion availability at December 31, 2020 after the use of $14 million in letters of credit. There are no material maturities until the revolver expires in November 2023. The RCF is secured by substantially all assets. The RCF was amended in April 2020 to provide that for the 4 quarters from April 1, 2020 the consolidated debt/EBITDA covenant shall not exceed 3x during the amendment period and returning to 2.5x thereafter. The Consolidated EBITDA/interest covenant requirement remained at no less than 5x. In June 2020, the RCF was further amended to adjust the calculations for cash interest expense and total indebtedness for the 4 consecutive quarters from June 2020 through June 2021. Concurrently with the transaction, the company entered into another amendment to the RCF to increase the permitted maximum leverage to 2.75x from 2.5x and lower the minimum interest coverage ratio requirement from 5x to 4x, among other changes to provisions that will provide for higher debt capacity. As of December 31, 2020, Alcoa was in compliance with all covenants and Moody's expect the company to remain in compliance in the next 12 to 18 months. The Ba1 senior unsecured debt rating, at the same level as the CFR, reflects the preponderance of unsecured debt in the capital structure, given the level of unsecured notes and unfunded pension obligations relative to the $1.5 billion secured revolving credit facility. As a primary aluminum producer, Alcoa faces numerous environmental risks across the totality of its operations with regulations varying significantly from country to country and region to region. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Given the volatility in the commodities in which Alcoa participates and potential for wide swings in performance, further upward rating movement could be limited. However, ratings could be upgraded should Alcoa be able to sustain an EBIT margin of at least 17.5%, EBIT/interest of at least 7x, and debt/EBITDA of no more than 2x. Continued discipline in its capital allocation strategy and financial policy would also be a consideration. The ratings could be downgraded should EBIT/interest be sustained below 4.5x, EBIT margins be less than 8%, leverage exceed and be sustained above 2.75x as the impact of the current difficult economic conditions ease in 2021. Substantial negative free cash flow and liquidity contraction would also be a downgrade consideration. Alcoa Nederland is a wholly owned subsidiary of Alcoa Corporation. Headquartered in Pittsburgh, PA, Alcoa holds the bauxite, alumina, aluminum, cast products and energy business. Alcoa's bauxite and alumina business is conducted through its AWAC joint venture with Alumina Ltd (60% Alcoa/40% Alumina Limited). Revenues for the twelve months ended December 31, 2020 were $9.3 billion. The principal methodology used in this rating was Mining published in September 2018. ALIXPARTNERS LLP: Moody's Completes Review, Retains B2 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of AlixPartners, LLP and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations AlixPartners B2 corporate family rating is constrained by a moderately high leverage profile, risks related to the employee retention, and financial policies that focus on debt funded shareholder return. The rating is supported by strong growth in earnings and top line, a solid liquidity profile, consistency in operating margins and performance, and diversity among product offerings. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. ALKERMES INC: Moody's Gives Ba3 Rating on New Secured Term Loan --------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the new senior secured term loan of Alkermes, Inc., a subsidiary of Alkermes plc (collectively "Alkermes"). There are no changes to Alkermes' existing ratings including the Ba3 Corporate Family Rating, the Ba3-PD Probability of Default Rating, Ba3 (LGD3) senior secured rating, or the SGL-1 Speculative Grade Liquidity Rating. The outlook remains unchanged at stable. Use of proceeds from the new term loan will include refinancing an existing senior secured term loan and general corporate purposes. Ratings assigned: Ba3 (LGD3) senior secured term loan RATINGS RATIONALE Alkermes' Ba3 Corporate Family Rating reflects its expertise in drug delivery technology and its high gross margins. The rating also reflects the company's niche specialization in conditions of the central nervous system including schizophrenia and substance abuse disorders, which have high societal need. The company's growth prospects are good, driven by rising sales of Vivitrol and Aristada. In addition, growth will be driven by the anticipated launch of Lybalvi (ALKS 3831), along with royalties from Biogen Inc.'s recently launched multiple sclerosis drug, Vumerity. The rating also reflects cash levels in excess of debt and the considerable value in Alkermes' existing revenue streams and its pipeline. Risk factors include limited profitability and cash flow until product sales and royalties substantially increase, pipeline execution risks, and revenue concentration in the schizophrenia category and in the US market. In addition, several products including Vivitrol face unresolved patent challenges from generic drug companies. ESG risks are material to Alkermes' credit profile. The company is subject to above-average regulatory risks given its concentration in the US market, where various legislative and regulatory proposals are aimed at drug pricing. These are driven by demographic and societal trends that contribute in escalating healthcare spending and proposals to reduce costs. The company's focus on products that treat schizophrenia and substance abuse disorders results in reliance on government payors including Medicaid, which increases Alkermes's exposure to these risks. Conversely, Alkermes' products treat conditions of high public health need including schizophrenia and opioid dependence. Among governance considerations, the company's financial policies are conservative, with very low debt levels relative to its equity value and strong liquidity. The outlook is stable, reflecting Moody's expectations for good top-line growth driven by Vivitrol and Aristada and the anticipated launch of Lybalvi. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade include strong growth in key products, launches of new drugs from the pipeline, consistently positive earnings and free cash flow, and debt/EBITDA sustained below 4.0 times. Factors that could lead to a downgrade include slow revenue growth due to competitive dynamics or pricing pressure, unexpected generic competition, material pipeline setbacks, incremental debt, or prolonged negative earnings and cash flow. Alkermes, Inc. is a US subsidiary of Dublin, Ireland-based Alkermes plc (collectively "Alkermes"). Alkermes is a specialty biopharmaceutical company that develops long-acting medications for the treatment of the central nervous system. Revenues in 2020 totaled approximately $1.0 billion. The principal methodology used in these ratings was Pharmaceutical Industry published in June 2017. AMERICAN AIRLINES: Fitch Affirms 'B-' LT IDR, Outlook Negative -------------------------------------------------------------- Fitch Ratings has affirmed American Airlines' Long-Term Issuer Default Rating (IDR) at 'B-' and has assigned a Negative Rating Outlook. The ratings have been removed from Rating Watch Negative. In addition, Fitch has downgraded American's existing senior secured debt ratings to 'B'/'RR3' from 'B+'/ 'RR2'. The removal of the Negative Rating Watch follows several positive events since Fitch's prior review. Liquidity has been bolstered by an increased allocation under the government loan program (to be replaced by the loyalty program issuance) and a renewed payroll support program. Meanwhile, the rollout of multiple effective coronavirus vaccines has increased the likelihood of a meaningful rebound in air travel starting some time in 2021, lowering the likelihood that American will continue to burn cash for a prolonged period. Positive factors are tempered by air traffic that remains at low levels, which has driven down Fitch's expectations for passenger traffic for the year. The Negative Outlook reflects continued pressure on the airline industry and uncertainty around the pace of recovery. The downgrade of American's senior secured debt to 'B'/'RR2' from 'B+'/'RR3' reflects the growing amount of senior secured debt in American's capital structure which may dilute recovery prospects in a distress scenario. KEY RATING DRIVERS Loyalty Program Debt Issuance: American is planning to issue new debt secured by the company's loyalty program. More information about the transaction that was announced earlier today can be found in Fitch's press release found on Fitch's website. The transaction structure follows the same format as the transactions from United Airlines and Delta Air Lines issued last year. Proceeds from the transaction will be used to bolster liquidity in place of the $7.5 billion in government loans available to American under the CARES Act. American initially chose to pledge its loyalty program assets to the government loan program due to the low cost of the government funds. American now believes that it can achieve more attractive financing in the capital markets. American was required to draw $550 million under the CARES Act loans last year in order to secure access to the remaining amount. The $550 million will be repaid with proceeds from the proposed issuance. Liquidity Position Better than Expected: Fitch's expectations for American's liquidity position have improved since its prior review. The company ended 2020 with total available liquidity of $14.3 billion, higher than Fitch's previous expectations, due to American's increased loan allocation under the CARES Act, the renewal of the government's payroll support program, and recently announced equity issuance. Congress' extension of the payroll support program in December 2020 provided American with roughly $3.1 billion in cash through a combination of grants and loans. American also announced a $1.1 billion at-the-market equity issuance program in January. Depending on the size of American's loyalty program issuance, liquidity may improve further. Fitch now anticipates that American could end 2021 with more than $10 billion of available liquidity, at which point cash burn may have halted, or at least materially reduced as the industry begins to recover. Fitch believes there is an increasing likelihood that liquidity for American and other airlines will be further supported by a third round government support under the Payroll Support Program. The House Financial Services Committee approved a plan to include $14 billion in extended payroll support for airlines in President Biden's proposed COVID relief bill. If approved, American could expect to receive another $3+ billion through a combination of direct grants and low interest loans. Debt Burden Is Substantial: American entered the crisis with a higher debt load than competitor airlines following multiple years of heavy capital spending and simultaneous share repurchases. The company ended 2020 with a total debt balance (including lease obligations) of $41 billion, which is likely to increase to $45 billion or more by YE 2021, leading to leverage be sustained at levels that constrain the rating to 'B-' at least through 2022. Debt maturities are manageable through 2024, but become substantial in 2025 when the company's $2.5 billion secured notes, 2013 term loan, $500 million unsecured notes, and $1 billion convertible issuance come due. Fitch expects that the industry will have fully recovered from the pandemic by 2025, allowing American to address maturities through a combination of FCF, cash on hand, and access to capital markets. Capital Spending and Cash Flow: Limited capex spending over the next few years will aid American's efforts to start paying down debt. American expects aircraft deliveries to result in a net cash inflow in 2021, due to a combination of attractive financing, returns of pre-delivery payments, and American's settlement with Boeing related to the grounding of the 737 MAX. American is scheduled to take delivery of 44 aircraft in 2021. Aircraft deliveries are limited in 2022 and 2023, as American largely completed its fleet renewal program prior to the pandemic. Fitch expects FCF to remain negative this year before potentially turning positive in 2022 or 2023, largely depending on the pace of recovery. Meaningful Cost Reduction Efforts: A slow recovery will be partly offset by a massive industry-wide cost-cutting effort. American reduced its non-fuel operating expenses by nearly 40% in the fourth quarter of this year compared to the same period in 2019. Variable costs will inevitably increase as flying levels rebound from current lows, but some cost-cutting efforts will prove longer lasting. For instance, fleet-simplification will lower maintenance and training costs while increasing fuel efficiency as older/less-efficient planes are retired. American is accelerating the retirement of 150 aircraft including its entire sub-fleets of 757s, 767s, A330-300s, and E-190s. Management headcount has been permanently reduced by a third, resulting in an estimated $500 million in annual savings. In total, American announced a goal of permanently reducing its annual cost structure by $1.3 billion. Industry Update: Recovery in airline traffic continues to be slower than Fitch's previous predictions. Multiple surges of coronavirus around the world have resulted in re-tightening of travel restrictions, discouraging leisure travel. As a result, U.S. airlines are expecting no real improvement in traffic for the first quarter. Data from the TSA shows that on most days passenger throughput remains 60%-70% below 2019 levels. Fitch's prior forecasts had anticipated that at this point in the crisis, traffic would be down by ~40%-45% compared to 2019 levels. Airlines experienced a boost around the Thanksgiving and Christmas holidays, with traffic reaching its highest levels since the onset of the crisis. However total passenger throughput remains 40% or more below 2019 levels even on peak travel days. While traffic remains weak, the distribution of effective coronavirus vaccines has now begun in earnest. Fitch expects that the pace of vaccine distribution will continue to pick up through the first quarter, potentially reaching a sufficient level of coverage by summer that would allow for a material rebound in traffic and a reduction in travel restrictions. Fitch believes that reaching full herd immunity may not be necessary to at least begin to drive a rebound in travel. Rather, a decline in death rates spurred by vaccine coverage among vulnerable populations, may be sufficient to loosen pandemic restrictions and build traveler comfort. Fitch anticipates a fairly robust rebound, particular in leisure and VFR traffic, once traveler confidence improves driven by pent up demand. Recent surveys conducted by Oliver Wyman and travel company VRBO, indicate that a majority of respondents expect to travel as much or more once the pandemic is over, compared to pre-pandemic level, with most respondents also indicating a desire to prioritize travel in the future. A recent survey from the Global Business Travel Association shows that 79% of respondents would be comfortable traveling for work after being vaccinated, and a small but increasing number of companies are planning to resume business travel in the near term. Although the successful development of coronavirus vaccines has improved Fitch's outlook for the sector, serious uncertainties remain. There is a possibility that new variants of the coronavirus could prolong the epidemic and delay a recovery in travel. Estimating the likelihood of such an outcome is difficult given the limited available data about the new variants of the virus. The pace of vaccine distribution and the willingness of a sufficient portion of the population to receive the vaccine also remain material question marks. Traffic Assumptions: Fitch has updated its expectations for passenger traffic in 2021, adjusting down its prior forecast, reflecting low passenger counts in the first quarter driven by the surge in coronavirus cases. Overall, Fitch expects traffic for North American carriers to remain lower than baseline 2019 levels by 45% or more compared to Fitch's prior forecast of ~40%. Fitch assumptions for 2022 and 2023 are essentially unchanged as vaccine distribution throughout 2021 should allow traffic to start trending towards normalized levels thereafter. Fitch anticipates that the recovery will be led by leisure travel, and that competition will put pressure on yields at least into 2022. Domestic focused leisure carriers remain better positioned to benefit from the early stages of the recovery that is likely to begin later this year. Recovery Ratings: Fitch's recovery analysis assumes that American would be reorganized as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. The going concern (GC) EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which the agency bases the enterprise valuation. Fitch uses a GC EBITDA estimate of $5.5 billion and a 5.0x multiple, generating an estimated GC enterprise value (EV) of $25 billion after an estimated 10% in administrative claims. Fitch views its GC EBITDA assumption as conservative as it remains below levels generated in 2014, the first year after American last exited bankruptcy, but it incorporates potential structural changes to the industry driven by the pandemic. These assumptions lead to an estimated recovery for senior secured positions in the 51%-70% (RR3) range and poor recovery prospects (RR6) for unsecured positions. This represents a one notch downgrade from Fitch's prior review, reflecting the effects of additional secured debt added to American's capital structure. DERIVATION SUMMARY American is rated lower than its major network competitors, Delta and United, primarily due to the company's more aggressive financial policies. American's debt balance has increased substantially since its exit from bankruptcy and merger with US Airways in 2013, as it has spent heavily on fleet renewal and share repurchases. As such, American's adjusted leverage metrics are at the high end of its peer group. KEY ASSUMPTIONS -- Airline traffic remaining substantially below historic levels through 2021 and recovering to 2019 levels by 2024; -- Jet fuel prices averaging around $1.65/gallon this year rising to $1.80/gallon through the forecast; -- Fitch's base case does not explicitly include a third round of government support through an extension of the payroll support program. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Adjusted debt/EBITDAR below 5x; -- FFO fixed-charge coverage sustained around 2x; -- FCF generation above Fitch's base case expectations; -- A faster than expected recovery in air traffic. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Failure to contain cash burn in 2021 leading to increased pressure on liquidity; -- Total liquidity falling towards or below $8 billion absent a line of sight towards cash flow breakeven; -- Inability to raise new capital in the event that liquidity becomes strained; -- Lack of recovery in passenger demand in 2021 possibly due to outbreaks of new variants of the coronavirus or new or lingering travel restrictions. 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. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. AMERICAN PUBLIC: Moody's Assigns First Time B1 Corp Family Rating ----------------------------------------------------------------- Moody's Investors Service assigned a B1 Corporate Family Rating and B1-PD probability of default rating to American Public Education, Inc. (APEI). Concurrently, Moody's assigned B1 ratings to the company's proposed $20 million senior secured first lien revolver due 2026 and $175 million senior secured first lien term loan B due 2027. Moody's also assigned APEI a SGL-1 speculative grade liquidity rating, indicating very good liquidity. The outlook is stable. This is the first time Moody's has rated APEI. Net proceeds from the new debt issuance along with cash on hand and $29 million of preferred stock will be used to fund the $329 million acquisition of Rasmussen University (Rasmussen) and to pay transaction costs. Rasmussen is one of the largest privately-held healthcare-focused universities offering associate's, bachelor's, master's, and doctoral degrees to over 18,000 students through 24 campuses across 7 states and online. Though nursing and health sciences account for the bulk of its $256 million revenue for its fiscal year ended September 30, 2020, Rasmussen also offers programs in business, education, justice studies, technology, and design. The transaction is expected to close in the July-September 2021 quarter, subject to approvals from the Department of Education (DOE), Higher Learning Commission, regulatory authorities and other closing conditions. The ratings are subject to the transaction closing as proposed and receipt and review of the final documentation. Assignments: Issuer: American Public Education, Inc. Corporate Family Rating, Assigned B1 Probability of Default Rating, Assigned B1-PD Speculative Grade Liquidity Rating, Assigned SGL-1 Senior Secured 1st Lien Revolving Credit Facility, Assigned B1 (LGD3) Senior Secured 1st Lien Term Loan B, Assigned B1 (LGD3) Outlook Actions: Issuer: American Public Education, Inc. Outlook, Assigned Stable RATINGS RATIONALE APEI's B1 CFR reflects the company's good financial performance through its two subsidiary institutions, American Public University System, Inc. (APUS) and Hondros College of Nursing (HCN), modestly low leverage, and strong cash flow generation. APUS provides affordable online postsecondary education to adult learners and is the leading provider of higher education to the military and veterans. Despite annual net course registration and student enrollment declines from 2014 to 2019, APUS realized modest growth in 2020 during the coronavirus pandemic, supported by the market shift to online learning, particularly among active military students. Enrollment at HCN, an accredited provider of postsecondary education to nursing professionals, increased due in part to successful marketing investments, a surge in demand for nursing education, and a change in the competitive environment due to coronavirus. The rating is constrained by the company's small scale and limited geographic diversity, APUS's high concentration and reliance of active military and veterans, and substantial regulatory requirements for operating for-profit higher education businesses. APUS is particularly reliant on the Department of Defense's (DoD) tuition assistance program and the DoD's budget, and the variability of military activity makes it difficult to predict APUS's future enrollments. The rating also reflects integration and execution risks associated with the Rasmussen acquisition. This is the company's first large-scale acquisition (HCN was acquired in 2013 and generated about $30 million in annual revenue at the time) with Rasmussen expected to comprise about 44% of the combined company's pro forma 2020 annual revenue. The combined company will become the leading provider in pre-licensure nursing and have a more diversified enrollment base across nursing, adult learning and military. Pro forma for the transaction, Moody's estimates that Moody's adjusted leverage (which accounts for Rasmussen's operating lease liabilities using Moody's standard adjustment for operating leases) is 3.3x for the LTM period ended September 30, 2020. The company has the ability to de-lever via free cash flow generation and Moody's expects that leverage will decline to 3x by FYE2021 and approach 2.5x by FYE2022. Moody's notes that ASC 842 lease accounting treatment will likely result in a lower on-balance sheet liability for Rasmussen's operating leases compared to Moody's current calculation using Moody's standard adjustment to operating leases. This may result in Moody's projected leverage estimates being further reduced by a range of .5x to .7x. Moody's also expects free cash flow as a percentage of debt (Moody's adjusted) to approach 19% by FYE2022, strong for the B1 CFR. The SGL-1 rating reflects Moody's expectation that liquidity will be very good over the next 12 to 18 months. APEI had $228 million of cash as of September 30, 2020. Pro-forma for the Rasmussen acquisition and the $86 million net proceeds from the common stock equity raise that closed on March 1, 2021, Moody's estimates cash balances to be about $184 million. Mandatory debt payments on its new term loan B will be $8.75 million per year. Including $2.6 million of annual preferred stock dividends, Moody's forecasts at least $25 million of free cash flow over the next 12 months. The company's new $20 million revolving credit facility expires in 2026, and Moody's does not expect APEI to draw on its revolver over the next 12 months. The revolver and term loan are expected to contain a maximum total net leverage ratio covenant set at 30% cushion with further stepdowns. Alternate liquidity is limited as the company's credit facilities are secured by a first-priority lien on substantially all tangible and intangible assets. Under Moody's ESG framework, the company has some social risks. APEI derives a significant portion of its revenue from government-assisted aid in many jurisdictions, and the company must comply with laws, regulations, and accreditation measures in each jurisdiction in which it operates. In particular, APUS students utilize various payment sources and programs to finance their educational expenses, including but not limited to funds from the DoD, tuition assistance programs, education benefit programs administered by the U.S. Department of Veterans Affairs (VA), and federal student aid from Title IV programs. Reductions in or changes to DoD tuition assistance, VA education benefits, Title IV programs, and other payment sources could have a significant impact on APEI's operations. As of September 30, 2020, approximately 60% of APUS students self-reported that they served in the military on active duty at the time of initial enrollment. Active duty military students generally take fewer courses per year on average than non-military students. Also, enrollments and course registrations by active duty service members may be adversely affected by a variety of factors not directly related to education programs, including changes in military activity and budgets. Moody's also regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Given APEI's exposure to the US and overseas economies as well as consumer spending, the company remains vulnerable to restrictions imposed on its operations and shifts in market demand and consumer sentiment in these unprecedented operating conditions. Somewhat offsetting these social risks are the social benefits associated with APUS's education services primarily being offered online, enabling new and current students to continue their education despite the coronavirus outbreak. Also, the coronavirus outbreak has cast a spotlight on nursing, driving increased interest in an industry that has an ongoing supply-demand imbalance for nursing professionals. The B1 rating on APEI's senior secured first lien credit facilities reflects both the Probability of Default rating of B1-PD and the loss given default assessment of LGD3. The senior secured first lien credit facilities benefit from the secured guarantees from all existing and subsequently acquired domestic subsidiaries. As there is no other meaningful debt in the capital structure, the facilities are rated in line with the B1 CFR. Preliminary terms in the company's first lien credit agreement indicate that APEI can incur incremental facilities up to the greater of $91 million and 100% of adjusted EBITDA as defined over the prior four fiscal quarter period, plus an additional amount so long as it is not greater than: 0.50x above the closing date first lien net leverage ratio for pari passu secured debt, or in the case of junior secured debt, 0.75x above the closing date secured net leverage ratio, or in the case of unsecured debt, either 1.0x above the closing date total net leverage ratio or the interest coverage ratio on a pro forma basis is not less than 2.0x (or, if used to finance a permitted acquisition or permitted investment, such ratio tests may be satisfied so long as leverage does not increase or interest coverage does not decrease on a pro forma basis). Amounts up to the greater of $91 million and 100% of adjusted EBITDA may be incurred with an earlier maturity date than the term loan facility. Only wholly owned subsidiaries must provide guarantees, raising the risk that guarantees may be released following a partial change in ownership, subject to restrictions only permitting releases if such guarantor ceases to be a restricted subsidiary as a result of a transaction permitted under the financing documentation or becomes an excluded subsidiary but which will not refer to becoming a non-wholly-owned subsidiary. Asset transfers to unrestricted subsidiaries are permitted, subject to "blocker" provisions that restrict transfers of material intellectual property to such unrestricted subsidiaries. In the event of an asset sale, a 100% proceeds prepayment applies with step-downs at 50% and 0% based on achieving reductions to the closing date first lien net leverage ratio of 0.25x and 0.5x, respectively. The above are proposed terms and the final terms of the credit agreement can be materially different. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's expectation that APEI will continue to grow in revenue, generate positive free cash flow, and successfully integrate Rasmussen into its operations. Given the company's small scale and limited geographic diversity, an upgrade is unlikely in the near term. However, the ratings could be upgraded if APEI increases its scale and geographic diversity significantly, maintains strong student enrollment growth, sustains Moody's adjusted leverage below 2x, and sustains free cash flow to debt (Moody's adjusted) above 20%. APEI's ratings could be downgraded if Moody's adjusted leverage is sustained above 3x, if enrollments meaningfully decline, its liquidity position meaningfully deteriorates, or if the company encounters any substantial challenges in integrating Rasmussen with its operations. A downgrade may also be warranted if unanticipated regulatory challenges result in sizeable litigation expenses, ineligibility for Title IV funding or the removal of accreditation to one of the company's learning institutions. Headquartered in Charles Town, West Virginia, American Public Education, Inc. is a provider of educational services and operates 5 campuses in Ohio, one campus in Indiana, and online. Revenue totaled $322 million for the last twelve months ended December 31, 2020. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. AMN HEALTHCARE: Moody's Affirms Ba2 CFR & Alters Outlook to Stable ------------------------------------------------------------------ Moody's Investors Service affirmed AMN Healthcare, Inc.'s Ba2 Corporate Family Rating, Ba2-PD Probability of Default Rating and Ba3 ratings on the company's senior unsecured notes. At the same time, Moody's changed the outlook to stable from negative. The company's Speculative Grade Liquidity Rating of SGL-1 is unchanged. The outlook change to stable from negative reflects the company's resilience during the coronavirus pandemic and increasing contribution from the more profitable technology and workforce solutions business. The affirmation of Ba2 CFR reflects Moody's expectations that the company's business volumes will recover fully this year after experiencing declines in 2020 due to coronavirus pandemic. The rating affirmation also reflects Moody's view that the company's debt/EBITDA will remain below 3.5x in 2021 despite resuming acquisition activity and share buybacks. The company's SGL-1 reflects a very good liquidity profile over the next 12-18 months with sustained positive free cash flow and access to a largely undrawn $400 million revolving credit facility. Ratings affirmed: AMN Healthcare, Inc. Corporate Family Rating at Ba2 Probability of Default Rating at Ba2-PD $350 million senior unsecured notes due 2029, Ba3 (LGD4 from LGD5) $500 million senior unsecured notes due 2027 at Ba3 (LGD4 from LGD5) Outlook action AMN Healthcare, Inc. Outlook changed to stable from negative RATINGS RATIONALE AMN Healthcare's Ba2 CFR reflects the company's leading market position in the temporary healthcare staffing industry and a very good liquidity profile. The rating also reflects Moody's expectations that the company will maintain moderate leverage with debt/EBITDA in 3.0-3.5 times range after considering acquisitions and share buybacks. Despite the disruption of demand in deferrable procedures and emergency department volumes, the company has benefited from an increase in temporary staffing demand due to coronavirus pandemic. The company's recent acquisitions, including that of Stratus Video Holding Company (Stratus) in early 2020, have improved AMN's business diversification and will contribute to reducing its vulnerability to the cyclical nature of the nurse and allied solutions business. The company's nurse and allied solutions business still accounts for 71% of the company's revenue, but concentration in this business has reduced in recent years. Further, Moody's expect that the company will continue its expansion through acquisitions which may result in a temporary increase in leverage from time to time. AMN's ratings are supported by the company's very good liquidity reflected by its Speculative Grade Rating of SGL-1 rating. The SGL-1 rating is supported by an expectation of positive free cash flow in the next 12 months, availability of $29 million in cash, and access to approximately $378 million under its $400 million revolver as of 12/31/2020. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. In terms of governance risk, as a provider of clinical labor solutions, the company is exposed to reputational and compliance risks if the traveling staff is involved in malpractice or fraud. As a publicly traded company, AMN's transparency, disclosures, accountability and compliance are likely to be better than its private equity-owned peers. The environmental component of ESG is not material to the company's credit ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if the company increases its scale and diversification without employing excessive financial or integration risks. Balanced growth through organic business expansion and acquisitions while sustaining Debt/EBITDA below 3.0 times could support upward rating momentum. The ratings could be downgraded if Moody's expects AMN's debt/EBITDA to exceed above 3.5 times due to a shift to a more aggressive acquisition strategy or financial policy. Furthermore, a weakening of liquidity or sustained decline in free cash flow could also result in a downgrade. AMN is the largest provider of workforce solutions and staffing services to healthcare facilities in the United States. The company's services include managed services programs, vendor management systems, recruitment process outsourcing and consulting services. The company's nurse and allied solutions segment accounted for 71% of revenue in fiscal 2020, the physician and leadership solutions segment accounted for 19.5% of revenue and the technology and workforce solutions segment accounted for 9.5% of revenue. The company is publicly traded, and its revenues exceed $2.3 billion. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. ARROW BIDCO: Moody's Completes Review, Retains B3 CFR ----------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Arrow BidCo LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Arrow BidCo's B3 corporate family rating is supported by strong contractual agreements with clients that supports the revenue base and high margins. The rating is constrained by concentration among customers, location and market, small size relative to other issuers, and exposure to the volatility of the oil & gas sector. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. ASBURY AUTOMOTIVE: Moody's Completes Review, Retains Ba2 CFR ------------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Asbury Automotive Group, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Asbury Automotive Group, Inc.'s Ba2 corporate family rating recognizes that despite its relatively small size as compared to its rated US peer group, it is highly-competitive in the markets in which it chooses to operate. Ratings also considers Asbury's historically-favorable brand mix, with around 80% of new vehicle sales coming from luxury and import brands, and its reduced reliance on earnings from the sale of new vehicles. Asbury's business model, with solid parts and service and finance and insurance segments, reduces reliance on new car sales, and it is successfully enhancing the efficiency of its used car business. Also considered is Asbury's good liquidity which benefits from its favorable debt maturity profile, further improved by the Park Place acquisition financing. Moody's expects the company to be committed to reducing leverage over the next twelve to eighteen months. The principal methodology used for this review was Retail Industry published in May 2018. AUTOKINITON US: Moody's Affirms B2 CFR & Alters Outlook to Positive ------------------------------------------------------------------- Moody's Investors Service affirmed Autokiniton US Holdings, Inc.'s corporate family rating and senior secured ratings at B2 and the Probability of Default Rating at B2-PD. The rating outlook was changed to positive from negative. The actions reflect Moody's expectations for Autokiniton's highly flexible cost structure and improving operating leverage, in conjunction with rising light vehicle production volumes, to generate steadily stronger operating results through 2021. Higher margins should drive greater free cash flow to strengthen liquidity and enable accelerated debt repayment. RATINGS RATIONALE Autokiniton's ratings reflect the company's strong competitive position as a Tier 1 supplier of structural components/assemblies and chassis/frame components that results in favorable exposure to current industry drivers of vehicle light-weighting and higher safety standards. Positively, over 85% of revenues are generated from the sale of light trucks/SUVs/CUVs, and the company has growing penetration into alternative fuel and battery electric vehicle platforms. Low capital expenditures for some time and a flexible, largely variable cost structure should boost returns over the next several years, resulting in improved financial flexibility and stronger liquidity. While customer concentration is high with about 70% of 2020 revenues derived from the top three customers, product focus on more profitable, top selling light trucks/SUVs/CUVs helps offset this concern. Moody's adjusted debt-to-EBITDA is expected to fall to the mid-3x range, largely due to stronger earnings, with retained cash flow-to-net debt bouncing back sharply by the end of 2021. Significantly stronger free cash flow should provide opportunities for further de-levering through accelerated debt repayment. The positive outlook reflects Moody's expectations for a rebound in free cash flow as light vehicle production levels continue to rise and margins meaningfully widen. The outlook also considers the company's favorable market position to capture growing light-weighting and electrification opportunities across all platforms, including electric vehicles as they steadily gain market share. Autokiniton is expected to maintain a good liquidity profile supported by increasing cash on hand and near-full availability under the $250 million asset based revolving credit facility (ABL). Moody's expects a sharp uptick in free cash flow in 2021, in the mid-$100 million range, as production volumes climb. The ABL is subject to a springing fixed charge covenant of 1x when excess availability falls below the greater of approximately $13 million or 10% of the facility or borrowing base in effect. This test is not expected to trigger in 2021 given the improving cash generation prospects. Autokiniton's role in the automotive industry exposes the company to material environmental risks arising from increasing regulations on carbon emissions. However, Autokiniton's products (structural assemblies, chassis, and frames) are not directly exposed to vehicle powertrains. Even as automotive production of hybrid and electric vehicles gradually increase, structural components & assemblies, and chassis & frame components will continue to be required. Further, Autokiniton's ability to develop lighter weight components with enhanced strength will support the industry's efforts to meet regulatory requirements. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if margins demonstrate accelerated expansion on the expected increase in new vehicle production, leading to stronger than expected free cash flow with debt-to-EBITDA falling below 3.5x on a sustained basis. EBITA-to-interest over 3x and a strengthening liquidity position, especially a more robust cash position, would also be important factors to upward rating actions. Ratings could be downgraded if margins decline, debt-to-EBITDA is expected to exceed 5.5x or EBITA-to-interest falls below 1.5x. A deteriorating liquidity profile, including increased reliance on the ABL, or debt-funded acquisitions or shareholder returns could also warrant a ratings downgrade. Moody's took the following rating actions on Autokiniton US Holdings, Inc.: - Corporate Family Rating, affirmed at B2 - Probability of Default Rating, affirmed at B2-PD - Senior Secured Bank Credit Facility, affirmed at B2 (LGD4) - Outlook, changed to Positive from Negative The principal methodology used in these ratings was Automotive Supplier Methodology published in January 2020. Autokiniton Global Group is a North American Tier 1 supplier of powertrain-agnostic, safety-critical metal-formed structural automotive components and complex assemblies. The company manufactures body structures, interiors, closures, thermal management components and chassis components that position it to capitalize on trends toward light-weighting and electrification. Revenues for the latest twelve months ended September 30, 2020 were approximately $1.8 billion. The company has been owned by affiliates of KPS Capital Partners, L.P. since May 2018. AVINGER INC: Reports $22.8 Million Net Loss in 2020 --------------------------------------------------- Avinger, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss applicable to common stockholders of $22.87 million on $8.76 million of revenues for the year ended Dec. 31, 2020, compared to a net loss applicable to common stockholders of $23.03 million on $9.13 million of revenues for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $33.19 million in total assets, $20.12 million in total liabilities, and $13.07 million in total stockholders' equity. Cash and cash equivalents totaled $22.2 million as of Dec. 31, 2020, compared with $25.3 million as of Sept. 30, 2020. Subsequent to Dec. 31, 2020, Avinger raised approximately $13.0 million in net proceeds from a bought deal offering, providing a cash balance of over $35 million when added to the Company's year-end cash position. Avinger amended the existing loan agreement in January 2021, including the extension of the interest only period and maturity date of the term loan by 2 1/1 years. The interest only period is extended from June 30, 2021 to Dec. 31, 2023. The maturity date is extended from June 30, 2023 to Dec. 31, 2025. In addition, the amendment reset the material adverse change representation date and adjusted the minimum revenue requirements. Jeff Soinski, Avinger's president and CEO, commented, "Avinger remains focused on driving top-line growth by introducing new products, launching new accounts and expanding utilization at existing sites. In January, we progressed to full commercial launch of Tigereye, our next generation CTO-crossing device, following completion of a successful limited launch program in the fourth quarter. Patient outcomes are compelling as more and more sites complete their first cases with this new device, demonstrating the benefits of Tigereye's enhanced imaging, steerability and new distal tip design in a real-world clinical setting." "We enter 2021 in a strong competitive position with three next generation products launched over the past three years, a leaner operating cost structure, a more capable commercial organization and a strengthened balance sheet. We are also investing in future growth drivers, including our next generation Lightbox 3 slated for 510(k) submission by mid-year, additional new PAD catheter solutions, the expansion of our field sales team and advancement of our clinical efforts in support of expanded use and reimbursement. In addition, we are in the first stages of expanding into the coronary artery disease (CAD) market by developing proprietary new product applications of our Tigereye technology for the treatment of chronic total occlusions in this challenging and underserved market." As of Dec. 31, 2020, the Company an accumulated deficit of $348.3 million as of Dec. 31, 2019. The Company expects to incur losses for the foreseeable future. The Company believes that its cash and cash equivalents of $22.2 million at Dec. 31, 2020, together with the approximately $13.0 million net proceeds from the February 2021 equity financing, and expected revenues, debt and financing activities and funds from operations will be sufficient to allow the Company to fund its current operations through 2022. The Company does not know when or if its operations will generate sufficient cash to fund its ongoing operations. Avinger said, "Additional debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any additional debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders and require significant debt service payments, which divert resources from other activities. Additional financing may not be available at all, or if available, may not be in amounts or on terms acceptable to us. If we are unable to obtain additional financing, we may be required to delay the development, commercialization and marketing of our products and we may be required to significantly scale back our business and operations. "In addition, the COVID-19 pandemic and responses thereto have resulted in reduced consumer and investor confidence, instability in the credit and financial markets, volatile corporate profits, restrictions on elective medical procedures, and reduced business and consumer spending, which could increase the cost of capital and/or limit the availability of capital to the Company. While we have taken certain actions to manage our available cash and other resources to mitigate the effects of COVID-19 on our business, there can be no assurance that such strategies will be successful in mitigating the negative impacts of the COVID-19 pandemic on our liquidity and capital resources. "To date, we have financed our operations primarily through net proceeds from the issuance of our preferred stock and debt financings, our "at-the-market" program, our initial public offering, or IPO, our follow-on public offerings and warrant issuances. The warrants issued pursuant to the Series B Purchase Agreement entered into in connection with the Series B preferred stock follow-on in February 2018, or the Series B Offering, prohibited us from entering into certain transactions involving the issuance of securities for a price determined by reference to the trading price of our common stock or otherwise subject to modification following the date of issuance, in each case for a period of three years from the closing date of the Series B Offering (and excluding purchases pursuant to the Series B Purchase Agreement, which may be made on the 120 day anniversary of the closing date of the offering)." A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/Archives/edgar/data/1506928/000143774921005713/avgr20201231_10k.htm About Avinger Headquartered in Redwood City, California, Avinger -- http://www.avinger.com-- is a commercial-stage medical device company that designs and develops image-guided, catheter-based system for the diagnosis and treatment of patients with Peripheral Artery Disease (PAD). AZALEA TOPCO: Moody's Completes Review, Retains B3 CFR ------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Azalea TopCo, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Azalea TopCo's B3 corporate family rating is supported by its market position in the healthcare performance management industry with the ability to cross-sell its offerings, benefits provided by regulation, good profitability margins and solid cash flow generation, and diversity among its customers and high retention rates among its customers. The rating is constrained by private equity influenced high leverage levels, narrow focus with a relatively small scale, exposure to healthcare regulation, and cybersecurity risks. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. BED BATH: Moody's Completes Review, Retains Ba3 CFR --------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Bed Bath & Beyond Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Bed Bath & Beyond Inc.'s Ba3 corporate family rating reflects the increased demand for its major home categories during the pandemic offset by the intense competition from e-commerce and other value players including the discounters. Bed Bath continues to make progress on improving product assortment, marketing, inventory, supply chain optimization and omni-channel capabilities; nonetheless, these actions must continue at a rapid pace for Bed Bath to return to former levels of profitability. The company benefits from scale as the largest dedicated retailer of domestic merchandise and home furnishings, its national footprint is supported by a good distribution network, and financial flexibility to support its transformation effort. Additionally, Bed Bath's recent divestitures will streamline its business focus and the closure of 200 lower performing stores will allow the of recapture sales at nearby stores or online and lower occupancy costs. The principal methodology used for this review was Retail Industry published in May 2018. BELK INC: Moody's Assigns Caa2 CFR Following Bankruptcy Emergence ----------------------------------------------------------------- Moody's Investors Service assigned ratings to Belk, Inc. following its emergence from bankruptcy, including a Caa2 corporate family rating; Caa2-PD probability of default rating, a Caa1 rating on its first lien first out term loan ("FLFO") and a Caa3 on its first lien second out term loan ("FLSO"). The new first lien credit facility, which comprises the FLFO and the FLSO, shall be secured by a first-priority lien on all assets and has a second priority lien on collateral securing its ABL, largely its inventory. The FLFO is priority in payment to the FLSO The ratings outlook is negative. The assignment reflects governance considerations particularly Belk's continued private equity ownership with Sycamore Partners controlling ownership and its execution of its prepackaged Chapter 11 filing on February 25, 2021 through which funded debt was reduced by approximately $450 million, and extended all term loan maturities until July 2025. The assignment also reflects Belk's continued weak credit metrics and liquidity. Assignments: Issuer: Belk, Inc. Probability of Default Rating, Assigned Caa2-PD Corporate Family Rating, Assigned Caa2 Senior Secured 1st Lien First Out Term Loan, Assigned Caa1 (LGD3) Senior Secured 1st Lien Second Out Term Loan, Assigned Caa3 (LGD4) Outlook Actions: Issuer: Belk, Inc. Outlook, Assigned Negative RATINGS RATIONALE Belk, Inc.'s Caa2 CFR reflects Belk's weak liquidity and its poor operating performance that has been stifled by weak customer demand which has been curtailed significantly beginning when its stores were temporarily closed by at the onset of the coronavirus pandemic in March 2020. Upon emergence on February 25, 2021, Belk had $83 million of cash and $259 million outstanding on its ABL facility. The company received new capital commitments in total of $225 million from Sycamore Partners ("Sycamore"), KKR and Blackstone Credit which will enable to return to more normalized terms with its vendors. Despite the reduction of $450 million of debt through the bankruptcy process, Belk's leverage remains unsustainably high and leaves the company vulnerable to any potential future shocks with limited access to additional sources of capital. The company remains private equity controlled. The company's modest scale and regional profile with a concentration in the southeastern U.S. region and modest scale in the challenged U.S. department store sector also is a constraint. Belk's stores have a significant concentration in three states (North Carolina, Georgia, and South Carolina). The negative outlook reflects the need to grow its business in an extremely challenging operating environment for the department store industry. The negative outlook also reflects that its unsustainable capital structure elevates the risk of future distressed exchanges. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded to the extent Belk's sales and operating profitability were to consistently grow as liquidity became adequate and positive free cash flow is generated. Ratings could be downgraded if expectations for Belk's family recovery rate deteriorates further, liquidity weakens, a distressed exchanged is pursued or should the likelihood of a default increase for any reason. Headquartered in Charlotte, North Carolina, Belk, Inc. operates 291 stores in 16 states primarily in Southeastern states. The company generated revenue of approximately $3.2 billion during the LTM period ending October 31, 2020. The company was acquired by Sycamore Partners in a transaction valued at approximately $3 billion in December 2015 and emerged from Chapter 11 proceedings on February 25, 2021 with Sycamore maintaining a controlling stake. The principal methodology used in these ratings was Retail Industry published in May 2018. BELK INC: Seeks Approval to Tap Kirkland & Ellis as Legal Counsel ----------------------------------------------------------------- Belk Inc. and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Kirkland & Ellis LLP and Kirkland & Ellis International LLP as their legal counsel. Kirkland & Ellis will render these services: (a) advise the Debtors regarding their powers and duties in the continued management and operation of their businesses and properties; (b) advise and consult the conduct of the Debtors' Chapter 11 cases; (c) attend meetings and negotiate with representatives of creditors and other parties in interest; (d) take all necessary actions to protect and preserve the Debtors' estates; (e) prepare pleadings; (f) represent the Debtors in connection with obtaining authority to continue using cash collateral and post-petition financing; (g) advise the Debtors in connection with any potential sale of assets; (h) appear before the court and any appellate courts to represent the interests of the Debtors' estates; (i) advise the Debtors regarding tax matters; (j) take any necessary action to negotiate, prepare and obtain approval of a disclosure statement and confirmation of a Chapter 11 plan and all documents related thereto; and (k) perform all other necessary legal services for the Debtors in connection with the prosecution of the cases. The hourly rates of Kirkland's attorneys and staff are as follows: Partners $1,080 - $1,895 Of Counsel $625 - $1,845 Associates $625 - $1,195 Paraprofessionals $255 - $475 In addition, Kirkland will be reimbursed for out-of-pocket expenses incurred. Kirkland provided the following in response to the request for additional information set forth in Paragraph D.1. of the Revised U.S. Trustee Guidelines: Question: Did Kirkland agree to any variations from, or alternatives to, Kirkland's standard billing arrangements for this engagement? Answer: No. Kirkland and the Debtors have not agreed to any variations from, or alternatives to, Kirkland's standard billing arrangements for this engagement. The rate structure provided by Kirkland is appropriate and is not significantly different from (a) the rates that Kirkland charges for other non-bankruptcy representations or (b) the rates of other comparably skilled professionals. Question: Do any of the Kirkland professionals in this engagement vary their rate based on the geographic location of the Debtors' chapter 11 cases? Answer: No. The hourly rates used by Kirkland in representing the Debtors are consistent with the rates that Kirkland charges other comparable Chapter 11 clients, regardless of the location of the Chapter 11 case. Question: If Kirkland has represented the Debtors in the 12 months prepetition, disclose Kirkland's billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If Kirkland's billing rates and material financial terms have changed post-petition, explain the difference and the reasons for the difference. Answer: Kirkland's current hourly rates for services rendered on behalf of the Debtors range as follows: Billing Category U.S. Range Partners $1,080 - $1,895 Of Counsel $625 - $1,845 Associates $625 - $1,195 Paraprofessionals $255 - $475 Kirkland represented the Debtors from Jan. 1, 2021 through Feb. 21, 2021, using those hourly rates. Kirkland represented the Debtors from Dec. 18, 2020 through Dec. 31, 2020 using the following hourly rates: Billing Category U.S. Range Partners $1,075 - $1,845 Of Counsel $625 - $1,845 Associates $610 - $1,165 Paraprofessionals $245 - $460 Question: Have the Debtors approved Kirkland's budget and staffing plan, and, if so, for what budget period? Answer: Yes, for the period from Feb. 23, 2021 through March 2, 2021. Steven Serajeddini, Esq., a partner at Kirkland & Ellis LLP and Kirkland & Ellis International, LLP, disclosed in a court filing that the firms are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code. The firms can be reached through: Steven N. Serajeddini, Esq. Kirkland & Ellis LLP Kirkland & Ellis International, LLP 601 Lexington Avenue New York, NY 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 Email: steven.serajeddini@kirkland.com About Belk Inc. Belk Inc. operates a private department store chain headquartered in Charlotte, N.C. Since opening in 1888 as a single small bargain store in Monroe, N.C., Belk and its affiliates have strategically grown to 291 stores spread throughout 16 states. The Debtors offer a strong e-commerce platform and employ approximately 17,000 associates. Belk and its affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 21-30630) on Feb. 21, 2021. William R. Langley, chief financial officer, signed the petitions. In the petitions, Belk disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge Marvin Isgur oversees the cases. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as bankruptcy counsel, Jackson Walker LLP as local counsel, Alvarez & Marsal North America, LLC as financial advisor, and Lazard Freres & Co. LLC as investment banker. Prime Clerk LLC is the claims and noticing agent. BELK INC: Seeks to Hire Jackson Walker as Conflicts Counsel ----------------------------------------------------------- Belk Inc. and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Jackson Walker LLP as co-counsel and conflicts counsel. Jackson Walker LLP has discussed the division of responsibilities with Kirkland & Ellis LLP and Kirkland & Ellis International LLP and will avoid duplication of efforts. The firm will render these professional services to the Debtors: (a) provide legal advice and services regarding local rules, practices, and procedures, including Fifth Circuit law; (b) provide certain services in connection with the administration of the Debtors' Chapter 11 cases; (c) review and comment on proposed drafts of pleadings to be filed with the court; (d) appear in court and at any meeting with the U.S. trustee and creditors; (e) perform all other services assigned by the Debtors to the firm as local and conflicts bankruptcy co-counsel; and (f) provide legal advice and services on any matter on which Kirkland & Ellis may have a conflict or as needed based on specialization. The hourly rates of the firm's professionals are as follows: Matthew D. Cavenaugh $825 Restructuring attorneys $445 - $935 Paraprofessionals $185 - $195 The Debtors provided a retainer to the firm in the amount of $150,000. The firm received a pre–bankruptcy payment in the amount of $71,934 for services rendered prior to the filing of the cases and reimbursement of expenses. Jackson Walker provided the following in response to the request for additional information set forth in Paragraph D.1 of the U.S. Trustee Fee Guidelines: Question: Did the firm agree to any variations from, or alternatives to, the firm's standard billing arrangements for this engagement? Answer: No. The firm and the Debtors have not agreed to any variations from, or alternatives to, the firm's standard billing arrangements for this engagement. The rate structure provided by the firm is appropriate and is not significantly different from (a) the rates that the firm charges for other non-bankruptcy representatives or (b) the rates of other comparably skilled professionals. Question: Do any of the firm professionals in this engagement vary their rate based on the geographical location of the Debtors' Chapter 11 cases? Answer: No. The hourly rates used by the firm in representing the Debtors are consistent with the rates that the firm charges other comparable Chapter 11 clients, regardless of the location of the Chapter 11 case. Question: If the firm has represented the Debtors in the 12 months prepetition, disclose the firm's billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If the firm's billing rates and material financial terms have changed post-petition, explain the difference and the reasons for the difference. Answer: Mr. Cavenaugh's hourly rate is $825. The rates of other restructuring attorneys at the firm range from $445 to $935 per hour while the paraprofessional rates range from $185 to $195 per hour. The firm represented the Debtors during the weeks immediately before the petition date, using those hourly rates. Question: Have the Debtors approved the firm's budget and staffing plan, and if so, for what budget period? Answer: The firm has not prepared a budget and staffing plan. Mr. Cavenaugh disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Matthew D. Cavenaugh, Esq. Jackson Walker LLP 1401 McKinney Street, Suite 1900 Houston, TX 77010 Telephone: (713) 752-4200 Facsimile: (713) 752-4221 Email: mcavenaugh@jw.com About Belk Inc. Belk Inc. operates a private department store chain headquartered in Charlotte, N.C. Since opening in 1888 as a single small bargain store in Monroe, N.C., Belk and its affiliates have strategically grown to 291 stores spread throughout 16 states. The Debtors offer a strong e-commerce platform and employ approximately 17,000 associates. Belk and its affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 21-30630) on Feb. 21, 2021. William R. Langley, chief financial officer, signed the petitions. In the petitions, Belk disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge Marvin Isgur oversees the cases. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as bankruptcy counsel, Jackson Walker LLP as local counsel, Alvarez & Marsal North America, LLC as financial advisor, and Lazard Freres & Co. LLC as investment banker. Prime Clerk LLC is the claims and noticing agent. BELK INC: Seeks to Hire Lazard Freres as Investment Banker ---------------------------------------------------------- Belk Inc. and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Lazard Freres & Co. LLC as their investment banker. Lazard Freres will render these services: (a) review and analyze the Debtors' businesses, operations, and financial projections; (b) evaluate the Debtors' potential debt capacity in light of its projected cash flows; (c) assist in the determination of an appropriate capital structure for the Debtors; (d) assist in the determination of a range of values for the Debtors on a going concern basis; (e) assist in analyzing potential liability management transactions or other capital structure alternatives; (f) advise the Debtors on tactics and strategies for negotiating with transaction counterparties and the Debtors' stakeholders; (g) render financial advice to the Debtors and participate in meetings or negotiations with the Debtors' stakeholders or other appropriate parties in connection with any restructuring; (h) advise the Debtors on the timing, nature, and terms of new securities, other consideration, or other inducements to be offered pursuant to any restructuring; (i) assist the Debtors in preparing documentation within Lazard's area of expertise that is required in connection with any restructuring; (j) attend meetings of the board of directors of the Debtors; (k) provide testimony in any proceeding before the court; and (l) provide the Debtors with other investment banking services. Lazard Freres will be compensated based on the following fee and expense structure: (a) Monthly fees equal to $270,967.74. (b) Restructuring fee equal to $7,729,032. (c) Reimbursement for out-of-pocket expenses. Tyler Cowan, a managing director at Lazard Freres, disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Tyler Cowan Lazard Freres & Co. LLC 30 Rockefeller Plaza New York, NY 10020 Telephone: (212) 632-6000 About Belk Inc. Belk Inc. operates a private department store chain headquartered in Charlotte, N.C. Since opening in 1888 as a single small bargain store in Monroe, N.C., Belk and its affiliates have strategically grown to 291 stores spread throughout 16 states. The Debtors offer a strong e-commerce platform and employ approximately 17,000 associates. Belk and its affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 21-30630) on Feb. 21, 2021. William R. Langley, chief financial officer, signed the petitions. In the petitions, Belk disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge Marvin Isgur oversees the cases. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as bankruptcy counsel, Jackson Walker LLP as local counsel, Alvarez & Marsal North America, LLC as financial advisor, and Lazard Freres & Co. LLC as investment banker. Prime Clerk LLC is the claims and noticing agent. BELK INC: Seeks to Tap Alvarez & Marsal as Financial Advisor ------------------------------------------------------------ Belk Inc. and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Alvarez & Marsal North America, LLC as their financial advisor. Alvarez & Marsal will render these services: (a) assist the Debtors in the preparation of financial-related disclosures required by the court; (b) assist the Debtors' management team and counsel focused on the coordination of resources related to the ongoing reorganization effort; (c) assist in the preparation of financial information for distribution to creditors and others; (d) attend meetings and assist in discussions with potential investors, banks and other secured lenders, any official committees appointed in the Debtors' Chapter 11 cases, the Office of the U.S. Trustee, and other parties in interest; (e) assist in the preparation of information and analysis necessary for the confirmation of a plan of reorganization; (f) render such other general business consulting or such other assistance as the Debtors' management or counsel may deem necessary consistent with the role of a financial advisor. The hourly rates for the firm's restructuring professionals are as follows: Managing Director $925 - $1,200 Director $725 - $900 Analysts/Associates $425 - $700 The hourly rates for the firm's case management professionals are as follows: Managing Director $875 - $1,100 Director $700 - $850 Analysts/Associates $400 - $650 In addition, the firm will be reimbursed for out-of-pocket expenses incurred. The firm received $300,000 as a retainer in connection with preparing for and conducting the filing of the cases. Jonathan Hickman, a managing director at Alvarez & Marsal North America, disclosed in a court filing that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Jonathan C. Hickman Alvarez & Marsal North America, LLC 112 South Tryon Street, Suite 540 Charlotte, NC 28284 Telephone: (704) 778-4700 Facsimile: (704) 778-4699 Email: jhickman@alvarezandmarsal.com About Belk Inc. Belk Inc. operates a private department store chain headquartered in Charlotte, N.C. Since opening in 1888 as a single small bargain store in Monroe, N.C., Belk and its affiliates have strategically grown to 291 stores spread throughout 16 states. The Debtors offer a strong e-commerce platform and employ approximately 17,000 associates. Belk and its affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 21-30630) on Feb. 21, 2021. William R. Langley, chief financial officer, signed the petitions. In the petitions, Belk disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge Marvin Isgur oversees the cases. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as bankruptcy counsel, Jackson Walker LLP as local counsel, Alvarez & Marsal North America, LLC as financial advisor, and Lazard Freres & Co. LLC as investment banker. Prime Clerk LLC is the claims and noticing agent. BETA MUSIC: Get Credit Healthy in Chapter 11 After Revenue Drop --------------------------------------------------------------- Ashley Portero of the South Florida Business Journal reports that Weston, Florida-based Beta Music Group and subsidiary Get Credit Healthy, a financial technology company that provides credit repair consulting services to consumers, filed for Chapter 11 bankruptcy protection on March 5, 2021. Beta Music Group (OTC PINK: BEMG) is a holding company that does business as Get Credit Healthy, according to a bankruptcy petition filed in U.S. District Court for the Southern District of Florida's Fort Lauderdale division. Get Credit Healthy's revenue plummeted during the Covid-19 pandemic after client enrollment dropped and a former company executive filed multiple lawsuits against the organization, court documents said. The company, which has five employees, can no longer afford attorneys' fees for prolonged litigation. "The debtors determined that they would not be able to sustain the cost of operations over the long term without an infusion of capital," court documents said. According to the filing, Beta Music Group recently entered into a management services agreement with an unnamed entity that will acquire its assets and preserve its business operations. Get Credit Healthy earned about $495,000 in gross income in 2020, according to court documents. It has earned $100,000 since Jan. 1, 2021. Beta Music Group and Get Credit Healthy collectively owe more than $2 million to at least 20 unsecured creditors, including a $23,000 claim from Elizabeth Karwowski, Beta Music Group's president and sole director. About Beta Music Group Beta Music Group, Inc. 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. Beta Music Group sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-12199) on March 5, 2021. In the petition signed by Elizabeth Karwowski, president, the Debtor disclosed $802,688 in assets and $1,336,478 in liabilities. Judge Scott M. Grossman oversees the case. Grace E. Robson, Esq., at MARKOWITZ, RINGEL, TRUSTY & HARTOG, P.A., is the Debtor's counsel. BETA MUSIC: Seeks to Hire Markowitz Ringel as Bankruptcy Counsel ---------------------------------------------------------------- Beta Music Group, Inc. and Get Credit Healthy, Inc. seek approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Markowitz Ringel Trusty & Hartog, PA as their bankruptcy counsel. The firm will render these legal services: (a) advise the Debtors with respect to their powers and duties in the continued management of their business operations; (b) advise the Debtors with respect to their responsibilities in complying with the U.S. trustee's operating guidelines and reporting requirements and with the rules of the court; (c) prepare legal papers; (d) protect the interest of the Debtors in all matters pending before the court; and (e) represent the Debtors in negotiation with their creditors in connection with their Chapter 11 plan. The firm has agreed to provide services at reduced hourly rates for the following professionals: Grace E. Robson $450 Adrian Delancy $400 Alan Rosenberg $350 Jerry Markowitz $595 The current hourly rates of the firm's legal assistants and paralegals range from $125 to $175. Grace Robson, Esq., the firm's attorney who will be handling the Debtors' Chapter 11 cases, disclosed in court filings that she and the firm are "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Grace E. Robson, Esq. Markowitz Ringel Trusty & Hartog, PA 9130 South Dadeland Boulevard, Suite 1800 Miami, FL 33156 Telephone: (305) 670-5000 Facsimile: (305) 670-5011 Email: grobson@mrthlaw.com About Beta Music Group Beta Music Group, Inc., through its operating subsidiary Get Credit Healthy, Inc. (www.getcredithealthy.com), utilizes its proprietary processes, platform and software to integrate with lenders to make it easier to recapture leads. Beta Music Group and Get Credit Healthy, Inc. filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Lead Case No. 21-12199) on March 5, 2021. Elizabeth Karwowski, president, signed the petitions. In the petition, Beta Music Group disclosed $802,688 in assets and $1,336,478 in liabilities. Judge Scott M. Grossman oversees the cases. Markowitz Ringel Trusty & Hartog, PA, led by Grace E. Robson, Esq., serves as the Debtors' legal counsel. BL RESTAURANTS: To Seek Confirmation of Wind-Down Plan April 21 --------------------------------------------------------------- Judge Mary F. Walrath has entered an order approving the Disclosure Statement of BL Restaurants Holding, LLC, et al., and setting a hearing for 10:30 a.m. (prevailing Eastern Time) on April 21, 2021, to consider confirmation of the Debtors' Plan. All objections to the Disclosure Statement are OVERRULED. Any objections to confirmation of the Plan must be filed and served no later than 4:00 p.m. (prevailing Eastern Time) on April 14, 2021. Counsel for the Debtors are authorized to file replies or responses to any such objections no later than 12:00 p.m. (prevailing Eastern Time) on April 19, 2021. BL Restaurants Holding, LLC, et al., filed a Plan and a Disclosure Statement. The Plan provides for the wind-down of the Debtors' affairs, continued liquidation of the Debtors' remaining assets to Cash and the distribution of the net proceeds realized therefrom, in addition to cash on hand on the Effective Date of the Plan, to creditors holding Allowed Claims as of the Record Date in accordance with the relative priorities established in the Bankruptcy Code. The Plan does not provide for a distribution to holders of Subordinated Claims or Interests, and their votes are not being solicited. The Plan contemplates the appointment of a Plan Administrator to, among other things, finalize the wind down of the Debtors' affairs, liquidate remaining assets of the Debtors, resolve Disputed Claims (other than Disputed General Unsecured Claims), pursue any unreleased Causes of Action (other than GUC Trust Avoidance Actions), implement the terms of the Plan and make Distributions to holders of Allowed Claims other than holders of Allowed General Unsecured Claims. The Plan also contemplates the appointment of a GUC Trustee to, among other things, resolve Disputed General Unsecured Claims, pursue any unreleased GUC Trust Avoidance Actions, implement the terms of the Plan as it relates to the GUC Trust and the GUC Trust Agreement and make Distributions to holders of Allowed General Unsecured Claims and administer the GUC Trust Assets. Specifically, the Plan Administrator shall continue to seek to sell and close on any pending sales of any remaining Revested Assets, which consists primarily of liquor licenses, and shall pay from Available Cash, all amounts remaining due under the Plan to Allowed: Administrative Claims, 503(b)(9) Claims, Priority Tax Claims, DIP Facility Claim, Professional Fee Claims (to the extent any amount of Professional Fee Claims remain outstanding after payment from the Professional Fee Claim Escrow), Class 1 Miscellaneous Secured Claims, and Class 2 Priority Non- Tax Claims. All Available Cash after payment of Allowed: Administrative Claims, 503(b)(9) Claims, Priority Tax Claims, DIP Facility Claim, Professional Fee Claims (to the extent any amount of Professional Fee Claims, and any Cash remaining in the Professional Fee Claims Escrow, if any, shall be transferred to the GUC Trust as part of the GUC Trust Assets. The GUC Trustee shall, to the extent it determines, pursue any GUC Trust Avoidance Actions and any claims reconciliation of Class 4 General Unsecured Claims. The GUC Trustee shall make distributions to holders of Allowed Class 4 General Unsecured Claims from the GUC Trust Assets. Counsel for the Debtors: Domenic E. Pacitti Michael W. Yurkewicz Sally E. Veghte KLEHR HARRISON HARVEY BRANZBURG LLP 919 N. Market Street, Suite 1000 Wilmington, DE 19801 Telephone: (302) 426-1189 Facsimile: (302) 426-9193 E-mail: dpacitti@klehr.com E-mail: myurkewicz@klehr.com E-mail: sveghte@klehr.com A copy of the Order is available at https://bit.ly/3lalklJ from PacerMonitor.com. A copy of the Disclosure Statement is available at https://bit.ly/3rJgT3R from PacerMonitor.com. About BL Restaurants Founded in 1991, BL Restaurants Holding, LLC operates gastrobars at various locations including lifestyle centers, traditional shopping malls, event locations, central business districts, and other stand-alone specialty sites. BL Restaurants and three affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 20-10156) on Jan. 27, 2020. At the time of the filing, the Debtors estimated assets of between $50 million and $100 million and liabilities of between $100 million and $500 million. The petitions were signed by Howard Meitiner, CRO. The Debtors tapped Klehr Harrison Harvey Branzurg LLP as legal counsel; Configure Partners LLC as investment banker; Carl Marks Advisory Group LLC as restructuring advisor; and Epiq Bankruptcy Solutions Inc as notice and claims agent. BLACKHAWK NETWORK: Moody's Completes Review, Retains B2 CFR ----------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Blackhawk Network Holdings, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Blackhawk Network Holdings B2 corporate family rating is supported by its growth potential while holding a leading market position, long term contracts with strong cash flows, global network that is scalable, and diversity among channels in both digital and physical US retail products. The rating is constrained by significant seasonal cash requirements, concentration among customers, high levels of leverage, and risks associated with financial sponsors and changes in the fintech industry. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. BMC ACQUISITION: Moody's Completes Review, Retains B2 CFR --------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of BMC Acquisition, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. BMC Acquisition's B2 corporate family rating is supported by strong and steady demand for benefits by employers, solid margins, wide network of brokers with limited concentration, and recurring nature of revenues. The rating is constrained by smaller scale following the sale of the payroll segment, exposure to small businesses that are at risk to economic conditions, leverage at high levels, and mature business with limited potential for growth. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. BW GAS: Moody's Hikes CFR to B1 on Solid Operating Performance -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of BW Gas & Convenience Holdings, LLC ("BW Gas & Convenience", dba "Yesway") including its corporate family rating to B1 from B2, probability of default rating to B2-PD from B3-PD, and its senior secured bank credit facility rating to B1 from B2. At the same time, Moody's assigned a B1 to the company's planned $535 million senior secured bank credit facility. The ratings on the existing bank credit facility will be withdrawn when the transaction closes. The rating outlook is stable. The upgrade reflects BW Gas & Convenience's solid operating performance in a challenging 2020, good credit metrics over the next two years -- leverage will remain below 5.0x and interest coverage will be above 3.0x -- and the company's very good liquidity. Moody's forecasts the company's credit metrics will remain appropriate for the B1 rating even as the company continues to grow through acquisitions. Proceeds from the planned $535 million bank credit facility -- including a 5-year $125 million revolver (undrawn at closing) and 7-year $410 million term loan -- will be used to refinance the company's existing term loan, put cash on the balance sheet and pay fees and expenses. The transaction extends the company's maturity profile and improves its liquidity with a larger committed revolver and lower interest expense. Upgrades: Issuer: BW Gas & Convenience Holdings, LLC Probability of Default Rating, Upgraded to B2-PD from B3-PD Corporate Family Rating, Upgraded to B1 from B2 Senior Secured Bank Credit Facility, Upgraded to B1 (LGD3) from B2 (LGD3) Assignments: Issuer: BW Gas & Convenience Holdings, LLC GTD Senior Secured Term Loan , Assigned B1 (LGD3) GTD Senior Secured Revolving Credit Facility, Assigned B1 (LGD3) Outlook Actions: Issuer: BW Gas & Convenience Holdings, LLC Outlook, Changed To Stable From Positive RATINGS RATIONALE BW Gas & Convenience's credit profile is constrained by its small scale in terms of number of stores and absolute levels of EBITDA. With just over 400 stores, the company is one of the smaller rated convenience stores. The company's small size and concentration in Texas, New Mexico and Oklahoma exposes it to regional economic swings. The rating also reflects governance considerations, particularly the private equity ownership and potential for continued acquisition activity in a consolidating industry. The company's credit profile benefits from its moderate leverage and good interest coverage. BW Gas & Convenience's combined merchandise gross profit margins has benefitted from the 2019 acquisition of Allsup's -- driven by a strong foodservice platform and good fuel margins on a cents per gallon basis (CPG) relative to the industry. Allsup's exposure to the growth in the Permian Basin is beneficial to both total gallon volumes as well as CPG due to a favorable mix shift toward higher margin diesel. BW Gas & Convenience's mix of merchandise vs fuel gross profit is weighted more towards merchandise at about 60% vs fuel at 40% which Moody's expect will provide more stability in gross profit margins going forward. The company also benefits from its very good liquidity and a significant portion of owned real estate in its portfolio of stores. BW Gas & Convenience has very good liquidity including cash balances of about $110 million and revolver availability of about $125 million, assuming the planned transaction closes. The company's $125 million committed revolving credit facility will expire in 2026. The credit agreement contains a springing total net leverage financial maintenance covenant (as defined) of 5.0x that is only tested if there is 25% drawn. Moody's expect covenant will not be tested over the next 12 to 18 months. The company also owns a significant portion of its convenience store real estate portfolio providing them with a material source of alternate liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's expectation that BW Gas & Convenience's leverage will remain below 5.0x, even assuming continued growth through acquisitions. Ratings could be upgraded if the company's financial strategies supported debt/EBITDA below 4.0x and maintained EBIT/interest expense above 3.0x. An upgrade would also require the company maintain at least good liquidity. A downgrade could occur if leverage increases to above 5.0x or EBIT/interest declines to below 2.0x. Fort Worth, Texas-based BW Gas & Convenience Holdings, LLC, through its operating subsidiaries, operates just over 400 convenience stores in 9 states primarily in the midwest and southern US under the Yesway and Allsup's banners. It is privately owned by Brookwood Financial Partners, LLC. Revenue for the fiscal year ended December 31, 2020 approximated $1.5 billion. The principal methodology used in these ratings was Retail Industry published in May 2018. CARBON AND CLAY: Seeks to Tap Langley & Banack as Legal Counsel --------------------------------------------------------------- Carbon and Clay Company seeks approval from the U.S. Bankruptcy Court for the Western District of Texas to employ Langley & Banack, Inc. as its legal counsel. Langley & Banack will render these services: (a) advise the Debtor regarding its duties and powers in its Chapter 11 case; and (b) handle all matters which come before the court in the Debtor's case. The hourly rates of Langley & Banack's attorneys are as follows: David S. Gragg, Esq. $450 William R. Davis, Jr., Esq. $400 The firm received $15,000 retainer, plus filing fee of $1,717 from the Debtor. William Davis, Jr., Esq., a partner at Langley & Banack, disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: William R. Davis, Jr., Esq. Langley & Banack, Inc. 745 E. Mulberry, Suite 700 San Antonio, TX 78212 Telephone: (210) 736-6600 Facsimile: (210) 735-6889 Email: wrdavis@langleybanack.com About Carbon and Clay Company Carbon and Clay Company, a manufacturer of beauty and oral care products based in New Braunfels, Texas, filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Texas Case No. 21-50242) on March 4, 2021. Jessica Arman, chief executive officer, signed the petition. In the petition, the Debtor disclosed $2,850,486 in assets and $1,434,965 in liabilities. Judge Craig A. Gargotta oversees the case. The Debtor tapped Langley & Banack, Inc. as legal counsel and LN Accounting Advisor, LLC as accountant. CARBON AND CLAY: Seeks to Tap LN Accounting Advisor as Accountant ----------------------------------------------------------------- Carbon and Clay Company seeks approval from the U.S. Bankruptcy Court for the Western District of Texas to employ LN Accounting Advisor, LLC as its accountant. LN Accounting Advisor will render these services: (a) prepare income tax returns; and (b) assist the Debtor with tax reporting and compliance. LN Accounting Advisor's customary hourly rate is $250. Lahari Neelapereddy, the owner of LN Accounting Advisor, disclosed in court filings that the firm is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Lahari Neelapereddy LN Accounting Advisor, LLC 9208 Fox Hollow Trail Irving, TX 75063 Telephone: (214) 903-0806 Email: Lahari@accountingadvisorscpa.com About Carbon and Clay Company Carbon and Clay Company, a manufacturer of beauty and oral care products based in New Braunfels, Texas, filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Texas Case No. 21-50242) on March 4, 2021. Jessica Arman, chief executive officer, signed the petition. In the petition, the Debtor disclosed $2,850,486 in assets and $1,434,965 in liabilities. Judge Craig A. Gargotta oversees the case. The Debtor tapped Langley & Banack, Inc. as legal counsel and LN Accounting Advisor, LLC as accountant. CASTEX ENERGY: Seeks Approval to Hire Okin Adams as Counsel ----------------------------------------------------------- Castex Energy 2005 Holdco, LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Okin Adams LLP as legal counsel. Okin Adams will render these legal services: (a) advise the Debtors regarding their rights, duties and powers in the Chapter 11 cases; (b) assist and advise the Debtors in their consultations relative to the administration of the cases; (c) assist the Debtors in analyzing the claims of their creditors and in negotiating with such creditors; (d) assist the Debtors in the analysis of and negotiations with any third party concerning reorganization matters; (e) represent the Debtors at all hearings and other proceedings; (f) review and analyze all applications, orders, statements of operations and schedules filed with the court and advise the Debtors as to their propriety; (g) assist the Debtors in preparing pleadings and applications; and (h) perform such other legal services as may be required. As of the petition date, Okin Adams was not owed any fees and expenses by the Debtors, and $130,039 of the retainer remained in the client trust account. The firm's attorneys and legal assistants will be paid at these rates: Matthew S. Okin, Partner $675 per hour David L. Curry, Jr., Partner $525 per hour Edward A. Clarkson, Associate $450 per hour Ryan A. O’Connor, Associate $400 per hour Timothy L. Wentworth, Of Counsel $395 per hour Johnie A. Maraist, Associate $325 per hour Legal Assistants $140 per hour Matthew Okin, Esq., a partner at Okin Adams, disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Matthew S. Okin, Esq. David L. Curry, Jr., Esq. Ryan A. O'Connor, Esq. Johnie A. Maraist, Esq. Okin Adams LLP 1113 Vine St., Suite 240 Houston, TX 77002 Telephone: (713) 228-4100 Facsimile: (888) 865-2118 Email: mokin@okinadams.com dcurry@okinadams.com roconnor@okinadams.com jmaraist@okinadams.com About Castex Energy 2005 Holdco Castex Energy 2005 Holdco, LLC and its affiliates, Castex Energy 2005, LLC, Castex Energy Partners, LLC, and Castex Offshore, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 21-30710) on Feb. 26, 2021. Douglas J. Brickley, the chief restructuring officer, signed the petitions. At the time of the filing, the Debtors estimated their assets and liabilities at $100 million to $500 million. Judge David R. Jones oversees the cases. The Debtors tapped Okin Adams LLP as their bankruptcy counsel, The Claro Group, LLC as financial advisor, and Thompson & Knight LLP as special counsel and conflicts counsel. Donlin, Recano & Company, Inc. is the notice, claims and balloting agent. CASTEX ENERGY: Unsecureds Get Share in Liquidating Trust -------------------------------------------------------- Castex Energy 2005 Holdco, LLC, et al., submitted a Disclosure Statement in support of Joint Chapter 11 Plan. As of the Petition Date, CEP and COI owned interests ("Working Interests") in approximately 182 oil, gas, and related wells, and have estimated proven reserves of approximately 2.3 MMBO (oil and gas condensate) and 38.5 BCFE (natural gas). Certain of the Debtors are also a party to numerous master service agreements, joint operating agreements, joint development agreements, exploration agreements, and area of mutual interest agreements. The Debtors' Working Interests can be categorized by their location and whether the Debtors serve as the operator of record for such properties. Generally, the Debtors' Working Interests fall into four (4) broad categories: (a) Offshore Operated; (b) Offshore Non-Operated; (c) Onshore Operated; and (d) Onshore Non-Operated. The Debtors' proportionate share of the total P&A Obligations (defined below) related to the Working Interests is approximately $36 million. Importantly, this $36 million of potential P&A Obligations are not currently due to be performed, but rather this number reflects an approximation of P&A Obligations that may arise, in the aggregate, over the future life of all Working Interests held by the Debtors - which in some cases range up to 40 years from the Petition Date. The $36 million in P&A Obligations can be further broken down into the four (4) categories described above, with Offshore Operated being approximately $12.3 million, Offshore Non-Operated being approximately $7.7 million, Onshore Operated being approximately $9.2 million, and Onshore Non-Operated being approximately $6.9 million. As of the Petition Date, the Debtors have approximately $12 million in P&A bonds that can be potentially used to cover the P&A Obligations. The vast majority of these bonds, approximately $11.8 million, relate to the Offshore Operated properties, with approximately $3.6 million of this amount consisting of areawide bonds. The Debtors have approximately $400,000 in P&A bonds covering their Onshore properties, but Castex Energy, Inc., a non-debtor, is the Principal under these bonds, not COI. COI, however, has paid the premiums on these bonds, and it believes that such bonds should be available to offset the P&A Obligations on the Onshore properties. The Plan shall be implemented on the Effective Date. At the present time, the Debtors believe that there will be sufficient funds, as of the Effective Date, to pay in full the expected payments required under the Plan to Holders of Allowed Administrative Expense Claims, Holders of Allowed Priority Non-Tax Claims in Class 1, and Holders of Other Priority Claims in Class 2. Class 3, Holders of Allowed Secured Debt Claims, will receive their Pro Rata Share of the equity interests in Lender NewCo. Class 4, Holders of General Unsecured Claims, will receive a Pro Rata Share of the interests in the Liquidating Trust. Class 5, Intercompany Claims, will be adjusted or reinstated, as determined by the Debtors, subject to the consent of the Required Lenders. Class 6, Class 510(b) Claims, shall have the Section 510(b) Claims extinguished and cancelled receiving no distribution. Class 7, Intercompany Interests, will be adjusted, reinstated or discharged by the Debtors. Class 8, Existing Interests, will be cancelled, released, and extinguished by the Debtors. Proposed attorneys for the Debtors: Matthew S. Okin David L. Curry, Jr. Ryan A. O'Connor Johnie A. Maraist OKIN ADAMS LLP 1113 Vine St., Suite 240 Houston, Texas 77002 Tel: 713.228.4100 Fax: 888.865.2118 E-mail: mokin@okinadams.com E-mail: dcurry@okinadams.com E-mail: roconnor@okinadams.com E-mail: jmaraist@okinadams.com A copy of the Disclosure Statement dated March 8, 2021, is available at https://bit.ly/38x9z3r from PacerMonitor.com. About Castex Energy 2005 Holdco Castex Energy 2005 Holdco, LLC and its affiliates, Castex Energy 2005, LLC, Castex Energy Partners, LLC, and Castex Offshore, Inc., sought protection under Chapter 11 of the Bankruptcy Code on February 26, 2021 (Bankr. S.D. Tex. Lead Case No. 21-30710) on February 26, 2021. The petitions were signed by chief restructuring officer, Douglas J. Brickley. At the time of the filing, the Debtors estimated their assets and liabilities at $100 million to $500 million. Judge David R. Jones oversees the case. The Debtors are represented by Matthew Okin, Esq. at Okin Adams LLP. The Debtors tapped The Claro Group, LLC as their Financial Advisors, Thompson & Knight LLP as their Special Counsel and Conflicts Counsel, and Donlin, Recano & Company, Inc. as their Notice, Claims & Balloting Agent. CHARLES RIVER: Moody's Gives Ba2 Rating on New Sr. Unsecured Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to Charles River Laboratories International Inc.'s proposed senior unsecured notes. There are no changes to Charles River's existing ratings, including the Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, Baa3 senior secured ratings, and existing Ba2 senior unsecured ratings. There is no change to the SGL-1 Speculative Grade Liquidity Rating. The outlook is stable. Proceeds from Charles River's offering will be used for general corporate purposes, including prefunding a portion of the acquisition of Cognate BioServices and to refinance its unsecured notes due in 2026. At the same time, Charles River is seeking to increase the size of its existing revolver to $3 billion from $2.05 billion and extend the maturity by three years. On February 17th, Charles River announced that it signed a definitive agreement to acquire Cognate for $875 million. Cognate is a contract development and manufacturing organization (CDMO) for cell and gene therapies, a fast-growing area of pharmaceutical development of treatments for cancers and rare diseases. Moody's estimates that debt/EBITDA will increase to around 4x at close and that it will rapidly decline to under 3.5x by the end of 2021 through a combination of earnings growth and debt repayment. The acquisition is consistent with Moody's expectations that Charles River's leverage will temporarily increase for M&A, but that the company's acquisition strategy will be disciplined. Charles River has demonstrated a solid track record of rapid deleveraging post-deals. The acquisition is expected to close by the end of first quarter of 2021. Charles River Laboratories International, Inc.: Rating assigned: New senior unsecured notes at Ba2 (LGD5) RATINGS RATIONALE Charles River's Ba1 Corporate Family Rating reflects its competitive position as one of the largest early-stage contract research organizations (CROs), and its good business diversity across geography and customers. Charles River generates strong and stable free cash and generally maintains moderate financial leverage. Despite strong operating performance, the ratings are constrained by Moody's expectation that Charles River will continue to be very acquisitive, a governance risk consideration. In addition, Charles River is vulnerable to reduced R&D budgets of its customers. For example, a reduction in availability of funding for academic or biotech research would have a negative impact on Charles River. Moody's believes this risk is somewhat mitigated by a robust biotech funding environment that provides multiple years of spending runway. Charles River's SGL-1 Speculative Grade Liquidity rating is supported by Moody's expectation for strong free cash flow of more than $450 million over the next 12 months. Charles River reported cash of $228 million at December 26, 2020. Charles River's liquidity is supported by a sizeable revolver which will increase to $3 billion and expire in 2026. Moody's expects the facility to be partially drawn in 2021 and in Moody's view, Charles River will continue to use this facility for future M&A. Moody's expects ample cushion under Charles River's financial maintenance covenants. The stable outlook balances Charles River's good cash generation and high single digit EBITDA growth over the next 12-18 months partially offset by temporarily higher leverage for the Cognate acquisition. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade include if Moody's expects adjusted debt to EBITDA to be sustained below 3.5x with free cash flow to debt above 20%. A disciplined approach to M&A and capital deployment would also be needed. The ratings could be downgraded if Charles River experiences declining profits due to competitive pressures or a market contraction. Specifically, the ratings could be downgraded if adjusted debt to EBITDA is sustained above 4.5x. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Charles River Laboratories International, Inc., headquartered in Wilmington, MA, is an early stage contract research organization. The company provides discovery and safety assessment services used in early-stage drug development, as well as research models (e.g. rodents) for use in scientific research, and manufacturing support products and services. The company reported revenues of approximately $2.9 billion for the twelve months ended December 26, 2020. CIBT GLOBAL: Moody's Completes Review, Retains Caa2 CFR ------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of CIBT Global, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. CIBT's Caa2 corporate family rating is weighed upon by high levels of leverage, pressure from the impacts of COVID that has significantly reduced travel globally, a growth strategy driven by M&A which imposes potential integration risk, and cyclical nature of the business. The rating is supported by its strong position in the specific markets of business, solid customer relations which assist with cyclicality of the business, diversity in the business which allows for benefit from any travel trends, and limited maintenance capex requirements. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. COMSTOCK MINING: Swings to $14.9 Million Net Income in 2020 ----------------------------------------------------------- Comstock Mining Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing net income of $14.93 million on $201,700 of total revenues for the year ended Dec. 31, 2020, compared to a net loss of $3.80 million on $179,632 of total revenues for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $43.12 million in total assets, $11.34 million in total liabilities, and $31.78 million in total equity. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1120970/000112097021000046/lode-20201231.htm About Comstock Mining Comstock Mining Inc. -- http://www.comstockmining.com-- is a Nevada-based, precious and strategic metal-based exploration, economic resource development, mineral production and metal processing business with a strategic focus on high-value, cash-generating, environmentally friendly, and economically enhancing mining and processing technologies and businesses. * * * This concludes the Troubled Company Reporter's coverage of Comstock Mining Inc. until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. CONCISE INC: Unsecureds to Recover Around 20% in Plan ----------------------------------------------------- Concise, Inc., submitted a Plan and a Disclosure Statement. The Debtor is a telecommunications and information technology network integrator company. The Plan provides for the payment of all administrative expenses and payment of the priority, secured and general unsecured claims of creditors from the net profits generated by the Debtor. The Plan is to continue to seek profitable contracts and obtain work orders on already awarded contracts so that creditors share in the net proceeds for a term of three years from the effective date of the plan. The priority creditors identified in the Plan will be paid semi-annually on a pro rata basis until satisfied. Claims of the Priority Claims shall be paid on the basis of 50% of the Debtor's net profits until fully paid or until the end of the Plan Term, whichever comes first. Concurrent with the Priority Creditors payments the Secured creditors shall be paid semi-annually the remaining 50% of the Debtor's net profits in the order of their priority until fully paid or until the end of the Plan Term, whichever comes first. The Debtor has four secured creditors which assert a continuing lien on the proceeds earned from its operations garnered from its performance on contracts. As each secured creditor becomes fully satisfied, the next secured creditor in order of priority will receive its share of the payments until that next secured creditor is fully paid, and so on until all secured creditors have been fully paid or until the end of the Plan Term, whichever comes first. Each and any secured creditor which is not paid in full over the Plan Term shall retain its lien to the extent that its claim remains unpaid. The claim of the SBA for its EIDL, having been incurred post-petition with the Court's authorization, shall be timely paid in accordance with its terms until fully paid as an expense of business. When fully paid the lien shall be released pursuant to the agreed upon terms. The Debtor shall pay holders of Allowed Unsecured Claims in Class V a pro rata share of 100% of the net profits remaining after payment of the Claims set forth in Classes I through IV. The creditors holding claims in Class V are impaired and may not be paid 100% of their allowed claims as the projected net profits may not provide sufficient funding to pay the claims in full. The Debtor provides the attached schedule of the estimated net profits available to make payments under its Plan. On the basis of the Debtor's projections, each unsecured creditor would receive an estimated 20% of each respective claim, but the unsecured creditors would receive more if the Debtor can secure and perform profitably under additional contracts, subcontracts, and/or task orders during the Plan. Debtor shall retain possession of all personal property of the estate. The Debtor shall aggressively and diligently seek profitable contracts, from both federal and private sources. The Plan will be funded from amounts currently held by the Debtor and by the proceeds of the Debtor's business operations. Based on the Debtor's cash flow projections, the Debtor believes that its cash flow will be sufficient to meet its obligations in the Plan and to fund ongoing business operations. Attorneys for the Debtor: Michael G. Wolff, Esq. Jeffrey M. Orenstein, Esq. Wolff & Orenstein, LLC 15245 Shady Grove Road, 465-N Rockville, MD 20850 301-250-7232 A copy of the Disclosure Statement is available at https://bit.ly/3bH8k3Y from PacerMonitor.com. About Concise Inc. Concise, Inc. (dba - CNS) was founded in 2003, as a turnkey in-building Distributed Antenna System Integrator (DAS). The Company offers wireless, infrastructure cabling, cyber|cloud services, IT telecommunications, managed security, and engineering design services. Visit https://www.conciseinc.com for more information. Concise, Inc. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 19-00079) on January 31, 2019. In the petition signed by David Johnson, chief executive officer, the Debtor estimated $51,715 in total assets and $3,556,125 in total liabilities. Judge Martin S. Teel, Jr. presides over the case. Jeffrey M. Orenstein, Esq. at Wolff & Orenstein, LLC represents the Debtor as counsel. COOLSYS INC: Moody's Completes Review, Retains B3 CFR ----------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of CoolSys, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. CoolSys's B3 corporate family rating is supported by its prominent position in the commercial refrigeration/HVAC industry, long history of customer relationships and recurring revenues, geographically diversity and a variety of solutions that provide competitive advantage, and the essential nature of the services it provides to customers. The rating is constrained by its small size and exposure to some cyclicality, concentration among its customers, acquisitive nature as a source of growth, high leverage profile, and private equity influenced financial strategies. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. CRED INC: Recovery for Convenience Claims Hiked to 30% in Plan -------------------------------------------------------------- Cred Inc., et al., submitted a Modified First Amended Combined Joint Plan of Liquidation and Disclosure Statement dated March 10, 2021 The estimated percentage recovery for Class 4: General Unsecured claims totaling $170.9 million is still unknown. Each Holder of an Allowed Convenience Claim (each an unsecured claim of $1,000 or less) in Class 5 will receive cash in an amount equal to 30% of the amount of such allowed convenience claim on or as reasonably practicable after the later of the Effective Date or 30 days after the date on which such Claim becomes Allowed. The prior iteration of the Disclosure Statement provided for an estimated recovery of 20% for the class. The Trust Advisory Board shall consist of those parties identified in the Plan Supplement and at no time greater than four members. To the extent any act of the Trust Advisory Board requires a majority vote of the Trust Advisory Board and such vote ends in a tie, then such act shall be subject to the approval of the Bankruptcy Court by the motion of the Liquidation Trustees. After the Effective Date, the Liquidation Trustees shall serve as the officers, directors, or managers of each of the Debtors, as applicable, under applicable state law, and shall be authorized to execute, deliver, file or record such documents, contracts, instruments, releases and other agreements and to take such actions on behalf of the Debtors as may be necessary or appropriate subject to the terms and conditions of the Combined Plan and Disclosure Statement. Subject to further order of the Court, the Examiner and his Professionals shall retain all documents, files and records pertaining to the Debtors in their possession, custody or control and may not share, produce or transmit such documents, files and records to any other Entity. The Liquidation Trustees may, in their sole discretion, deem that any Claim is a Disputed Claim unless otherwise provided in a Final Order of the Bankruptcy Court, agreed to by the Liquidation Trustees or until expiration of the Claims Objection Deadline as set forth in section 14.2. To the extent that there is no claim objection pending on the Claims Objection Deadline and a Claim has not otherwise been Disallowed pursuant to the terms of the Combined Plan and Disclosure Statement, such claim shall then be deemed an Allowed Claim. Co-Counsel to the Debtors: James T. Grogan Mack Wilson PAUL HASTINGS LLP 600 Travis Street, Fifty-Eighth Floor Houston, Texas 77002 Telephone: (713) 860-7300 Facsimile: (713) 353-3100 Email: jamesgrogan@paulhastings.com mackwilson@paulhastings.com - and - G. Alexander Bongartz (admitted pro hac vice) Derek Cash (admitted pro hac vice) PAUL HASTINGS LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 318-6000 Facsimile: (212) 319-4090 Email: alexbongartz@paulhastings.com derekcash@paulhastings.com Scott D. Cousins (No. 3079) COUSINS LAW LLC Brandywine Plaza West 1521 Concord Pike, Suite 301 Wilmington, Delaware 19803 Telephone: (302) 824-7081 Facsimile: (302) 295-0331 Email: scott.cousins@cousins-law.com A copy of the Modified First Amended Combined Joint Plan of Liquidation and Disclosure Statement is available at https://bit.ly/30CqSvB from Donlin Recano, the claims agent. About Cred Inc. Cred Inc. is a cryptocurrency platform that accepts loans of cryptocurrency from non-U.S. persons and pays interest on those loans. Cred -- https://mycred.io/ -- is a global financial services platform serving customers in over 100 countries. Cred is a licensed lender and allows some borrowers to earn a yield on cryptocurrency pledged as collateral. Cred Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-12836) on Nov. 7, 2020. Cred was estimated to have assets of $50 million to $100 million and liabilities of $100 million to $500 million as of the bankruptcy filing. The Debtors 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. CROCS INC: Moody's Assigns First Time Ba3 Corp Family Rating ------------------------------------------------------------ Moody's Investors Service assigned first time ratings to Crocs, Inc. including a Ba3 corporate family rating, a Ba3-PD probability of default rating and a speculative grade liquidity rating of SGL-2. In addition, Moody's assigned a B1 rating to Crocs' proposed $300 million unsecured notes. The outlook is stable. The proceeds will be used to repay the $180 million outstanding balance under its revolving credit facility. The rest of the proceeds will be used for general corporate purposes. Moody's ratings and outlook are subject to receipt and review of final documentation. The Ba3 CFR assignment incorporates governance considerations particularly Crocs' conservative financial strategies which support low debt levels and good liquidity. Moody's adjusted debt/EBITDA, pro forma for the notes issuance, is 1.6x at December 31, 2020. In addition, Crocs does not pay dividends to its shareholders but will continue to make share repurchases as it has $337.8 million remaining under its $1 billion share repurchase program. Historically, share repurchases have been funded with excess cash flow and the company did not take part in share repurchases in Q2 and Q3 2020 in response to the COVID-19 pandemic. Assignments: Issuer: Crocs, Inc. Corporate Family Rating, Assigned Ba3 Probability of Default Rating, Assigned Ba3-PD Speculative Grade Liquidity Rating, Assigned SGL-2 Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD5) Outlook: Issuer: Crocs, Inc. Outlook, is Stable RATINGS RATIONALE Crocs' Ba3 CFR reflects its well-known brand, leading market position in the clog category and successful digital marketing strategies. The rating also reflects the company's diversified sales channels with a good mix of wholesale, retail and digital, improving margins and good liquidity. Also considered are governance considerations, specifically conservative financial strategies as reflected by its low debt levels, low leverage and strong interest coverage. Over the past several years, Crocs has been able to improve its margins as a result of strategies implemented to close unprofitable store locations, reduce it SKU offering to focus on its more profitable core products like the clog and a shift to digital marketing. However, prior to these management initiatives, Crocs has a history of erratic EBITDA performance. The rating is constrained by the company's modest scale, single brand and limited product diversification with the majority of sales derived from the sale of the clog. As a footwear wholesaler/retailer, the company is subject high level of competition in the footwear sector. It is also subject to fashion risk which is heightened due to the company's narrow product focus in casual footwear and significant exposure to a single silhouette. Crocs' liquidity is good. The company had $136 million of cash on hand as of 12/31/2020 and consistent free cash flow generation which is expected to continue. The company has a $500 million revolving credit facility due 2024 that is used to fund seasonal working capital needs. Moody's expects the company to have ample availability. The revolver contains a maximum leverage ratio of 3.50x which steps down to 3.25x after 12/31/2021 as well as a minimum interest coverage ratio of 4.00x. Moody's expects the company to remain in compliance with these covenants. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's expectation of sales growth while maintaining good liquidity and sustaining profit margins over the next 12-18 months. An upgrade to the ratings is unlikely given the company's modest scale and limited product diversification. However, the ratings could be upgraded if the company increases its scale and product diversity while maintaining strong operating performance, very good liquidity and sustaining EBITA/interest expense above 3.5x and debt/EBITDA below 2.25x or 2.75x following acquisitions. An upgrade would also require a demonstration of a successful integration of any potential acquisitions. The ratings could be downgraded if there is a shift to more aggressive financial strategies or if there is a deterioration in the company's overall operating performance, brand relevance or liquidity profile. Quantitatively, the ratings could be downgraded if debt/EBITDA rises above 3.5x or EBITA/interest expense declines below 2.75x. Headquartered in Broomfield, Colorado, Crocs, Inc. is engaged in the design, development, marketing distribution and sale of casual footwear. The company's products are sold through digital and wholesale channels as well as 351 company operated retail stores across the globe. Revenue for the twelve months ended December 31, 2020 was approximately $1.4 billion. The principal methodology used in these ratings was Apparel Methodology published in October 2019. CROSS FINANCIAL: Moody's Rates Repriced $450MM 1st Lien Loan 'B2' ----------------------------------------------------------------- Moody's Investors Service has assigned a B2 rating to a repriced $450 million (including pending $100 million increase) first-lien senior secured term loan being issued by Cross Financial Corp. (Cross Financial). The company plans to use net proceeds along with existing cash to repurchase shares from certain equity holders, fund near-term acquisitions and pay related fees and expenses. The company is also upsizing its revolving credit facility to $80 million (rated B2). The rating outlook for Cross Financial is unchanged at stable. RATINGS RATIONALE According to Moody's, Cross Financial's ratings reflect its good regional market presence in small and middle market insurance brokerage particularly in Maine, Massachusetts and New Hampshire. The company has good diversification across clients, client industries, producers, and insurance carriers primarily for P&C products with some employee benefits. Cross Financial also has a track record of healthy EBITDA margins and cash flow. These strengths are offset by elevated financial leverage post transaction, modest interest coverage, and a geographic concentration where the top three states account for nearly 80% of total revenue. Cross Financial's revenues and earnings are subject to fluctuations in the economic and regulatory conditions of the northeast US, in particular Maine and Massachusetts. Other challenges include the company's limited scale relative to other rated insurance brokers as well as potential liabilities arising from errors and omissions, a risk inherent in professional services. Cross Financial reported revenue of $215 million in 2020, up 14% from 2019 with organic growth around 4%. EBITDA margins have remained solid, helped by expense savings. Following the refinancing, Moody's estimates that Cross Financial's pro forma debt-to-EBITDA will be around 5.5x with (EBITDA - capex) coverage of interest around 2.5x and a free-cash-flow-to-debt ratio in the low-to-mid single digits. These pro forma metrics include Moody's adjustments for operating leases, run-rate earnings from acquisitions and certain other debt-like obligations. The stable outlook reflects Moody's expectation that Cross Financial will reduce leverage to about 5x over the next year through continued EBITDA growth supplemented by tuck-in acquisitions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the company's limited scale and geographic concentration, an upgrade of Cross Financial's ratings is unlikely in the intermediate term. Factors that could contribute positively to the company's credit profile include: (i) increased scale and geographic diversification, (ii) debt-to-EBITDA ratio maintained below 4.5x, (iii) (EBITDA - capex) coverage of interest exceeding 3.5x, and (iv) free-cash-flow-to-debt ratio exceeding 7%. The following factors could lead to a downgrade of Cross Financial's ratings: (i) revenue decline and/or disruptions to existing or newly acquired operations, (ii) debt-to-EBITDA ratio consistently above 5.5x, (iii) (EBITDA - capex) coverage of interest below 2.5x, (iv) free-cash-flow-to-debt ratio below 4%, or (v) deviation from the company's historic financial policies. Moody's has assigned the following rating to Cross Financial Corp.: $450 million (including pending $100 million increase) first-lien senior secured term loan maturing September 2027 at B2 (LGD3). Moody's maintains the following ratings on Cross Financial Corp.: Corporate family rating at B2; Probability of default rating at B2-PD; $80 million (including pending $10 million increase) first-lien senior secured revolving credit facility maturing September 2025 at B2 (LGD3); $350 million first-lien senior secured term loan maturing September 2027 at B2 (LGD3) (rating to be withdrawn upon closing of the new term loan). The rating outlook for Cross Financial Corp. is unchanged at stable. The principal methodology used in this rating was Insurance Brokers and Service Companies published in June 2018. Based in Bangor, ME, Cross Financial ranks among the top 30 US insurance brokers based on 2019 revenues, according to Business Insurance. The company's product mix is about 60% commercial insurance, 25% personal and 15% employee benefits and related products, all distributed to small and middle market businesses and individuals across New England. In 2020, Cross generated total revenue of $215 million. CROSSPLEX VILLAGE: Unsecured Creditors Will Recover 5% in Plan -------------------------------------------------------------- Crossplex Village Qalicb, LLC, submitted a Plan and a Disclosure Statement. Traditionally, the ready liquidity of active credit markets would have allowed the Debtor either to sell the high-quality Project or to obtain refinancing that would pay off the existing debt. But under New-Market Tax Structure that was not possible. Given these restrictions, "Take-Out" lenders are not readily available in such a structure. Generally, therefore, a frequent solution to loan difficulties in today's market is the extension of the maturity of loans at reasonable interest rates and with the elimination or relaxation of financial covenants, coupled continued and regular cash flow of the Project. This is the approach that the Debtor is pursuing. Treatment of Claims Class 3 consists of BBVA/Compass Bank as holder of $14,000,000 in Commercial Development Revenue Bonds pursuant to that certain Trust Indenture dated April 1, 2017. The Reorganized Debtor is not in a financial position to service this debt at this time. Post-Confirmation, and as the revenues of the Project stabilize and improve, the Reorganized Debtor will commence making payments towards debt service to BBVA/Compass (or even partial payments) as soon as possible. Class 3 is impaired. Class 4 consists of all Unsecured Claims not otherwise classified in the Plan. Under the Plan, Holders of Allowed Class 4 Claims shall be paid from a fund, the source of which shall be the excess cash flow, if any, of business operations of the Project after debt service and expenses, payable in equal yearly payments, beginning on the date that is thirty (30) days after the first anniversary of the Effective Date and thereafter on an annual basis until the aggregate amount of five percent (5%) of each Allowed Claim is paid. Class 4 is impaired. The Plan shall be implemented on the Effective Date, and the primary source of the funds necessary to implement the Plan initially will be the Cash of the Reorganized Debtor. At the present time, the Debtor believes that the Reorganized Debtor will have sufficient funds, as of the Effective Date, to pay the expected payments required under the Plan. Counsel for the Debtor: Jeffery J. Hartley Christopher T. Conte HELMSING, LEACH, HERLONG, NEWMAN & ROUSE, P.C. Post Office Box 2767 Mobile, AL 36652 Tel: (251) 432-5521 E-mail: jjh@helmsinglaw.com ctc@helmsinglaw.com A copy of the Disclosure Statement is available at https://bit.ly/3l7MXeY from PacerMonitor.com. About Crossplex Village Qalicb CrossPlex Village QALICB, LLC, filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ala. Case No. 20-02586) on Aug. 10, 2020. At the time of the filing, the Debtor disclosed assets of between $10 million and $50 million and liabilities of the same range. The Debtor has tapped Helmsing, Leach, Herlong, Newman & Rouse, P.C., as its legal counsel. DATA AXLE: Moody's Completes Review, Retains Caa1 CFR ----------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Data Axle Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Data Axle, Inc.'s Caa1 Corporate Family Rating reflects its modest scale and high leverage, exposure to cyclicality and highly competitive nature of the marketing services industry. Data Axle provides data driven marketing services that aims to help clients retain and expand customers through its solutions and services. Data Axle benefits from multi-year data contracts with its customers and a diversified customer base. However marketing budgets are often reduced as a result of recessionary pressure which offsets earnings and cash flow visibility. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. DESERT VALLEY: Atlas Says Plan Disclosures Misleading ----------------------------------------------------- The creditor Atlas Residential, LLC, objects to the approval of Desert Valley Steam Carpet Cleaning LLC's January 29, 2021 First Amended Disclosure Statement because it contains misleading information, and it does not contain adequate information required by 11 U.S.C. § 1125. Among other things, the Amended DS falls short in several important aspects: (1) it fails to properly address the value of Debtor's assets; (2) it fails to address issues concerning ownership of the real property; (3) it fails to fully and accurately address treatment of administrative claims, including claims of Debtor's current attorneys, Wright Law Offices and Atlas's administrative claim; (4) it fails to adequately address both Atlas's secured and unsecured claims; (5) it fails to adequately discuss the treatment of Lane & Nach, the other purported secured creditor in this case; (6) it fails to identify its proposed "Interest Holders;" (7) it fails to explain why $20,000 is sufficient new value from those Interest Holders; and (8) it fails to adequately address the proposed management of the reorganized Debtor. Attorneys for Atlas Residential, LLC: Patrick R. Barrowclough ATKINSON, HAMILL & BARROWCLOUGH, P.C. 3550 N. Central Avenue, Suite 1150 Phoenix, AZ 85012 Tel: (602) 222-4828 Fax: (602) 222-4820 E-mail: pbarrowclough@ahblawfirm.com Cynthia L. Johnson LAW OFFICE OF CYNTHIA L. JOHNSON 11640 E. Caron Street Scottsdale, AZ 85259 Tel: (480) 381-7929 Fax: (480) 614-9414 E-mail: cynthia@jsk-law.com About Desert Valley Steam Carpet Cleaning Desert Valley Steam Carpet Cleaning, LLC, was formed on or about Aug. 12, 2005, for the purpose of owning and operating a multi-family housing property located at 603 and 607 North D. Street, Eloy, Arizona. Desert Valley Steam Carpet Cleaning sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-00570) on Jan. 16, 2020. Judge Brenda K. Martin oversees the case. Wright Law Offices, led by Benjamin Wright and Shawn A. McCabe, is serving as counsel to the Debtor. Wright replaced Patrick Keery of Keery McCue, PLLC, the original bankruptcy counsel of the Debtor. DESOTO OWNERS: Unsecureds to Split At Least $500,000 in Plan ------------------------------------------------------------ Desoto Owners, LLC and Desoto Holding, LLC submitted a Second Amended Joint Plan of Reorganization. Class 3 – Romspen Allowed Secured Claim is impaired and entitled to vote on the Plan. Romspen is the sole creditor of Desoto Holding LLC and its obligation to Romspen is co-extensive with the obligation of Desoto Owners LLC to Romspen. By no later than the Construction Loan Closing Date, Desoto Owners shall make application to the Bankruptcy Court in accordance with section 5.04 to sell at auction, parcels of the Mall Property, designated in the application. The auction sale shall take place no later than 60 days after entry of a court order approving bid procedures. At the auction, the parcels will be sold off one after the other until such time as the proceeds (including credit bids if any), net of all costs and expenses incurred in connection with the auction sale, will realize at least $10 million. Within 3 business days of the receipt by Desoto Owners of such proceeds, they shall be paid to Romspen. In lieu of auctioning off any properties, Desoto Owners shall have the right to pay Romspen $10 million in cash instead. Class 4 Allowed Unsecured Claim of Hudson's is impaired: * If Hudson's selects Option A Hudson's shall within 60 days of the Effective Date (or such later time as the Debtors shall elect, vacate the premises occupied pursuant to the Hudson's Lease and be deemed to have released any rights with respect to such premises or any Claim against the Debtors in exchange for payment of $100,000 on the Effective Date. * If Hudson's selects Option B, Hudson's shall within 60 days of the Effective Date, vacate the premises occupied pursuant to the Hudson's Lease and be deemed to have released any rights to such premises and any Claim against the Debtors in exchange for Desoto Owners' execution of an agreement pursuant to which Hudson's shall purchase a portion of the Mall Property and engage the Debtor to build on such portion to Hudson's specifications. * If Hudson's fails to exercise either Option A or Option B, the Hudson's Lease shall be deemed rejected. Hudson's shall be required to notify the Debtors no later than 5 Business Days before the Confirmation Date whether it elects its rights. If Hudson's elects treatment under 11 U.S.C. Sec. 365(h)(1)(A) (i), Hudson's shall be required to vacate the premises leased under the Hudson Lease and to file any Claim for rejection damages within 30 days of the Effective Date; Hudson's Claim, if Allowed, shall be treated as a General Unsecured Claim and shall receive its Pro Rata Share of any Distribution to Holders of Class 5 Claims. Class 4A – Allowed Claim of ATC Indoor DAS LLC is Impaired: * If ATC Indoor DAS LLC selects Option A, ATC Indoor DAS LLC shall within 60 days of the Effective Date (or such later time as the Debtors shall elect, vacate the premises occupied pursuant to its lease dated March 15, 2004 (the "ATC Lease"), as amended, and be deemed to have released any rights with respect to such premises or any Claim against the Debtors in exchange for payment of $10,000 on the Effective Date. * If ATC Indoor DAS LLC fails to exercise Option A, the ATC Lease shall be deemed rejecte. ATC Indoor DAS LLC shall be required to notify the Debtors no later than five (5) Business Days before the Confirmation Date whether it elects its rights. If ATC Indoor DAS LLC elects treatment under 11 U.S.C. § 365(h)(1)(A) (i), ATC Indoor DAS LLC shall be required to vacate the premises leased under the ATC Lease and to file any Claim for rejection damages within 30 days of the Effective Date; ATC Indoor DAS LLC Claim, if Allowed, shall be treated as a General Unsecured Claim and shall receive its Pro Rata Share of any Distribution to Holders of Class 5 Claims. Class 5 Allowed General Unsecured Claims are impaired. Each Holder of a Class 5 Allowed General Unsecured Claim shall receive its Pro Rata Share of (a) $500,000 payable at the earlier of (i) 3 years from the Effective Date (ii) 90 days after the closing of a sale of all units built on the Parcel A Property and (iii) 90 days after the Closing of the Refinancing Loan (b) membership interests in the reorganized Desoto Owners LLC in an amount set forth in Section 4.08 of the Plan and (c) 40% the Namdar Litigation Net Proceeds payable within 90 days of receipt of such proceeds until 100% of all Allowed General Unsecured Claims have been paid. Class 6 – Interests In Desoto Owners LLC are Impaired. Holders of Interests in Desoto Owners LLC shall receive no distribution under the Plan. Class 7 – Interests In Desoto Holding LLC. Class 7 are impaired. Holders of Interests in Desoto Holding LLC shall receive no distribution under the Plan. In accordance with the Plan Support Agreement or any capital contribution to be made by any creditor, equity holder or party in interest, Desoto Owners will, prior to the Effective Date, obtain sufficient funds to make payments of all amounts required by the Plan to be made within 30 days of the Effective Date. Desoto Owners shall obtain demolition permits to demolish the buildings on the Mall Property and then demolish those buildings; subdivide a roughly 22-acre parcel of the Mall Property which will become the Parcel A Property and obtain approval from Manatee County to commence construction of the Parcel A Property. Newco and/or capital contributions made by a creditor or party in interest, will provide Desoto Owners with all funds necessary to pay for these services and all other costs incurred by Desoto Owners (including taxes and insurance) until the Construction Loan Approval Date. Thereafter, (i) Desoto Owners will obtain a construction loan to finance construction of 360 multi-family residential units on the Parcel A Property and (ii) Newco/or a creditor or party in interest will (A) deed the Brooklyn Properties (or other properties) having a value of no less than $8 million to Desoto Owners (which will record a mortgage against such properties such that Romspen will have a Lien on such property(ies) in exchange for a release of its Lien on the Parcel A Property) and (B) contribute sufficient funds to pay Class 1 and Class 2 Claims. Prior to Confirmation Newco will execute the Plan Support Agreement obligating it to make these payments and any other payments necessary to complete development of the Parcel A Property in exchange for equity interests in Desoto Owners. Following Closing of the Construction Loan, Desoto Owners will complete the development of the Parcel A Property. Desoto Owners will commence leasing the newly constructed units as they are finished. After the 360 units are built and stabilized, Desoto Owners will either sell the developed Parcel A Property or refinance its construction loan. Desoto Owners will then pay off the balance of the Class 3 Romspen Claim and the balance due to the Class 5 General Unsecured Claims from the proceeds of the sale or refinance of the Parcel A Property and if necessary, a sale or refinance of all or part of the rest of the Mall Property. Attorneys for Debtors: Isaac Nutovic, Esq. NUTOVIC &ASSOCIATES 261 Madison Avenue, 26th Floor New York, New York 10036 Tel.: (212) 789-3100 A copy of the Disclosure Statement dated March 8, 2021, is available at https://bit.ly/3qLVzJK from PacerMonitor.com. About Desoto Owners Desoto Owners LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)), owning a real property commonly known as the Desoto Square Mall, which is located at 303 301 Blvd W., Bradenton, Fla. and is situated on a 58-acre parcel of land. Desoto Owners LLC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 2043387) on Sep. 22, 2020. The petition was signed by Moshe Fridman, chief executive officer. At the time of filing, the Debtor estimated $1 million to $10 million in assets and $10 million to $50 million in liabilities. Isaac Nutovic, Esq., at NUTOVIC & ASSOCIATES, represents the Debtor. DG INVESTMENT 2: Moody's Rates $1.26BB First Lien Loans 'B2' ------------------------------------------------------------ Moody's Investors Service affirmed DG Investment Intermediate Holdings 2, Inc.'s (dba "Convergint") credit ratings, including the B3 corporate family rating and B3-PD probability of default rating. Moody's assigned B2 instrument ratings to the security-systems integrator's new, $1.26 billion first-lien credit facilities, consisting of a $150 million revolving credit facility, a $930 million term loan, and a $180 million delayed-draw term loan. Moody's also assigned a Caa2 facility rating to Convergint's new, $305 million second-lien term loan. Proceeds from the first- and second-lien funded term loans, $146 million of balance sheet cash, and $200 million of new preferred equity will be used to pay down Convergint's $990 million of existing first- and second-lien debt and pay a $583 million dividend distribution to Convergint's private equity owners and management. Upon closing of the proposed financing, Moody's will withdraw instrument ratings on Covergint's existing first- and second-lien debt. Convergint's outlook remains stable. Issuer: DG Investment Intermediate Holdings 2, Inc. ("Convergint") Affirmations: Probability of default rating, affirmed B3-PD Corporate family rating, affirmed B3 Assignments: $150 million senior secured first-lien revolving credit facility, expiring 2026, assigned B2 (LGD3) $930 million senior secured first-lien term loan, maturing 2028, assigned B2 (LGD3) $180 million senior secured first-lien delayed-draw term loan, maturing 2028, assigned B2 (LGD3) $305 million senior secured second-lien bank credit facility, maturing 2029, assigned Caa2 (LGD5) Outlook action Outlook remains stable RATINGS RATIONALE Despite the large debt-funded dividend distribution's releveraging impact, Moody's has affirmed Convergint's B3 CFR because of the company's steady growth, strong free cash flow generation capability, and Moody's expectations for a return to a delevering trend. The ratings affirmation also takes into account only minimally reduced demand for Convergint's commercial security systems in the face of the COVID-19 pandemic. Through 2020, organic revenue grew by 4%, underscoring the company's cyclical resilience. Margins held steady throughout 2020, and free cash flow, as a percentage of debt, grew from single-digit percentages to nearly 13%, strong for the CFR. Although it has had to delay work at some client sites because of quarantine restrictions, other end-markets such as government and education have experienced accelerated demand as those customers seek to take advantage of empty facilities. The company acted quickly to reduce variable costs and suspended discretionary travel and marketing expenses, thus preserving its modest, very-low-double-digit EBITDA margins. Most of Convergint's installation projects continue as planned, as its services are deemed mission critical for many customers. Ratings are supported by Convergint's strong market presence in the design, installation, and contractual service and maintenance of electronic and physical commercial security systems, with ancillary capabilities in fire alarm/notification and life safety. Even against the backdrop of a possible resurgence in COVID cases, Moody's expects demand for the integration of security systems to remain relatively robust, as commercial reliance on crucial but increasingly sophisticated and innovative technologies grows. Convergint faces moderate risk from the project-based nature of security installation projects and the related lack of recurring, subscription-based revenues that would otherwise provide cushion against job delays and cancellations. However, a dynamic technology environment allows for periodic upgrades and retrofits, supporting the approximately 90% re-occurring nature of Convergint's revenues. And security and surveillance are becoming more of a core business process, regardless of industry, and as such Convergint has minimal customer or end market concentration. Convergint's ratings are supported by a sizable, better than $1.3 billion revenue base (up from approximately $800 million when we originally rated the company, in early 2018). Moody's views Convergint's liquidity as good. A full, preemptive drawdown under the company's $75 million revolver in early 2020 was paid off completely, while the company's quarter-end cash balance averaged a very healthy $150 million throughout the year. However, most of that cash will be swept to meet the proposed dividend. The new credit facilities include an expanded, $150 million revolver as well as a $180 million delayed-draw term loan, to accommodate the company's swift growth and the restarting of its M&A strategy that had been quiet during 2020. Moody's expects free cash flow in excess of $100 million in 2021. The revolver (only) will include a springing maximum first-lien net-leverage covenant. Convergint's stable outlook reflects Moody's expectations for at least 5% annual revenue growth over the next 12 to 18 months, modest expansion in EBITDA margins, and a resumption of both cash-accumulation and deleveraging trends, the latter towards 6.5 times over the ratings horizon. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A ratings upgrade may be considered upon the achievement of ongoing strong revenue gains, margin expansion, and significant, sustained deleveraging below 6.0 times. Also, given the aggressive financial strategy implied by private equity ownership and an active acquisition platform, a ratings upgrade would be considered upon demonstration of restrained financial strategy, as evidenced by minimal dividend distributions and balanced funding of acquisitions. The ratings could be downgraded if Convergint experiences reversals in an anticipated favorable revenue and margin trends, such that Moody's expects debt-to-EBITDA leverage to drift up; if Moody's expects free cash flow to approach breakeven; or if compliance with debt covenants becomes challenged. DG Investment Intermediate Holdings 2, Inc. (formerly Gopher Sub Inc.; dba Convergint) is a service-based organization that designs, installs, and maintains building systems, with a focus in the areas of security systems, and with ancillary services in fire alarm/notification and life safety. The corporate entity was formed to facilitate Ares Management's early 2018 acquisition of Convergint from another private equity sponsor. Moody's expects the company to generate 2021 revenues of at least $1.40 billion. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. DIAMOND SPORTS: Moody's Lowers CFR to B3, Outlook Negative ---------------------------------------------------------- Moody's Investors Service downgraded Diamond Sports Group, LLC's corporate family rating to B3 from B1 and probability of default rating to B3-PD from B1-PD. Concurrently, Moody's downgraded the ratings on the company's senior secured credit facility and senior secured notes to B2 from Ba3 and Diamond's senior unsecured rating to Caa2 from B3. Diamond's speculative grade liquidity rating is maintained at SGL-3. The outlook is negative. The downgrade of the CFR to B3 and negative outlook reflect Diamond's recently updated guidance for 2021 EBITDA which ranges from $441 to $709 million. Such a wide range highlights the high uncertainty over any distributor renewal in 2021. A failure to renew key distributor relationships in 2021 could lead to concerns over the sustainability of the capital structure. Downgrades: Issuer: Diamond Sports Group, LLC Corporate Family Rating, Downgraded to B3 from B1 Probability of Default Rating, Downgraded to B3-PD from B1-PD Senior Secured Bank Credit Facility, Downgraded to B2 (LGD3) from Ba3 (LGD3) Senior Secured Regular Bond/Debenture, Downgraded to B2 (LGD3) from Ba3 (LGD3) Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 (LGD6) from B3 (LGD6) Outlook Actions: Issuer: Diamond Sports Group, LLC Outlook, Remains Negative RATINGS RATIONALE Diamond's B3 CFR reflects the high leverage the company will be operating with for at least the next 12 months. Even assuming the higher end of the company's recent EBITDA guidance, which includes assumptions around the renewal of distributor contracts, Moody's adjusted leverage will exceed 10x in 2021. Dish has not been carrying the RSNs since 2019 and Hulu and YouTube TV did not renew carriage at the end of 2020. In addition, distribution revenues are facing headwinds from accelerated cord cutting and subscriber declines. Diamond's ability to renew contracts with distributors on acceptable terms will be a key determinant as to whether profitability and credit metrics will rebound in 2022. The B3 rating also reflects Diamond's position as the largest holder of RSNs, with 15 sports networks all carrying at least one basketball, one hockey and one baseball team. The rating also reflects the fact that despite free cash flow weakness in 2020, the company retains a large cash balance $783 million at year end 2020 and access to under 35% of its $650 million revolver. The response to the coronavirus outbreak with stay at home orders, rapid unemployment increases and a deteriorating economic outlook have created a severe and extensive credit shock across many sectors, regions and markets and in particular on the live sports segment. In 2020, sporting events were significantly affected by the shock given mandates restricting crowd gatherings and sensitivity to consumer demand and sentiment. Heavily reduced sports seasons, gave distributors more ease in not renewing their RSN carriage agreements and at the end of 2020 both Hulu and YouTube TV announced they would stop carrying Diamond's RSNs. Moody's base case scenario is that the US vaccine rollout should allow 2021 to see far more normalized sports seasons. The timely start of the Major League Football (MLB) season in April will be a key date as the MLB provides around 50% of all games played on the RSNs. Moody's will be monitoring the progress of Diamond in renewing carriage agreements after the start of the MLB. Failure to re-sign lost distributors in 2021 would raise concerns over the overall EBITDA potential of Diamond and, ultimately, over the long term sustainability of the current capital structure. Despite weakness in operating performance, Diamond retains an adequate liquidity profile with around $783 million of cash and a fully undrawn $650 million revolving credit facility at the end of FY 2020 -- although the company can only draw less than 35% of that revolver as that is the threshold for the 6.25x springing net first lien leverage covenant requirement which Diamond would not be in compliance of. The company's liquidity is supported by the absence of near term maturities with the next maturity in September 2023 when the ABL facility expires. The negative outlook reflects the uncertainty over the timing and terms of a renewal of any of DISH's, Hulu's, or YouTube TV's carriage agreements as well as their full year impact on the company's EBITDA and run rate leverage. The negative outlook also reflects the potential for further downgrade should carriage agreements renewal fail to meet the company's higher end guidance in 2021. At that point, Moody's estimates Diamond's run rate leverage could be in the teens, raising concerns over the long term sustainability of the current capital structure as well as over the potential risk of a distressed exchange transaction. The B2 (LGD3) rating on the company's senior secured credit facilities and senior secured notes, reflects their first priority ranking ahead of the company's senior unsecured notes rated Caa2 (LGD6). The instrument ratings reflect the probability of default of the company, as reflected in the B3-PD PDR, an average family recovery rate of 50% at default given the mix of secured and unsecured debt in the capital structure, and the particular instruments' rankings in the capital structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the weak operating profile expected in 2021 as well as the potential for further COVID-19 related disruption and the uncertainty over the timing and terms of any distributor renewal upwards movement on the rating is currently limited. Ultimately, upwards pressure would require the company to return to a run rate leverage (Moody's adjusted) below 7.5x on a sustained basis while also returning to its strong free cash flow generation. Further downward pressure on the ratings could ensue should Moody's expectations over 2022 EBITDA deteriorate leading to leverage remaining very high on a run rate, annualized, basis. Ratings downgrade could also occur should the company's liquidity profile deteriorate. Headquartered in Hunt Valley, MD, Diamond Sports Group, LLC was formed on March 11, 2019 and is the entity through which Sinclair Broadcast Group, Inc. ("SBGI") executed the acquisition of the RSNs. Diamond owns and operates 22 RSNs that broadcast NBA, NHL and MLB games on pay-TV platforms. The principal methodology used in these ratings was Media Industry published in June 2017. DIOCESE OF CAMDEN: Century Questions Scope of Abuse Claims ---------------------------------------------------------- Century Indemnity Company objects to the Disclosure Statement proposed by the Diocese of Camden, New Jersey, filed on December 31, 2020, and respectfully states as follows: The size and nature of the potential claims against the estate are entirely unknown and will remain that way until the bar date runs on June 30, 2021. The Tort Committee, and the law firms that represent the members of the Tort Committee, have refused to identify the Abuse Claimants that are now known to them beyond the members of the Tort Committee itself. The Debtor, for its part, has offered no information on the number of the total claims. As a result, the sections of the Disclosure Statement that are supposed to explain what claimants may receive provide no substantive explanation for the reader to make an informed decision. Equally baffling, the proposed solicitation procedures call for the Debtor to solicit and ballot votes before the claims are known, as is explained in the separate objection to the solicitation procedures that Century is filing concurrently with this objection to the Disclosure Statement. This information will be readily available when the bar date runs on June 30, 2021 -- a mere three months from the currently scheduled Disclosure Statement hearing. The bar date order signed by the Court on February 11, 2021, requires the Debtor to issue publication notices beginning "as soon as practicable" and running until June 7, 2021. The paramount importance of this information requires the Court to adjourn the Disclosure Statement hearing until after the bar date has passed and the universe of claims is known in order to ensure all creditors are able to make an informed decision on the Disclosure Statement, as mandated by the Federal Rules of Bankruptcy. The Disclosure Statement should further be denied because by failing to meaningfully describe the scope of the abuse claims or address substantively the allowance and valuation of these claims, Rule 3017(a)'s 28-day-notice requirement is not triggered because both the Plan and Disclosure Statement are missing vital information. Per Rule 3017(d)'s Advisory Committee Notes, "Section 1125(c) of the Code requires that the entire approved disclosure statement be provided in connection with voting on a plan." As only an inadequate placeholder plan was filed without information on the number or nature of the claims, the "entire disclosure statement" requirement of Section 1125(c), necessary to trigger the 28-day notice of Rule 3017(a), is not met. The schedule for objections and a hearing approving the Debtor’s Chapter 11 Plan of Reorganization (the "Plan") should be postponed accordingly. The Disclosure Statement also does not merit approval by the Court for the separate and independent reason that it describes a patently unconfirmable Plan, and provides inadequate and misleading information to creditors. The Plan fails to explain the Covered Parties’ contribution to the reorganization, thereby preventing the Court from determining whether the Covered Parties are making a contribution that is critical to the feasibility of the reorganization, or whether the contribution is fair consideration for an injunction of claims against the Covered Parties. The Disclosure Statement is fatally misleading because it includes statements that could lead the Tort Claimants to believe that, if they vote for the Plan, they will benefit from insurance settlements, without disclosing that the Plan makes no provision for such settlements. The Disclosure Statement fails to provide essential information regarding the conditions to coverage and Debtor’s self-insurance and deductible amounts, and the implication of self-insurance and deductibles on the case, which could give the Tort Claimants the impression that insurance coverage would be available to pay claims when it is not. Counsel for Century Indemnity Company, as successor to CCI Insurance Company, as successor to Insurance Company of North America: Mark D. Sheridan Jason King SQUIRE PATTON BOGGS (US) LLP 382 Springfield Avenue Summit, New Jersey 07901 Telephone: (973) 848-5681 O'MELVENY & MYERS LLP Tancred Schiavoni, Esq. Times Square Tower 7 Times Square New York, NY 10036 Telephone: (212) 326-2000 About The Diocese of Camden, NJ The Diocese of Camden, New Jersey is a nonprofit religious corporation organized pursuant to Title 16 of the Revised Statutes of New Jersey. The Diocese is the secular legal embodiment of the Roman Catholic Diocese of Camden, a juridic person recognized under Canon Law. The Diocese of Camden sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 20-21257) on Oct. 1, 2020. The petition was signed by Reverend Robert E. Hughes, vicar General and vice president. At the time of the filing, the Debtor had total assets of $53,575,365 and liabilities of $25,727,209. Judge Jerrold N. Poslusny Jr. oversees the case. McManimon, Scotland & Baumann, LLC, is the Debtor's legal counsel. DIOCESE OF CAMDEN: Plan Funding Raised to $11.3 Million ------------------------------------------------------- The Diocese of Camden, New Jersey submitted a First Amended Disclosure Statement. The Amended Disclosure Statement adds a discussion on the Litigation Claims Against The Diocese of Camden Trusts, Inc. The Tort Committee has asserted that the Diocese has claims against The Diocese of Camden Trusts, Inc. ("DOC Trusts"). The value of DOC Trusts was $100,734,747 as of January 31, 2021. The Diocese disagrees with the Tort Claimants' Committee's analysis. To the extent any claims exist, the Diocese values these claims at $0.00. The Amended Disclosure Statement also lists in detail the assets of the Debtor: * Parish Loans and Accounts Receivable. In the ordinary course of its business, the Diocese made various unsecured loans to the parishes and schools located within the territory of the Diocese. The loans total $44,265,624, with a total of $25,467,565 considered doubtful or uncollectible. * Personal Property. The Diocese owns certain personal property, including, but not limited to office equipment, furniture, fixtures, vehicles, and religious accessories. Pursuant to the appraisal, the Personal Property is valued at $192,620. * Real Estate. The Diocese owns a total of 52 real properties. As of the filing of this Disclosure Statement, the Diocese is in the process of retaining an appraiser for certain parcels. * Trusts Funds and Foundations. The Debtor identified various trust funds and foundations but note4d that these assets are not assets of the Diocese and not available for distributions under the Plan. The Debtor estimates that Tort Claims in Class 4 are approximately $10,000,000. Between 1990 and 2020, the Debtor resolved 170 claims that would have been categorized as a Class 4 claim. The Debtor resolved those 170 claims for a total amount of $18,222,500, for an average payment amount of $107,191.18. The Debtor estimates that approximately 100 Class 4 Claims will be filed. This analysis is based on: (i) the robust efforts taken by the Diocese to resolve claims prepetition; (ii) the efforts undertaken by the IVCP; (iii) the age of potential claimants; and (iv) the fact that there has been no credible reports of abuse since 2002. The Debtor anticipates that additional funds will be available for the Trust to distribute based on the claims against insurers, which are being transferred to the Trust. The actual dividend paid to a Class 4 Claimant cannot be fixed until the Tort Claim Reviewer has analyzed the Claim. The Plan will be funded from cash and other assets with an expected value of $11,300,000. The prior iteration of the Plan provided for funding of $10,000,000. Counsel to Debtor: Richard D. Trenk, Esq. Robert S. Roglieri, Esq. McMANIMON, SCOTLAND & BAUMANN, LLC 75 Livingston Avenue, Second Floor Roseland, New Jersey 07068 Tel: (973) 622-1800 E-mail: rtrenk@msbnj.com rroglieri@msbnj.com A copy of the First Amended Disclosure Statement is available at https://bit.ly/3l9zTpC from Primeclerk, the claims agent. About The Diocese of Camden, NJ The Diocese of Camden, New Jersey is a nonprofit religious corporation organized pursuant to Title 16 of the Revised Statutes of New Jersey. The Diocese is the secular legal embodiment of the Roman Catholic Diocese of Camden, a juridic person recognized under Canon Law. The Diocese of Camden sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 20-21257) on Oct. 1, 2020. The petition was signed by Reverend Robert E. Hughes, vicar General and vice president. At the time of the filing, the Debtor had total assets of $53,575,365 and liabilities of $25,727,209. Judge Jerrold N. Poslusny Jr. oversees the case. McManimon, Scotland & Baumann, LLC, is the Debtor's legal counsel. DW TRIM: Seeks Approval to Hire Lucove Say & Co. as Accountant -------------------------------------------------------------- DW Trim Contractors, Inc. seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ Lucove, Say & Co. as its accountant. The firm will render these services: (a) review the Debtor's financial status and determine accounting and financial changes, which are appropriate and necessary; (b) assist the Debtor in determining whether post-petition financing is appropriate and help the Debtor obtain said financing; (c) review the Debtor's financial records and assist its legal counsel in determining what avoidance actions, if any, should be brought against insiders and others for the benefit of the estate; (d) prepare tax returns, handle audits and take steps necessary to reduce the estate's liabilities; and (e) render other accountancy services that may be necessary during the pendency of the Debtor's Chapter 11 case. The firm received a retainer of $3,500 from the Debtor's principal. Richard Say, a certified public accountant, will provide most of the accountancy services. His hourly rate is $300. Cameron Say, a support staff, will be paid at the rate of $150 per hour. Mr. Say disclosed in a court filing that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Richard Say, CPA Lucove, Say & Co. 23901 Calabasas Road, Suite 2085 Calabasas, CA 91302-3380 Telephone: (818) 224-4411 Facsimile: (818) 225-7054 Email: RSay@Lucovesay.com About DW Trim DW Trim, Inc. offers construction services and labor as a finish carpentry sub-contractor on tract homes providing, among other things, installation of doors and mouldings. DW Trim filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Calif. Case No. 21-10758) on Feb. 15, 2021. Christopher S. De Mint, president, signed the petition. In the petition, the Debtor disclosed total assets of $2,332,771 and total liabilities of $1,808,316. Judge Mark D. Houle oversees the case. The Debtor tapped The Fox Law Corporation, Inc. as legal counsel and Lucove, Say & Co. as accountant. ENDEAVOR ENERGY: Fitch Hikes LongTerm IDR to BB+, Outlook Pos. -------------------------------------------------------------- Fitch Ratings has upgraded the Long-Term Issuer Default Rating (IDR) of Endeavor Energy Resources, L.P. to 'BB+' from 'BB'. Fitch has also affirmed the 'BBB-'/'RR1' rating for Endeavor's senior secured bank credit facility and the 'BB+'/'RR2' rating for the company's unsecured notes. The Rating Outlook has been revised to Positive from Stable. The upgrade reflects Endeavor's reestablishment of operational momentum, Fitch's expectation that production size will reach about 175 thousand barrels per day (mboepd), and maintenance of mid-cycle debt/EBITDA below 2.0x. The Positive Outlook reflects Fitch's expectation for continued production growth momentum and development return improvements that will help to further strengthen the company's cash flow profile over the next 12-18 months. Fitch expects to resolve the Positive Outlook upon successful execution of the growth strategy and further increases in the proved developed producing (PDP) reserves that allow for production approaching 200 mboed through the cycle while maintaining strong credit metrics. Endeavor's ratings reflect its oil-oriented Permian basin production, proved reserve base and competitive full-cycle break-even oil-price. The high-quality asset base supports positive FCF in the current pricing environment, although Fitch expects excess FCF will largely be committed to growth. The ratings also reflect the company's credit-conscious financial policy with Fitch forecasted base case leverage metrics below 1.5x, on average, strong liquidity position, and extended maturity profile. Endeavor's deep inventory provides a path to sustainable production growth longer term, as well as a potential contingent liquidity option in a prolonged downturn. Offsetting factors include credit risks related to corporate governance, including a greater focus on production growth unseen among public E&P peers. KEY RATING DRIVERS Large, Quality Permian Footprint: Endeavor's sizeable acreage position, consisting of approximately 378,000 net acres, much of it contiguous, is located in the core of the Midland basin, primarily split between Martin, Midland, and Reagan counties. The liquids-weighted assets generated approximately 170 mboepd in 2020, an increase of approximately 38% from the prior year. The company's leasehold contains approximately 8,400 gross horizontal drilling locations that support 2+ mile laterals at $50/bbl oil price with additional upside associated with improved oil prices. Inventory life remains strong at approximately 35 years (assuming 8,900 drilling locations and 250 wells spud per year on average) and 95% of total gross acreage is held by production which improves overall capital flexibility. Improving Production Growth Forecast: Fitch believes Endeavor will continue to invest for growth with plans to increased capex towards $1.45 billion and average approximately nine rigs which should bring production towards 180-190 mboepd in 2021. The plan is expected to continue throughout the rating horizon with growth-linked capex increases, which should allow further economies of scale and capital efficiencies. Fitch expects the production profile to reach investment grade thresholds by 2022. However, Fitch would look for additional build-up of PDP reserves that supports a more shallow production decline and allows for a more sustainable, through the cycle production stream in light of recent price volatility, operational curtailments, and the overall high decline nature of the assets. Drilling Efficiencies Support FCF: Fitch believes Endeavor's low cost profile will persist throughout the forecasted rating horizon and supports the shift towards positive FCF in 2022 under Fitch's current price deck. Recent drilling activity has been concentrated in Martin and Midland counties, with both counties seeing excellent well performance in terms of production volumes, drilling and completion (D&C) costs. Fitch estimates that well-level lease operating expenses (LOE) decreased from roughly $11.10/boe on Dec. 31, 2018 to $6.11/boe in 3Q20 and well stages completed per day increased 13% since 3Q19. Fitch also observed similar improvements in E&P SG&A and gross interest expense, demonstrating the achievement of cost efficiencies related to operational scale. Near-Term Hedging Focus: Endeavor's current heading program is front-loaded with near-term production volumes covered primarily by West Texas Intermediate (WTI) price swaps. The company has approximately 50% of 2021F production currently hedged at an average price of approximately $45/bbl, which materially drops off in 2022. Endeavor's hedge position is generally consistent with peers that exhibit strong unit economics, capital flexibility, and conservative capital structure. Sub-1.5x Leverage Metrics: Fitch forecasts YE 2021 debt/EBITDA will be approximately 1.4x, under base case assumptions, before price and growth-linked improvements thereafter. Leverage declines may accelerate as price improvements should support continued production growth given the company's higher quality acreage and competitive cost structure. Fitch believes the leverage profile will drop below 1.0x in the outer years of the forecast. Corporate Governance-Related Risks: Fitch views Endeavor's lack of an independent board and ownership concentration as presenting material risks to the company's credit profile. The company's founder owns Endeavor's GP and the majority of its LP units. Endeavor also engages in related-party transactions with companies owned by the founder. However, the terms of the credit agreement partially mitigate these risks, and Endeavor has moved towards professional management, including making outside hires for key management positions in 2016-2017. The credit agreement limits distributions to Mr. Stephens to $60,000 per month plus $4.8 million per year for his life insurance policy plus an amount necessary to cover his taxes. Additional cash distributions may be made if there is no event of default, at least 25% availability on the revolver, net funded debt to EBITDA is below 3.0x, and the aggregate amount of all distributions does not exceed the lesser of $100 million or 10% of the borrowing base. Additionally, all transactions with affiliates must be done on fair and reasonable terms as would be accepted in a comparable arm's length transaction. DERIVATION SUMMARY At approximately 167 mboe/d as of Sept. 30, 2020, Endeavor is considerably smaller than investment-grade Permian peers Diamondback Energy, Inc., pro forma the QEP Resources, Inc. and Guidon Energy acquisitions, (BBB/Rating Watch Negative; approximately 357 mboepd of core Permian production), Pioneer Natural Resources Co., pro forma the Parsley Energy, Inc. acquisition, (BBB+/Stable; 538 mboepd), but is larger than growth-focused peer CrownRock, L.P. (B+/Positive; 76.7 mboepd). Endeavor's core position in the Midland Basin and continued efficiencies have resulted in Fitch-calculated operating costs improving from $15.4/boe in 2018 to $8.7/boe in 3Q20, which is relatively in-line with the Permian peer average. Endeavor's 3Q20 Fitch-calculated unhedged netback of $16.5/boe (60% margin) is also in-line with Permian peers and benefits from a high liquids content of approximately 85% and competitive cost structure. Endeavor has over 35 years of inventory (assuming 8,900 drilling locations and 250 wells spud per year on average) in some of the core areas of the Midland basin. The inventory depth provides a path to sustainable growth and capital flexibility across a range of commodity prices. In terms of leverage, Fitch forecasts Endeavor's YE 2021 debt/EBITDA to be approximately 1.4x and debt/flowing bbl to be approximately $11,000/bbl. This is lower than peers Diamondback (2.6x) and CrownRock (2.8x), but in-line with Pioneer (sub-1.5x). Fitch forecasts the Permian peer group as a whole to exhibit moderating leverage profiles in 2021, following elevated profiles in 2020, as oil prices improve and public operators opt for low-to-mid-single-digit growth and a focus on FCF generation for debt repayment and shareholder returns. KEY ASSUMPTIONS -- WTI prices of $42.00/bbl in 2021, $47.00/bbl in 2022 and $50.00/bbl in 2023 and thereafter; -- Henry Hub prices of $2.45/mcf in 2021 and thereafter; -- Total hydrocarbon production of 190 mboe/d in 2021, 235 mboe/d in 2022, and positive growth thereafter; -- Modest improvement in LOE unit costs during 2021 and flat thereafter; -- Other operating costs decline slightly in 2019 and flat thereafter; -- Capex of $1.45 billion in 2021 with price-linked increases thereafter; -- Fitch also tested the company's credit profile using a range of other price scenarios. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Continued operational momentum and PDP reserve growth that leads to through the cycle production approaching 200 mboe/d; -- Maintenance of mid-cycle total debt with equity credit/operating EBITDA below 2.0x and/or FFO-adjusted leverage under 2.3x on a sustained basis; -- Steps taken to further moderate corporate governance-related risks. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Material deviation from management's target leverage ratio resulting in a mid-cycle total debt with equity credit/operating EBITDA sustained over 3.0x and/or FFO adjusted leverage greater than 3.3x on a sustained basis; -- Pursuit of a growth-oriented capital deployment strategy in a way that results in a substantially weaker liquidity position and/or leverage exceeding the threshold stated above; -- Evidence of heighted governance risk that could negatively impact the credit profile. 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 Solid Liquidity: Cash and cash equivalents were $392 million as of Sept. 30, 2020. Endeavor's primary source of liquidity is the $1.5 billion reserve-based revolving credit facility (RBL), which is currently undrawn as of Sept. 30, 2020. Fitch expects cash on hand will used to continue to fund the development program in 2021 and sees limited redetermination risk for the RBL given the growing production and reserve profiles and currently supportive pricing environment. Extended Maturity Profile: The maturity profile is clear until Endeavor's $600 million senior unsecured notes mature in 2025. The company has another $500 million due in 2026 and $1.0 billion due in 2028. ESG CONSIDERATIONS Endeavor has an ESG Relevance Score of '4' for Governance Structure as the founder of the company, Mr. Autry Stephens, owns entirely the general partner (Endeavor Petroleum, LLC) as well as the majority of the limited partner units of Endeavor. Additionally, the company does not have an independent board of directors and Mr. Stephens has the power to select all six members of the board. Fitch views issues related to Governance Structure to have a negative impact on the credit profile and is relevant to the rating 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. ENDEAVOR ENERGY: Moody's Hikes CFR to Ba2 & Alters Outlook to Pos. ------------------------------------------------------------------ Moody's Investors Service upgraded Endeavor Energy Resources, L.P.'s Corporate Family Rating to Ba2 from Ba3, its Probability of Default Rating to Ba2-PD from Ba3-PD and Senior Unsecured rating to Ba3 from B1. At the same time, Moody's also changed Endeavor's rating outlook to positive from stable. "The upgrade of Endeavor's ratings reflects its increased scale and high cash margins that will support free cash flow generation and continued production growth in 2021," commented John Thieroff, Moody's Senior Credit Officer. " The company's large core acreage position in the Midland Basin and competitive full-cycle economics provide strong growth opportunity in most oil price environments for at least the next several years." Upgrades: Issuer: Endeavor Energy Resources, L.P. Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD Corporate Family Rating, Upgraded to Ba2 from Ba3 Senior Unsecured Notes, Upgraded to Ba3 (LGD4) from B1 (LGD4) Outlook Actions: Issuer: Endeavor Energy Resources, L.P. Outlook, Changed To Positive From Stable RATINGS RATIONALE Endeavor's Ba2 CFR reflects the company's large inventory of acreage in highly productive areas of the Midland Basin, low financial leverage and strong cash flow metrics. Endeavor grew production by 35% in 2020 and achieved approximate cash flow neutrality after years of substantially outspending cash flow, despite its significantly reduced drilling program and depressed commodity prices. Moody's expects Endeavor to gradually increase its activity level and grow production by about 10% in 2021, even after accounting for recent weather-related production outages. Endeavor continues to improve its cost structure, as production from horizontal wells as a percentage of the company's overall production grows and the company realizes drilling efficiencies. The company's competitive cost structure and oil-weighted production profile lead to comparatively high returns and capital efficiency. Moody's expects Endeavor will maintain substantial financial flexibility and hold excess cash until it identifies opportunities that are aligned with its strategy. Limitations to Endeavor's ratings include its single-basin concentration in the Permian's Midland Basin and its history of habitually outspending cash flow, although Moody's projects free cash flow generation in 2021 and 2022. Endeavor's senior unsecured notes are rated Ba3, one notch below the CFR. The rating on the notes reflects their subordinated position to Endeavor's $1.5 billion elected committed senior secured revolving credit facility. Moody's expects Endeavor to have excellent liquidity through early 2022. At September 30, 2020, the company had essentially full availability under its revolving credit facility. Moody's expects Endeavor to generate free cash flow in 2021 and not need to utilize the revolver. The revolver has a $2 billion borrowing base, although the company has elected a commitment level of $1.5 billion. Endeavor had more than $400 million of cash on its balance sheet at year-end 2020. The financial covenants under Endeavor's revolving credit agreement include a minimum current ratio of 1.0x and a maximum net funded debt/EBITDA ratio of 4.0x, which Moody's expects Endeavor will remain comfortably in compliance through early 2022. Liquidity is also buttressed by the company's hedge position; it has hedged roughly 45% of its 2021 planned oil production and a modest amount of its 2022 planned oil production. Endeavor's revolver expires in 2023 and the company faces no debt maturities until 2025. The positive outlook reflects Moody's expectation that Endeavor will generate production growth and free cash flow while maintaining low leverage and excellent liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Endeavor's ratings may be upgraded if production exceeds 200,000 boe/d and consistently generates free cash flow while maintaining a Leveraged Full-Cycle Ratio (LRCF) above 2x. The ratings may be downgraded if Endeavor outspends cash flow, RCF to debt ratio falls toward 30%, or LFCR approaches 1.5x. Midland, Texas-based Endeavor is an independent exploration and production (E&P) company with assets concentrated in the Permian Basin. The company holds a core net acreage position of approximately 388,000 acres in the Midland Basin. At year-end 2019 Endeavor had 656 million boe of proved reserves of which 361 million boe was proved developed. Founded in 2000, Endeavor is privately held and wholly owned by Autry Stephens and family. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. EVOKE PHARMA: Widens Net Loss to $13.1 Million in 2020 ------------------------------------------------------ Evoke Pharma, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $13.15 million on $23,020 of net product sales for the year ended Dec. 31, 2020, compared to a net loss of $7.12 million on $0 of net product sales for the year ended Dec. 31, 2019. This increase in net loss was primarily due to recording a $5 million expense in June 2020 upon achieving a technology acquisition milestone related to FDA's approval of GIMOTI, along with costs associated with the commercial launch of GIMOTI. "Despite the challenges precipitated by the COVID-19 pandemic, 2020 proved to be a transformative year for Evoke as we initiated the commercial launch of GIMOTI for acute and recurrent diabetic gastroparesis with our commercial partner EVERSANA," stated David A. Gonyer, R.Ph., president and CEO of Evoke Pharma. "We are encouraged by the early traction we are seeing in GIMOTI sales and the feedback we are receiving from gastroenterologists, which was further illustrated by the positive data observed in our market research study. We believe GIMOTI offers a distinct advantage over oral metoclopramide formulations as it is currently the only outpatient non-oral treatment option to help improve the quality of life for patients suffering with diabetic gastroparesis. We look forward to further addressing this significant medical need for the up to 16 million patients suffering from these symptoms as we continue to build sales traction." As of Dec. 31, 2020, the Company had $9.43 million in total assets, $12.65 million in total liabilities, and a total stockholders' deficit of $3.21 million. For the full year of 2020, research and development expenses were approximately $6.6 million compared to approximately $3.4 million in the prior year. This increase in 2020 was primarily due to recording a $5.0 million expense in June 2020 upon achieving a technology acquisition milestone related to the FDA's approval of GIMOTI. For the year ended Dec. 31, 2020, total operating expenses were approximately $13.1 million compared to approximately $7.2 million for the full year of 2019. For the year ended Dec. 31, 2020, selling, general and administrative expenses were approximately $6.4 million versus approximately $3.7 million for the full year of 2019. BDO USA, LLP, in San Diego, California, the Company's auditor since 2014, issued a "going concern" qualification in its report dated March 11, 2021, citing that the Company has had recurring losses and negative cash flows from operations since inception and expects to continue to incur net losses for the foreseeable future. The determination as to whether the Company can continue as a going concern includes consideration of managements operating plan and anticipated timing of future cash flows. Fourth Quarter Financial Review For the fourth quarter of 2020, net sales were approximately $23,000 and the net loss was approximately $2.3 million, or $0.09 per share, compared to a net loss of approximately $1.4 million, or $0.06 per share for the fourth quarter of 2019. Research and development expenses totaled approximately $0.1 million for the fourth quarter of 2020 compared to approximately $0.6 million for the fourth quarter of 2019. For the fourth quarter of 2020, selling, general and administrative expenses were approximately $2.0 million compared to approximately $0.8 million for the fourth quarter of 2019. The Company expects that selling, general and administrative expenses will increase in the future as it continues to progress with the commercialization of GIMOTI and it reimburses Eversana from the net profits attained from the sales of GIMOTI. Total operating expenses for the fourth quarter of 2020 were approximately $2.1 million compared to total operating expenses of approximately $1.4 million for the same period of 2019. As of Dec. 31, 2020, the Company's cash and cash equivalents were approximately $8.1 million, which excludes approximately $13.1 million in net proceeds raised from its common stock offering in January 2021. The Company expects sufficient runway to fund its operations into the first quarter of 2022. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/Archives/edgar/data/1403708/000156459021012510/evok-10k_20201231.htm About Evoke Pharma Headquartered in Solana Beach, California, Evoke -- http://www.evokepharma.com-- is a specialty pharmaceutical company focused primarily on the development of drugs to treat GI disorders and diseases. The Company is developing Gimoti, a nasal spray formulation of metoclopramide, for the relief of symptoms associated with acute and recurrent diabetic gastroparesis in adult women. EXSCIEN CORPORATION: Creditors to Get Proceeds From Liquidation --------------------------------------------------------------- Exscien Corporation filed with the U.S. Bankruptcy Court for the Southern District of Alabama a Disclosure Statement for Plan of Liquidation on March 9, 2021. On July 10, 2020, the Debtor filed a Sale Motion seeking approval for the sale of the Purchased Assets to the University of South Alabama College of Medicine ("USA"). On Sept. 2, 2020, the Bankruptcy Court entered the Sale Order approving the transaction. The sale transaction closed on October 7, 2020, leaving only cash and intangible assets in the Estate. The Plan seeks to provide a framework for liquidating any remaining intangible Assets and distribute all the remaining assets for the benefit of Allowed Claims. Class 1 consists of all Allowed Priority Claims pursuant to Section 507(a) of the Bankruptcy Code. All Allowed Priority Claims shall be paid on the Effective Date from the Assets of the Estate. Class 1 is Unimpaired and, therefore, is not entitled to vote to accept or reject the Plan. Class 1 is presumed to have accepted the Plan Class 2 consists of all Allowed Secured Tax Claims. Each Holder of an Allowed Class 2 Claim shall be paid (a) an amount in Cash by the Debtor equal to the Allowed Amount of its Secured Tax, or (b) under such other terms as may be agreed upon by both the Holder of such Allowed Class 2 Claim and the Debtor. Class 2 is Impaired and is entitled to vote to accept or reject the Plan. Class 3 consists of all Allowed Unsecured Claims against the Debtor not otherwise specifically classified in the Plan. Each Holder of an Allowed Class 3 Unsecured Claim shall receive a pro rata share of the Assets of the Estate remaining after payment of (a) all Allowed Administrative Expense Claims; (b) all Allowed Priority Tax Claims; (c) all Allowed Priority Claims; and (d) all Allowed Secured Tax Claims. The distribution to creditors holding Allowed Class 3 Claims shall be made by the Debtor as soon as reasonably practicable following the liquidation of all Estate Assets and the resolution of all objections to claims. Class 3 is impaired and entitled to vote to accept or reject the Plan. Class 4 consists of all Allowed Unsecured Claims against the Debtor asserted by direct or indirect Equity Holders of the Debtor, including but not limited to William Ker Ferguson, Christine C. Cumbie, and the Ferguson Family Trust. Each Holder of an Allowed Class 4 Unsecured Claim, if any, shall receive a pro rata share of the Assets of the Estate remaining after payment of (a) all Allowed Administrative Expense Claims; (b) all Allowed Priority Tax Claims; (c) all Allowed Priority Claims; and (d) all Allowed Secured Tax Claims. Any distribution to a Holder of a Class 4 Claim shall be on par with distribution(s) made under Class 3. Class 4 is Impaired and entitled to vote to accept or reject the Plan. Class 5 consists of all Equity Interests. On the Effective Date, the Equity Interests shall be cancelled and extinguished. Class 5 is deemed to have rejected the Plan and is therefore not entitled to vote to accept or reject the Plan. The Plan provides for the distribution of the assets of the Estate. The Plan provides for Cash payments to Holders of Allowed Claims, except Holders of Equity Interests. The Plan shall be implemented on the Effective Date. The Debtor determined that it would be in the best interests of its creditors and the estate to maximize value through a sale of substantially all of its assets pursuant to Section 363 of the Bankruptcy Code. Absent such a sale, the Debtor would have been facing a liquidation under Chapter 7 of the Bankruptcy Code, which would have achieved far less for creditors than a sale as a going concern. A full-text copy of the Disclosure Statement dated March 9, 2021, is available at https://bit.ly/3qMEJub from PacerMonitor.com at no charge. Counsel for the Debtor: Jodi Daniel Dubose, Esq. STICHTER RIEDEL BLAIN & POSTLER, P.A. 41 N. Jefferson Street, Suite 111 Pensacola, FL 32501 Tel: (850) 637-1836 Fax: (850) 791-6545 E-mail: jdubose@srpb.com About Exscien Corporation Exscien Corporation filed a Chapter 11 bankruptcy petition (Bankr. S.D. Ala. Case No. 20-11364) on May 18, 2020, disclosing under $1 million in both assets and liabilities. Jodi Daniel Dubose, Esq., at Stichter Riedel Blain & Postler, P.A., is the Debtor's counsel. FCG ACQUISITIONS: Moody's Assigns First Time B3 Corp Family Rating ------------------------------------------------------------------ Moody's Investors Service assigned ratings to FCG Acquisitions, Inc. (Flow Control Group, FCG) with B2 to the proposed first lien credit facilities, a Caa2 rating to the $110 million second lien term loan, and a B3 Corporate Family Rating and a B3-PD Probability of Default Rating. The rating outlook is stable. This is a first-time rating for Flow Control Group. Proceeds from the term loans, along with $613 million in equity (including rollover and preferred equity), will be used to fund the acquisition of the company by financial sponsor KKR & Co. Inc. (KKR). The first lien senior secured credit facilities will include an $80 million revolving credit facility, a $525 million senior secured first lien term loan and a $100 million delayed draw term loan. Flow Control Group is likely to have high financial leverage as a consequence of its highly acquisitive business model, which goes to the governance risk. The following rating actions were taken: Assignments: Issuer: FCG Acquisitions, Inc. Corporate Family Rating, Assigned B3 Probability of Default Rating, Assigned B3-PD Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3) Senior Secured 1st Lien Delayed Draw Term Loan, Assigned B2 (LGD3) Senior Secured 1st Lien Revolving Credit Facility, Assigned B2 (LGD3) Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD6) Outlook Actions: Issuer: FCG Acquisitions, Inc. Outlook, Assigned Stable RATINGS RATIONALE Flow Control Group's B3 CFR reflects the significant event risk inherent in the company's acquisition growth strategy, along with the high leverage that ensues from the FCG's purchase by KKR. With $635 million in debt on close of the acquisition, Moody's estimates FCG's debt-to-EBITDA at approximately 8.5x based on estimated fiscal year 2021 (ending June) earnings. Pro forma for FCG's 2021 acquisitions to date, this measure is closer to 7.5x. Moody's considers Flow Control Group's roll-up model, characterized by a continuous pace of acquisitions, as a key credit risk. The company has generated thin free cash over the past few years: less than $5 million annually since FY 2017 and approximately negative $2 million in the first half of FY 2021. Moody's expects more robust levels of free cash flow starting in in the second half of FY 2021, which will be important to support the proposed debt levels. This is predicated on smooth integration of planned acquisitions and immediate strong earnings contributions from those entities. Any shortfall to achieving those goals in executing acquisitions would materially weaken cash flow. Moody's assesses FCG's ratings as adequate to cover near term operating and debt service requirements. The company will have only modest cash balances on close of the KKR acquisition. But with moderate free cash flow projected, FCG will likely have full access to its $80 million revolving credit facility as little or no drawings are expected over the next few years. This facility has a maximum first lien covenant that is only effective if revolver drawings exceed the greater of $32 million or 40% of total facility amount, starting in the second full quarter after close. There are no other financial covenants under the remainder of the first or second lien debt instruments. The ratings also consider the company's long history as a value-added distributor of critical, highly-engineered components to industrial companies in the US and Canada. The company has long-established relationships with a diverse group of customers, with no single customer representing more than 2% of revenue. With a significant portion of revenue derived from aftermarket and services sales, Flow Control Group generates EBITA margins of approximately 10%, which is strong when compared to distribution sector peers. The stable outlook reflects Moody's expectations that Flow Control Group will be able to maintain consistent EBITA margins in excess of 10% over the next few years with little business disruption as it completes acquisitions totaling in the $30 million to $50 million range annually. Revenue will grow primarily through acquisition, and Moody's expects the company to generate free cash of about 3% to 5% of total debt. As additional debt may be used to help fund acquisitions, Moody's expects debt-to-EBITDA (including standard adjustments, but not pro forma for acquisitions) to remain close to 8x through 2022. The first lien bank credit facility is rated B2, one notch higher than the CFR, reflecting the loss absorption provided by second lien debt and other unsecured liabilities in the event of default per Moody's Loss Given Default methodology. The Caa2 rating on the second lien term loan reflects that facility's junior position to a significant amount of first lien debt in the capital structure and the substantial loss that would be incurred by second lien lenders in a default. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade FCG's ratings if the company demonstrates successful execution of planned acquisitions in the next few years. Higher ratings would be supported by deleveraging primarily through debt repayment, with debt-to-EBITDA falling below 5.5x without pro forma adjustments for acquisitions. The maintenance of EBITA margins in excess of 10% and strong liquidity along with conservative financial policies would also support higher ratings. Ratings could be downgraded if the company is unable to execute its acquisition growth strategy as planned. This may result in negative or breakeven free cash flow over the next few years. Significantly higher debt levels, including increased drawing on the revolving credit facility to support cash flow shortfalls, would also warrant lower ratings. As well, the undertaking of more aggressive financial policies could prompt a downgrade. This may include an accelerated pace of debt-financed acquisitions or a distribution of capital to owners. Headquartered in Charlotte, North Carolina, Flow Control Group is a distributor of industrial products and services. Revenue are approximately $600 million. The principal methodology used in these ratings was Distribution & Supply Chain Services Industry published in June 2018. FERRELLGAS PARTNERS: Court Confirms Prepackaged Plan ---------------------------------------------------- Judge Mary F. Walrath has confirmed the Second Amended Prepackaged Joint Chapter 11 Plan of Reorganization of Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. Judge Walrath on March 5, 2021, entered an order ruling that the Disclosure Statement of Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. is APPROVED, and the Plan, in its entirety, is CONFIRMED. All objections are overruled. As more fully set forth in the Tabulation Declaration, Class 4 (2020 Notes Claims) and Class 10 (Existing LP Units Interests) voted to accept the Plan. Holders of Claims in Class 1 (Secured Claims), Class 2 (2025 OpCo Secured Notes Guaranty), Class 3 (Other Priority Claims), Class 5 (Litigation Claims), Class 6 (General Unsecured Claims), Class 7 (Intercompany Claims), Class 8 (Intercompany Interests), and Class 9 (Existing GP Units) are Unimpaired and, pursuant to Section 1126(f) of the Bankruptcy Code, are conclusively presumed to have accepted the Plan, thus meeting the requirements of Section 1128(a)(8) of the Bankruptcy Code. As reported in the Troubled Company Reporter, the Plan leaves all Claims other than the 2020 Notes Claims, the Existing LP Units Interests, and the Other Existing Equity Interests unimpaired. Class 4 2020 Notes Claims in the principal amount of $357,000,000 will recover 62 percent under the Plan in the form of 100% of the New Class B Units. Class 6 General Unsecured Claims are unimpaired and thus will recover 100% under the Plan. Holders of Existing LP Units Interest in HoldCo in Class 10 will each receive or retain such Holder's pro rata share of 100% of the New Class A Units, subject to dilution by the New Class A Units issued upon any future conversion of the New Class B Units. According to the Debtors, support for the Plan is overwhelming and unequivocal. The Plan has been accepted by both voting classes, including acceptance by over 95% of the unitholders that voted, and the Debtors have resolved all but three objections to the Plan. The Plan effectuates a pre-negotiated debt-for-equity swap to satisfy the 2020 Notes Claims and leaves existing equity holders with the same rights and interests that they had on Petition Date. The mechanics of the Plan are simple -- holders of 2020 Notes Claims receive New Class B Units, which if not redeemed in the first five years after the Effective Date, will be converted into New Class A Units. Meanwhile, holders of Existing LP Units Interests, despite being "out of the money" and, therefore, not entitled to any recovery, will retain the same interests that they currently have, which are renamed New Class A Units. The most notable feature of the Plan is that it provides value to the holders of Existing LP Units Interests by allowing them to retain their interests in Reorganized HoldCo, even though senior debt is not being paid in full. 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. FLOOR AND DECOR: Moody's Completes Review, Retains Ba3 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Floor and Decor Outlets of America, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Floor & Decor Outlets of America, Inc.'s Ba3 Corporate Family Rating benefits from its solid market position as a leading operator in the fragmented hard surface flooring and accessories segment which services both do-it-yourself (DIY) and professional (Pro) customers. The company's direct sourcing model, extensive product offering, and everyday low-price value positioning have supported its consistent growth historically. Floor & Decor weathered the temporary closure of its stores in the spring of 2020, as it relied on curbside pickup and online sales. The company has thereafter experienced outsized growth as stores reopened given the tailwinds from an increased focus on home maintenance and remodeling as well as low interest rates and a healthy housing market. The principal methodology used for this review was Retail Industry published in May 2018. FURNITURELAND USA: Seeks to Hire GrayRobinson as Special Counsel ---------------------------------------------------------------- Furnitureland USA, Inc. seeks approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ GrayRobinson, PA and its attorney, James Nolan, Esq., as special counsel. The Debtor needs the assistance of a special counsel to sell its real property. The firm will be compensated at the hourly rate of $400 but not to exceed $10,000 for the sale transaction. In addition, the firm will seek reimbursement for expenses incurred. Mr. Nolan disclosed in a court filing that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: James A. Nolan, Esq. GrayRobinson, PA 50 North Laura Street, Suite 1100 Jacksonville, FL 32202 Telephone: (904) 598-9929 Facsimile: (904) 598-9109 Email: james.nolan@gray-robinson.com About Furnitureland USA Furnitureland USA, Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-06634) on Dec. 1, 2020. Mark Cantley, president, 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. Judge Lori V. Vaughan oversees the case. The Debtor tapped the Law Offices of Scott W. Spradley, P.A., as legal counsel and GrayRobinson, PA, led by James A. Nolan, Esq., as special counsel. GALLERIA OF ST. MATTHEWS: Seeks to Hire Real Estate Broker ---------------------------------------------------------- Galleria of St. Matthews, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Kentucky to employ Sandra Schroeder, a commercial real estate broker at Rodulfo Realty, LLC. The Debtor needs the assistance of a broker to sell its real property located in St. Matthews, Ky. The Debtor will pay a brokerage commission equal to 6 percent of the purchase price, to be split evenly between Ms. Schroeder and the buyer's broker, Bert L. Blieden Company, Realtors. Ms. Schroeder disclosed in a court filing that she is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The real estate broker can be at: Sandra Schroeder Rodulfo Realty, LLC 173 Sears Ave Ste. 180 Saint Matthews, KY 40207 Telephone: (502) 896-2106 About Galleria of St. Matthews Galleria of St. Matthews, 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 4101-4127 Oechsli Ave., Louisville, Ky., valued at $1.75 million. Galleria of St. Matthews sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No. 21-30360) on Feb. 19, 2021. Enrique L. Pantoja, manager, signed the petition. At the time of the filing, the Debtor disclosed total assets of $1,817,376 and total liabilities of $4,024,374. Judge Charles R. Merrill oversees the case. Kaplan Johnson Abate & Bird LLP serves as the Debtor's legal counsel. GC EOS BUYER: Moody's Upgrades CFR to B3 on Improved Earnings ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of GC EOS Buyer, Inc. (d/b/a BBB Industries), including the corporate family rating to B3 from Caa1, the probability of default rating to B3-PD from Caa1-PD, the first lien secured rating to B3 from Caa1 and the second lien secured rating to Caa2 from Caa3. The outlook is stable. The upgrades reflect Moody's expectation for stabilizing demand for BBB Industries' automotive replacement parts will support deleveraging efforts toward the low-6x debt/EBITDA range over the next twelve months. In addition, Moody's expects BBB to maintain an adequate liquidity profile supported by modestly positive free cash flow in 2021. The following rating actions were taken: Upgrades: Issuer: GC EOS Buyer, Inc. Corporate Family Rating, Upgraded to B3 from Caa1 Probability of Default Rating, Upgraded to B3-PD from Caa1-PD Senior Secured 1st Lien Bank Credit Facility, Upgraded to B3 (LGD3) from Caa1 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, Upgraded to Caa2 (LGD5) from Caa3 (LGD5) Senior Secured Regular Bond/Debenture, Upgraded to B3 (LGD3) from Caa1 (LGD3) Outlook Actions: Issuer: GC EOS Buyer, Inc. Outlook, Changed To Stable From Negative RATINGS RATIONALE BBB Industries' ratings consider the elevated financial risk with still high financial leverage, competitive industry dynamics, and a relatively aggressive financial policy driven by its private equity ownership with partially debt-funded acquisitions. Moody's expects BBB's leverage profile to improve from over 7x debt/EBITDA on a pro forma basis (inclusive of acquisitions) at the end of 2020 toward the low-6x range in 2021 as the company's earnings improve from ongoing demand growth and a sustained level of cost and productivity initiatives enacted during 2020. A primary risk to any deleveraging is the company's financial policy to pursue further debt-funded acquisitions, specifically to complement its geographic and product expansion into Europe after its purchase of M&R in 2020. BBB maintains a strong market position with a product portfolio of largely non-discretionary remanufactured vehicle parts that support a good margin profile and expectations for revenue stability during normal operating conditions. Improving demand trends in the back half of 2020, including vehicle miles traveled, support Moody's expectations for organic revenue growth in the mid-single digit range in 2021. Given its high customer concentration, specifically the large auto parts retailers, Moody's believes that BBB will need to maintain high levels of customer investments to spur growth. Moody's expects BBB's liquidity to remain adequate. The company had a sizeable cash position at the end of 2020 at over $100 million as a result of stronger than expected free cash flow during the year of about $80 million. Primarily supporting this level of free cash flow was significant working capital inflows, which Moody's expects to reverse during 2021. Nonetheless, Moody's expects BBB to maintain positive free cash flow in 2021 in the range of about $10 million to $20 million. BBB maintains a $150 million asset-based revolving credit facility (ABL) due 2023, which is anticipated to remain fully available. The company has historically relied on the ABL to offset periods of high cash burn, specifically during 2018 and 2019. The ABL contains a springing fixed charge coverage ratio of 1x should availability fall below 12.5% of the commitment, which Moody's expects BBB not to trigger. The stable outlook reflects Moody's view that BBB will maintain steady earning margins to support debt/EBITDA being sustained in the 6x range and to generate positive free cash flow. Moody's views environmental risk for BBB to be low compared to the broader auto supplier sector given the nature of its products and its focus in the automotive aftermarket. From a governance perspective, the company's elevated financial risk is reflected in its high leverage profile under private equity ownership that has been driven by partially-debt funded acquisitions. FACTORS THAT COULD LEAD TO A DOWNGRADE OR UPGRADE OF THE RATINGS Moody's could upgrade the ratings if BBB demonstrates stability in its earnings profile to support debt/EBITDA being maintained below 5.5x and generate consistent positive free cash flow of at least 4% of total debt. Consideration for an upgrade will also incorporate expectations for a measured financial policy as it pertains to further acquisitions. Moody's could downgrade the ratings if weakening operating results or debt-financed acquisitions or shareholder returns result in debt/EBITDA expected to be sustained above 6.5x or EBITA/interest expense below 1.5x, or if cash flow is expected to be persistently negative. An inability to effectively manage its working capital, specifically inventory purchases, could result in a downgrade. The principal methodology used in these ratings was Automotive Supplier Methodology published in January 2020. Headquartered in Daphne, Alabama, GC EOS Buyer, Inc. (d/b/a BBB Industries) is a supplier of primarily remanufactured automotive replacement parts to North America automotive and light truck OEMs and aftermarket. The company's main products include alternators, starters, brake calipers, power steering components and turbochargers. For the twelve-month period ended September 30, 2020 the company's net revenues are approximately $717 million. GIRARDI & KEESE: CA Bar Questions Girardi's Dementia ---------------------------------------------------- Law360 reports that the State Bar of California on Friday, March 12, 2021, questioned whether Thomas Girardi really has dementia and needs a conservator, telling a Los Angeles probate court judge that granting him a full conservatorship would stall the agency's disbarment proceedings against the bankrupt trial lawyer. In a court filing Friday, March 12, 2021, afternoon, the state bar said it had videos of the Girardi Keese founder eloquently discussing strategies for jury trials and complex litigation from October and November 2020 — mere weeks before public accusations that he misappropriated at least $2 million of his clients' settlement funds destroyed his firm and reputation. About Girardi & Keese Girardi and Keese or Girardi & Keese was a Los Angeles-based law firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It served clients in California in a variety of legal areas. It was known for representing plaintiffs against major corporations. An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No. 20-21022) was filed in December 2020 against GIRARDI KEESE by alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian, Erika Saldana, Virginia Antonio, and Kimberly Archie. The petitioners' attorneys: Andrew Goodman Goodman Law Offices, Apc Tel: 818-802-5044 E-mail: agoodman@andyglaw.com Elissa D. Miller, a member of the firm SulmeyerKupetz, has been appointed as Chapter 7 trustee. The Chapter 7 trustee can be reached at: Elissa D. Miller 333 South Grand Ave., Suite 3400 Los Angeles, California 90071-1406 Telephone: (213) 626-2311 Facsimile: (213) 629-4520 E-mail: emiller@sulmeyerlaw.com GOGO INC: Incurs $250 Million Net Loss in 2020 ---------------------------------------------- Gogo Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $250.04 million on $269.72 million of total revenue for the year ended Dec. 31, 2020, compared to a net loss of $146 million on $308.98 million of total revenue for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $673.58 million in total assets, $1.31 billion in total liabilities, and a total stockholders' deficit of $641.11 million. Fourth Quarter 2020 Financial Results from Continuing Operations * Total revenue of $77.6 million decreased approximately 10% from Q4 2019, driven by decreases in both service and equipment revenue caused by the negative impact of COVID-19 on demand for air travel. On a sequential basis, total revenue grew nearly 17%, driven by a 57% increase in equipment revenue and a 7% increase in service revenue. * Service revenue of $56.9 million decreased approximately 3% from Q4 2019, resulting primarily from a 4% decrease in average monthly connectivity service revenue per ATG aircraft online that was partially offset by a 2% increase in ATG aircraft online. Service revenue increased 7% sequentially as AOL and ARPU increased 4% and 2%, respectively. * Equipment revenue of $20.7 million decreased 24% from Q4 2019, due primarily to lower narrowband satellite unit shipments. Equipment revenue increased 57% sequentially, due primarily to an increase in ATG shipments, particularly L5 and L3 products on the AVANCE platform. * Combined engineering, design and development, sales and marketing and general and administrative expenses increased to $30.4 million from $25.7 million in Q4 2019, due primarily to increases in general and administrative spending and employee bonuses. * Adjusted EBITDA of $19.3 million decreased from $36.2 million in Q4 2019 and $30.2 million in Q3 2020, due primarily to a $10.1 million full year accrual of employee cash bonus expense. "Our 2020 performance demonstrates the resiliency of our business in this attractive market as Gogo exited the year with a record number of ATG units online," said Oakleigh Thorne, president and CEO of Gogo. "We plan to invest in improving the performance of our proprietary ATG network and driving market penetration of our AVANCE platform, positioning us well to introduce valuable add-on services such as Gogo 5G, and other new technologies as they evolve," Thorne said. "With the sale of the Commercial Aviation division, we have significantly improved Gogo's financial profile and net debt level," said Barry Rowan, Gogo's executive vice president and CFO. "We are now well-positioned to execute a comprehensive refinancing to de-lever and reduce our interest expense, drive future growth and increase shareholder value." A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1537054/000156459021012575/gogo-10k_20201231.htm About Gogo Inc. Gogo Inc. -- http://www.gogoair.com-- is an inflight internet company that provides broadband connectivity products and services for aviation. It designs and sources innovative network solutions that connect aircraft to the Internet, and develop software and platforms that enable customizable solutions for and by its aviation partners. Gogo's products and services are installed on thousands of aircraft operated by the leading global commercial airlines and thousands of private aircraft, including those of the largest fractional ownership operators. Gogo is headquartered in Chicago, IL, with additional facilities in Broomfield, CO, and locations across the globe. * * * As reported by the TCR on Sept. 4, 2020, Moody's Investors Service changed Gogo Inc.'s outlook to positive from stable following the company's announcement that it had agreed to sell its commercial aviation (CA) business to Intelsat Jackson Holdings S.A. Concurrently, Moody's affirmed Gogo's Caa1 corporate family rating. GORDIAN MEDICAL: Moody's Assigns B2 CFR, Outlook Stable ------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating and a B2-PD Probability of Default Rating to Gordian Medical, Inc. ("Gordian" dba AMT). At the same time, Moody's assigned B1 ratings to the proposed senior secured credit facilities, including $280 million 6-year Term Loan B and $40 revolving 5-year credit facility. The outlook is stable. Proceeds from the new credit facilities, together with new sponsor equity from One Equity Partners and Restorix seller rollover equity, will be used to fund the acquisition of RestorixHealth and pay related fees and expenses. The B1 rating assigned to the proposed credit facilities reflects their first lien position on substantially all assets of the borrowers and the level of junior capital in the company's capital structure comprised of an $35 million Unsecured Seller Note and a $73 million Subordinated Seller Note. Ratings assigned: Issuer: Gordian Medical, Inc. Corporate Family Rating, at B2 Probability of Default Rating, at B2-PD $40 million senior secured 1st lien revolver expiring 2026, at B1 (LGD3) $280 million senior secured 1st lien term loan B due 2027, at B1 (LGD3) The rating outlook is stable RATINGS RATIONALE Gordian's B2 CFR reflects the combined company's high initial leverage, at roughly 5 times on a pro forma basis. The rating is also constrained by the combined company's modest (but improving) scale with combined revenue of approximately $270 million, and narrow business focus on wound care treatment in two primary settings, Skilled Nursing Facilities ("SNFs") and wound clinics. Gordian has some payor concentration with Medicare accounting for 36% of pro forma revenue. The B2 rating is supported by both companies' track records of solid revenue and earnings growth and Moody's expectation that this growth will continue. This reflects favorable fundamentals for wound care industry including ageing population, growing incidence of chronic illnesses, and a stable reimbursement environment. Moody's views integration risk as modest as there is limited operating overlap between the two companies, with only modest back-office integration required. Moody's forecasts that adjusted debt/EBITDA will decline towards mid-4 times by the end of 2022 primarily due to earnings growth due in part to patient volumes recovering from the negative impact of the coronavirus pandemic during 2020. Given the company's profit margins and modest capital requirements (mostly IT and systems investments), Moody's expects the company to generate solid free cash flow in excess of $25 million per year. Social and governance considerations are material to Gordian's credit profile. Moody's regards the coronavirus pandemic as a social risk under Moody's ESG framework, given the substantial implications for public health and safety. RestorixHealth's performance will be negatively affected by reduced volume of procedures since RestorixHealth's wound care centers are affiliated with hospitals. Gordian also faces higher social risks reflecting the high reliance on Medicare and the need to maintain proper controls and compliance procedures which was evidenced when under previous management and owner Gordian filed for bankruptcy in February 2012 due to a reimbursement dispute with Medicare over billing separately for dressings related to gastronomy tubes. Among governance considerations, Gordian's financial policies under private equity ownership are aggressive, reflected in high debt levels following the acquisition of RestorixHealth. The stable outlook reflects Moody's expectation that Gordian's leverage will approach 4.5 times over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be downgraded if the company's operating performance suffers due to failure to effectively manage its growth, if integration issues arise, or if pricing pressure develop. The rating could also be downgraded if the company's financial policies become more aggressive. Specifically, the ratings could be downgraded if adjusted debt to EBITDA is sustained over 5 times. Ratings could be upgraded if Gordian successfully executes the combination and benefits competitively from the larger scale and service offerings. An upgrade would also be supported by demonstration of conservative financial policies including debt reduction. Specifically, the ratings could be upgraded if adjusted debt to EBITDA was sustained below 4 times. Following are some of the preliminary credit agreement terms, which remain subject to market acceptance. The proposed first lien term loan is expected to have no financial maintenance covenants while the proposed revolving credit facility will contain a springing maximum first lien leverage ratio of 4.75:1.00 that will be tested when the revolver is more than 35% drawn. In addition, the first lien credit facility contains incremental facility capacity up to the greater of $85.0 million and 100.0% of Consolidated EBITDA plus unlimited amounts up to: First Lien Net Leverage of 3.25x if secured on a pari passu basis. Alternatively, the ratio test may be satisfied on a leverage neutral basis if incurred in connection with a permitted acquisition or investment. A portion of the incremental (amount to be determined) may be incurred with an earlier maturity date than the initial term loans. The 100% asset-sale proceeds prepayment requirement has a leverage-based step-down to 50%, subject to First Lien Net Leverage reaching 2.75x. Collateral leakage is permitted through transfers of assets to unrestricted subsidiaries; material intellectual property may not be transferred to an unrestricted subsidiary. Only subsidiaries that are wholly-owned must act as subsidiary guarantors; dividends or transfers of partial ownership interests could jeopardize guarantees, with no explicit protective provisions limiting such releases. Gordian will maintain very good liquidity over the next 12-18 months, with no near-term debt maturities. Liquidity is supported by $5 million of cash at close of the refinancing transaction. Moody's estimates that Gordian free cash flow be at least $25 million annually. Liquidity is supported by a new 5-year revolving credit facility that provides for borrowings of $40 million. This facility has springing First Lien Net Leverage Covenant of 4.75x when 35% drawn. Moody's expects the company to make minimal draws on this facility over the next 12 months. Alternative sources of liquidity are limited as substantially all assets are pledged. There is no financial covenant on the term loan. Gordian Medical is a leading provider of specialized wound care supplies and related clinical education services in the United States. The Company operates in the post-acute care space as a clinically oriented provider of wound care management and ostomy, urology and tracheostomy supplies and services. Pro forma revenue was approximately $270 million in 2020. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. GRANITE ACQUISITION: Moody's Assigns First Time 'B1' CFR -------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Granite Acquisition, Inc. ((New), d/b/a Waste Innovations "WIN"), including a B1 Corporate Family Rating, B1-PD Probability of Default Rating and B1 rating on the company's proposed senior secured (first lien) bank credit facility, consisting of a revolving credit facility and term loan. The outlook is stable. The rating assignment follows the January 2021 strategic merger of Wheelabrator Technologies, Inc. ("WTI") with Tunnel Hill Partners, LP ("THP", Caa1 stable), a waste-by-rail company, and which will operate primarily as a waste-environmental services company. WIN will issue a $1 billion 7-year term loan to fund a sponsor dividend of $629 million and repay $306 million of the existing (net) debt of THP. WIN will also have a $400 million 5-year revolving credit facility, which is expected to be undrawn at transaction close. The existing ratings of THP are unaffected at this time, and will be withdrawn once repaid. As well, the existing debt ratings of WTI (rated under Granite Acquisition Inc.) will be withdrawn upon transaction close. RATINGS RATIONALE WIN's ratings reflect its modest scale, with a primary regional focus in the US Northeast, and capital-intensive business model that generates a more moderate cash flow profile relative to rated industry peers. Debt-to-EBITDA (all ratios including Moody's standard adjustments), approaching 4.6x pro forma, will likely remain elevated into 2022 amid higher SG&A and rising labor cost pressures, although Moody's expects the ratio to moderate towards 4x by year end 2022. WIN is still exposed to earnings and cash flow volatility from commodity prices in its energy business, which represents about 20% of company EBITDA, although that risk is partially mitigated by hedging. These factors are tempered by WIN's relatively stable waste disposal operations, underpinned by long term contracts (averaging 7.6 years) and critical infrastructure assets with high barriers to entry that support a recurring revenue base. With disposal capabilities supported by strategically-located facilities and rail-connected transfer stations, the company is well-positioned to capture growing demand in the northeast region where landfill capacity is tightening. This should continue to drive positive pricing and support better margins and cash flow generation over the intermediate term. WIN's liquidity profile is adequate based on a large revolving credit facility of $400 million for a company with revenue expected to approach the $1 billion range. Moody's expects free cash flow to be constrained by high capital expenditures over the next year, and nominal cash balances, but expects free cash flow to improve in 2022, with at least low to mid-single digit range free cash flow to debt. The revolving facility will be subject to a springing first-lien net leverage covenant (ratio to be determined), tested if borrowings exceed 35% of the revolver commitment and subject to certain carve-outs related to letters of credit. The term loan is not expected to have any financial maintenance covenants. The stable outlook reflects Moody's expectations for steady waste streams to support modest revenue growth and margin expansion, aided by a positive disposal pricing revenue environment amid limited landfill capacity over time in the primary US northeast region. Moody's also expects the company to maintain adequate liquidity and continue to mitigate the risks associated with commodity pricing and weak power markets in the U.S. From an environmental perspective, WIN should benefit from regulatory requirements driving demand for its waste disposal services. The essential nature of services and increasing awareness of environmental concerns in the industry should support the company's operating model and credit metrics longer term. The company complies with environmental laws and regulations and obtains necessary government permits to operate its collection facilities and landfills, with no material issues disclosed. Governance risk is highlighted by potential for aggressive financial policies given WIN's private equity ownership and acquisitive nature, which creates uncertainty and execution risks. The senior credit facility is expected to contain flexible covenants for transactions that if undertaken could adversely affect creditors, including incremental facility capacity up to the sum of (a) the greater of closing date EBITDA and an EBITDA equivalent percentage (100% of pro forma Consolidated EBITDA divided by an amount yet to be determined; plus (b) amounts replacing any permanent voluntary prepayments on the term loan or reduction in revolver commitments, plus (c) unlimited amounts so long as (x) the Consolidated First Lien Net Leverage Ratio does not exceed a level 0.5x higher than the closing date ratio (for pari passu debt); (y) Consolidated Senior Secured Net Leverage Ratio does not exceed a level 1.25x higher than the closing date ratio (for junior secured debt); or (z) either the Consolidated Total Net Leverage Ratio does not exceed a level 2.0x higher than the closing date ratio, or the Consolidated Interest Coverage Ratio is no less than 2.0x (for unsecured debt). The credit agreement is expected to require a 100% asset sale sweep (with step-downs to 50% and 0% at 0.5x and 1.0x inside closing date first lien net leverage ratio, respectively) of non-ordinary course asset sale proceeds, subject to reinvestment rights. Only wholly-owned subsidiaries are required to provide subsidiary guarantees, posing risks of potential guarantee release following a partial change in ownership; there is no explicit protective language limiting such releases. Moody's took the following actions: New Assignments: Issuer: Granite Acquisition, Inc. (New) Corporate Family Rating, Assigned B1 Probability of Default Rating, Assigned B1-PD Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3) Senior Secured 1st Lien Revolving Credit Facility, Assigned B1 (LGD3) Outlook Actions: Issuer: Granite Acquisition, Inc. (New) Outlook, Assigned Stable FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded with Moody's expectation of a decline in revenues (including flat organic top line growth) and margins, and/or sustained negative free cash flow and debt-to-EBITDA approaching 5x. A meaningfully weaker liquidity position would also lead to a downgrade. The ratings could be upgraded with profitable expansion of the company's operating footprint beyond its primary focus on US northeast markets for greater scale and expectations of debt-to-EBITDA sustainably below 4x, EBIT to interest above 2x and free cash flow to debt to be sustained above the mid-single digits. The maintenance of a good liquidity profile would also be a prerequisite for an upgrade. The principal methodology used in these ratings was Environmental Services and Waste Management Companies published in April 2018. Granite Acquisition, Inc. is an indirect wholly-owned subsidiary of Wheelabrator Technologies, Inc. Wheelabrator merged with Tunnel Hill Partners LP (in January 2021), one of the largest integrated waste-by-rail companies in the US which owns and operates a network of collection and transfer assets in the Northeast US. Wheelabrator and Tunnel Hill Partners LP are owned by affiliates of Macquarie, a private equity firm, which will remain the owner of the merged company, Waste Innovations. On a pro forma basis, revenues approximated $960 million for the fiscal year ended December 31, 2020. GROUP 1 AUTOMOTIVE: Moody's Completes Review, Retains Ba1 CFR ------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Group 1 Automotive, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Group 1' Automotive Inc.'s Ba1 corporate family rating considers its flexible operating model, with relatively unpredictable new car profitability exceeded by the more predictable parts and service and growing used car segments, its brand mix, which is weighted to the historically more stable imports, and its geographic diversity, with presence in the UK and Brazil, with used businesses in those markets driving profitability under normal circumstances. Moody's notes that challenges remain in both of these international markets, as well as the potential for another "wave" of pandemic-related pressures in the US, with Group 1's heavy weighting in Texas noteworthy. The principal methodology used for this review was Retail Industry published in May 2018. GTT COMMUNICATIONS: Fitch Withdraws All Ratings ----------------------------------------------- Fitch Ratings has downgraded to 'CC' from 'CCC', removed the Negative Watch and withdrawn the Issuer Default Rating (IDR) of GTT Communications, Inc. and its subsidiary, GTT Communications, B.V. Fitch has also downgraded, removed the Negative Watch and withdrawn the ratings of the company's debt issues. The downgrade reflects Fitch's expectation that a restructuring or a distressed debt exchange (DDE) is likely to occur in the next 12 months based on GTT's disclosure on the hiring of financial advisors by its lenders to work through deleveraging the company's capital structure. The company also recently appointed directors with restructuring experience to the Board and its Strategic Planning Committee. News reports have indicated that GTT may consider bankruptcy restructuring following the close of its infrastructure asset sale later this year. All these point to a heightened risk of GTT pursuing a restructuring or a DDE in the near term. Fitch is withdrawing all ratings due to lack of sufficient information to support the ratings. GTT amended its priming term loan to add a covenant that could extend the forbearance period to Sept. 30, 2021. In addition, the company obtained an extension from the NYSE under its listing rules to extend the deadline to file delayed financials by Aug 17, 2021. With these extensions, Fitch believes there will likely be a further significant delay until the time GTT's audited financials are available. KEY RATING DRIVERS Not Applicable. The ratings are withdrawn. RATING SENSITIVITIES Not Applicable. The ratings are withdrawn. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. ESG CONSIDERATIONS Not Applicable. The ratings are withdrawn. GUMP'S HOLDINGS: Recovery for Unsecureds Owed $34M Unknown in Plan ------------------------------------------------------------------ Gump's Holdings, LLC, submitted a Plan of Liquidation and a Disclosure Statement. The Plan is an attempt to maximize value for creditors by, primarily, (a) providing a mechanism for liquidating the remaining assets of the Debtors in an orderly and value-maximizing manner and (b) resolving the claims against the recoveries. The Plan establishes a Liquidating Trust for the benefit of the holders of Administrative Claims, Priority Unsecured Claims and General Unsecured Claims. The Plan implements and is built around the following key elements: * On the Effective Date, a Liquidating Trust will be created pursuant to the Plan. Holders of Administrative Claims, Allowed Unsecured Priority Claims and Allowed General Unsecured Claims will receive Liquidating Trust Beneficial Interests in the Liquidating Trust. * On the Effective Date, all of the Debtor's assets that are not necessary to pay Administrative Claims will be transferred into the Liquidating Trust. * The Liquidating Trustee will liquidate the assets in the liquidating trust and pay creditors in the order of priority under the Bankruptcy Code. The projected percentage recoveries for Class 3(a) General unsecured claims against Holdings totaling $15.06 million, and Class 3(b) general unsecured claims against Retail totaling $19.18 million are "unknown" at this time, according to the Disclosure Statement. Attorneys for the Debtors: WILLIAM M. NOALL GABRIELLE A. HAMM GARMAN TURNER GORDON LLP 7251 Amigo Street, Suite 210 Las Vegas, Nevada 89119 Telephone (725) 777-3000 Facsimile (725) 777-3112 E-mail: wnoall@gtg.legal E-mail: ghamm@gtg.legal A copy of the Disclosure Statement is available at https://bit.ly/3etFg1y from PacerMonitor.com. About Gump's Holdings Gump's Holdings, LLC -- http://www.gumps.com/-- operates as a holding company. The company, through its subsidiaries, sells furniture, lighting, rugs, linens, apparel and jewelry. Gump's Holdings, Gump's Corp. and Gump's By Mail, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case Nos. 18-14683 to 18-14685) on Aug. 3, 2018. In the petitions signed by Tony Lopez, CFO and chief operating officer, the Debtor disclosed these assets and liabilities: Assets Liabilities ------------ ------------ Gump's Holdings, LLC $47,031 $16,456,335 Gump's Corp. $9,812,318 $23,713,258 Gump's By Mail, Inc. $4,198,319 $23,755,942 The Debtors tapped Garman Turner Gordon LLP as counsel; Lincoln Partners Advisors LLC as financial advisor; and Donlin, Recano & Company Inc. as claims and notice agent. The U.S. Trustee for Region 17 appointed an official committee of unsecured creditors on Aug. 20, 2018. The committee tapped Brownstein Hyatt Farber Schreck, LLP as its legal counsel. HARBOR FREIGHT: Moody's Completes Review, Retains Ba3 CFR --------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Harbor Freight Tools USA, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Harbor Freight USA, Inc.'s ("HFT",) Ba3 corporate family rating benefits from its consistent track record of selling value priced tools and equipment, as it pursues further opportunities for store expansion. HFT's business strategy of direct sourcing and proprietary brands has driven its ability to price product at relatively lower price points while maintaining solid EBIT margins and healthy free cash flow. HFT's rating also reflects the company's history of periodically increasing leverage in order to pay a debt financed dividend. The principal methodology used for this review was Retail Industry published in May 2018. HEALTHMAX LLC: Seeks to Hire Leiderman Shelomith as Counsel ----------------------------------------------------------- Carol Fox, the Subchapter V trustee appointed in Healthmax, LLC's Chapter 11 case, seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to hire Leiderman Shelomith Alexander + Somodevilla, PLLC as her counsel. The firm's services include: a. give advice to the trustee with respect to her duties and powers; b. prepare legal documents necessary in the trustee's administration of the Debtor's bankruptcy case; c. protect the interests of the trustee in all matters pending before the court; and d. perform all other legal services for the trustee, which may be necessary. The firm will be paid at these rates: Attorneys $175 to $475 per hour Legal Assistants $120 per hour Zach Shelomith, Esq., the attorney who will be handling the case, charges an hourly fee of $475. Mr. Shelomith disclosed in its application that his firm does not represent any entity in any matter which would constitute a conflict of interest or otherwise impair the disinterestedness of the firm. The firm can be reached through: Zach B. Shelomith, Esq. Leiderman Shelomith Alexander + Somodevilla, PLLC 2699 Stirling Road, Suite C401 Ft. Lauderdale, FL 33312 Tel: (954) 920-5355 Fax: (954) 920-5371 About Healthmax LLC Healthmax, LLC sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 20-21700) on Oct. 26, 2020. At the time of the filing, the Debtor disclosed assets of between $500,001 and $1 million and liabilities of the same range. Judge A. Jay Cristol oversees the case. Gary M. Murphree, Esq. at A.M. LAW, LLC, serves as the Debtor's counsel. On Oct. 29, 2020, Carol Fox was appointed as the Subchapter V trustee in the Debtor's Chapter 11 case. The trustee is represented by Leiderman Shelomith Alexander + Somodevilla, PLLC. HELIUS MEDICAL: Incurs $14.1 Million Net Loss in 2020 ----------------------------------------------------- Helius Medical Technologies, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $14.13 million on $661,000 of total operating revenue for the year ended Dec. 31, 2020, compared to a net loss of $9.78 million on $1.49 million of total operating revenue for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $6.54 million in total assets, $2.67 million in total liabilities, and $3.87 million in total stockholders' equity. Philadelphia, Pennsylvania-based BDO USA, LLP issued a "going concern" qualification in its report dated March 10, 2021, citing that the Company has incurred substantial net losses since its inception, has an accumulated deficit of $118.9 million as of Dec. 31, 2020 and the Company expects to incur further net losses in the development of its business. These conditions raise substantial doubt about its ability to continue as a going concern. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/Archives/edgar/data/1610853/000156459021012121/hsdt-10k_20201231.htm About Helius Medical Helius Medical Technologies -- http://www.heliusmedical.com-- is a neurotech company focused on neurological wellness. Its purpose is to develop, license or acquire non-invasive technologies targeted at reducing symptoms of neurological disease or trauma. HERALD HOTEL: Gets OK to Tap Substitute Special Labor Counsel ------------------------------------------------------------- Herald Hotel Associates, LP received approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Ellenoff Grossman & Schole, LLP as its substitute special labor counsel. Ellenoff Grossman & Schole will render these legal services: (a) negotiate modifications to the current collective bargaining agreement with the Debtor's labor union, the New York Hotel & Motel Trades Council; (b) negotiate with the union severance payments required by the Debtor's collective bargaining agreement triggered as a result of the Covid-19 pandemic; and (c) if necessary, assist with the Debtor's efforts to reject its collective bargaining agreement with the union pursuant to Section 1113 of the Bankruptcy Code. David Rothfeld, Esq., the lead attorney in this case, will be compensated at his hourly rate of $715 while the hourly rates of the firm's other attorneys range from $375 to $645. Ellenoff Grossman & Schole also provided the following in response to the request for additional information set forth in paragraph D.1. of the Appendix B Guidelines. Question: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? Response: No. Ellenoff Grossman & Schole and the Debtor agreed the firm's fees will be its usual and customary fees at the hourly rates detailed above. 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 post-petition, explain the difference and the reasons for the difference. Response: EGS did not represent the Debtor prepetition. As set forth above, EGS represents the Hotel Association of the City of New York of which the Debtor is a member. EGS's rates here are the same as the rates it generally charges to its privately held clients. Question: Has your client approved your prospective budget and staffing plan, and, if so, for what budget period? Response: The Debtor prepared and filed an initial thirteen (13) week cashflow attached to the interim cash collateral order. David Rothfeld, Esq., a partner at Ellenoff Grossman & Schole, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: David R. Rothfeld, Esq. Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, NY 10105 Telephone: (212) 370-1300 / (646) 895-7222 Facsimile: (212) 370-7889 Email: drothfeld@egsllp.com About Herald Hotel Associates Herald Hotel Associates, L.P. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 20-12266) on Sept. 22, 2020. Judge Shelley C. Chapman oversees the case. Tarter Krinsky & Drogin LLP serves as the Debtor's bankruptcy counsel. The Debtor also tapped Ellenoff Grossman & Schole LLP as its special labor counsel, replacing Kane Kessler, PC. HIGHPOINT RESOURCES: Case Summary & 30 Top Unsecured Creditors -------------------------------------------------------------- Lead Debtor: HighPoint Resources Corporation 555 17th Street, Suite 3700 Denver, Colorado 80202 Business Description: HighPoint Resources Corporation, a Delaware corporation, together with its wholly-owned subsidiaries, is an independent oil and gas company engaged in the exploration, development and production of oil, natural gas and natural gas liquids. Visit https://www.hpres.com for more information. Chapter 11 Petition Date: March 14, 2021 Court: United States Bankruptcy Court District of Delaware Three affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- HighPoint Resources Corporation (Lead Debtor) 21-10565 HighPoint Operating Corporation 21-10566 Fifth Pocket Production, LLC 21-10567 Judge: Hon. Christopher S. Sontchi Debtors' General Bankruptcy Counsel: Joshua A. Sussberg, P.C. KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, New York 10022 Tel: (212) 446-4800 Fax: (212) 446-4900 Email: joshua.sussberg@kirkland.com - and - W. Benjamin Winger, Esq. 300 North LaSalle Street Chicago, Illinois 60654 Tel: (312) 862-2000 Fax: (312) 862-2200 Email: benjamin.winger@kirkland.com Debtors' Local Bankruptcy Counsel: Domenic E. Pacitti, Esq. Michael W. Yurkewicz, Esq. KLEHR HARRISON HARVEY BRANZBURG LLP 919 North Market Street, Suite 1000 Wilmington, Delaware 19801 Tel: (302) 426-1189 Fax: (302) 426-9193 Email: dpacitti@klehr.com - and - Morton R. Branzburg, Esq. 1835 Market Street, Suite 1400 Philadelphia, Pennsylvania 19103 Tel: (215) 569-3007 Fax: (215) 568-6603 Email: mbranzburg@klehr.com Debtors' Financial Advisors and Investment Bankers: TUDOR, PICKERING, HOLT & CO. AND ITS AFFILIATES, INCLUDING PERELLA WEINBERG PARTNERS Debtors' Restructuring Advisor: ALIX PARTNERS, LLP Debtors' Notice & Claims Agent: EPIQ CORPORTAE RESTRUCTURING, LLC https://dm.epiq11.com/case/highpoint/dockets Total Assets as of December 31, 2020: $826,637,000 Total Debts as of December 31, 2020: $760,434,000 The petitions were signed by William Crawford, chief financial officer. A copy of HighPoint Resources' petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/IYUBRHI/HighPoint_Resources_Corporation__debke-21-10565__0001.0.pdf?mcid=tGE4TAMA List of Debtors' 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Deutsche Bank Trust Co Unsecured $360,140,277 Americas as Indenture Trustee Debt for 7% Senior Notes 60 Wall Street 27th Floor New York, NY 10005 Robert Pian Tel: (212) 250-2500 Fax: (210) 723-2451 Email: robert.pian@db.com 2. Deutsche Bank Trust Co Unsecured $280,948,784 Americas as Indenture Trustee Debt for 8.75% Senior Notes 60 Wall Street 27th Floor New York, NY 10005 Robert Pian Tel: (212) 250-2500 Fax: (210) 723-2451 Email: robert.pian@db.com 3. Meadowlark Midstream Trade $2,014,376 Company LLC Payable 2300 Windy Ridge Pkwy SE Ste 240S Atlanta, GA 30339-5665 James Johnston Tel: (720) 452-6220 (720) 452-6232 Email: info@summitmidstream.com 4. Covenant Testing Trade $231,779 Technologies Payable PO Box 733809 Dallas, TX 75373-3809 Pat Larkin Tel: (432) 214-8040 Email: plarkin@ctest.com 5. NGL Water Solutions Trade $218,027 6120 South Yale Ave Payable Tulsa, OK 74136 Eli Gordon Tel: (303) 815-1010 (303) 815-1011 Email: eli.gordon@nglep.com 6. Cureton Front Range LLC Trade $212,223 518 17th St Payable Denver, CO 80202 Orgil Batsaikhan Tel: (833) 287-3866 (303) 376-6106 Email: orgil.batsaikhan@curetonmidstream.com 7. Swabbco Trade $190,967 Attn: Alison Strain Payable PO Box 745 Windsor, CO 80550 Tel: (970) 675-6292 (970) 548-4000 Email: alison.strain1@swabbco.com 8. UMR Inc. Trade $183,561 115 W Wausau Ave Payable Wausau, WI 54401 Lori Wood Tel: (800) 826-9781 (855) 405-2189 Email: lori_wood@uhc.com 9. Jacam Chemicals 2013 LLC Trade $177,059 PO Box 96 Payable Sterling, KS 67579 Carla Gustafson Tel: (620) 278-3355 (620) 278-2112 Email: carla.gustafson@jacam.com 10. Titan Field Service LLC Trade $155,703 Attn: Kelly Porter Payable PO Box 113 Silt, CO 81652 Tel: (970) 379-2741 Email: kporter@titanfieldservice.com 11. R J Mann Associates Inc. Trade $144,976 860 N 9th Avenue Payable Brighton, CO 80603 Debbie Kirchner Tel: (303) 659-5139 (303) 659-5309 Email: debbiekirchner@rjmann.com 12. American Oilfield Trade $127,609 Products Inc. Payable 915 39th St Evans, CO 80602 Jim Ferfoss Tel: (970) 573-5682 Email: jimw@amoilfieldprod.com 13. Techneaux Technology Trade $124,822 Services, LLC Payable Attn: Michael Johnson 312 Westgate Rd Lafayette, LA 70506 Tel: (800) 337-5513 Email: michael.johnson@techneaux.com 14. Coastal Chemical Co LLC Trade $121,046 Dept 2214 Payable Dallas, TX 75312-2214 Kerry Wiltz Tel: (800) 535-3862 (337) 892-1185 Email: info@coastalchem.com 15. Archrock Services LP Trade $116,955 Langley & Banack Payable Incorporated Attorneys and Counselors At Law 745 East Mulberry Avenue | Suite 700 San Antonio, TX 78212 Genia Romero Tel: (281) 836-8000 (302) 636-5454 Email: genia.romero@archrock.com 16. Enterprise Fleet Services Trade $116,462 Enterprise FM Trust Payable Kansas City, MO 64180-089 Steve Bloom Tel: (877) 233-5338 (314) 863-1701 Email: steven.e.bloom@efleets.com 17. Contreras Field Trade $110,917 Services LLC Payable PO Box 848244 Los Angeles, CA 90084-8244 Alexander E. Contretars Tel: (970) 381-8143 Email: alex.contreras@contrerasfs.com 18. Total Quality Field Trade $99,717 Services LLC Payable 338 Remington Ranch Rd Carpenter, WY 82054 Ted B Vassos Tel: (307) 216-0225 19. Champion Oilfield Service, Inc. Trade $97,650 Attn: Mike Miller Payable 16461 Hwy 52 PO Box 96 Wiggins, CO 80654 Tel: (970) 483-7252 Email: info@championoilfieldservice.com 20. Mundt Energy Services, LLC Trade $93,658 Attn: Dan Newell Payable 6513 W 4th St Greeley, CO 80634 Tel: (970) 353-1264 (970) 460-0517 Email: dan.n@mundtenergy.com 21. Zito Trucking Trade $91,530 PO Box 327 Payable Williamsville, NY 14231 David Zito Tel: (970) 515-6132 (970) 515-6069 Email: davidzito@zitotruckinggroup.com 22. Confluence DJ LLC Trade $89,649 1001 17th St Ste 1250 Payable Denver, CO 80210 Williams E. Nicas Tel: (303) 226-9500 23. Pluggin Along LLC Trade $75,285 PO Box 2295 Payable Gillette, WY 82717 Rebecca Clabaugh Tel: (307) 682-3717 (307) 682-3587 Email: info@plugginalong.com 24. Superior Oilfield Trade $75,282 Services Co Ltd. Payable DBA Laser Oilfield Services 2986 W 29th St Suite 12-13 Greeley, CO 80631 Richard Miller Tel: (970) 352-4444 (855) 966-8106 25. Select Energy Services LLC Trade $74,262 PO Box 203997 Payable Dallas, TX 75320-3997 Craig Fric Tel: (713) 235-9500 (713) 986-2501 Email: cfric@selectenergyservices.com 26. Mancos Petroleum Trade $71,702 Services LLC Payable 405 Uban Street, Ste. 125 Lakewood, CO 80228 Bob O'Donovan Tel: (720) 508-4261 Email: info@mancospetroleum.com 27. Enerflex Energy Trade $70,138 Systems, Inc. Payable Attn: Cheryl Lindsey 10815 Telge Rd Houston, TX 77095 Tel: (281) 345-9300 (281) 345-7434 Email: clindsey@enerflex.com 28. Morgan County Rural Electric Trade $67,286 Association Payable PO Box 738 Fort Morgan, CO 80701 Rob Baranowski Tel: (970) 867-5688 (970) 867-3277 Email: customerservice@mcrea.org 29. KRAN LLC Trade $57,292 Attn: Eric Whitehead Payable 3620 W 10th Street Unit B Box 171 Greeley, CO 80634 Email: whitehead@thekran.com 30. Sterling Energy Litigation Undetermined Investments LLC 1200 17th Street Suite 2850 Denver, CO 80202 John Carpenter Tel: (720) 881-7100 (720) 881-7101 Email: jcarpenter@sterlingenergy.com HIGHPOINT RESOURCES: Files for Chapter 11 to Effect Bonanza Merger ------------------------------------------------------------------ HighPoint Resources Corporation (NYSE: HPR) on March 14, 2021, announced that it has filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware to effectuate the previously announced prepackaged plan of reorganization and consummate the transactions pursuant to the Agreement and Plan of Merger, dated as of November 9, 2020, by and among Bonanza Creek Energy, Inc., HighPoint and Boron Merger Sub, Inc. (the "Merger Agreement"). The Prepackaged Plan implements the merger and restructuring transactions contemplated under the Merger Agreement and TSA. As previously announced, the conditions to Bonanza Creek's exchange offer for HighPoint Operating Corporation's 7.0% Senior Notes due October 15, 2022 (the "2022 Notes") and 8.75% Senior Notes due June 15, 2025 (the "2025 Notes" and, together with the 2022 Notes, the "HighPoint Senior Notes") were not satisfied at the expiration time of the exchange offer. However, in response to HighPoint's solicitation of votes from holders of the HighPoint Senior Notes to accept or reject the Prepackaged Plan, over 99% in aggregate principal amount of the HighPoint Senior Notes and over 90% of the holders of the HighPoint Senior Notes that voted on the Prepackaged Plan voted to accept the Prepackaged Plan. In response to HighPoint's solicitation of votes from its stockholders to accept or reject the Prepackaged Plan, over 99% of the HighPoint stock that was voted on the Prepackaged Plan voted to accept the Prepackaged Plan. In addition, at a special meeting of Bonanza Creek's stockholders, over 99% of the Bonanza Creek stock that was voted on the issuance of Bonanza Creek common stock in connection with the merger voted in favor of the issuance. The consummation of the Prepackaged Plan will be subject to confirmation by the Court in addition to other conditions set forth in the Prepackaged Plan, the Merger Agreement, the Transaction Support Agreement, dated as of November 9, 2020, by and among HighPoint, HighPoint Operating Corporation, Fifth Pocket Production, LLC, certain consenting holders of the 2022 Notes and 2025 Notes, and certain consenting HighPoint stockholders (the "TSA"), and related transaction documents. HighPoint has filed customary motions with the Court seeking a variety of "first-day" relief, including authority to pay owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided. The entities included in the filing are HighPoint Resources Corporation, HighPoint Operating Corporation and Fifth Pocket Production, LLC. 97.5% Threshold Greg Avery of Denver Business Journal reports that too few owners of $625 million in Denver-based HighPoint Resources debt were willing to exchange it for Bonanza Creek Energy stock and debt as a first step toward merging the companies, they announced Friday, March 12, 2021, leaving HighPoint Resources to seek Chapter 11 bankruptcy protection to keep the deal alive. Bonanza Creek Energy Inc. announced on Nov. 9, 2020, that it had reached a deal to buy HighPoint Resources. The transaction was valued at $346 million. More than 93% of holders of two tranches of HighPoint debt were willing to tender their notes in return for shares in Bonanza Creek and new debt notes that the company would issue. But the transaction the companies arranged required at least 97.5% of noteholders to participate. The deal that was struck accounted for the possibility the debt exchange could fail. It outlined a Bonanza Creek acquisition through bankruptcy reorganization as an alternative. The companies received approval from enough creditors to pursue the pre-packaged Chapter 11 filing in U.S. Bankruptcy Court in Delaware, they said Friday, March 12, 2021. Both oil and gas companies focus on the Denver-Julesburg Basin. Their wells have been producing a combined 50,000 barrels of oil, liquids and natural gas equivalents per day. "It's been clear to everyone that HighPoint and Bonanza Creek should have been one company a long time ago," Eric Greager, Bonanza Creek Energy CEO and president, said on a November conference call about the deal. The main obstacle to merging had been HighPoint's debt, he said. HighPoint Resources has $350 million in debt notes for which the principal comes due next year, and it has another $275 million in notes due in 2025. Bonanza Creek proposed swapping that debt for shares of Bonanza Creek Energy stock and new senior notes due in 2026 that the company would issue. That offering is on hold following Friday's, March 12, 2021, exchange rejection. The boards of both companies and HighPoint's biggest shareholder, Fifth Creek Energy, agreed to the complicated merger deal last 2020. So, too, did HighPoint's largest debt holder, San Mateo California-based Franklin Securities (NYSE: BEN). The transaction still must receive approval from Bonanza Creek shareholders. Filing for bankruptcy would make HighPoint Resources the latest of at least six Denver-based oil and natural gas producers to go through bankruptcy in the past 2020. A post-merger Bonanza Creek Energy would own 57 new wells that have been drilled but not yet completed. It will begin completing those wells this year and would expect to hire a drilling crew to start adding new wells afterward. The goal would be to hold the post-merger company's production steady between 45,000 and 50,000 barrels of oil, liquids and natural gas equivalents per day for the next five years, Greager said. The post-merger company would be able, at last fall's prices, to generate at least $340 million in cash flow through 2023 to pay down debt and have money left that it would consider returning to shareholders through dividends or share buybacks, he said. About HighPoint Resources Corporation HighPoint Resources Corporation (NYSE: HPR) is a Denver, Colorado-based company focused on the development of oil and natural gas assets located in the Denver-Julesburg Basin of Colorado. Additional information about HighPoint may be found on its website at http://www.hpres.com/ On March 14, 2021, HighPoint Resources Corporation and two affiliated companies filed petitions under chapter 11 of the United States Bankruptcy Code (Bankr. D. Del. Lead Case No. 21-10565) to seek confirmation of a prepackaged plan that would provide for a merger with Bonanza Creek Energy, Inc. Kirkland & Ellis LLP is serving as legal advisor, Tudor, Pickering, Holt & Co. / Perella Weinberg Partners are serving as financial advisor, and AlixPartners, LLP, is serving as restructuring advisor to HighPoint. Epiq Corporate Restructuring is the claims agent. Evercore is serving as financial advisor and Vinson & Elkins LLP is serving as legal advisor to Bonanza Creek. Akin Gump LLP is serving as legal advisor to an informal group of HighPoint noteholders that have signed the TSA. J.P. Morgan Securities LLC also served as an advisor to HighPoint. HOLLISTER CONSTRUCTION: April 15 Hearing on Settlement-Based Plan ----------------------------------------------------------------- Hollister Construction Services, LLC submitted a Disclosure Statement for First Amended Plan of Liquidation. A hearing to consider confirmation of the Plan and approval of the Disclosure Statement is scheduled for April 15, 2021, at 10:00 a.m. (Eastern Time). Ballots and objections are due April 8. The Debtor proposed the Plan, which seeks approval of the Settlement Agreement, over the alternative of converting the Debtor's chapter 11 bankruptcy case to Chapter 7, because the Debtor believes that: (i) the Plan ensures a timely resolution of the Case, including the administration of the Debtor's Remaining Assets; and (ii) the Plan avoids unnecessary costs to the Debtor's Estate which would accrue should the Case be converted to Chapter 7. The Plan implements the Settlement Agreement between and among the Debtor, the Committee, PNC, Arch and the Insiders. Pursuant to the Settlement Agreement, on the Effective Date, the Contributing Insiders (Johnson and Flanagan) will pay the sum of $2,509,746 be distributed as follows: $1,107,500 to Arch, $527,246 to PNC, and $875,000.00 to the Estate to fund the Professional Fee Escrow. In addition, the Contributing Insiders will execute the Five Year Arch Note, which will be secured by the Five Year Arch Mortgage, the Non-Recourse Limited Guarantees and the Third Party Limited Guaranty. The Settlement Agreement also sets forth how funds in the Escrow Account, the Settlement Account and certain Partially Bonded Settlement Proceeds will be distributed to Holders of Unclassified Claims and otherwise pursuant to the Plan. Further, the Settlement Agreement also provides for certain Special Disbursements and for the distribution of any recoveries on the Known Litigation Claims, which are intended to be commenced by the Debtor or, after the Effective Date, the Liquidating Trust, including, the D&O Policy Claims, the E&O Policy Claims, and the Malpractice Claim. Last, the Settlement Agreement provides for the payment of certain outstanding Professional Fees due to the Debtor's and Committee's Professionals and provides for certain releases by and among certain parties to the Settlement Agreement. On the Effective Date, the Liquidation Trust shall be formed to carry out all actions and perform all duties set forth in the Plan and the Liquidation Trust Documents. On the Effective Date, the Debtor will distribute the Liquidation Trust Assets to the Liquidation Trust and as soon as reasonably practicable after the Effective Date, the Liquidation Trust will distribute Cash to Holders of certain Allowed Claims as of the Effective Date, subject to any required Reserves, in accordance with the Plan and the Settlement Agreement. The Liquidation Trust will also pursue future litigation Causes of Action, including the Known Litigation Claims, the Enforcement Actions, if any, and the Avoidance Actions, the proceeds of which will be distributed in accordance with the Settlement Agreement and Plan. Class 4 General Unsecured Claims will each be entitled to receive a pro rata share of the cash to be distributed from the Liquidating Trust, if any, after payment of (or the establishment of a sufficient Reserve for) all other claims. Class 4 is impaired. The projected estimated recovery for Class 4 is unknown at this time. Counsel to the Debtor: Arielle B. Adler, Esq. Bruce Buechler, Esq. Joseph J. DiPasquale, Esq. Jennifer B. Kimble, Esq. Kenneth A. Rosen, Esq. Mary E. Seymour, Esq. LOWENSTEIN SANDLER LLP One Lowenstein Drive Roseland, New Jersey 07068 Tel: (973) 597-2500 Fax: (973) 597-2400 A copy of the Disclosure Statement is available at https://bit.ly/30H3c9q from Primeclerk, the claims agent. About Hollister Construction Hollister Construction Services, LLC -- http://www.hollistercs.com/ -- is a full service commercial construction company with a team of 150+ construction professionals. The Company's specialties include interior and exterior renovations, building additions, and ground up construction. Hollister's areas of expertise include the construction of corporate, education, healthcare, industrial, retail, and residential projects. Hollister Construction sought Chapter 11 protection (Bankr. D.N.J. Lead Case No. 19-27439) on Sept. 9, 2019, in Trenton, New Jersey. In the petition signed by Brendan Murray, president, the Debtor was estimated to have $100 million to $500 million in assets and liabilities of the same range. The Hon. Michael B. Kaplan oversees the case. The Debtor tapped Lowenstein Sandler as counsel; SM Law PC, as special counsel; 10X CEO Coaching, LLC, as restructuring counsel; and The Parkland Group, Inc., as business consultant. Prime Clerk serves as the claims agent. HOUTEX BUILDERS: Seeks to Hire Parkins Lee & Rubio as Counsel ------------------------------------------------------------- HouTex Builders, LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Parkins Lee & Rubio, LLP as their legal counsel. Charles Rubio, Esq., was the principal attorney at Diamond McCarthy LLP representing the Debtors in their Chapter 11 cases. Mr. Rubio became a partner at Parkins Lee & Rubio on Aug. 1, 2020 and the Debtors believe that it is in their best interest to have continuity of legal services and continue to use Mr. Rubio as their legal counsel since he is familiar with all aspects of the Debtors' cases. Charles Foster, the owner and manager of the Debtors, has agreed to be a third-party payor and pay Parkins Lee & Rubio's legal fees and reimbursement of its expenses. Mr. Rubio disclosed in a court filing that Parkins Lee & Rubio is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Charles M. Rubio, Esq. Parkins Lee & Rubio LLP Pennzoil Place 700 Milam, Suite 1300 Houston, TX 77002 Telephone: (212) 763-3331 Email: crubio@parkinslee.com About HouTex Builders Located at 17 Courtlandt Place, Houston, HouTex Builders, LLC and affiliates 415 Shadywood, LLC and 2203 Looscan Lane, LLC are privately held companies engaged in activities related to real estate. 2203 Looscan, LLC and 415 Shadywood, LLC, are special purpose entities established for the purpose of constructing new houses. Both are owned 100% by Charles C. Foster and Lily Foster. HouTex Builders, 415 Shadywood, and 2203 Looscan Lane, sought Chapter 11 protection (Bankr. S.D. Texas Lead Case No. 18-34658) on Aug. 23, 2018. In the petitions signed by Charles C. Foster, manager, the Debtors disclosed $1 million to $10 million in both assets and liabilities. Judge Jeffrey P. Norman presides over the cases. The Debtors tapped Charles M. Rubio, Esq., at Parkins Lee & Rubio LLP as its legal counsel. HSA ENTERPRISES: Gets Court Approval to Hire Accountant ------------------------------------------------------- HSA Enterprises, LLC received approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Robert Norris, an accountant practicing in Texas. The Debtor needs the assistance of an accountant to provide monthly accounting and other financial services for its Chapter 11 plan. Mr. Norris will be compensated at his hourly rate of $200, while associates are paid at the rate of $75 per hour. In addition, Mr. Norris will seek reimbursement for out-of-pocket expenses. Mr. Norris disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The accountant can be reached at: Robert Norris Norris & Associates 1614 Holland Ave. Houston, TX 77029 Telephone: (713) 453-3310 About HSA Enterprises HSA Enterprises, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 21-30023) on Jan. 4, 2021. HSA Enterprises President Shawn LePorte signed the petition. At the time of the filing, the Debtor estimated $1 million to $10 million in assets and $100,000 to $500,000 in liabilities. Judge Eduardo V. Rodriguez presides over the case. The Debtor tapped Reese Baker, Esq., at Baker & Associates as its legal counsel and Robert Norris as accountant. HUMANIGEN INC: Widens Net Loss to $89.5 Million in 2020 ------------------------------------------------------- Humanigen, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $89.53 million on $312,000 of total revenue for the 12 months ended Dec. 31, 2020, compared to a net loss of $10.29 million on zero revenue for the 12 months ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $68.30 million in total assets, $22.76 million in total liabilities, and $45.54 million in total stockholders' equity. Humanigen said, "The Consolidated Financial Statements for the years ended December 31, 2020 and 2019 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. However, the Company has incurred net losses since its inception and has negative operating cash flows. These conditions raised substantial doubt about the Company's ability to continue as a going concern as described in the Company's historical Condensed Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020." "The Company believes that its cash and cash equivalents will be sufficient to fund its planned operations and capital expenditure requirements for at least 12 months. This evaluation is based on relevant conditions and events that are currently known or reasonably knowable. As a result, the Company could deplete its available capital resources sooner than it currently expects, and a delay in obtaining or failure to obtain an EUA could further constrain its cash resources. The Company has based these estimates on assumptions that may prove to be wrong, and its operating projections, including its projected net revenue following the potential receipt of an EUA for lenzilumab in COVID-19 patients, may change as a result of many factors currently unknown to it. If the Company is unable to raise additional capital when needed or on acceptable terms, it would be forced to delay, reduce, or eliminate its research and development programs and commercialization efforts. Alternatively, the Company might raise funds through strategic collaborations, public or private financings or other arrangements. Such funding, if needed, may not be available on favorable terms, or at all." A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/Archives/edgar/data/1293310/000121465921002990/hgen342110k.htm About Humanigen Based in Brisbane, California, Humanigen, Inc. (OTCQB: HGEN), formerly known as KaloBios Pharmaceuticals, Inc. -- http://www.humanigen.com-- is a clinical stage biopharmaceutical company, developing its clinical stage immuno-oncology and immunology portfolio of monoclonal antibodies. The Company is focusing its efforts on the development of its lead product candidate, lenzilumab, its proprietary Humaneered anti-human GM-CSF immunotherapy, through a clinical research agreement with Kite Pharmaceuticals, Inc., a Gilead company to study the effect of lenzilumab on the safety of Yescarta, axicabtagene ciloleucel including cytokine release syndrome, which is sometimes also referred to as cytokine storm, and neurotoxicity, with a secondary endpoint of increased efficacy in a multicenter Phase Ib/II clinical trial in adults with relapsed or refractory large B-cell lymphoma. INOVALON HOLDINGS: Moody's Completes Review, Retains B2 CFR ----------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Inovalon Holdings, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Inovalon Holdings, Inc's B2 Corporate Family Rating reflects a strong growth profile, moderate leverage and highly recurring revenue base. Inovalon is a cloud-based analytics company supporting the healthcare industry. The company provides services such as data validation and integration, advanced analytics and data-driven intervention solutions and processing services to healthcare organizations. The healthcare sector is becoming more data driven with an increase in demand for digitalization, increasing complexity and an emphasis on value-based models over volume based. Moody's expect Inovalon to be a beneficiary of these sector trends in the long-term. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. INTERSTATE COMMODITIES: Taps Martin Auction Services as Auctioneer ------------------------------------------------------------------ Interstate Commodities, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of New York to employ Martin Auction Services as its auctioneer. The Debtor needs the assistance of an auctioneer to hold a live and online marketplace auction to sell its trucking equipment, vehicles, and tools located in Watseka and Charleston, Ill. Martin Auction Services will receive 10 percent commission of the gross proceeds. Robert Nord, an auctioneer at Martin Auction Services, 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 through: Robert Nord Martin Auction Services 9515 Texas Church Rd. Clinton, IL 61727 Telephone: (217) 935-3245 Facsimile: (217) 935-3888 About Interstate Commodities Interstate Commodities Inc., a Troy, N.Y.-based company engaged in the merchandise of commodities, filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D.N.Y. Case No. 20-11139 on Aug. 26, 2020. Michael G. Piazza, chief operating officer, signed the petition. At the time of the filing, the Debtor disclosed $12,558,336 in assets and $25,513,305 in liabilities. Judge Robert E. Littlefield Jr. oversees the case. Forchelli Deegan Terrana, LLP, and Tabner, Ryan & Keniry, LLP, serve as the Debtor's bankruptcy counsel and special counsel, respectively. The U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in the Debtor's case on Sept. 25, 2020. The committee is represented by Lemery Greisler, LLC. ION CORPORATE: Incremental Debt No Impact of Moody's B2 CFR ----------------------------------------------------------- Moody's Investors Service said ION Corporate Solutions Finance Limited's announced plan to refinance its bank debt with a new credit facility featuring nearly $300 million of incremental term loan debt with which the company will also pay a dividend of approximately $200 million has negative credit implications for the software supplier's credit profile. The increase in debt, issued by subsidiaries Helios Software Holdings, Inc. and ION Corporate Solutions Finance Sarl ("Sarl"), will result in a 0.8x increase in 2020 debt leverage (Moody's adjusted) to 6x, leaving the company weakly positioned within the B2 rating category. However, Helios' B2 corporate family rating and stable outlook are not affected. All other ratings, including the B2-PD probability of default rating and the B2 rating on ION's new first lien bank debt also remain unchanged. ION, owned by ION Investment Group, provides software and services for treasury risk management, foreign exchange processing, and energy and commodity trading risk management (E/CTRM) applications. Moody's expects the company's revenues to approximate $635 million in 2021. J-BIRD PROPERTIES: Seeks to Tap Supple Law Office as Counsel ------------------------------------------------------------ J-Bird Properties, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of West Virginia to employ Supple Law Office PLLC and its attorney, Joe Supple, Esq., as its legal counsel. The professional services to be rendered include: (a) advise the Debtor regarding the administration of its Chapter 11 case; (b) assist the Debtor in formulating a plan of reorganization and represent the Debtor in negotiating terms for reorganization; and (c) perform such other matters as required in this case. The Debtor has agreed to compensate Supple Law Office at an hourly rate of $300 for the services of Mr. Supple, with paralegal support at the rate of $100 per hour. Supple Law Office received a retainer of $8,000. Mr. Supple disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Joe M. Supple, Esq. Supple Law Office, PLLC 801 Viand Street Point Pleasant, WV 25550 Telephone: (304) 675-6249 Email: joe.supple@supplelaw.net About J-Bird Properties J-Bird Properties, LLC sought Chapter 11 protection (Bankr. S.D. W.Va. Case No. 21-30032) on Feb. 24, 2021, listing under $1 million in both assets and liabilities. Supple Law Office, PLLC, led by Joe M. Supple, Esq., serves as the Debtor's counsel. JFG HOLDINGS: Unsecured Creditors to be Paid in Full in Plan ------------------------------------------------------------ JFG Holdings, Inc, filed an Amended Plan of Reorganization. Class 6 Claimants (Allowed Unsecured Creditors Claims) are impaired and shall be satisfied as follows. All creditors holding allowed unsecured claims will be paid from the operations of the company. The Debtor shall pay $250 per month commencing on the Effective Date until all Class 6 Claimants are paid in full. The unsecured creditors shall receive 100% of their allowed claims under the Plan. The Debtor's obligations under this Plan will be satisfied out of the ongoing operations of the Reorganized Debtor. Attorney 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 A copy of the Amended Plan of Reorganization is available at https://bit.ly/38AEOdU from PacerMonitor.com. About JFG Holdings JFG Holdings, Inc., a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)), filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-43378) on Nov. 2, 2020. JFG Holdings President Janice Grimes signed the petition. At the time of filing, the Debtor estimated assets of up to $50,000 and estimated liabilities of $1 million to $10 million. Eric A. Liepins, P.C., serves as the Debtor's legal counsel. JFK HEATING: Seeks Approval to Hire Coolidge Wall as Counsel ------------------------------------------------------------ JFK Heating and Cooling, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Ohio to employ Coolidge Wall Co., LPA and its attorney, Patricia Friesinger, Esq., as its legal counsel. Coolidge Wall Co. will render these legal services: (a) advise the Debtor regarding its powers and duties in the continued management and operation of its business; (b) attend meeting and negotiate with representatives of creditors and other parties of interest; (c) protect and preserve the Debtor's estate; (d) prepare legal papers; (e) prepare a plan of reorganization, disclosure statement, and all related agreements or documents; (f) advise the Debtor in connection with any potential sale of its assets; (g) appear before the bankruptcy court, any appellate courts and the U.S. trustee; (h) consult with the Debtor regarding tax matters; and (i) perform all necessary legal services in connection with the Debtor's Chapter 11 case. The hourly rates of Coolidge Wall Co.'s attorneys and staff are as follows: Patricia J. Friesinger, Esq. $310 Other Attorneys $190 - $450 Paralegals $140 - $215 The firm received payment from the Debtor totaling $15,000 for its pre-bankruptcy services and expenses. Ms. Friesinger disclosed in court filings that she and the firm are "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Patricia J. Friesinger, Esq. Coolidge Wall Co., LPA 33 W. First Street, Ste. 200 Dayton, OH 45402 Telephone: (937) 449-5776 Facsimile: (937) 223-6705 Email: friesinger@coollaw.com About JFK Heating & Cooling JFK Heating & Cooling, LLC -- https://www.jfkheatingandcooling.com -- is a heating and cooling company based in Dayton, Ohio. The Company offers furnace and air conditioning services in and around Dayton. JFK Heating & Cooling sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ohio Case No. 21-30341) on March 8, 2021. Jason Kirby, member, signed the petition. At the time of the filing, the Debtor disclosed total assets of $431,058 and total liabilities of $1,212,947. Judge Guy R. Humphrey oversees the case. Coolidge Wall Co., LPA, led by Patricia J. Friesinger, Esq., serves as the Debtor's counsel. JJE INC: Court Confirms Amended Plan ------------------------------------ Jje Inc. has won confirmation of its Chapter 11 Plan. Judge Mildred Caban Flores has entered an order that the Amended Disclosure Statement of Jje Inc. filed on Sept. 17, 2020, is finally approved. The Amended Plan filed by debtor dated Sept. 17, 2020, is confirmed as supplemented on Dec. 16, 2020, and on Jan. 26, 2021. As reported in the TCR, the Debtor has proposed a Chapter 11 plan that will award unsecured creditors a total sum of $25,965 which represents a 20% distribution for this class. The Plan will be funded with cash available proceeds from the revenue that the hospice generates after paying operating expenses and taxes. The Debtor's income is based on the admissions of patients to provide treatment, which is the Debtor's business. A full-text copy of the Amended Disclosure Statement dated Sept. 17, 2020, is available at https://tinyurl.com/y345ngps from PacerMonitor at no charge. About JJE Inc. JJE, Inc., is a home health care services provider based in Manati, Puerto Rico. JJE, Inc., filed a Chapter 11 petition (Bankr. D.P.R. Case No.19-02034) on April 12, 2019, and is represented by Victor Gratacos Diaz, Esq., in Caguas, Puerto Rico. In the petition signed by Jenny Olivo, president, the Debtor disclosed $295,244 in total assets and $1,953,718 in total liabilities. KEN GARFF: Moody's Completes Review, Retains Ba2 CFR ---------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Ken Garff Automotive, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Ken Garff Automotive, LLC's Ba2 corporate family rating considers its favorable position in its chosen markets, predominantly in its home state of Utah, its brand mix with heavy domestic weighting, its good liquidity, its flexible business model, with shifting emphasis towards used vehicles as this segment lags the rated universe, and its stable ownership and management befitting a third-generation company. The rating also reflects Moody's view that Garff will continue to manage its costs to 'flex' in line with potential negative demand drivers such that current credit metrics are largely preserved. The principal methodology used for this review was Retail Industry published in May 2018. KOSMOS ENERGY: Fitch Assigns Final B- Rating on $450MM Notes ------------------------------------------------------------ Fitch Ratings has assigned Kosmos Energy Ltd.'s new 7.5% USD450 million notes due in 2028 a final senior unsecured rating of 'B-' with a Recovery Rating of 'RR5'. The agency has simultaneously downgraded the existing 7.125% USD650 million senior unsecured notes due in 2026 to 'B-' from 'B'. The Recovery Rating is 'RR5' versus 'RR4' previously. The downgrade reflects the higher quantum of debt post-issuance. The agency has also maintained the Long-Term Issuer Default Rating of 'B' on Rating Watch Negative (RWN). The new USD450 million senior unsecured notes benefit from the same guaranty package from Gulf of Mexico (GoM) operating subsidiaries as the existing senior unsecured notes. The notes are pari passu in right of payment with the USD400 million corporate revolver as well as the USD650 million notes, and are subordinated to the company's USD200 million senior secured term loan. Proceeds are being used for debt repayment and general corporate purposes. The new notes' issue allows Kosmos to meet near-term debt maturities and marks a positive step in the company's refinancing cycle but will not be sufficient to fund upcoming committed capex. Sustainable improvement of its liquidity profile remains subject to successful sale & leaseback of the floating production storage and offloading (FPSO) asset and an extension of the reserve-based loan (RBL) amortisation beyond the near term, the completion of which may support the RWN resolution. The 'B' Long-Term IDR reflects Kosmos' small size, high leverage and limited liquidity that are balanced by a longer reserve life than peers'. KEY RATING DRIVERS Off-Market Funding Plans: Kosmos has indefinitely postponed plans to fund its around USD700 million of capex on Mauritania & Senegal assets via farm-downs, due to the low valuations of oil & gas assets following the pandemic. Its alternative funding plan of off-market options, including sale & leaseback of infrastructure as well as other structured transactions, is achievable but overall less certain. This is partially mitigated by the recent signing of a MoU with BP plc (A/Stable) on the sale & leaseback of a FPSO unit, and Fitch sees continued sustainable positive trends in the LNG market as potentially improving Kosmos' financial flexibility. Liquidity Risks Postponed: The USD450 million new notes allow Kosmos to pro-actively address impending 2022 maturities. Its RBL begins amortising in 2022, and its corporate revolver will likewise fall due, which would otherwise make the refinancing of existing debt and/or the bolstering of internal liquidity more urgent. New Notes Insufficient for Capex: Fitch expects the new notes to help Kosmos manage higher capex after the postponement of farm-downs leads to negative free cash flow (FCF) for 2021 under Fitch's base-case assumptions. However, Fitch expects current internal liquidity sources to be insufficient to fund capital commitments should any of the major contemplated transactions fail to materialise, which is the key credit constraint for Kosmos. Limited Liquidity: Committed liquidity of USD569 million at end-2020 is sufficient for Kosmos to comfortably weather 2021, under Fitch's base-case macro assumptions including USD45/bbl Brent prices for 2021 (versus current prices of above USD60/bbl). However, under Fitch's base-case price assumptions, Fitch expects the company's net debt-to-EBITDAX covenant to limit access to liquidity sources although this is partially mitigated by positive recent market trends. While Fitch does not assume a breach of the covenant, minimal headroom will restrict financial flexibility with regard to funding near-term capex. Covenant Levels in Focus: Kosmos' net debt-to-EBITDAX reached 4.7x in 4Q20, leaving minimal headroom under the 4.75x covenant following a covenant relaxation earlier this year. Covenant headroom using Fitch's base-case forecasts is expected to remain tight in the near term, although current price dynamics have materially pared back the risk of a covenant breach. An unremedied covenant breach would be an event of default, limit access to the company's committed debt facilities and potentially lead to the acceleration of outstanding amounts under the RBL and corporate revolver, absent a waiver from lenders. Our base case does not imply a covenant breach, the risk of which has been reduced in the near term by a recovering hydrocarbon price environment. High Leverage: Following the downturn in oil and gas prices since 1Q20 and the postponement of Mauritania & Senegal farm-downs, cash flows fell significantly lower in 2020, resulting in funds from operations (FFO) net leverage of around 7.3x for the same year, up from 2.5x in 2019. While Fitch expects a recovery in the market during 2021, Fitch's FFO net leverage forecast will remain above Fitch's negative rating sensitivity of 4.0x for the 'B' rating. Fitch expects FFO net leverage to only normalise towards 4.0x (assuming successful funding transactions) during 2022. Financial Policy Actions Positive: Kosmos has responded to the low hydrocarbon price environment by implementing a comprehensive set of financial-policy measures, including the suspension of its dividend and cuts to both capex and operating expenditure. This alleviated cash flow pressure during 2020, with total savings from these initiatives exceeding USD300 million. Fitch views the policy package as credit-positive. DERIVATION SUMMARY Fitch rates Kosmos in line with Ithaca Energy Ltd (B/RWN). The latter has slightly higher production volumes of around 75kboepd, lower capital intensity, lower leverage of around 2x, and stronger cash flow generation resulting from more robust hedging. However, these strengths are offset by Kosmos' significantly higher proved reserve life of 11 years (four years for Ithaca) and a more liquids-weighted production mix leading to higher long-term margins. While Fitch expects Kosmos' liquidity position to be somewhat weak due to a reliance on certain strategic transactions being executed in a timely manner and weaker credit metrics, Fitch sees potential pressure for Ithaca due to liquidity issues experienced by its 100% parent, Delek Group. Compared with Seplat Petroleum Development Company Plc (B-/Positive) Kosmos has a smaller reserve base, lower reserve life (Seplat: 30 years on a 2P basis), and higher leverage, which is offset by a more diversified asset base versus Seplat's high exposure to areas characterised by geopolitical risk. Kosmos is a small-size, full-cycle deep-water independent oil and gas exploration and production company. Its production assets include producing fields (primarily oil) offshore Ghana, Equatorial Guinea and in the deep-water US GoM. KEY ASSUMPTIONS -- Brent crude price of USD45/bbl in 2021, USD50/bbl in 2022 and USD53/bbl thereafter. -- Henry Hub price of USD2.45/mcf in 2021 and thereafter. -- Total net production of around 57kboepd in 2021, increasing to around 61kboepd in 2022. -- Tortue Ahmeyim project funded by the sale & leaseback of the FPSO unit, National Oil Company financing and additional debt. -- Capex as guided by the company. -- No dividend payments until 2023. Fitch's Key Assumptions for Recovery Analysis: -- Fitch's recovery analysis assumes that Kosmos would be reorganized as a going-concern in bankruptcy rather than liquidated. -- The going-concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganisation EBITDA level upon which we base the enterprise valuation (EV). -- Kosmos' going-concern EBITDA reflects Fitch's view on EBITDA generation from the company's GoM assets, assuming a sustained period of USD30/bbl Brent prices. This is followed by one year of moderate recovery, yielding a going-concern EBITDA of USD130 million. Fitch focuses Fitch's analysis on EBITDA attributable to the GoM assets as the subsidiaries owning these assets guarantee the senior unsecured notes. -- A 4.5x multiple is used to calculate a post-reorganisation EV, reflecting a mid-cycle multiple for the sector. -- The senior unsecured notes rank pari passu with Kosmos' USD400 million revolver, but are subordinated to the company's USD200 million GoM term loan that is secured against the GoM assets. The notes are also subordinated to the company's USD1.32 billion RBL with respect to the Ghanaian and Equatorial Guinea assets. The notes and revolver benefit from joint and several senior unsecured guarantees from restricted subsidiaries owning the assets in GoM. They are guaranteed on a subordinated unsecured basis by the restricted subsidiaries that guarantee the RBL. -- After deducting 10% for administrative claims, Fitch's waterfall analysis generated a ranked recovery in the 'RR5' band, indicating a 'B-' instrument rating. The waterfall analysis output percentage on current metrics and assumptions was 22%. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Failure to secure additional financing to cover contractual capex needs. -- A further lowering of the RBL's borrowing base that cannot be covered by internal liquidity sources. -- Unremedied covenant breach. -- FFO net leverage above 4.0x on a sustained basis. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- As the rating is on RWN, a positive rating action is unlikely in the short term. However, increasing internal liquidity sources and/or improvement in financial performance such that covenant headroom becomes ample, allowing for free usage of committed liquidity sources as well as FFO net leverage falling below 4.0x may result in a rating affirmation and a Stable Outlook. -- FFO net leverage declining below 3.0x on a sustained basis may support a positive rating action. -- Successful execution of contemplated off-market funding options in 2021 and arrangement of a clear path to funding capex commitments in 2022, such that at least 75% of the expected Mauritania & Senegal capex is covered. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Limited Liquidity: At end-2020, Kosmos had around USD149 million of cash and USD420 million of availability under its USD400 million RCF, which matures in May 2022 and a USD1.5 billion RBL that matures in 2025. At end-2020, indebtedness stood at USD2.2 billion, including USD1.2 billion drawn under the RBL (after September's re-determination, the borrowing base was reduced to USD1.32 billion), which starts amortising in 2022; USD100 million drawn under the RCF; USD650 million of senior notes due in April 2026; and USD200 million of the GoM term loan due in 2025 (starts amortising in 4Q21). The new USD450 million senior unsecured notes are being used to refinance upcoming debt maturities, with the remainder for capex and general-corporate purposes. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. L.G. STECK: Court Approves Disclosure Statement ----------------------------------------------- Judge Mary Jo Heston has entered an order approving the Disclosure Statement for L.G. Steck Memorial Clinic, P.S.'s First Amended Plan of Reorganization filed on March 5, 2021. April 9, 2021, is fixed as the last day for filing written acceptances or rejections of the Debtor's proposed First Amended Plan of Reorganization. The hearing on confirmation of the Debtors' First Amended Plan of Reorganization will be held telephonically on Monday, April 19, 2021, at 9:00 a.m., before the Honorable Mary Jo Heston thru telephonic means. Objections to the Debtor's proposed Plan of Reorganization must be served and filed by no later than April 9, 2021. L.G. Steck Memorial Clinic, P.S. submitted a Plan and a Disclosure Statement. As of the Petition Date, the Debtor had approximately $20,041 in cash and deposits. As of the date of the Disclosure Statement, the Debtor had cash and deposits in the approximate amount of $292,571 (in large part this increase is due to three CARES Provider Relief Fund grants that the Debtor received in May of 2020 in the total amount of $525,111). As of the Petition Date, the Debtor's books and records showed that it had approximately $687,773 in outstanding accounts receivables, of which $190,683 were over 90 days old. The collectability of these outstanding amounts has not been fully determined. As set forth previously, the Debtor has been working throughout this case to improve its collection rate. As of 12-31-2020, the Debtor's outstanding accounts receivables were $929,202. As of the Petition Date, the Debtor had approximately $75,213 of inventory primarily consisting of medical supplies, approximately $41,335 in office supplies and office equipment, and approximately $15,080 in other medical equipment. As of the Petition Date, the Debtor had an interest in two different life insurance policies with a total cash surrender value of $25,240. Additionally, the Debtor has potential claims against Athena in an unknown amount resulting from Athena's inadequate, inaccurate and otherwise deficient billing services. Further, the Debtor is still investigating potential claims against certain exemployees for breach of non-compete and/or other employment agreement breaches that arose post-petition. The Debtor intends to continue with its operations and provide medical care to the citizens of Lewis County and the surrounding areas. From the operations of its business, the Debtor intends to: (1) pay the IRS's secured claim, and all priority non-tax claims in full, over a period not exceeding five years after the Effective Date, and all priority tax claims over a period not exceeding five years after the Petition Date, in equal cash payments made on the first business day of every month following the Effective Date, with interest fixed at the statutory rates for each type of claim as established on the Effective Date; and (2) contribute 50% of its Net Profits to the payment of unsecured claims for a period of five years, or until paid in full, which ever shall occur first, with payments to be made on a bi-annual basis. In other words, if the Plan is confirmed, secured and priority claimants will be paid in full over time, and unsecured creditors will maximize their return by sharing in the Reorganized Debtor's profitability while still allowing it to retain enough revenue to ensure that it has sufficient capital in the event that its profitability unexpectedly declines over the course of the Plan. The Plan also provides that equity security holders will not receive any distribution on account of their equity interest unless and until such time as the Plan terms have been satisfied in full. Finally, the Plan also provides the Debtor with a liquidation option if deemed prudent in its informed business judgment, and also provides that the Debtor shall have a small window of time to attempt to effectuate a sale of the business in the event it defaults under the terms of the proposed Plan. Attorneys for the Debtor: J. Todd Tracy Steven J. Reilly THE TRACY LAW GROUP 1601 Fifth Ave, Suite 610 Seattle, WA 98101 206-624-9894 phone / 206-624-8598 fax A copy of the Order is available at https://bit.ly/3rI93Hp from PacerMonitor.com. A copy of the Disclosure Statement is available at https://bit.ly/3qOHPOp from PacerMonitor.com. About L.G. Steck Memorial Clinic L. G. Steck Memorial Clinic, P.C., is a professional service corporation that provides health care services. The Company was incorporated in 1977 and does business as The Steck Medical Group. L. G. Steck filed a Chapter 11 petition (Bankr. W.D. Wa. Case No. 19-43334) on Oct. 17, 2019, in Tacoma, Washington. In the petition signed by Hugo De Oliveira, chief administrative officer, signed the petition, the Debtor was estimated with assets between $500,000 and $1 million, and liabilities between $1 million and $10 million. The case is assigned to Judge Mary Jo Heston. THE TRACY LAW GROUP PLLC is the Debtor's counsel. LAKELAND TOURS: Moody's Completes Review, Retains Caa2 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Lakeland Tours, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations Lakeland Tours, LLC's Caa2 Corporate Family Rating reflects weak credit metrics as a result of the impact of COVID-19 on travel. Leverage is elevated and visibility into future earnings and cash flow is restricted due to the uncertainty surrounding travel and the long-term impact on the travel sector as a whole. The rating is supported by the company's status as one of the largest educational tour providers, network of teacher advocates that help to retain students for tours and solid liquidity profile. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. LESLIE'S POOLMART: Moody's Completes Review, Retains B1 CFR ----------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Leslie's Poolmart, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Leslie's Poolmart, Inc.'s B1 corporate family rating reflects its moderately high leverage with debt/EBITDA of 4.1x and that it remains 49% owned by private equity following its public stock offerings. The company benefits from relatively stable demand of pool and spa maintenance products from a large installed base that diminishes its economic sensitivity, despite its weather dependence. Leslie's has also experienced significant tail winds from the pandemic as consumers remain focused on their homes, and sanitation increases in importance. The increase in pool installations will help support demand for its products in future years. Leslie's has a leading market share with approximately 15% of the $11 billion US pool and spa care market which serves residential, professional, and commercial consumers. Despite its strength in the category, its limited absolute scale and geographic concentration constrains its rating. The principal methodology used for this review was Retail Industry published in May 2018. LITHIA MOTORS: Moody's Completes Review, Retains Ba1 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Lithia Motors, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Lithia Motors, Inc.'s Ba1 corporate family rating considers its strong credit metrics, its good liquidity, meaningful scale and leading competitive position in its chosen markets. The rating is supported by favorable governance considerations specifically maintaining low leverage and good liquidity. Moody's expects Lithia to continue to generate strong free cash flow which will be used for acquisitions, share repurchases, dividends and some debt reduction. In the event of a macroeconomic slowdown, such as at present, Moody's expects Lithia to be able to flex its operations to largely ensure maintenance of its current quantitative profile. The principal methodology used for this review was Retail Industry published in May 2018. LS GROUP: Moody's Completes Review, Retains B2 CFR -------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of LS Group OpCo Acquisition LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations LS Group OpCo Acquisition LLC's B2 corporate family rating benefits from the strong brand awareness of its Les Schwab banner in its core markets of Washington, Northern California, Oregon and Idaho, as well as a somewhat diversified earnings stream in addition to replacement tires with "under-the-car" products and services, a material amount of contributed equity, and good liquidity. The credit profile also reflects the essential nature of automotive tire replacement and the fairly stable demand characteristics of the do-it for-me auto repair sector. The credit profile also incorporates LS Group's relatively high pro forma leverage , modest scale compared to a number of its peers, geographic concentration within four states and a high reliance on a relatively narrow product line related to replacement tires. The principal methodology used for this review was Retail Industry published in May 2018. LSF9 ATLANTIS: Moody's Completes Review, Retains B2 CFR ------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of LSF9 Atlantis Holdings, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. LSF9 Atlantis Holdings, LLC's (dba "Victra"); B2 corporate family rating reflects its reliance on cellphone manufacturers for continued product innovation and the risk of volatile customer demand related to new product introductions, as well as a lengthening customer replacement/upgrade cycle and declines in wireless activations. Victra's credit profile is constrained by governance considerations particularly its financial strategies which under its private equity owners, Lone Star Funds, include a history of debt financed dividends. Victra benefits from its symbiotic relationship with Verizon Communications, Inc. (Baa1) as it is Verizon's largest independent retailer, the nondiscretionary nature of cell phones, and beneficial relationships with the handset manufacturers. The credit profile also considers Victra's good liquidity. The principal methodology used for this review was Retail Industry published in May 2018. LUXURY OUTER: Seeks Court Approval to Hire Bankruptcy Counsel ------------------------------------------------------------- Luxury Outer Banks Homes, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of North Carolina to employ Howard, Stallings, From, Atkins, Angell & Davis, PA as its legal counsel. The legal services to be rendered include: (a) advise the Debtor regarding its duties and responsibilities in the continued operation of its business and the management or liquidation of its property; (b) prepare legal papers; (c) recover any property as may be necessary and protect the estate during the preparation of a plan of reorganization; and (d) perform all other legal services as may be required. The hourly rates of the firm's counsel and staff are as follows: James B. Angell, Esq. $450 Other Attorneys $175 - $495 Paralegals $175 - $225 The firm holds a retainer of $17,939.50. James Angell, Esq., an attorney at Howard, Stallings, From, Atkins, Angell & Davis, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: James B. Angell, Esq. Howard, Stallings, From, Atkins, Angell & Davis, PA 5410 Trinity Road, Suite 210 Raleigh, NC 27607 Telephone: (919) 821-7700 Facsimile: (919) 821-7703 Email: JAngell@hsfh.com About Luxury Outer Banks Homes Luxury Outer Banks Homes, LLC owns a house and lot located at 1340 DuckRoad, Duck, N.C., valued at $4.85 million, and a house and lot located at 116 Duchess Court, Kill Devil Hills, N.C., valued at $489,700. Luxury Outer Banks Homes sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 21-00508) on Mar. 5, 2021. Kimberly H. Lane, manager, signed the petition. At the time of the filing, the Debtor disclosed total assets of $5,352,747 and total liabilities of $2,192,061. Judge Joseph N. Callaway oversees the case. Howard, Stallings, From, Atkins, Angell & Davis, PA, led by James B. Angell, Esq., serves as the Debtor's counsel. MATTEL INC: Fitch Rates Proposed USD1.2 Billion Unsec. Notes 'BB' ----------------------------------------------------------------- Fitch Ratings has rated Mattel, Inc.'s proposed $1.2 billion of guaranteed unsecured notes 'BB'/'RR4', in line with the company's existing guaranteed unsecured debt. The issuance, plus cash on hand, will be used to repay $1.225 billion of its $1.5 billion in guaranteed unsecured debt due December 2025. Mattel expects the new notes to be issued in two $600 million tranches due 2026 and 2029. Mattel's recent upgrade to 'BB'/Outlook Stable from 'B'/Outlook Positive 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, 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 11.0x 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. 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 billings for the Barbie brand (approximately 25% of gross billings) 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 billings, 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 11.0x 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; Mattel has indicated it expects to extend its $1.6 billion asset-based revolver, currently due November 2022, and downsize it modestly to $1.4 billion, as part of its current refinancing effort. DERIVATION SUMMARY Mattel's 'BB'/Outlook Stable ratings reflect 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 11.0x 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% CAGR 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 Issuer Default Rating (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'/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 3.0x 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 its 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. The company has indicated plans to extend and modestly downsize its ABL to $1.4 billion as part of its current refinancing effort. 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. The company has proposed a $1.2 billion issuance of guaranteed unsecured notes in $600 million tranches due 2026 and 2029. Proceeds, plus cash on hand, would be used to redeem $1.225 billion of guaranteed unsecured notes due December 2025. In addition, the company plans to extend its ABL, currently due 2022, and downsize the size to $1.4 billion from the current $1.6 billion. Fitch does not expect the downsize to have a material impact on the company's liquidity. 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 nonguaranteed 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 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 PricewaterhouseCoopers LLP remains the company's external audit firm. The company has also added controls and processes to its accounting function to reduce the risk of future errors. Finally, Mattel'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. MATTEL INC: Moody's Gives Ba2 Rating on New $1.2B Unsecured Bonds ----------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Mattel, Inc's new $1.2 billion guaranteed senior unsecured bonds in 5 and 8 year tranches. The stable outlook and other ratings including the company's Ba2 Corporate Family Rating are unchanged. Proceeds will be used for general corporate purposes including refinancing other guaranteed senior unsecured debt. The refinancing is credit positive because it will extend maturities and reduce annual cash interest expense. The following ratings were assigned: Guaranteed senior unsecured notes due 2026 and 2029 at Ba2 (LGD4) The outlook is stable RATINGS RATIONALE Mattel's Ba2 CFR reflects the company's improved but still elevated leverage and modest but improving profitability after several years of operating challenges. The rating is supported by the company's status as one of the largest toy makers in the world, a strong brand portfolio, and good geographic diversification. The suspension of the dividend in 2017 indicated a willingness to restore financial strength, and cost savings will continue to improve profitability. Management's target debt-to-EBITDA leverage of 2.0-2.5x (based on the company's definition this stood at 4.0x at end of 2020) indicates considerable scope for additional debt and leverage reduction from current levels. Mattel has transformed itself to a mostly asset light model, permanently reducing capex while maintaining control of production for certain brands which it deems critical. It has also fundamentally changed its approach to its business, pivoting from a company that historically was more of a toy manufacturer, to a strategy focused on enhancing the value of its intellectual properties though design led, culturally relevant innovation. It increasingly seeks to connect its owned brands with the consumer not just through advertising, but through brand driven content via partnerships with entertainment companies and game developers. This is driving increased demand for its products evidenced by the growth in sales and market share across much of its portfolio in 2020. While Moody's expects this strategic shift to continue to support better performance over time, there remain risks associated with toys including fashion risk, seasonality, product and channel concentration, product recall risks, dependence on certain entertainment licenses and the timing and success of entertainment releases, as well as shifting play patterns and consumer behavior. Given these risks, Moody's expects stronger liquidity and credit metrics for a given rating than for other, more predictable consumer products companies. ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS 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 Mattel 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 the rating agency'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. Volatility can still be expected in 2021 due to uncertain demand characteristics, channel disruptions, and supply chain disruptions. Social risk remains limited for Mattel, which is in line with the industry as a whole and is not a material factor in the rating. However, product safety issues can and do periodically warrant recalls which can also create legal and reputational risk, and the company must be on top of shifts in children's play patterns and preferences. Mattel's exposure to environmental risk is limited, which is in line with the industry as a whole. Mattel has a stated goal to achieve 100% recycled, recyclable or bio-based plastic Materials in all products and Packaging By 2030. In terms of governance, Mattel benefits from the transparency typically associated with publicly traded companies and a mostly independent board of directors. Financial policy has historically been conservative, notwithstanding high leverage that resulted from business and operational issues in recent years. The company's suspension of the divided and stated target to reduce leverage to 2.0-2.5x and restore investment grade ratings reflect an overall conservative financial policy aspiration. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's assumes in the stable outlook that the company will continue to grow profitability and free cash flow and reduce leverage. The rating could be upgraded if the company demonstrates continued good business momentum, improved profitability and growing free cash flow and if debt to EBITDA leverage is sustained below 3.5x. The rating could be downgraded if the company faces operational difficulties, liquidity weakens, debt to EBITDA is sustained above 4.5x or if it engages in large debt financed shareholder returns or acquisitions. The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020. Mattel, Inc., headquartered in El Segundo, California is a worldwide leader in the design, manufacture and marketing of toys. The company's core portfolio is comprised of brands such as Barbie, Fisher-Price, Hot Wheels, Matchbox, Thomas the Tank Engine, Mega Brands and American Girl. Mattel also derives a significant portion of its sales from entertainment properties licensed from Disney, Warner Bros., and other content owners. Net sales for the publicly-traded company for the 12 months ended December 31, 2020 approximated $4.6 billion. MATTEL INC: Moody's Upgrades CFR to Ba2 on Solid Progress --------------------------------------------------------- Moody's Investors Service upgraded Mattel, Inc.'s Corporate Family Rating to Ba2 from B1, its senior unsecured guaranteed bonds to Ba2 from B1, its senior unsecured unguaranteed bonds to B1 from B3 and speculative grade liquidity rating to SGL-1 from SGL-2. The rating outlook is stable. The following ratings were affected: Upgrades: Issuer: Mattel, Inc. Corporate Family Rating, Upgraded to Ba2 from B1 Probability of Default Rating, Upgraded to Ba2-PD from B1-PD Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 Guaranteed Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2 (LGD4) from B1 (LGD4) Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD6) from B3 (LGD6) Outlook Actions: Issuer: Mattel, Inc. Outlook, Remains Stable RATINGS RATIONALE The upgrade reflects solid progress on the company's multi-year turnaround plan with improved margins, operating profit, free cash flow and leverage. Debt to EBITDA fell to 4.5x by year end 2020 (including Moody's adjustments), despite significant challenges in the year related to COVID disruptions. This is well below the 5x level that Moody's had previously said could lead to an upgrade. The company more than doubled free cash flow and ended the year with cash balances of over $760 million, so that net debt-to-EBITDA leverage was a full turn lower at 3.5x. Moody's expects further progress in 2021 based on the significant cost take outs already achieved -- over $1 billion to date, a new optimization for growth initiative that will, together with other programs, reduce costs by another $250 million over the next three years, and strong brand momentum in many of its products exiting 2020. Moody's believes that Mattel can reduce debt to EBITDA to under 4x in 2021 and net leverage to around 3x. In addition to improved internal cash flow, the company's $1.6 billion covenant light revolver was unused at year end and the company has substantial unencumbered assets including most of its intellectual property, which could provide alternate liquidity. Mattel has transformed itself to a mostly asset light model, permanently reducing capex while maintaining control of production for certain brands which it deems critical. It has also fundamentally changed its approach to its business, pivoting from a company that historically was more of a toy manufacturer, to a strategy focused on enhancing the value of its intellectual properties though design led, culturally relevant innovation. It increasingly seeks to connect its owned brands with the consumer not just through advertising, but through brand driven content via partnerships with entertainment companies and game developers. This is driving increased demand for its products evidenced by the growth in sales and market share across much of its portfolio in 2020. While Moody's expects this strategic shift to continue to support better performance over time, there remain risks associated with toys including fashion risk, seasonality, product and channel concentration, product recall risks, dependence on certain entertainment licenses and the timing and success of entertainment releases, as well as shifting play patterns and consumer behavior. Given these risks, Moody's expects Mattel to have stronger liquidity and credit metrics for a given rating than other, more predictable consumer products companies. Mattel's Ba2 CFR reflects the company's improved but still elevated leverage and modest but improving profitability after several years of operating challenges. The rating is supported by the company's status as one of the largest toy makers in the world, a strong brand portfolio, and good geographic diversification. The suspension of the dividend indicated a willingness to restore financial strength, and cost savings will continue to improve profitability. Management's target debt-to-EBITDA leverage of 2.0 - 2.5x (based on the company's definition; 4.0x at end of 2020) indicates considerable scope for additional debt and leverage reduction from current levels. Environmental, Social and Governance considerations: 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 Mattel 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 the rating agency'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. Volatility can still be expected in 2021 due to uncertain demand characteristics, channel disruptions, and supply chain disruptions. Social risk remains limited for Mattel, which is in line with the industry as a whole and is not a material factor in the rating. However, product safety issues can and do periodically warrant recalls which can also create legal and reputational risk, and the company must be on top of shifts in children's play patterns and preferences. Mattel's exposure to environmental risk is limited, which is in line with the industry as a whole. Mattel has a stated goal to achieve 100% recycled, recyclable or bio-based plastic Materials in all products and packaging By 2030. In terms of governance, Mattel benefits from the transparency typically associated with publicly traded companies and a mostly independent board of directors. Financial policy has historically been conservative, notwithstanding high leverage that resulted from business and operational issues in recent years. The company's suspension of the divided and stated target to reduce leverage to 2.0- 2.5x reflect an overall conservative financial policy aspiration. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's assumes in the stable outlook that the company will continue to grow profitability and free cash flow and reduce leverage. The rating could be upgraded if the company demonstrates continued good business momentum, improved profitability and growing free cash flow and if debt to EBITDA leverage is sustained below 3.5x. The rating could be downgraded if the company faces operational difficulties, liquidity weakens, debt to EBITDA is sustained above 4.5x or if it engages in large debt financed shareholder returns or acquisitions. Mattel, Inc., headquartered in El Segundo, California is a worldwide leader in the design, manufacture and marketing of toys. The company's core portfolio is comprised of brands such as Barbie, Fisher-Price, Hot Wheels, Matchbox, Thomas the Tank Engine, Mega Brands and American Girl. Mattel also derives a significant portion of its sales from entertainment properties licensed from Disney, Warner Bros., and other content owners. Net sales for the publicly-traded company for the 12 months ended December 31, 2020 approximated $4.6 billion. The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020. MATTHEWS INTERNATIONAL: Moody's Completes Review, Retains Ba3 CFR ----------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Matthews International Corporation and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Matthews International Corporation's Ba3 Corporate Family Rating reflects the company's market leading position within the deathcare products and branding solutions segment, diversity of business lines and geographical diversity. Matthew's ratings are constrained by high financial leverage, historical appetite for debt funded acquisitions and shareholder return policies. Matthew's has been able to execute on cost savings and has successfully integrated acquired businesses, therefore, Moody's view integration risk to be mild. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. MEDICAL SOLUTIONS: Moody's Affirms B3 CFR on Continued Improvement ------------------------------------------------------------------ Moody's Investors Service affirmed Medical Solutions Holdings, Inc.'s B3 Corporate Family Rating, B3-PD Probability of Default Rating, B2 rating of first lien senior secured debt and Caa2 rating on the company's second lien debt. At the same time, Moody's changed the outlook to positive from negative. The change of outlook to positive reflects the company's resilience during the coronavirus pandemic and Moody's expectation of continued improvement in the company's financial metrics in the next 12-18 months. Moody's expects that in the absence of large-scale acquisition(s), the company's debt/EBITDA will decline below 6.0 times by the end of 2021. Ratings affirmed: Medical Solutions Holdings, Inc. Corporate Family Rating at B3 Probability of Default Rating at B3-PD $75 million first lien senior secured revolving credit facility expiring 2022 at B2 (LGD3) $641 million first lien senior secured term loan due 2024 at B2 (LGD3) $140 million second lien senior secured term loan due 2025 at Caa2 (LGD5 from LGD6) Outlook action: Medical Solutions Holdings, Inc. The rating outlook is changed to positive from negative. RATINGS RATIONALE The B3 CFR reflects Medical Solutions' high financial leverage and the execution risk associated with the company's aggressive acquisition strategy. The company's services are somewhat cyclical because hospitals and other healthcare facilities usually cut temporary staff first during an economic downturn before making cuts to their permanent staff. Moody's notes that despite the disruption of demand in deferrable procedures and emergency department volumes, the company's business has remained resilient primarily because of an offsetting increase in temporary staffing demand due to the coronavirus pandemic. The company's debt/EBITDA increased to nearly eight times (LTM Sept20) after the C&A Industries acquisition in October 2019. However, leverage is expected to decline below 7.0 times by year-end 2020, as synergies from C&A acquisition roll in and the impact of the coronavirus pandemic gradually ebbs. Going forward, Moody's expects that the company's leverage will continue declining to below 6.0 times by the end of 2021. Medical Solutions' ratings are supported by Moody's expectation that despite short-term volatility, longer-term demand for Medical Solutions' services will remain healthy. This is due to the aging demographics of the US population and the growing desire of hospitals to outsource the administration of their temporary staffing activities. Medical Solutions' ratings are also supported by the company's good liquidity. Moody's expects that the company will generate positive about $50 million of free cash flow in the next 12 months and will have access to largely unused $75 million revolver and cash balance, which was $54 million at the end of September 2020. There are no debt maturities in the next year, although the revolver expires in June 2022. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. In terms of governance risk, as a provider of clinical labor solutions, the company is exposed to reputational and compliance risks if the traveling staff is involved in malpractice or fraud. The company's financial policies are expected to remain aggressive reflecting its ownership by a private equity investor (funds owned by TPG Growth) FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if the company expands its scale and diversity without employing a more aggressive financial policy, and Moody's believes that debt to EBITDA will be sustained below 6.0 times. The ratings could be downgraded if the company faces challenges in integrating acquisitions, sustains weak operating performance due to poor execution or reduced demand for the company's services or if the company's free cash flow turns negative or liquidity weakens. Medical Solutions is a leading provider of contingent clinical labor to hospitals across the US. The company places contract nurses on assignment at hospitals, and in some cases, administers the entire short-term staffing needs (nurses and other specialists) of its clients. Medical Solutions also provides nursing solutions during labor disputes. Annual revenues are approximately $1.2 billion. The company is owned by funds managed by TPG Growth. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. MERCY HOSPITAL: Moody's Cuts Rating on 2011 Revenue Bonds to B1 --------------------------------------------------------------- Moody's Investors Service has downgraded Mercy Hospital's (Iowa City, IA) Series 2011 revenue bonds to B1 from Ba3. The downgrade affects approximately $29 million of rated debt. The outlook is revised to negative from stable. RATINGS RATIONALE The downgrade to B1 reflects the near term challenges that Mercy will face following the large operating loss in fiscal 2020, narrow headroom to the debt service covenant in fiscal 2020 and the pronounced December COVID surge, creating headwinds to return to historical levels of stronger financial performance. Further, an unexpected write down of prior period receivables will likely result in a restatement of fiscal year 2020 in conjunction with the fiscal 2021 audited financial statements. Mercy expects to be in compliance with the debt service covenant in 2020 and again in 2021, even with the write down of prior period receivables, with the CARES Act and other state funding received in fiscal 2021 to offset a portion of the revenue decline during 2021. Favorably, current cash levels remain ample, even when excluding the Medicare accelerated payments, although absolute and relative liquidity have declined by $45 million or 43 days over the past five years. Plans to install a new EMR system and high equity exposure will increase the risk of liquidity declining. Competition will remain a factor with a large academic medical center in the primary service area. RATING OUTLOOK The revision of the outlook to negative from stable reflects anticipated low headroom to the debt service covenant in fiscal 2021 as the system experienced a large surge in COVID cases in December. Another COVID surge in cases or the upcoming EMR installation could result in continued losses and decline in balance sheet metrics over the coming months. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING - Material and sustained improvements in operating performance - Significant growth of cash flow - Enterprise growth or expansion of geographic footprint - Widening and stabilization of headroom to financial covenants FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING - Breach of financial covenant - Liquidity decline or inability to sustain current cash flow levels - Challenges related to the EMR installation that place pressure on operating performance or liquidity LEGAL SECURITY The bonds are secured by a mortgage pledge on the Hospital and parking garages. Financial covenants include a 1.0 debt service coverage (1.15x for incremental debt) and 60 days cash on hand and failure to meet these covenants will require a consultant. A fully-funded debt service reserve fund on the Series 2011 will spring if days cash falls under 100. As required by the terms of the Series 2018 transaction, the Series 2011 bonds must maintain at least a B2 rating. Failure to maintain a rating of B2 or higher would not result in a default or acceleration of debt. The employed physician group is not part of the obligated group. PROFILE The Mercy Iowa City and Subsidiaries System includes a 194-bed Mercy Hospital, Mercy Services Iowa City and Mercy Hospital Foundation. The hospital is in Iowa City, Iowa. Consolidated operating revenues were approximately $200 million in fiscal 2020. METHODOLOGY The principal methodology used in this rating was Not-For-Profit Healthcare published in December 2018. MERCY HOSPITAL: State Faces Demands From Community to Vet Buyer --------------------------------------------------------------- Lauren Coleman-Lochner of Bloomberg News reports that Illinois refused to let bankrupt Mercy Hospital close; now the state is facing demands from the Chicago community for a voice in who will keep it open. Staffers, community members, patients and three former or current mayors from Flint, Michigan, defended a $1 offer from their hometown facility Insight Health Corp. at a public hearing Friday, March 12, 2021, held by the Illinois Health Facilities & Services Review Board. At the same time, a coalition of local healthcare providers made a rival offer to buy Chicago's oldest facility caring for the sickest patients. About Mercy Hospital and Medical Center Mercy Hospital and Medical Center -- http://www.mercy-chicago.org/ -- operates a general acute care hospital located at 2525 South Michigan Ave., Chicago. The hospital 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 are part of Trinity Health's network of health care providers. Mercy Hospital and Mercy Health System of Chicago sought Chapter 11 protection (Bankr. N.D. Ill. Lead Case No. 21-01805) on Feb. 10, 2021. Mercy Hospital estimated $100 million to $500 million in assets and liabilities as of the bankruptcy filing. Judge Timothy A. Barnes oversees the cases. Foley Lardner LLP, led by Matthew J. Stockl, is the Debtors' legal counsel. Epiq Corporate Restructuring, LLC is the claims, noticing, solicitation and administrative agent. The U.S. Trustee for Region 11 appointed an official committee of unsecured creditors in the Debtors' cases on March 3, 2021. The committee is represented by Perkins Coie, LLP. MICHAELS STORES: Moody's Completes Review, Retains Ba3 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Michaels Stores, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Michaels Stores, Inc.'s Ba3 corporate family rating is under review for downgrade reflecting that it has entered into a definitive a definitive agreement to be acquired by investment funds managed by affiliates of Apollo Global Management, Inc. in a deal valued at approximately $5 billion. The deal is subject to customary closing conditions and the receipt of regulatory approvals and it is expected to close in the first half of the Company's fiscal year. Moody's review will focus on Michaels' completion of the transaction, its final capital structure, future governance considerations particularly its financial strategies, including its willingness to de-leverage using excess cash and free cash flow under new private ownership. The principal methodology used for this review was Retail Industry published in May 2018. MISTER CAR: Moody's Completes Review, Retains B3 CFR ---------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Mister Car Wash Holdings, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Mister Car Wash Holdings, Inc.'s B3 corporate family rating considers its debt-financed acquisition strategy, which results in periodic spikes in leverage, and its aggressive sponsor-driven financial policy. Mr. Car Wash's ratings are constrained by its currently weak credit metrics particularly its very high leverage. Ratings also consider its solid operating performance driven by consistent positive same store sales, its history of successful growth through acquisitions, as well as the significant portion of revenues generated from its unlimited wash subscription business. In addition, the rating reflects the company's strong market position in the largely fragmented car wash sub-segment, which despite its limited scope is considered by Moody's to be an asset given its strength in its chosen markets. The rating is also supported by Moody's expectation that consumer demand for car washes will gradually recover from the disruption of the widespread location closures in the spring of 2020. The principal methodology used for this review was Retail Industry published in May 2018. MOBITV INC: Seeks to Hire Stretto as Claims Agent ------------------------------------------------- MobiTV, Inc. and MobiTV Service Corporation seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ Stretto as claims, noticing and solicitation agent. Stretto will oversee the distribution of notices and will assist in the maintenance, processing and docketing of proofs of claim filed in the Debtors' Chapter 11 cases. Prior to the petition date, the Debtors provided Stretto an advance in the amount of $10,000. Stretto will bill the Debtor no less frequently than monthly. The Debtor agreed to pay out-of-pocket expenses incurred by the firm. Sheryl Betance, a managing director at Stretto, disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Sheryl Betance Stretto 410 Exchange, Ste. 100 Irvine, CA 92602 Telephone: (714) 716-1872 Email: sheryl.betance@stretto.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. FTI Consulting, Inc. and FTI Capital Advisors LLC have been retained as the Debtors' 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 Debtors' legal counsel. Stretto is the claims agent, maintaining the page https://cases.stretto.com/MobiTV. MY FL MANAGEMENT: U.S. Trustee Unable to Appoint Committee ---------------------------------------------------------- The U.S. Trustee for Region 21, until further notice, will not appoint an official committee of unsecured creditors in the Chapter 11 case of MY FL Management LLC, according to court dockets. About My FL Management MY FL Management LLC owns Royal Beach Palace, a hotel located in the residential Lauderdale-by-the-Sea. Fort Lauderdale, Fla.-based MY FL Management sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 21-11028) on Feb. 2, 2021. Yuri Gnesin, manager, signed the petition. In the petition, the Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. Judge Scott M. Grossman oversees the case. The Debtor tapped Edelboim Lieberman Revah Oshinsky, PLLC as its legal counsel and Karlinsky & Golub CPAs, PLLC as its accountant. MYOMO INC: Incurs $11.5 Million Net Loss in 2020 ------------------------------------------------ Myomo, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $11.56 million on $7.58 million of revenue for the year ended Dec. 31, 2020, compared to a net loss of $10.71 million on $3.84 million of revenue for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $14.71 million in total assets, $3.14 million in total liabilities, and $11.56 million in total stockholders' equity. Revenue for the fourth quarter of 2020 was $3.8 million, an increase of 149% compared with the fourth quarter of 2019, due to a higher average selling price and a greater number of revenue units. Myomo recognized revenue on 97 units in the fourth quarter of 2020, an increase of 126% compared with the fourth quarter of 2019. This includes 13 direct billing units, which represented $0.4 million in revenue recognized upon delivery as those customers met the conditions for revenue recognition. Full year 2020 revenue of $7.6 million was up 98% over 2019. Gross margin for the fourth quarter of 2020 was 73%, compared with 72% for the fourth quarter of 2019. The increase primarily reflects a higher average selling price partially offset by cost of revenue recognized in the fourth quarter of 2020 for deliveries of units to patients expected to be recognized as revenue in future periods. The Company delivered 101 units to patients in the fourth quarter, including 97 recognized as revenue. Full year 2020 gross margin was 66%, compared with 63% in 2019. Operating expenses for the fourth quarter of 2020 were $4.5 million, an increase of 22% over the fourth quarter of 2019. The increase primarily reflects higher incentive compensation accruals and advertising costs. Full year 2020 operating expenses were $15.4 million, an increase of 17% over 2019. Operating loss for the fourth quarter of 2020 decreased to $1.7 million from $2.6 million for the fourth quarter of 2019. Net loss for the fourth quarter of 2020 was $1.7 million, or $0.36 per share, compared with a net loss of $2.8 million, or $4.81 per share, for 2019. Full year 2020 operating and net losses were $10.5 million and $11.5 million, respectively. Net loss for the full year 2020 includes a charge of $0.7 million related to the extinguishment of the Company's convertible note. Adjusted EBITDA for the fourth quarter of 2020 was negative $1.4 million, compared with negative $2.4 million for the fourth quarter of 2019. Full year 2020 Adjusted EBITDA was negative $9.7 million, compared with negative $9.8 million in 2019. Management Commentary "Fourth quarter revenue was not only a record, it also was equivalent to our full year 2019 revenue. This is a testament to the adaptability and execution of our team in light of the challenges presented by the COVID-19 pandemic," stated Paul R. Gudonis, Myomo's chairman and chief executive officer. "The strategic shift to direct billing implemented in late 2019 is supporting both revenue growth and margin improvement." Business Outlook "We expect revenue in the first quarter of 2021 to be higher year-over-year, but lower sequentially. This reflects the usual seasonality in our business, as well as the pull in of revenue into the fourth quarter of 2020 as a result of the acceleration of direct billing revenue for certain insurers where we have completed delivery and have sufficient history to assume collectability," said David Henry, Myomo's chief financial officer. "While we are planning for continued annual revenue growth this year, we expect a decrease in authorizations and orders in the first quarter resulting from lower lead generation in the last several months of 2020," added Mr. Gudonis. "We implemented changes in our advertising in the fourth quarter and we're seeing results from those efforts so far in the first quarter. Our field clinical staff is now focusing on growing the number of candidates in the pipeline. As a result, our pipeline is expanding rapidly, with nearly 300 candidates added so far in the first quarter. As our experience shows, it will take some time for these pipeline additions to become authorizations and orders." Liquidity Cash and cash equivalents as of Dec. 31, 2020 were $12.2 million. Cash used by operating activities was $1.2 million in the fourth quarter of 2020, which was the lowest level since the Company's IPO in 2017, prior to investments made to scale the business. Cash used by operations is expected to increase in the first quarter due to lower anticipated revenue and the payment of a deposit for inventory to one of the Company's contract manufacturing partners to support planned MyoPro unit volumes in 2021. In addition, capital expenditures are expected to higher in the first quarter due to leasehold improvements for the Company's new headquarters facility in Boston. The Company expects 2021 cash used in operations to follow a similar pattern as 2020, with higher usage of cash in the first half of the year and lower usage of cash in the second half. Our goal is to further reduce cash used by operating activities in 2021 compared to 2020. "With more than $7 million in proceeds received from the exercise of warrants so far during the first quarter of 2021, we believe we have sufficient cash to fund operations well into 2022," added Mr. Henry. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/Archives/edgar/data/1369290/000156459021012068/myo-10k_20201231.htm About Myomo Headquartered in Cambridge, Massachusetts, Myomo, Inc. -- http://www.myomo.com-- is a wearable medical robotics company that offers expanded mobility for those suffering from neurological disorders and upper limb paralysis. Myomo develops and markets the MyoPro product line. MyoPro is a powered upper limb orthosis designed to support the arm and restore function to the weakened or paralyzed arms of patients suffering from CVA stroke, brachial plexus injury, traumatic brain or spinal cord injury, ALS or other neuromuscular disease or injury. NATIONAL SMALL: Seeks Court Approval to Tap Bankruptcy Counsel -------------------------------------------------------------- National Small Business Alliance, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Columbia to employ Law Group International Chartered and its attorney, Eric Chibueze Nwaubani, Esq., as its legal counsel. The legal services to be rendered include: (a) assist and advise the Debtor relative to the administration of its Chapter 11 case; (b) advise the Debtor regarding its powers and duties in the continued management and operation of its business and property; (c) represent the Debtor before the bankruptcy court and advise the Debtor on pending court litigation, hearings, motions, and decisions; (d) review and advise the Debtor regarding applications, orders, and motions filed with the bankruptcy court by third parties; (e) attend meetings and represent the Debtor at all examination; (f) communicate with creditors and other parties-in-interest; (g) assist the Debtor in preparing legal papers; (h) confer with other professionals retained by the Debtor and other parties-in-interest; (i) negotiate and prepare the Debtor's Chapter 11 plan, related disclosure statement, and all related agreements and documents; and (j) perform all other necessary legal services in connection with the Debtor's case. The hourly rates of Law Group International Chartered's counsel and staff are as follows: Attorneys $275 - $300 Paralegals $120 - $135 Eric Nwaubani, Esq., the attorney who will be primarily engaged in this case, has agreed to reduce his hourly rate from $325 to $225. In addition, the firm will seek reimbursement for expenses incurred. Prior to the petition date, the Debtor, through its principal officer, Michael Holleran, provided a retainer in the amount of $3,262. Mr. Nwaubani disclosed in a court filing that he and the firm are "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Eric Nwaubani, Esq. Law Group International Chartered 1629 K Street, NW #300 Washington, DC 20006 Telephone: (202) 446 8050 Email: enwaubani391@gmail.com About National Small Business Alliance National Small Business Alliance, Inc. -- http://www.nsbamembers.org-- is a small business owners' membership association that provides a variety of critical services to thousands of small businesses. National Small Business Alliance sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.D.C. Case No. 21-00031) on Jan. 31, 2021. Michael Holleran, director and chief executive officer, signed the petition. At the time of the filing, the Debtor disclosed $1 million to $10 million in both assets and liabilities. Judge Elizabeth L. Gunn oversees the case. Law Group International Chartered, led by Eric Nwaubani, Esq., serves as the Debtor's legal counsel. NEENAH INC: Moody's Affirms Ba2 CFR Amid Global Release Transaction ------------------------------------------------------------------- Moody's Investors Service affirmed Neenah, Inc.'s Ba2 corporate family rating and Ba2-PD probability of default rating following the company's announcement that it has signed a definitive agreement to acquire Global Release Liners, S.L., the parent company of Industrias de Transformacion de Andoain, S.A. ("ITASA"), from Magnum Capital and other minority shareholders for EUR205 million in cash. The acquisition is expected to close in early April and is subject to customary conditions. Moody's also assigned a Ba2 rating to the proposed $450 million term loan due in 2028. The proceeds of the term loan and cash on hand will be used to fund the acquisition and repay the existing term loan and cover fees and expenses. The speculative grade liquidity rating remains SGL-2. All other ratings remain unchanged and Moody's will withdraw the rating on the existing term loan once the transaction closes. Moody's also changed the outlook to negative because of the uneven recovery in the company's technical product and fine paper segments, higher input costs and a doubling of the company's debt for the acquisition which may keep leverage elevated past 2022. Assignments: Issuer: Neenah, Inc. Senior Secured Term Loan, Assigned Ba2 (LGD4) Affirmations: Issuer: Neenah, Inc. Probability of Default Rating, Affirmed Ba2-PD Corporate Family Rating, Affirmed Ba2 Outlook Actions: Issuer: Neenah, Inc. Outlook, Changed To Negative From Stable RATINGS RATIONALE The affirmation of Neenah's ratings reflects Moody's views that the announced ITASA acquisition complements the company's existing specialty coating business and expands its faster growing technical products segment, offsetting the secular decline in the fine paper and packaging segment. However, the fully debt-funded transaction will result in elevated leverage metrics. Pro forma for the ITASA acquisition, Neenah's debt/EBITDA as adjusted by Moody's will increase to approximately 4.6x in the twelve months ended December 30, 2020 from about 2.9x and the balance sheet debt will more than double, reflecting a high multiple at which ITASA is valued. The acquisition is the largest transaction for Neenah in the past 10 years and the first under the new management team which publicly maintains the company's long-standing net leverage target of 2.5-3.0x. The company historically reinvested the majority of its operating cash flow in the business, while maintaining dividend growth and supplementing its organic growth with acquisitions funded with a combination of cash, free cash flow and borrowings. Following the acquisition, Moody's expects leverage to decline to around 4x in 2022 and to 3.6x in 2023 through EBITDA growth (Moody's adjustments add approximately a turn of leverage). Moody's assumes volume recovery in the technical products segment (roughly 60% of sales) as economies return to growth in the wake of the coronavirus pandemic. However, near-term Moody's expect ongoing weakness in the fine paper and packaging segment (roughly 40%) due to the continuation of remote work and education that exacerbate existing secular decline in graphic paper usage. In addition, higher pulp prices will negatively impact non-integrated paper producers like Neenah and continue to pressure operating margins, which are weak for the current rating. The acquired ITASA release liner business with operations in Spain, Mexico and Malaysia has higher margins and diverse end markets, both industrial, such as tapes and composites, and consumer, such as hygiene and labels, which should support its rebound in the wake of the coronavirus pandemic. The company also expects to realize some synergies from the acquisition. Even after the debt-funded acquisition, Moody's expect the company to remain free cash flow generative. Neenah's Ba2 corporate family rating reflects the company's strong market position in its niche specialty paper segments, long-term growth potential in the technical products business and historically conservative credit metrics and track record of free cash flow generation. However, earnings and margins peaked in 2016 and have been declining for a number of years even before the negative impacts of the coronavirus pandemic, which pressures the rating. The rating is constrained by the company's limited scale and lack of diversification relative to its peers, exposure to cyclical inputs and end markets and expectations for continued secular contraction in demand for printing and writing papers. Neenah is one of the smallest Ba-rated companies in the paper and forest products industry. The company is not backward-integrated into pulp used in its paper-making processes and thus is exposed to volatile softwood and hardwood pulp pricing as well as latex, natural gas, and rising freight costs. The Ba2 rating on the senior secured term loan is in line with the Ba2 CFR because it represents the majority of debt in the capital structure. The term loan is secured by the first priority lien on domestic non-current assets of the domestic material subsidiaries (including intellectual property, real property, machinery and equipment), the second priority lien on the current assets of the domestic subsidiaries that secure the revolver and the pledge of stock of foreign subsidiaries. The term loan is guaranteed by the company's material domestic subsidiaries. The SGL-2 speculative grade liquidity rating reflects Neenah's good liquidity position. The company had $37 million of cash on hand at 31 December 2020 and $139 million of availability under its $175 million asset-based revolver due in December 2023, which is subject to borrowing base calculations. The amended facility has a springing fixed charge coverage test set at 1.1 times if availability falls below $15 million or 10% of the maximum aggregate commitments of the revolver. The company would be able to meet its fixed charge covenant, but we do not expect it to be tested. Some of the assets are not encumbered by the asset-backed revolver and the term loan, providing some alternative liquidity. Moody's believes the company has established expertise in complying with moderate environmental and social risks and has incorporated procedures to address them in its operational and business models. The company is addressing the secular decline in printing and writing papers which we view as a social risk due to expansion of digital alternatives by growing its technical products business, closing, divesting or repurposing assets. Governance risks are low as Neenah is a public company with established and transparent reporting and conservative financial policies. The company's relatively new leadership has publicly maintained its conservative financial targets and is pursuing growth through acquisitions, as expected. The company would need to demonstrate margin improvement, strong EBITDA growth or use free cash flow to bring leverage in line with its own targets after the ITASA acquisition. The negative outlook reflects expectations of elevated leverage metrics over the next 12-18 months due to an uneven recovery in the company's technical product and fine paper segment, higher input costs and a doubling of the company's debt for the ITASA acquisition. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could downgrade the rating if adjusted debt/EBITDA exceeds 4x for a sustained period of time, the company cannot demonstrate EBITDA margin improvement toward 15% or if there is a prolonged weakness in some of the company's cyclical markets or changes in financial management. Upward rating momentum is unlikely due to the company's limited scale and diversification. An upgrade could be considered if the company significantly increases its scale and expands its product line, improves margins above 18% and demonstrates that they can be sustained, while also maintaining its strong credit metrics such as leverage sustained between 2.5-3x. The principal methodology used in these ratings was Paper and Forest Products Industry published in October 2018. Based in Alpharetta, Ga., Neenah, Inc. is a manufacturer of fiber-based technical products and fine paper and packaging products. The company generated revenues of approximately $793 million for the 12 months ending December 29, 2020 or approximately $913 million pro forma for the ITASA acquisition. NEONODE INC: Incurs $5.6 Million Net Loss in 2020 ------------------------------------------------- Neonode Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss attributable to the company of $5.6 million on $5.98 million of total revenues for the year ended Dec. 31, 2020, compared to a net loss attributable to the company of $5.30 million on $6.65 million of total revenues for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $16.57 million in total assets, $4.68 million in total liabilities, and $11.89 million in total stockholders' equity. Since Jan. 1, 2020, the Company has allocated revenues to three different business areas. Revenues allocated to HMI Solutions consist of license fees and related non-recurring engineering revenues while revenues allocated to HMI Products are derived from the sale of sensor modules and related non-recurring engineering revenues. The Company expects that future revenues within its Remote Sensing Solutions business area will be derived from license fees and non-recurring engineering revenues. Net revenue for fiscal 2020 was $6.0 million, a 10.0% decrease, compared to 2019. For 2020, HMI Solutions revenues were $5.0 million, a decrease of 17.6% compared to 2019. This is primarily due to lower license fees from the Company's automotive and consumer electronics customers. These decreases were partially offset by an increase in NRE fees for prototype work related to military avionics projects. The Company's HMI Products revenues were $1.0 million, an increase of 66.8% compared to 2019. This is due to larger volumes of the Company's sensor modules being shipped to its distributors and customers designing and selling medical devices, airport baggage trolleys and contactless touch solutions for elevators and self-service kiosks, which incorporate our sensor modules. The Company continues to earn revenues from the sale of its AirBar products, however the number of AirBar units sold continues to decrease over time. The Company's combined total gross margin was 82.0% in 2020 compared to 89.7% in 2019. The decrease in total gross margin in 2020 as compared to 2019 is primarily due to the change in the mix of the components of overall revenue with an increase in sales of sensor modules and NRE revenues which have a lower overall gross margin compared to the 100% gross margin license fee business. The Company's operating expense decreased slightly in 2020 compared to 2019 and its overall operating expenses remain within budget. In fiscal 2020, the Company's cash used by operations was $5.8 million compared to $3.5 million in fiscal 2019. Cash and accounts receivable totaled $12.2 million and working capital was $10.4 million as of Dec. 31, 2020 compared to $3.7 million and $2.4 million as of Dec. 31, 2019, respectively. CEO's Comments "My first year as CEO has been characterized by periods of frustration and at the same time great satisfaction. We had to navigate some definite headwinds in 2020, including not only the general global economic downturn caused by the COVID-19 pandemic but also the effects of the world going on lockdown, which brought on new challenges for our business development work and slowed decision making processes at most of our customers. However, the pandemic also created an unexpected opportunity for us to leverage existing products and knowhow in contactless touch applications. This is a new market for which we feel we are uniquely positioned to provide the perfect technology solution with our Touch Sensor Modules. Building on this we have identified and engaged with several new customers and partners in Asia, Europe, North America, and other parts of the world that will help us increase our product sales significantly in the coming years. During the year we have also recruited several new, strong members to our Sales and Engineering teams, who are driving our efforts to capitalize on the growing opportunities in current and new markets. Coming out of 2020, we feel we are well positioned with a very good team, a strong technology and IP portfolio, a well-recognized brand, and an impressive and growing customer list, which we will capitalize on in 2021 and the coming years," said Dr. Urban Forssell, CEO of Neonode. "Although our license revenue from existing legacy customers decreased in 2020 compared to the prior year, we are encouraged by positive customer interest in our technology and solutions offerings in the Military & Avionics, Industrial, and Automotive market segments. We are engaged with several customers in these markets and have identified several application areas where we believe our technology is very competitive and adds value, which we will use to grow our solutions and licensing businesses in the coming years. Our presence in the new market for contactless touch continues to grow. Here our focus is on the Interactive Kiosk and Elevator market segments and we are addressing these markets both directly with our Sales team and indirectly via different types of partners, mainly value-added resellers and distributors. Growth in contactless touch for kiosks and elevator is currently led by our customers and partners in Asia with a growing demand in Europe and North America. Customers and partners in China and Singapore have installed aftermarket solutions in elevators and public space kiosks in airports, hospitals and hospitality businesses and are now installing new contactless-touch-enabled devices in hospitals, train stations and other locations. In Japan and South Korea our partners are increasing the number of devices incorporating our sensor modules in elevators and kiosks in both retrofit and new OEM applications. Europe and North America are not far behind. We strongly believe the increasing demand related to these customer activities will define 2021 as the transition year in our drive to profitability," concluded Dr. Forssell. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/Archives/edgar/data/87050/000121390021014481/f10k2020_neonodeinc.htm About Neonode Neonode Inc. (NASDAQ:NEON) -- http://www.neonode.com-- develops user interface and optical interactive touch and gesture solutions. Its patented technology offers multiple features including the ability to sense an object's size, depth, velocity, pressure, and proximity to any type of surface. NORDAM GROUP: Fitch Lowers LongTerm IDR to 'CCC+' ------------------------------------------------- Fitch Ratings has downgraded The NORDAM Group LLC's Long-Term Issuer Default Rating (IDR) to 'CCC+' from 'B'. Fitch has also downgraded the ratings of NORDAM's senior secured ABL facility to 'B+'/'RR1' from 'BB'/'RR1' and the term loan B to 'B'/'RR2' from 'BB'/'RR1'. The downgrade reflects the significant deterioration of the company's financial metrics during the current aviation downturn that resulted from the coronavirus pandemic, and expectation that these metrics will remain weak for the 'B' category over the intermediate term. NORDAM's leverage exceeded 11x at YE 2020 based on the company's preliminary results and is likely to further increase in 2021 as commercial and business aviation markets remain pressured. Fitch believes leverage metrics will likely remain elevated above 6x until at least 2023 as end markets begin to approach pre-pandemic levels. The two-notch downgrade was also driven by the risk that continued negative FCF beyond 2021 could result in liquidity constraints that further pressure the credit profile, particularly in case of a delayed recovery. These risks were partially offset by NORDAM's adequate near-term financial flexibility, which is reinforced by approximately $19 million of cash and $70 million of ABL availability at YE 2020, which should be sufficient to cover expected negative FCF through 2021. The company also has a strong portfolio of sole source contracts, which are vital to its customers and provides the company with a strategic position within the aerospace industry. KEY RATING DRIVERS Operating Headwinds: NORDAM's preliminary full year 2020 results were materially weaker than Fitch's expectation, with revenue declining approximately 28% due to significant weakness in commercial aerospace maintenance, repair and overhaul (MRO)and manufacturing operations that stemmed from the coronavirus-driven downturn. EBITDA margins declined beyond Fitch's prior expectations while FCF remained negative. Fitch expects that the company will remain challenged in 2021, with revenue declining in the mid-single-digits as commercial aerospace markets continue to experience softness. Fitch expects the global aerospace market will begin to show signs of recovery in late 2021 with a return to pre-pandemic travel levels by the end of 2023. The near-term pressures are somewhat mitigated by the company's strong liquidity position, which limits the possibility of default over the near term. Leverage is a Near-Term Outlier: Fitch estimates NORDAM's leverage increased to approximately 11x at YE 2020 from 4.1x at YE 2019 due to the decline in EBITDA that resulted from the sharp downturn in commercial aerospace. Leverage is unlikely to improve materially until 2023 or 2024 due to lower projected aircraft production rates and MRO services demand. While leverage will be high for the rating through the near term, the company is not subjected to a leverage covenant under its credit agreements, and Fitch believes NDM's strategic position in the industry with a high-percentage of sole source contracts supports recovery with the overall market. Adequate Financial Flexibility: Fitch believes that NORDAM has adequate liquidity and financial flexibility in the near term that is more consistent with the 'B' category. The company had cash of approximately $19 million at YE 2020, which was supported by $54 million of CARES Act funds received in the year, with an additional $40 million awarded in the first quarter of 2021. The company also had ABL availability of approximately $70 million at YE 2020. Despite the near-term pressures, the company has sufficient liquidity headroom due to manageable debt amortization of $2.5 million per year, lack of material near-term maturities and a fixed charge coverage covenant of 1.1x that springs only if ABL availability is less than $10 million. Uncertain Time Frame to Positive FCF: NORDAM's cash flow was significantly negative from 2016 to 2019 due to cost overruns related to the PW800 program that ultimately led the company to declare Chapter 11 bankruptcy in July 2018, with emergence in April 2019. Fitch had previously expected NORDAM to generate positive FCF of approximately 1.5% of annual revenue beginning in 2020, however, the steep decline in revenue and continued investment in engineering led to negative FCF despite improvements in working capital management. Fitch expects continued negative FCF in 2021, and the path to positive FCF is dependent on end market recovery, cost control, and management of working capital expansion. Liquidity and financial flexibility could become constrained if FCF remains negative beyond 2021. Customer Concentration, Increasing Diversification: Fitch views the company's customer concentration as a credit negative; however, the blue-chip nature and NDM's long term relationships with these customers somewhat offsets the risk. Fitch estimates that the top 10 customers accounted for approximately 65% of 2020 revenue. NORDAM has historically generated the majority of its revenue from the business jet market, which has proven to be significantly more cyclical than the commercial and military aviation markets over the last decade, though Fitch expects the company to execute on its plan to continue improving its business mix and diversification over the next few years. Small Size, Limited Scale: Fitch views NORDAM's size and scale as limiting factors to its credit profile. Larger companies are able to more easily absorb cost overruns and changes in production rates in the face of adverse market conditions or contract terms. The company's lack of scale ultimately led to bankruptcy when one program, the PW800, experienced significant regulatory approval delays. However, Fitch believes cost overruns similar to the magnitude of those experienced between 2017 and 2018 are less likely to occur in the intermediate term, as the company is not currently exposed to a contract the size of the PW800. Strategic Position: NORDAM's strategic position as a niche supplier to the aerospace and defense industry supports the 'B' category rating. The company generates approximately 70% of its manufacturing revenue and 40% of its MRO revenue through sole-source contracts, which provide a heightened level of confidence in future profitability and cash flow. NDM's pipeline for growth has become less certain due to the pandemic-driven downturn. However, the company plans to target programs with smaller size and exposure than the PW800, which will limit any significant improvement to scale that would help materially mitigate individual project risk without pursuing acquisitions. DERIVATION SUMMARY The NORDAM Group, LLC is one of the smaller suppliers in Fitch's aerospace and defense portfolio, lacking meaningful size and scale compared to peers such as Spirit Aerosystems, Inc. (Not Publicly Rated). The company compares well to other private aerospace companies. NORDAM has a fundamentally stronger credit profile than Sequa Corporation (CCC+/Negative); with lower historical leverage and a path to positive FCF generation, which is an important factor for the rating category. Compared to StandardAero parent Dynasty Acquisition Co., Inc., (B-/Stable), NORDAM has similar historical margins, but may experience a higher degree of cyclicality due to its manufacturing operations and smaller scale. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Revenue declines by mid-single-digits in 2021 due to continued weakness in commercial and business aviation; -- Recovery begins in 2022 as aircraft production rates begin to increase and demand for MRO services return; -- EBITDA margins stall in the mid-single digits in 2021, with expansion in 2022; -- Capex, including the purchase of rotables, totals between 3.5% to 4.0% of annual revenue; -- FCF is negative in 2021; -- Liquidity remains adequate through the near term. Recovery Assumptions The recovery analysis assumes that NORDAM would be considered a going concern (GC) in bankruptcy and that the company would be reorganized rather than liquidated. A 10% administrative claim is assumed in the recovery analysis. In Fitch's recovery analysis, potential default is assumed to come from a combination of one or more of the following scenarios: a materially negative hit to the company's reputation affects its ability to retain contracts or win new business; certification or design delays cause several periods of large cash outflows; or a significant disruption to the aerospace and defense industry that materially affects production. Fitch's recovery assumptions are based on NORDAM's high percentage of sole source contracts, program diversification, and long-term relationships with key OEMs. Fitch also considered the meaningful execution risk and potential for cost overruns. Fitch assumes $50 million as the GC EBITDA in the analysis, representing Fitch's estimate of post-downturn earnings. Fitch believes a GC EBITDA greater than 2020 EBITDA is appropriate in this instance, due to the highly cyclical nature of the industry, particularly following one of the greatest aviation downturns in history as a result of the coronavirus pandemic and based on Fitch's assumption that liquidity/refinancing issues, rather than a further deterioration in the business, would be the catalyst for a restructuring. The actual emergence EBITDA for the company's recent bankruptcy in 2019 was $69 million, which included $16 million of additional annual cost savings expected to be realized following actioned headcount reductions and other measures; however, a future bankruptcy would likely be driven by contract cost overruns or significantly deteriorated end markets. Fitch assumes NORDAM will receive a GC recovery multiple of 6.0x EBITDA under this scenario. Fitch calculates the enterprise value (EV) multiple used in the actual NORDAM bankruptcy at approximately 7.5x. The company received $250 million in debt financing through a term loan B, with an equity valuation of $311 million based on Carlyle's purchase of a 45% stake for $140 million. NORDAM's creditors received a 100% recovery in conjunction with their restructuring. Another bankruptcy would further diminish the value prospects of the company resulting in a lower multiple. Fifty-six percent of industrial and manufacturing defaulters had exit multiples in the range of 5.0x to 8.0x according to the "Industrial, Manufacturing, Aerospace and Defense Bankruptcy Enterprise Values and Creditor Recoveries" report published by Fitch in December of 2020. Within the report, Fitch observed that approximately 90% of the bankruptcy cases analyzed were resolved as a GC. Most of the defaulters observed in the Fitch report were smaller in scale, had less diversified product lines or customer bases and were operating with leveraged capital structures. Fitch assumes the company's $100 million ABL revolver was 85% drawn, which demonstrates the contraction of the borrowing base as a company becomes distressed. This is in line with other companies observed in Fitch's various bankruptcy case studies. The 'B+' rating and Recovery Rating of 'RR1' on the ABL revolver are based on Fitch's recovery analysis under a GC scenario, which indicates outstanding recovery prospects in the range of 91% to 100%. The 'B' rating and Recovery Rating of 'RR2' on the company's first lien term loan B would indicate strong recovery prospects for the credit facility in the range of 71% to 90%. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The company executes on its diversification strategy which leads to increased size and scale; -- Leverage (total debt/EBITDA) sustains below 6.5x; -- FFO interest coverage sustains around or above 1.5x; -- Sustained neutral to positive FCF. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The ABL borrowing base is reduced to the point where liquidity may be constrained; -- FCF remains negative in 2022 and beyond; -- FFO interest coverage sustains below 1.0x. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Fitch expects that NORDAM will have sufficient liquidity to cover near term expenses without additional external sources. Liquidity as of Dec. 31, 2020 consisted of approximately $70 million of availability on the $100 million ABL revolver and cash of $19 million. Liquidity was supported in 2020 by $54 million of CARES Act payroll support grants, of which $7.3 million was in the form of a long-term note payable. Liquidity was further bolstered in the first quarter of 2021 with the receipt of $16 million of CARES Act funds in February and $24 million awarded in March. Fitch believes this is adequate, along with internally generated cash, to cover amortization of $2.5 million per year and capex. Liquidity could be constrained if the ABL experiences significant borrowing base reductions. Debt Structure: NORDAM's debt structure at YE 2020 consisted of a $246 million term loan B balance and no borrowings under the $100 million ABL revolver. The term loan is priced at LIBOR + 550bp with 1% annual amortization, with a maturity date of April 2026. The ABL revolver is subject to a pricing grid of LIBOR + 175 to 225bps depending on a fixed-charge coverage ratio with maturity in April 2024. Additionally, as of YE 2020 the company had approximately $8 million of other borrowings tied to its European operations, and a $7.3 million 10-year note related to CARES Act funding. In 1Q21, the company incurred an additional $7 million long-term note tied to CARES Act funds. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. NORWEGIAN AIR: Hits Chapter 15 Bankruptcy in New York ----------------------------------------------------- Norwegian Air Shuttle ASA filed for Chapter 15 bankruptcy protection in New York on Friday, March 12, 2021. Norwegian is one of the largest airline carriers in Europe and among the ten largest in the world, with a route network connecting North America, South America, Europe, North Africa, the Middle East, and Southeast Asia. It commenced examinership proceedings in Ireland in November 2020 and reconstruction proceedings in Norway in December 2020. On March 11, 2021, the examiner appointed in Norweigian's examinership proceedings proposed two schemes of arrangement -- one for Norwegian, and a related scheme on substantially similar terms for certain subsidiaries of Norwegian in the Irish Examinership Proceeding, including Arctic Aviation Assets DAC -- the effect of which will be to reduce the reorganized Debtors' total debt and to raise new capital through a combination of a public offering and a private placement to certain investors and existing creditors. Shareholders and creditors are scheduled to vote on the Schemes on March 18, 2021, March 19, 2021, and March 20, 2021. It is expected that the Irish Court will approve the Schemes on or about March 26, 2021. On March 11, 2021, the reconstructor appointed in the reconstruction proceedings in Norway sent a final Reconstruction plan to creditors. The proposed Reconstruction Plan reflects the terms and substance of the Norwegian Scheme, and the vote will track the vote solicited on the Norwegian Scheme. The voting period on the Reconstruction Plan is expected to last for approximately two weeks, and the Norwegian Court is expected to sanction the Reconstruction Plan on or about April 15, 2021. The Foreign Representative submits that recognition and enforcement of the Foreign Proceedings, the Schemes, the Reconstruction Plan, and the orders entered by the Irish Court and the Norwegian Court is necessary to protect the Debtors' assets in the United States, and will facilitate the Debtors' overall restructuring and achieve the objectives of chapter 15 About Norwegian Air Shuttle ASA Founded in 1993, Norwegian Air Shuttle ASA is a Norwegian low-cost airline and Norway's largest airline. Norwegian was incorporated on Jan. 22, 1993, and became a publicly listed company on Oslo Børs (the Oslo Stock Exchange in Norway) in 2003. Norwegian's headquarters and primary operations are located in Lysaker, Norway. To restructure its business and survive the coronavirus pandemic, Noweigian Air sought bankruptcy protection from its creditors on Nov. 18, 2020. The airline filed for examinership in Ireland, which is where its aircraft assets are held. The Irish Court-appointed Kieran Wallace as examiner. The Irish examinership proceeding is a court-controlled reorganization process under Irish law in which a company that has, or in the foreseeable future will have, serious financial difficulties may file for reorganization and have an independent person appointed as an examiner to formulate proposals for a scheme of arrangement, which is akin to a chapter 11 plan of reorganization. As certain creditors continued to pursue claims against Norwegian after the Irish Examinership Proceeding commenced, Norwegian considered it necessary to also commence the Reconstruction Proceeding to obtain certain protections in Norway. On Dec. 8, 2020, Norwegian entered into the Reconstruction Proceeding before the Norwegian Court. The Norwegian Court issued an order appointing Havard Wiker of the law firm Ro Sommernes as Chairman of the Debt Restructuring Committee to oversee the operations of Norwegian and granting certain relief in connection with the Reconstruction Proceeding. On Feb. 26, 2021, the Norwegian Court issued an order appointing Geir Karlsen as the Foreign Representative of the Reconstruction Proceeding. Norwegian Air, along with affiliate Arctic Aviation Assets DAC, filed a Chapter 15 bankruptcy petition in New York (Bankr. S.D.N.Y. Case No. 21-10478) on March 12, 2021, to seek U.S. recognition of its restructuring proceedings in Ireland. Weil, Gotshal & Manges LLP, led by Kelly DiBlasi, is the Company's counsel in the U.S. case. OCULAR THERAPEUTIX: Incurs $155.6 Million Net Loss in 2020 ---------------------------------------------------------- Ocular Therapeutix, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss and comprehensive loss of $155.64 million on $17.40 million of net total revenue for the year ended Dec. 31, 2020, compared to a net loss and comprehensive loss of $86.37 million on $4.23 million of net total revenue for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $261.86 million in total assets, $185.76 million in total liabilities, and $76.09 million in total stockholders' equity. Since inception, the Company has incurred significant operating losses. As of Dec. 31, 2020, the Company had an accumulated deficit of $539.3 million. As of Dec. 31, 2020, the Company had cash and cash equivalents of $228.1 million, notes payable of $25.0 million face value and senior subordinated convertible notes of $37.5 million par value, plus accrued interest of $4.2 million. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1393434/000155837021002813/ocul-20201231x10k.htm About Ocular Therapeutix Headquartered in Bedford, MA, Ocular Therapeutix, Inc. -- http://www.ocutx.com-- is a biopharmaceutical company focused on the formulation, development, and commercialization of innovative therapies for diseases and conditions of the eye using its proprietary bioresorbable hydrogel-based formulation technology. Ocular Therapeutix's first commercial drug product, DEXTENZA, is FDA-approved for the treatment of ocular inflammation and pain following ophthalmic surgery. OPTION CARE: Incurs $8.1 Million Net Loss in 2020 ------------------------------------------------- Option Care Health, Inc. filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $8.07 million on $3.03 billion of net revenue for the year ended Dec. 31, 2020, compared to a net loss of $75.92 million on $2.31 billion of net revenue for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $2.64 billion in total assets, $1.63 billion in total liabilities, and $1.01 billion in total stockholders' equity. John C. Rademacher, chief executive officer, commented, "I am incredibly proud of the effort and execution by the Option Care Health team in the face of an exceptionally challenging year. In addition to delivering strong financial results, the team continued to focus on integration efforts and laying the groundwork for future growth while always remaining focused on the thousands of patients relying on us for critical therapy every single day." Fourth Quarter 2020 Financial Highlights * Net revenue of $804.7 million, up 11.6% compared to $720.8 million in the fourth quarter of 2019 * Gross profit of $183.8 million, or 22.8% of revenue, up 4.6% compared to $175.6 million, or 24.4% of revenue, in the fourth quarter of 2019 * Net income of $17.8 million, or $0.10 earnings per share, compared to net loss of $15.8 million, or $0.09 loss per share, in the fourth quarter of 2019 * Adjusted EBITDA of $67.7 million, up 27.7% compared to $53.0 million in the fourth quarter of 2019 * Cash flow from operations of $25.7 million, up 12.1% compared to $22.9 million in the fourth quarter of 2019 * Cash balances of $99.3 million at the end of the fourth quarter and no outstanding borrowings on the Company's $175.0 million revolver A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1014739/000101473921000011/bios-20201231.htm About Option Care Health Option Care Health, together with its wholly-owned subsidiaries, provides infusion therapy and other ancillary health care services through a national network of 145 locations around the United States. The Company contracts with managed care organizations, third-party payers, hospitals, physicians, and other referral sources to provide pharmaceuticals and complex compounded solutions to patients for intravenous delivery in the patients' homes or other nonhospital settings. Its services are provided in coordination with, and under the direction of, the patient's physician. Its multidisciplinary team of clinicians, including pharmacists, nurses, dietitians and respiratory therapists, work with the physician to develop a plan of care suited to each patient's specific needs. The Company reported a net loss of $6.11 million for the year ended Dec. 31, 2018. PACIFIC LINKS: U.S. Trustee Unable to Appoint Committee ------------------------------------------------------- The U.S. Trustee for Region 15 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 cases of Pacific Links US Holdings Inc. and its affiliates. About Pacific Links U.S. Holdings Pacific Links US Holdings, Inc. is a golf club that offers global reciprocal programs to members and participating clubs. Pacific Links US Holdings sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Hawaii Case No. 21-00094) on Feb. 1, 2021. Affiliates that also sought Chapter 11 protection are Hawaii MVCC LLC, Hawaii MGCW LLC, MDRE LLC, MDRE 2 LLC, MDRE 3 LLC, MDRE 4 LLC, and MDRE 5 LLC. On Feb. 2, the court authorized the jointly administration of the cases under Case No. 21-00094. At the time of the filing, Pacific Links had estimated assets of between $50,000 and $100,000 and liabilities of between $50 million and $100 million. Choi & Ito and Tsugawa Lau & Muzzi LLLC serve as the Debtors' bankruptcy counsel and special litigation counsel, respectively. PACKERS HOLDINGS: Moody's Completes Review, Retains B3 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Packers Holdings, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Packers Holdings, LLC's B3 Corporate Family Rating reflects high financial leverage, aggressive financial policy consisting of shareholder distributions and an appetite for debt funded M&A activity. The company benefits from a long operating history, key relationships with food processing constituents and the contractual nature of the business. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. PALMS NL CONDOMINIUM: Seeks Court Approval to Hire CRO ------------------------------------------------------ The Palms NL Condominium Association, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Leigh Hoffman, a certified property manager and owner of LH Alliance, Inc., as its chief restructuring officer. Mr. Hoffman will render these services: (a) prepare the Debtor's bankruptcy documents as required by the court; (b) prepare monthly operating reports; (c) prepare the Debtor's Chapter 11 plan of reorganization; (d) prepare the Debtor's budget to meet its operating expenses and propose a Chapter 11 plan; (e) manage claims review and objection process in Chapter 11 case; (f) implement the Debtor's Chapter 11 plan and budget; (g) manage the Debtor's accounts receivable; (h) manage and direct litigation that may be brought by or against the Debtor in bankruptcy court or state court; and (i) direct the Debtor's budget. Mr. Hoffman will be compensated at his hourly rate of $275. Mr. Hoffman disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Leigh Hoffman LH Alliance, Inc. 8751 W. Broward Blvd., Ste. 400 Plantation, FL 33324 Telephone: (954) 473-4733 About The Palms NL Condominium Association The Palms NL Condominium Association, Inc. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-12227) on March 8, 2021, listing under $1 million in both assets and liabilities. Judge Scott M. Grossman oversees the case. The Debtor tapped Hoffman, Larin & Agnetti, PA, led by Michael S. Hoffman, Esq., as its bankruptcy counsel and Leigh Hoffman as its chief restructuring officer. PALMS NL CONDOMINIUM: Seeks to Hire Hoffman Larin as Legal Counsel ------------------------------------------------------------------ The Palms NL Condominium Association, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Hoffman, Larin & Agnetti, PA as its bankruptcy counsel. The firm will render these legal services: (a) advise the Debtor regarding its duties under the Bankruptcy Code; (b) advise the Debtor regarding its responsibilities in complying with the U.S. trustee's operating guidelines and reporting requirements and with the rules of the court; (c) prepare legal papers; (d) protect the interest of the Debtor in all matters pending before the bankruptcy court; (e) represent the Debtor in negotiations with creditors; and (f) propose and seek confirmation of a plan of reorganization. The firm received $12,000 retainer from the Debtor which was used to pay for pre-bankruptcy expenses, leaving a balance of $8,200. Michael Hoffman, Esq., a partner at Hoffman, Larin & Agnetti, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Michael S. Hoffman, Esq. Hoffman, Larin & Agnetti, PA 909 North Miami Beach Blvd., Suite 201 North Miami Beach, FL 33162 Telephone: (305) 653-5555 Facsimile: (305) 940-0090 Email: mshoffman@hlalaw.com About The Palms NL Condominium Association The Palms NL Condominium Association, Inc. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-12227) on March 8, 2021, listing under $1 million in both assets and liabilities. Judge Scott M. Grossman oversees the case. The Debtor tapped Hoffman, Larin & Agnetti, PA, led by Michael S. Hoffman, Esq., as its bankruptcy counsel and Leigh Hoffman as its chief restructuring officer. PAPER SOURCE: U.S. Trustee Appoints Creditors' Committee -------------------------------------------------------- The U.S. Trustee for Region 4 appointed a committee to represent unsecured creditors in the Chapter 11 cases of Paper Source Inc. and its affiliates. The committee members are: 1. Brookfield Properties Retail, Inc. 350 North Orleans Street, Suite 100 Chicago, IL 60654 2. Hachette Book Group USA 53 State Street Boston, MA 02109 3. Rifle, Inc. d/b/a Rifle Paper Co. 558 West New England Avenue, Suite 150 Winter Park, FL 32789 4. FedEx Corporate Services, Inc. 3680 Hacks Cross Road, Building H Memphis, TN 38125 5. Metropolitan Transportation Authority 2 Broadway New York, NY 10004 Official creditors' committees serve as fiduciaries to the general population of creditors they represent. They may investigate the debtor's business and financial affairs. Committees have the right to employ legal counsel, accountants and financial advisors at a debtor's expense. About 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 e-commerce website. Its administrative headquarter is in Chicago. Paper Source and Pine Holdings, Inc. sought Chapter 11 protection (Bankr. E.D. Va. Case No. 21-30660) on March 2, 2021. At the time of the filing, the Debtor disclosed assets of between $100 million and $500 million and liabilities of the same range.The Hon. Keith L. Phillips is the case judge. The Debtors tapped Willkie Farr & Gallagher LLP and Whiteford Taylor & Preston LLP as bankruptcy counsel, M-III Advisory LP as restructuring advisor, SSG Capital Advisors LLC as investment banker, and A&G Real Estate Partners as real estate advisor. Epiq Corporate Restructuring, LLC is the claims agent. PARKLAND CORP: Fitch Rates Proposed CAD Unsecured Notes 'BB/RR4' ---------------------------------------------------------------- Fitch Ratings has assigned a rating of 'BB'/'RR4' to Parkland Corporation's proposed issuance of Canadian dollar-denominated senior unsecured notes. Proceeds will be used for the refinancing of senior unsecured notes maturing in 2024 and 2025. Parkland's ratings and Stable Outlook reflect its unique business characteristics as a fully integrated downstream petroleum company, which features a strong retail fuel presence in Canada and the Caribbean and a growing presence in the U.S. as well as supporting distribution and logistics businesses and small relative refining operations. Fitch views the long-term cash flow stability gained through Parkland's integrated operations and diversified asset base as supportive of credit quality. The company has grown measurably over the past few years, 2020 aside, through a combination of acquisitions, a few large and many small, including compelling synergy capture, and steady capital spending on organic initiatives. Risks remain as the lasting impact of the measures taken to control the spread of the coronavirus continue to unfold in the marketplace. The 'RR4' rating for the senior unsecured notes reflects Fitch's expectation for 'Average' recovery for the debt security in the event of default. KEY RATING DRIVERS Resilient 2020: Volumes declined meaningfully and rapidly across Parkland's businesses during the first and second quarters of 2020 in response to stay-at-home orders put in place to combat the spread of the coronavirus. The large YOY product volume decreases experienced in the first few months of the pandemic proved temporary and full-year 2020 volumes ended up down 12% in Canada and down only 3% in International, compared to 2019, both better than Fitch expected. Furthermore, higher than anticipated margins in Canada and the U.S. led to EBITDA, and consequently leverage, that was much better than previous Fitch targets. The Fitch forecast contemplates a continued return to a sustainable operating environment, including a return to driving patterns near levels seen prior to the spread of coronavirus in North America and the Caribbean, occurring over the next 12 months to 24 months. Capturing Margin Along the Value Chain: Parkland has a strong and established retail footprint in Canada and the Caribbean and a small but growing presence in the U.S. and is able to drive value through the system by creating and exploiting cost/supply advantages. These advantages come via downstream integration, allowing Parkland to secure attractive margins in of support consistent cash flow generation. The downstream integration advantages are meaningful versus nonintegrated fuel retailer peers. Parkland's diversified business model and vertical integration also help smooth some of the volatility that is common in the refining space, supporting higher credit quality versus standalone refiner peers. Parkland's own retail outlet for finished product sourced both internally and externally, and its capability to move, store and deliver that product to customers provide the company with an offset, and a simple buffer to the cyclical lows that are inherent in the refining industry. Diverse Portfolio: Parkland has approximately 1,850 retail service stations across Canada and just under 500 in the Caribbean. Additionally, the company has approximately 435 retail locations in the U.S. Parkland's retail and commercial franchises display size and scale advantages and geographic and product diversification. Parkland has regionally relevant brands in close proximity to the major population centers. The company cites that roughly 85% of Canadians live within a 15 minute drive of a Parkland service station. Parkland has a dominant position in many of the Caribbean countries where it operates, meaningful shipping capabilities, and control of essential distribution and supply assets, garnering regulated margins on roughly 45% of the international business for onshore volumes only. Size/scale in the U.S. is small currently, but the company has been expanding its retail, commercial and wholesale capabilities off the back of advantages developed just north of the border. The juxtapositions within Parkland's refining operations in Burnaby, British Columbia (BC), as it relates to size, scale and asset quality are distinct. Currently, the company operates only a single, small capacity, low complexity refinery. Fitch typically views refining companies with less than 100,000 barrels per day of capacity as well as single-asset refineries as being more consistent with a 'B' credit profile, if it were a standalone refining business. Fitch does believe Parkland's single refinery possesses some geographic advantages. It is strategically connected by pipeline to the Trans Mountain Pipeline and its tank farm in Burnaby is located on the Burrard inlet, in close proximity to Vancouver, BC. Additionally, the Burnaby refinery is fully integrated with Parkland's commercial/wholesale and retail businesses in Western Canada, and as such is not a merchant refiner. Fitch believes that these unique characteristics provide more cash flow and earnings stability than Parkland would have without integration. Growth Supported by M&A: Parkland has grown meaningfully over the past few years, 2020 aside, largely on the back of successful acquisitions, with synergy capture after the fact and steady organic growth all along the way. The company has been able to, with the Ultramar (CAD978 million) and Chevron Canada (CAD1.68 billion) acquisitions, both acquired in 2017, generate a projected approximate 50% synergy capture, defined by the company as EBITDA lift post-acquisition. In early 2019, the company moved into the Caribbean with the purchase of 75% of Sol Investments for CAD1.5 billion to obtain a dominant fuel marketing position in 23 countries with extensive supply and distribution assets. Additionally, the company has spent nearly CAD400 million on acquisitions in the U.S. since the beginning of 2018 through the end of 2020, expanding into three distinct regional operating centers: Northern Tier, Rockies and Southeast. Additionally, in late February 2021 Parkland announced an acquisition that would add a fourth regional operating center in the Pacific Norwest U.S. The company has been successful in finding and transacting on attractive assets and also proven to be capable of capturing significant synergies from the acquired assets post-transaction, supporting Fitch's assumptions for improving leverage metrics beyond 2020. Ups and Downs of Refining: Refining remains one of the most cyclical of corporate sectors, and is subject to periods of boom and bust, with sharp swings in crack spreads over the cycle. Given the rest of Parkland's portfolio is highly ratable, refining remains a source of potential variability in results in the future. The retail, commercial and wholesale fuel and logistics operating segments tend to be less cyclical, and Parkland's positions in Canada and the Caribbean are expected to benefit from the company's position as one of the largest competitors in the regions. DERIVATION SUMMARY Parkland is somewhat unique relative to Fitch's coverage given its diversification across the midstream and downstream value chain, especially due to the relatively small size and scale of its refining operations. From a business line perspective, though orders of magnitude smaller in size and scale, Fitch sees Marathon Petroleum Corporation (MPC; BBB/Negative) as a peer. Fitch views a one full rating category difference between Parkland and MPC as appropriate, given Parkland's distinctive characteristics, significantly smaller size and scale, and weaker relative financial profile. Credit rating differences, relative to MPC, arise from Parkland's 'single refiner risk' factor and the substantially smaller size, scale and complexity of Parkland's refining operations. Fitch views similarly rated Sunoco LP (SUN; BB/Positive) as a relevant peer for the distribution segment of Parkland's business. Differences in credit profile, relative to SUN, arise from Parkland's position as a fully integrated downstream operator. However, Fitch views SUN as having greater margin stability, supported by its multi-year take-or-pay fuel supply agreement with a 7-Eleven subsidiary, under which SUN will supply approximately 2.2 billion gallons of fuel annually, and no refining operations. Puma Energy Holdings Pte Ltd (BB-/RWN) is a global integrated midstream and downstream peer with storage, distribution, fuel-retailing and business to business activities across the globe. Relative to Parkland, Puma has a slightly larger size and scale, leverage that is similar but more exposure to developing economies and foreign currency risks globally, leading to its lower credit rating. Leverage, as measured by total adjusted debt/operating EBITDAR, is roughly one half to one full turn worse than MPC, 2020 excluded, and Fitch does not forecast improvement in this metric for Parkland until later in the forecast period. Furthermore, Parkland's leverage is expected to be at least one turn better than Sunoco's over the forecast period, 2020 excluded, based on Fitch's expectations for SUN's total debt with equity credit/operating EBITDA to end 2021 between 4.0x-4.3x. Parkland's weaker relative financial profile is a factor considered in the credit rating difference between MPC and Parkland. KEY ASSUMPTIONS -- Full-year 2021 volumes, both retail and commercial, rebound meaningfully in Canada, leading to approx. 20% growth compared to 2020. Margins in Canada move towards historical averages; -- The USA segment experiences a similar level of YOY volume growth in 2021, relative to Canada, driven in large part by acquisitions, both announced and assumed; -- Given the strong 2020 volume performance in the International segment, compared to the Canadian segment, 2021 growth assumptions are more muted. Margins remain similar to recent history; -- Utilization at the company's Burnaby refinery of roughly 85% in 2021, after posting a turnaround impacted 68.9% utilization in 2020. Refining utilization of 90%-94% in years without a major turnaround, beyond 2021; -- An increase in near-term growth and acquisition spending, from the trough seen in 2020, including maintenance and growth capital expenditures in line with management guidance; -- Minimal debt issuances/repayments over the forecast period, beyond the currently proposed transaction; -- USD1.00/CAD1.33 throughout the quarters of the forecast period. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Expected or actual fiscal year with total adjusted debt/operating EBITDAR below 3.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Total adjusted debt/operating EBITDAR, capitalizing operating lease expense at 8.0x, above 4.0x on a sustained basis. Attractive acquisitions that push this metric above the negative sensitivity temporarily will be reviewed on a case by case basis; -- A second wave of stay-at-home orders across North America related to the coronavirus, leading to further demand destruction, without an offsetting increase in fuel margins; -- A disproportionate decrease in realized fuel margins versus increased fuel volumes; -- Impairments to liquidity; -- Acquisitions that increase overall business risk and/or are not financed in a balanced manner. 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 Liquidity Adequate: Parkland had total available liquidity of roughly CAD1.3 billion, including CAD262 million in unrestricted cash and equivalents on the balance sheet as of Dec. 31, 2020. The company has a two tranche credit facility that includes a CAD700 million facility as well as a USD780 million facility. Both credit facilities mature in 2023. The company had approximately CAD1 billion available under both credit facilities as of Dec. 31, 2020. On June 9, 2020 Parkland exercised the accordion feature in its CAD credit facility, adding an incremental CAD300 million of capacity to CAD700 million, mentioned above. Along with additional cash generated from operations, Parkland's liquidity position improved significantly since the end of first-quarter 2020. With proceeds from the proposed issuance of senior unsecured notes being used to refinance 2024 and 2025 maturities, Parkland will have no senior unsecured notes due until 2026. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch applies an 8.0x multiple to operating leases. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. PARTY CITY: Moody's Completes Review, Retains Caa1 CFR ------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Party City Holdings Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Party City's Caa1 corporate family rating reflects the company's continued weak operating performance. Party City's operating performance began weakening prior to the pandemic as a result of increased competition, elevated helium prices, and tariffs that took a significant toll on margins in 2019. Credit metrics have deteriorated in 2020 as operating performance was significantly impacted by COVID-19 store closures and less demand for party items stemming from social distancing measures to combat the virus. Moody's estimates revenue and earnings will continue to be challenged in the first half of 2021 as the social distancing measures remain in place in light of the ongoing pandemic but expects a recovery starting in the back half of 2021 with Moody's adjusted leverage improving to between 6.5x-7x. Party City is exposed to changing demographic and societal trends, including the shift of consumers purchasing goods and accessories online. The rating is supported by Party City's strong market presence in both retail and wholesale, geographic diversification, and historically more stable party goods and accessories segment. The principal methodology used for this review was Retail Industry published in May 2018. PBS BRAND: Seeks Approval to Hire CBRE as Real Estate Broker ------------------------------------------------------------ PBS Brand Co., LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ CBRE, Inc. as real estate broker. CBRE will render these services: (a) consult with the Debtors' representatives to discuss their goals, objectives and financial parameters in connection with their leases; (b) provide ongoing advice and guidance based upon the Debtors' goals and objectives; (c) assist in the development and implementation of a negotiation strategy for the services; (d) assist and support the development of landlord communications and materials to support negotiations; (e) negotiate with landlords or their representatives to obtain monetary lease modifications and certain non-monetary lease modifications, as may be directed by the Debtors; (f) negotiate lease terminations, as may be directed by the Debtors; (g) coordinate with the Debtors' in-house team, landlords and legal counsel to effectuate lease amendments and other necessary documents; and (h) provide weekly reports regarding the status of the services and participate in regularly scheduled meetings as required by the Debtors; and (i) support the Debtors' sale process by assisting in their response to buyer due diligence requests for summaries regarding status of negotiations with respect to properties. CBRE will receive non-refundable retainer of $50,000 and property success fee of $15,000 per transaction pursuant to which a lease of a property is modified. In addition, CBRE will seek reimbursement for expenses incurred. Bill Wright, a senior managing director at CBRE, disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Bill Wright CBRE, Inc. 321 N Clark Street, Suite 3400 Chicago, IL 60654 Telephone: (630) 573-7049 Email: bill.wright@cbre.com About PBS Brand Co. Denver-based PBS Brand Co. LLC and its affiliates own and operate "Punch Bowl" restaurants and bars across the United States. PBS Brand Co. and its affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-13157) on Dec. 21, 2020. Stacy Johnson Galligan, authorized representative, signed the petitions. In its petition, PBS Brand disclosed assets of between $10 million and $50 million and liabilities of the same range. Judge John T. Dorsey oversees the cases. The Debtors tapped Morris James LLP as their legal counsel; SSG Advisors, LLC as investment banker; Omni Agent Solutions as the claims, noticing and balloting agent; and Gavin/Solmonese LLC and B. Riley Advisory Services as restructuring advisors. Edward Gavin of Gavin/Solmonese and Mark Shapiro of B. Riley both serve as chief restructuring officers. The U.S. Trustee for Region 3 appointed an official committee of unsecured creditors on Jan. 6, 2021. Porzio, Bromberg & Newman, P.C., and Province, LLC serve as the committee's legal counsel and financial advisor, respectively. PEOPLE SPEAK: Case Summary & 12 Unsecured Creditors --------------------------------------------------- Debtor: People Speak, LLC DBA Blue Lagoon NOLA DBA Maison Blue 1419 Dauphine St. New Orleans, LA 70116 Business Description: People Speak, LLC is a privately held company that operates in the traveler accommodation industry. Chapter 11 Petition Date: March 11, 2021 Court: United States Bankruptcy Court Eastern District of Louisiana Case No.: 21-10315 Judge: Hon. Meredith S. Grabill Debtor's Counsel: Stewart F. Peck, Esq. LUGENBUHL, WHEATON, PECK, RANKIN & HUBBARD 601 Poydrass Street, Suite 2775 New Orleans, LA 70130 Tel: (504) 568-1990 E-mail: speck@lawla.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Rachele Riley, owner/member. A copy of the Debtor's list of 12 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/IREHL5Y/People_Speak_LLC__laebke-21-10315__0003.0.pdf?mcid=tGE4TAMA A copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/IFILPQQ/People_Speak_LLC__laebke-21-10315__0001.0.pdf?mcid=tGE4TAMA PITNEY BOWES: Moody's Rates New Amended Credit Facilities 'Ba1' --------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Pitney Bowes Inc.'s proposed amended and extended senior secured revolver and term loan B. Moody's also assigned a B1 rating to the new senior unsecured notes offering and (P)B1 to the existing senior unsecured shelf. All other ratings and the negative outlook are unchanged. Net proceeds from the new unsecured notes and a portion of excess cash will be used to reduce term loan B outstandings by $418 million, repay all of the notes due 2021, and fund partial tenders of notes due 2022 through 2024. The $140 million net debt reduction will improve adjusted debt to EBITDA to roughly 5.7x from 6.1x as of December 2020. Assignments: Issuer: Pitney Bowes Inc. Senior Secured Revolving Credit Facility, Assigned Ba1 (LGD2) Senior Secured Term Loan A, Assigned Ba1 (LGD2) Senior Secured Term Loan B, Assigned Ba1 (LGD2) Gtd Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD5) Senior Unsecured Shelf, Assigned (P)B1 RATINGS RATIONALE The proposed amended and extended credit facility and new notes are opportunistic as Pitney Bowes looks to extend nearer term debt maturities. Post-closing of the transactions, remaining debt maturities for 2022 through 2024 will be more manageable with the nearest significant debt maturity extended to 2026 when the amended term loan A comes due. Accordingly, these refinancings provide a five-year runway for Pitney Bowes to further scale its shipping and ecommerce operations while improving overall EBITDA margins. Additionally, proposed financial covenants for the amended term loan A will be relaxed while financial covenants for the term loan B will be eliminated. Pitney Bowes' Ba3 Corporate Family Rating (CFR) reflects Moody's view that adjusted debt to EBITDA and profit margins will improve over the next year, despite the expected decrease in free cash flow in 2021 reflecting certain working capital benefits in 2020 that will not be as significant in 2021. Pitney Bowes has consistently reduced debt balances which peaked in 2017, and Moody's expects continued debt reduction over the next 18 months. Nevertheless, Pitney Bowes' operating performance has been pressured by the negative impact of COVID-19 which disrupted new equipment sales that require installation in 2020. The pandemic contributed to a full year decline in revenues from pre-sorting of marketing mail reflecting soft advertising demand, as well as from supplies and support services. However, Pitney Bowes' CFR benefits from the company's leading market presence, long standing customer relationships under multi-year contracts in the highly regulated mail metering market, as well as growth opportunities in the shipping and ecommerce businesses. Moody's expects Pitney Bowes will be able to continue growing revenues from ecommerce and shipping operations while gradually improving profit margins. High growth shipping-related revenues represented 50% of total revenues in 2020 with Global Ecommerce revenues growing 41% reflecting solid demand supported by stay at home orders which helped fuel a total 11% top line gain in 2020. Moody's continues to view the transition to higher growth shipping as strategically favorable over the long term given the growth potential in ecommerce fulfillment and shipping services, in contrast to the secular decline in mail volumes. However, there are ongoing execution risks related to growing market share among established shipping providers. Credit metrics will continue to be pressured by the secular decline in the high margin, legacy mailing operations and the need for significant investments to scale higher growth shipping and ecommerce businesses. These factors will limit the ability to expand EBITDA margins and free cash flow over at least the next two years. Accordingly, Pitney Bowes will need to maintain good financial flexibility as it navigates through these challenges, exacerbated by the remaining negative impact from the coronavirus pandemic. 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 corporate assets 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 our 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. Pitney Bowes has good liquidity supported by sizable cash balances exceeding $700 million post-closing and an undrawn $500 million revolver. Nevertheless, Moody's expects ongoing investments to scale ecommerce and shipping operations as well as expand third party equipment financing will continue to limit free cash flow generation over the next 18 months. In an effort to manage liquidity, Pitney Bowes has reduced dividends since the first half of 2019, suspended share buybacks, and limited M&A and near-term expansion of third-party equipment financing. Moody's believes that Pitney Bowes will continue to adhere to disciplined financial policies and remain committed to reducing adjusted leverage as well as maintaining strong credit protection measures of its equipment financing operations. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The negative outlook is driven by uncertainty regarding the remaining impact of the pandemic and challenges for Pitney Bowes to scale its shipping and ecommerce operations while improving profitability. The pandemic contributed to reduced sales for Pitney Bowes' equipment, supplies, support services, and advertising related marketing mail in 2020. To the extent timing of a rebound from the COVID-19 outbreak and recovery in demand for these offerings leads to growth in adjusted EBITDA and free cash flow that is in line with Moody's expectation, the outlook could be revised to stable. Ratings could be upgraded if Pitney Bowes demonstrates a track record of consistent revenue and EBITDA growth with improving operating margins. Moody's would also need to be comfortable with the execution and financial policies related to developing third party equipment financing. Adjusted debt/EBITDA would need to be on track to improve to the mid 3x range with adjusted free cash flow to debt sustained at about 2%. Ratings could be downgraded if Moody's expects consolidated revenues will decline from current levels reflecting greater than expected weakness in mature mailing operations. Ratings could also be downgraded if Moody's expects adjusted debt to EBITDA will be sustained above 4.5x beyond 2022. There would be downward pressure on ratings if EBITDA margins or free cash flow deteriorate from current levels reflecting underperformance in core operations or with development of third-party equipment financing. Based in Stamford, CT, Pitney Bowes Inc. is a global provider of ecommerce fulfillment, shipping and returns, cross-border ecommerce, office mailing and shipping, presort services, as well as related services and financing. Revenues are expected to exceed $3.6 billion over the next year. The principal methodology used in these ratings was Diversified Technology published in August 2018. POUGHKEEPSIE, NY: Moody's Assigns Ba1 Rating to $5.2MM Bonds ------------------------------------------------------------ Moody's Investors Service has assigned a Ba1 rating to the City of Poughkeepsie, NY's $5.2 million Public Improvement Refunding Bonds, 2021. Moody's maintains the Ba1 on the city's issuer and GOLT ratings. The outlook remains stable. The issuer rating is equivalent to the city's hypothetical general obligation unlimited tax (GOULT) rating; there is no debt associated with the GOULT security. RATINGS RATIONALE The Ba1 issuer rating reflects the city's weak financial position. Although the city has made material strides in improving its operations and governance, its financial position remains weak as the negative fund balance position accumulated in previous years is still being dealt with. Favorably, the city is continuing to take action to run operating surpluses which are being used to reduce that deficit. Management's endeavors are aided by a recent uptick in development which is causing tax base, and revenue expansion. The ongoing pandemic has had only a modest impact on the city. While sales taxes took a large hit before rebounding, the city's conservative budgeting and stable property taxes have largely blunted the financial impact of the pandemic. Moody's consider the outstanding debt to be GOLT because of limitations under New York State (Aa2 stable) law on property tax levy increases. The absence of distinction between the GOLT rating and the Issuer rating reflects the town council's ability to override the property tax cap and the faith and credit pledge in support of debt service. RATING OUTLOOK The stable outlook reflects Moody's expectations that, despite ongoing improvements, it will take continued effort to restore financial health. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING - Significant and sustained improvement in reserves and liquidity - Material tax base growth - Improved resident wealth and income FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING - Reversion to structural imbalance - Declines in the tax base or resident wealth and income LEGAL SECURITY Debt service on the bonds and notes is secured by the City's faith and credit supported by its pledge to levy ad valorem property taxes to pay debt service as limited by New York State's Property Tax Cap-Legislation (Chapter 97 (Part A) of the Laws of the State of New York, 2011). USE OF PROCEEDS Proceeds from the bonds will be used to refund all or a portion of the Public Improvement (Serial) Bonds, Series 2009A and Public Improvement (Serial) Bonds, Series 2020 for interest savings. PROFILE The City of Poughkeepsie is the county seat of Dutchess County (Aa2 stable) and is located on the Hudson River, approximately 70 miles north of New York City (Aa2 negative). The city encompasses a land area of 4.9 square miles and has approximately 30,400 residents and provides standard municipal services such as public safety and public works including roads, and utilities. METHODOLOGY The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2021. PRE-PAID LEGAL: Moody's Completes Review, Retains B2 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Pre-Paid Legal Services, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Pre-Paid Legal Services' B2 corporate family rating is supported by reoccurring nature of revenues provided by the subscription base, growth expectations in memberships as consumers look for cost effective ways to get legal advice, and strong cash flows and debt paydown initiatives. The rating is constrained by the company's small size, leverage levels that are high, private equity influenced financial policies, and risks associated with regulation. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. PROMETRIC HOLDINGS: Moody's Alters Outlook on B3 CFR to Stable -------------------------------------------------------------- Moody's Investors Service affirmed Prometric Holdings Inc.'s B3 Corporate Family Rating and B3-PD Probability of Default Rating. Concurrently, Moody's affirmed the B2 rating on the company's the first lien credit facilities (revolver and term loan). The outlook is revised to stable from negative. The outlook revision to stable from negative reflects Moody's expectation that operating performance such as test volume will continue to recover in 2021 as a higher share of the public receive vaccinations and the coronavirus pandemic subsides. Currently, all of Prometric's centers are open except in Ireland. With testing volume returning to normal levels and the CFA contract starting to contribute to the topline, Moody's expect FY2021 revenue and earnings to be above FY19 (pre Covid-19) level. Moody's adjusted leverage is about 14x for the LTM period ended December 31, 2020 and Moody's expect leverage will decline with earnings recovery to below 7.0x over the next 12 to 18 months. Moody's also expect adequate liquidity for next year. Prometric had about $41 million cash on hand at December 31, 2020 and $30 million availability on its $50 million revolver due Jan 2023. Moody's expect the company to generate modestly positive free cash flow of about $15 million to $20 million in FY21 and repay all its revolver balance by end of FY21. Moody's took the following rating actions: Issuer: Prometric Holdings Inc. Corporate Family Rating, affirmed B3 Probability of Default Rating, affirmed B3-PD Senior Secured First Lien Bank Credit Facilities (revolver and term loan), affirmed B2 (LGD3) Outlook Actions: Issuer: Prometric Holdings Inc. Outlook, revised to Stable from Negative RATINGS RATIONALE Prometric's B3 CFR reflects its high leverage with Moody's adjusted debt-to-EBITDA of about 14x for the LTM period ended December 30, 2020 due to earnings decline from coronavirus impact. However, Moody's expect leverage will decline to below 7.0x over the next 12 to 18 months along with earnings recovery. The rating is constrained by Prometric's modest scale, customer concentration and event and financial policy risk due to its private equity ownership. However, the rating is supported by Prometric's established position in the online testing and assessment services market as well as good revenue visibility from long term contracts with historically high retention rates. The rating also benefits from Moody's view that there is only moderate cyclical exposure since educational-related testing volumes can increase in periods of economic weakness and mitigate declines in more economically-sensitive testing such as for employment. Moody's expect the company to have adequate liquidity over the next year. The B2 rating on the senior secured first lien credit facilities is one notch above the B3 CFR reflecting the priority lien on the collateral that would yield better recovery than the second lien term loan in the event of a default. The (unrated) $110 million senior secured second lien term loan has a subordinate lien on the collateral. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's view that Prometric's leverage will decline to below 7.0x over the next 12 to 18 months with earnings recovery. The stable outlook also reflects our expectation that the company will maintain good liquidity and generate free cash flow as a percentage of debt in low single digit over the next year. Ratings could be upgraded should operating performance continue to improve with Moody's adjusted debt-to-EBITDA leverage sustained below 6.5x with good liquidity including free cash flow as a percentage of debt at or above 5%. The ratings could be downgraded if there is further deterioration of operating performance, credit metrics or liquidity. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Prometric, headquartered in Baltimore, Maryland, is a provider of testing and assessment services to educational testing providers, associations, and corporations globally. The company generated $245 million of revenue for the trailing twelve months ended December 31, 2020. Prometric has been owned by funds affiliated with Baring Private Equity Asia since January 2018. QVC GLOBAL: Moody's Hikes 2031 Sr. Exchangeable Debentures to B1 ---------------------------------------------------------------- Moody's Investors Service upgraded QVC Global Corporate Holdings, LLC 3.5% senior exchangeable debentures due 2031 ("The MSI Exchangeables") to B1 from B2. Moody's also affirmed Liberty Interactive LLC's corporate family rating at Ba3; probability of default rating at Ba3-PD; and senior unsecured rating at B2. At the same time, Moody's affirmed QVC, Inc.'s senior secured notes rating at Ba2. The SGL rating was also upgraded from SGL-2 to SGL-1. The outlook is stable. The upgrade reflects governance considerations including QVC Global Corporate Holdings, LLC (a subsidiary of QVC International) being added as the primary obligor of the Senior Exchangeable Debentures, while Liberty Interactive LLC is a co-obligor. The structural change will enable cash generated from QVC's foreign operations to directly service the MSI Exchangeables. The MSI Exchangeables are viewed senior in position to the debt at Liberty Interactive LLC, but junior to debt obligations at QVC, Inc. and results in a B1 instrument rating. The upgrade to SGL-1 reflects Liberty's solid free cash flow generation and $2.95bn revolver which remains completely undrawn as of December 31, 2020. Ratings Upgraded: Issuer: Liberty Interactive LLC -- Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 Issuer: QVC Global Corporate Holdings, LLC -- Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded to B1 (LGD5) from B2 (LGD5) Ratings Affirmed: Issuer: Liberty Interactive LLC -- Corporate Family Rating, Affirmed Ba3 -- Probability of Default Rating, Affirmed Ba3-PD -- Senior Unsecured Conv./Exch. Bond/Debenture, Affirmed B2 (LGD6) from (LGD5) -- Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD6) from (LGD5) Issuer: QVC, Inc. -- Senior Secured Notes, Affirmed Ba2 (LGD3) Outlook Actions: Issuer: Liberty Interactive LLC Outlook, Remains Stable Issuer: QVC, Inc. Outlook, Remains Stable Issuer: QVC Global Corporate Holdings, LLC Outlook, Assigned Stable RATINGS RATIONALE Liberty's Ba3 corporate family rating reflects its solid operating margins and cash flow generation from its portfolio of operating assets, as it continues to have moderate leverage with Moody's adjusted debt/EBITDA estimated at 3.6x and excellent liquidity at December 31, 2020. The combined operations of QVC and HSN ("QxH") focuses on differentiating its offering through its ability to entertain, inform, and provide exclusive product. Although QxH has benefitted from strong demand, particularly in home, through its digital offerings during the pandemic, it must also contend with secular trends that include a growing number of consumers who are cancelling their cable subscriptions, increased price transparency and shorter product life cycles. The company has significant scale and solid free cash flow generation of which a major portion has been historically returned to shareholders. The company's speculative grade liquidity rating of SGL-1 takes into account the company's significant cash flow generation and long term debt maturity profile. The stable outlook reflects our expectation that Liberty with its online presence will continue to be able maintain stable operating performance even as demand trends normalize and consumers become more inclined to visit stores. Moody's also expects financial strategies will remain balanced. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive consistency in sales and operating performance while maintaining balanced financial strategy, and continued meaningful debt reductions could lead to an upgrade. Quantitatively, the company could be upgraded if debt/EBITDA was sustained below 4.25x. The ratings could be downgraded if liquidity weakens, the asset composition or its financial strategy meaningfully changes, or operating performance deteriorates, or debt-to-EBITDA is sustained above 5.25x. Liberty Interactive LLC, a wholly owned subsidiary of its parent Qurate Retail Inc., formerly named Liberty Interactive Corporation, is headquartered in Englewood, Colorado. Qurate operates QxH, and holds equity interests in other smaller assets. QVC, Inc. was founded in 1986 and has operations in the U.S., United Kingdom, Germany, Japan, Italy, and China. The principal methodology used in these ratings was Retail Industry published in May 2018. RB ENTERPRISES: Seeks to Hire Bush Kornfeld as Bankruptcy Counsel ----------------------------------------------------------------- RB Enterprises, LLC seeks approval from the U.S. Bankruptcy Court for the District of Alaska to employ Bush Kornfeld LLP as its bankruptcy counsel. The legal services to be rendered include: (a) advise the Debtor regarding its powers and duties in the continued operation of its business and management of its property; (b) prepare legal papers; (c) advise the Debtor regarding all processes surrounding its Chapter 11 case; (d) assist the Debtor in reviewing claims and in determining issues associated with distribution on allowed claims; (e) take necessary action to avoid any liens subject to the Debtor's avoidance; and (f) perform other legal services necessary to administer the case. The Debtor may request that Bush Kornfeld be authorized to obtain reimbursement on a monthly basis for its costs and payment of 80% of its fees. Thomas A. Buford, Esq., an attorney at Bush Kornfeld, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Thomas A. Buford, Esq. Bush Kornfeld LLP 601 Union St., Suite 5000 Seattle, WA 98101-2373 Telephone: (206) 292-2110 Facsimile: (206) 292-2104 About RB Enterprises RB Enterprises LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Alaska Case No. 21-00040) on March 1, 2021. Robert Gross, member and manager, signed the petition. At the time of the filing, the Debtor disclosed total assets of $400,500 and total liabilities of $10,162,604. Judge Gary Spraker oversees the case. Bush Kornfeld LLP serves as the Debtor's legal counsel. RESEARCH NOW: Moody's Completes Review, Retains B2 CFR ------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Research Now Group, LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Research Now Group's B2 corporate family ratings is supported by its leading position in a niche and focused market, a well-integrated platform, high margins, and diversity among its customer base. The rating is constrained by its small size relative to other issuers in the B2 rating category, high levels of leverage and influence of private equity owners, and exposure to cyclicality driven by political polling. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. RGN-NEW YORK V: Case Summary & Unsecured Creditor ------------------------------------------------- Debtor: RGN-New York V, LLC 3000 Kellway Drive Suite 140 Carrollton, Texas 75006 Business Description: RGN-New York V, LLC is primarily engaged in renting and leasing real estate properties. Chapter 11 Petition Date: March 11, 2021 Court: United States Bankruptcy Court District of Delaware Case No.: 21-10555 Judge: Hon. Brendan Linehan Shannon Debtor's Counsel: Ian J. Bambrick, Esq. FAEGRE DRINKER BIDDLE & REATH LLP 222 Delaware Avenue, Suite 1410 Wilmington, Delaware 19801 Tel: (302) 467-4200 E-mail: lan.Bambrick@faegredrinker.com Debtor's Financial Advisor: ALIXPARTNERS Debtor's Restructuring Advisor: DUFF & PHELPS, LLC Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $10 million to $50 million The petition was signed by James S. Feltman, responsible officer. The Debtor listed 275 Seventh Avenue Building LLC as its sole unsecured creditor holding a claim of $1,341,611. A copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/IRF4FUI/RGN-New_York_V_LLC__debke-21-10555__0001.0.pdf?mcid=tGE4TAMA The Debtor will move for joint administration of its case for procedural purposes only pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure under the case captioned In re RGN-Group Holdings, LLC, et al., Bank. D. Del. Case No. 20-11961. ROCKPORT DEVELOPMENT: To Seek Plan Confirmation on May 20 --------------------------------------------------------- Judge Scott C. Clarkson has entered an order that the First Amended Disclosure Statement of Rockport Development, Inc., provides adequate information and is approved with the minor modifications stated on the record. The deadline for creditors to return to Debtors' counsel, Ballots containing written acceptances or rejections of the First Amended Plan is April 15, 2021, at 5:00 p.m. The hearing on the confirmation of the First Amended Plan shall be held on May 20, 2021, at 11:00 a.m. Objections to the First Amended Plan, if any, must be filed and served not later than April 15, 2021. On or before April 29, 2021, the Debtors shall file with the Bankruptcy Court, and serve on any parties objecting to the plan (a) a brief in support of confirmation of the First Amended Plan; (b) a tally of the Ballots received with respect to the First Amended Plan; (c) any declarations and other evidence in support of confirmation of the First Amended Plan; and (d) any reply to any objections to the confirmation of the First Amended Plan. Responses to the Debtors' confirmation brief and ballot summary, if any, must be filed and served not later than May 13, 2021. Attorneys for the Debtor: MATTHEW W. GRIMSHAW DAVID A. WOOD LAILA MASUD MARSHACK HAYS LLP 870 Roosevelt Irvine, California 92620 Telephone: (949) 333-7777 Facsimile: (949) 333-7778 E-mail: mgrimshaw@marshackhays.com dwood@marshackhays.com lmasud@marshackhays.com About Rockport Development Rockport Development, Inc., a company based in Irvine, Calif., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-11339) on May 7, 2020. On June 11, 2020, Rockport's affiliate Tiara Townhomes LLC filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-11683). Judge Scott C. Clarkson oversees the cases, which are jointly administered under Case No. 20-11339. At the time of the filing, Rockport was estimated to have $10 million to $50 million in both assets and liabilities. Tiara Townhomes LLC disclosed assets of between $1 million and $10 million and liabilities of the same range. The Debtor has tapped Marshack Hays, LLP, as its legal counsel, and Michael VanderLey of Force Ten Partners, LLC, as its chief restructuring officer. S-TEK 1: Seeks to Tap Financial Strategy Group as Expert Witness ---------------------------------------------------------------- S-Tek 1, LLC seeks approval from the U.S. Bankruptcy Court for the District of Mexico to employ Financial Strategy Group, Inc. as an expert witness. The Debtor requires expert analysis of the value of Surv-Tek, Inc.'s collateral in connection with the complaint it filed against the company and its owners. The complaint generally alleges that Surv-Tek fraudulently misrepresented the value of the assets it sold to the Debtor. Brent Carey, the professional who will provide services on behalf of Financial Strategy Group, will be billed at his hourly rate of $225 and will be reimbursed for expenses incurred. The Debtor also seeks authority to pay a retainer fee of $3,000. Mr. Carey and his firm have no connection with the Debtor, its creditors or any other party-in-interest, according to court papers filed by the firm. Financial Strategy Group can be reached through: Brent J. Carey Financial Strategy Group, Inc. 4425 Juan Tabo NE Suite 145 Albuquerque, NM 87111 Telephone: (505) 332-1700 Facsimile: (505) 332-1701 Email: brent@financialstrategygroup.com About S-Tek 1 S-Tek 1 LLC, also known as SurvTek -- https://www.survtek.com – is a land surveying and consulting firm providing services to both the private and public sectors throughout New Mexico. It is based in based in Albuquerque, N.M. S-Tek 1 filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.N.M. Case No. 20-12241) on Dec. 2, 2020. Randy Asselin, managing member, signed the petition. At the time of the filing, the Debtor disclosed $355,177 in assets and $2,251,153 in liabilities. Judge Robert H. Jacobvitz presides over the case. The Debtor tapped Nephi D. Hardman Attorney at Law, LLC as its bankruptcy counsel and FPM & Associates, LLC as its accountant. SAVE ON COST: Unsecureds Will Get 100% of Claims from Operation --------------------------------------------------------------- Save On Cost Manufacturing, LLC ("SOCM") filed with the U.S. Bankruptcy Court for the Central District of California an Original Disclosure Statement describing Chapter 11 Plan on March 9, 2021. This is a reorganizing plan. In other words, SOCM proposes to restructure its debts through the Plan and accomplish payments under the Plan with funds generated through a refinance loan and, if necessary, contributions to be made by No Keun Kwak, SOCM's sole member. SOCM shall have until September 15, 2021 to complete a refinance, and satisfy the claims of all allowed claimants. If SOCM is unable to timely complete a refinance, SOCM shall have until March 15, 2022 to sell the Bellflower Property, unless extended by the Court for good cause shown. The effective date of the Plan is 30 days following entry of a final order confirming the Plan and refinance of the Bellflower Marketplace loan or sale of the Bellflower Marketplace. SOCM's primary asset is a four unit building and kiosk, one story retail shopping center located at 9754 Rosecrans Avenue and 14301 Bellflower Boulevard, Bellflower, California 90706 known as the Bellflower Marketplace. The Bellflower Marketplace has an estimated fair market value of $4.3 million. The Bellflower Marketplace tenants are Starbuck, Wingstop, Maxx Grill and Bank of America. SOCM's liabilities as of the Petition Date consist of $2,935,024 in secured debt and $21,698 in unsecured debt. Class 6 consists of General Unsecured Claims in the total amount of $21,699. General unsecured creditors will receive a dividend of 100% of their claims paid in a lump sum. The source of the payment will be the net monthly income from operation of SOCM's business, and a refinance loan or the sale of the Bellflower Marketplace -- in the event a refinance loan cannot be obtained by September 23, 2021. No Keun Kwak shall retain his 100% ownership interest in SOCM. The Plan will be funded by a refinance loan; and, if necessary, contributions to be made by No Keun Kwak, SOCM's sole member. If SOCM is unable to timely complete a refinance, SOCM will sell the Bellflower Property. A full-text copy of the Disclosure Statement dated March 9, 2021, is available at https://bit.ly/38CjuFg from PacerMonitor.com at no charge. Proposed General Insolvency Counsel for the Debtor: Raymond H. Aver, Esq. Law Offices of Raymond H. Aver A Professional Corporation 10801 National Boulevard, Suite 100 Los Angeles, CA 90064 Telephone: (310) 571-3511 Email: ray@averlaw.com About Save On Cost Manufacturing Save on Cost Manufacturing, LLC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-10057) on Jan. 5, 2021. Jae Sung Kwak, co-manager, signed the petition. At the time of filing, the Debtor disclosed $1 million to $10 million in both assets and liabilities. Judge Barry Russell oversees the case. Law Offices of Raymond H. Aver, A Professional Corporation, serves as the Debtor's counsel. SEADRILL PARTNERS: Parties Extend PSA Milestones ------------------------------------------------ In the Chapter 11 cases of Seadrill Partners LLC, et al., the TLB Ad Hoc Committee, the TLB Agent (at the direction of the Required Lenders and for the benefit of the TLB Secured Parties), and the Debtors agree that the following Milestones in the Interim Cash Collateral Order and the Plan Support Agreement will be modified as follows: * No later than 98 calendar days after the Petition Date, the Debtors shall have filed all exhibits and schedules to the Disclosure Statement, in form and substance acceptable to the TLB Ad Hoc Committee and the TLB Agent (with respect to provisions regarding the TLB Agent); * No later than 98 calendar days after the Petition Date, the Debtors and the TLB Ad Hoc Committee shall have agreed on a schedule of executory contracts to be assumed or rejected; and * No later than 101 calendar days after the Petition Date, the Court shall have approved the agreement or agreements governing the operation of the Debtors' vessels following the effective date of the Debtors' chapter 11 plan (the "New MSA(s)"), which such New MSA(s) shall be acceptable to the TLB Ad Hoc Committee. Co-Counsel for the Debtors: Matthew D. Cavenaugh J. Machir Stull Genevieve Graham Veronica A. Polnick JACKSON WALKER L.L.P. 1401 McKinney Street, Suite 1900 Houston, Texas 77010 Telephone: (713) 752-4200 Facsimile: (713) 752-4221 E-mail: mcavenaugh@jw.com mstull@jw.com ggraham@jw.com vpolnick@jw.com Co-Counsel for the Debtors: Brian Schartz, P.C. KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 609 Main Street Houston, Texas 77002 Telephone: (713) 836-3600 Facsimile: (713) 836-3601 E-mail: brian.schartz@kirkland.com - and - Anup Sathy, P.C. Chad J. Husnick, P.C. Gregory F. Pesce 300 North LaSalle Street Chicago, Illinois 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 E-mail: anup.sathy@kirkland.com chad.husnick@kirkland.com gregory.pesce@kirkland.com - and - Conflicts Counsel for the Debtors: Justin R. Bernbrock, Esq. Robert B. McLellarn, Esq. SHEPPARD, MULLIN, RICHTER & HAMPTON LLP Three First National Plaza 70 West Madison Street, 48th Floor Chicago, IL 60602 Telephone: (312) 499-6321 Facsimile: (312) 499-4741 E-mail: jbernbrock@sheppardmullin.com rmclellarn@sheppardmullin.com Lawrence A. Larose, Esq. SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 30 Rockefeller Plaza New York, New York 10122 Telephone: (212) 896-0627 Facsimile: (917) 438-6197 Email: llarose@sheppardmullin.com - and - Jennifer L. Nassiri, Esq. SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 333 South Hope Street, 43rd Floor Los Angeles, California 90071 Telephone: (213) 617-4106 Facsimile: (213) 443-2739 E-mail: jnassiri@sheppardmullin.com About Seadrill Partners Seadrill Partners LLC (NYSE: SDLP) is a limited liability company formed bydeepwater drilling contractor Seadrill Ltd. (OTCMKTS:SDRLF) to own, operate and acquire offshore drilling rigs. Seadrill Partners was founded in 2012 and is headquartered in London, the United Kingdom. Seadrill Partners, set up as an asset-holding unit, owns four drillships, four semi-submersible rigs and three so-called tender rigs which are all operated by Seadrill Ltd. Seadrill Partners LLC and its affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-35740) on Dec. 1, 2020. Mohsin Y. Meghji, authorized signatory, signed the petitions. Judge Marvin Isgur oversees the cases. Seadrill Partners disclosed $4,579,300,000 in assets and $3,122,300,000 in total debts as of June 30, 2020. The Debtors tapped Kirkland & Ellis LLP, Kirkland & Ellis International LLP, and Jackson Walker LLP as their bankruptcy counsel, and Sheppard Mullin Richter & Hampton, LLP as conflicts counsel. KPMG LLP provides tax provision and consulting services to the Debtors. SILICONSAGE BUILDERS: CEO Acharya Ends Efforts in Saving Business ----------------------------------------------------------------- Silicon Valley Business Journal reports that a U.S. bankruptcy judge earlier this month granted a request from the CEO of SiliconSage Builders to switch from trying to reorganize his embattled company to instead liquidating its assets. Bankruptcy Judge Stephen Johnson on March 5 granted the motion from Sanjeev Acharya to switch from a Chapter 11 to a Chapter 7 bankruptcy, a move which effectively put the developer out of business. The Mercury News first reported the development Friday. "The fatal blow appeared to be the decision by U.S. District Court Judge Susan Illston to appoint receiver David Stapleton of Stapleton Group to take over all of the assets of Acharya and Silicon Sage Builders. The receiver’s actions included Acharya’s termination as principal executive of Silicon Sage Builders," according to the Mercury News' report. Acharya, the CEO of Sunnyvale-based SiliconSage Builders LLC, had been under scrutiny since the end of 2020 by the Securities and Exchange Commission. In December, Acharya and the company were named in a federal complaint accusing them of fraud in connection with a $119 million investment offering. The SEC said that the company promised big returns to about 250 investors — mostly from the South Asian community. But instead of the profitable business they were pitched, the SEC said that from 2016 to 2019, all but one of the company's projects had significant cost overruns and didn't generate enough money to pay investors the returns they were promised. The developer used new investor funds to pay existing backers, misleading them to believe that the money came from profits, the SEC said. It further accuses Acharya of falsely telling investors they could redeem their investments despite lacking sufficient funds to meet redemption requests. SiliconSage had a number of residential projects in various stages of development. In early January 2021, its website showed an apartment complex in downtown San Jose that it was marketing for lease and two for-sale projects in San Jose's Willow Glen neighborhood and Fremont that it was actively marketing. The firm submitted formal plans in January 2020 to develop a mixed-use project along Alum Rock Avenue in east San Jose that included up to 796 residential units and ground-floor commercial space. About Silicon Sage Builders SiliconSage Builders LLC, a/k/a Silicon Sage Builders, is a Sunnyvale, California-based real estate development developer formed by Sanjeev Acharya in 2011. The Securities and Exchange Commission on Dec. 21, 2020, filed a complaint against Silicon Sage and Acharya in connection with an alleged $119 million fraudulent offering. The SEC's complaint said Silicon Sage and Acharya raised money from approximately 250 retail investors by falsely describing Silicon Sage Builders' real estate business as profitable and promising investors exorbitant returns. A motion on the SEC's motion to appoint a receiver to take over the assets was slated for Feb. 9, 2021. The case is Securities and Exchange Commission v. SiliconSage Builders, LLC, et al. (N.D. Cal. Case No. 20-cv-09247), pending before Judge Susan Illston. According to PacerMonitor.com, Sanjeev Acharya and Mina Acharya filed a Chapter 11 bankruptcy petition (Bankr. N.D. Cal. Case No. 21-50082) on Jan. 23, 2021. The Acharyas estimated less than $10 million in assets and at least $100 million in liabilities in its bankruptcy filings. The largest unsecured creditors are Acres Loan Origination LLC, owed $45 million on a construction loan (for 42183 Osgood Road), and $40.66 million on another construction loan (1821-1873 Almaden Rd.), and PFP Holding Company V, LLC, owed $39.63 million on a construction loan (Balbach St.), and Fremont Peralta Holding Company, LLC, owed $13.82 million on a land loan (37358-37482 Fremont Bl.). The Debtors tapped Binder & Malter, LLP, led by Robert G. Harris, as counsel. SINCLAIR TELEVISION: Moody's Affirms Ba3 CFR, Outlook Stable ------------------------------------------------------------ Moody's Investors Service affirmed Sinclair Television Group, Inc.'s Ba3 corporate family rating and Ba3-PD probability of default rating. Additionally, Moody's affirmed the Ba2 rating on the company's senior secured credit facility and senior secured notes and the B2 rating on the senior unsecured notes. Sinclair's speculative grade liquidity (SGL) rating was upgraded to SGL-1 from SGL-2. The outlook is stable. The affirmation of Sinclair's ratings follows the company's record political advertising revenue in 2020, which offset the weakness in the company's core advertising caused by the effects of the COVID-19 pandemic on the TV ad market. The upgrade of the company's SGL is driven by the improvement in Sinclair's liquidity profile following the company's record political advertising year, which resulted in the company growing its cash balance to $458 million at the end of December 31, 2020. This coupled with full availability under the company's $650 million revolving credit facility and a long dated maturity profile means Sinclair has very good liquidity going into 2021. Affirmations: Issuer: Sinclair Television Group, Inc Corporate Family Rating, Affirmed Ba3 Probability of Default Rating, Affirmed Ba3-PD Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD3) Senior Secured Regular Bond/Debenture, Affirmed Ba2 (LGD3) Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD5) Upgrades: Issuer: Sinclair Television Group, Inc Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 Outlook Actions: Issuer: Sinclair Television Group, Inc Outlook, Remains Stable RATINGS RATIONALE Sinclair's Ba3 CFR is supported by the company's established brand, its scale and the significant reach of its network of broadcast channels. The company is one of the largest US broadcasters with 628 channels on 188 TV stations in 88 markets as of December 31, 2020. The company's revenue model benefits from a mix of recurring retransmission fees that help offset the inherent volatility of traditional advertising related revenue. The company benefited from record political advertising demand from the US presidential election in 2020, which drove the company's ability to generate about $650 million of free cash flow in FY 2020, despite the steep core advertising declines caused by COVID-19. Sinclair's Ba3 CFR also reflects the sharp downturn in core TV advertising demand in 2020 as a result of lockdowns related to the COVID-19 pandemic as well as by the company's financial policy that has historically tolerated high leverage. The resulting shock to the US economy from the coronavirus lead to double digit declines in TV advertising and Sinclair's leverage (Moody's adjusted and on a two year average) remains near 4.7x at the end of FY 2020 compared to our previous expectations that leverage would approach 4.3x by year end. Excluding the effect of the coronavirus, TV advertising remains cyclical and in structural decline as new media forms continue to encroach on TV's share of advertising. Moody's run-rate expectations are that core TV revenues will decline by low single digit annually as advertising budgets continue to shift towards digital platforms. In addition, the continuing growth rate in retransmission fees may be at risk of accelerating MVPD subscriber losses, with cord cutting trends having accelerated in 2020. In addition, 2021 is a year when Sinclair's EBITDA growth will be pressured by the lack of meaningful retransmission fee increases (only renewal is DISH in September 2021) and increased cost as a third of its big-four channels stepped-up the reverse retransmission fees paid to the networks at the end of 2020. Governance factors that were taken into consideration include Sinclair's financial policy. The company has publicly stated a commitment to a leverage (company's defined net debt/EBITDA) of high 3x to low 4x -- at December 2020, this ratio stood at 4.0x. Sinclair has tolerated higher leverage in the past, especially in the context of M&A, and Moody's adjusted debt to 2-year average EBITDA was around 4.7x at the end of 2020. Moody's expect leverage to remain near 4.7x through 2021. Sinclair's credit policy is somewhat shareholder focused with the distribution of quarterly dividends as well as share buybacks. With regard to dividends, Sinclair has historically paid out approximately 25% of operating cash flow. Moody's expect Sinclair to pay around $60 million of dividends in 2021 and while we do not expect material share repurchases in 2021, we believe these could start again in the second half of 2021 albeit at around 15% to 20% of Sinclair's operating cash flow, lower than the historical average of near 30%. Sinclair's liquidity profile is very good as reflected in its SGL-1 speculative grade liquidity rating. As of December 31, 2020, the company had about $458 million in cash and cash equivalents and almost full availability under its $650 million revolving credit facility. The revolver has a springing 4.5x first lien net leverage covenant, tested at or above 35% utilization. The company generated about $650 million of free cash flow in FY 2020 as a result of record political advertising. The Ba2 (LGD3) rating on the company's senior secured facilities and notes reflects their priority ranking ahead of the B2 (LGD5) rated senior unsecured notes. The instrument ratings reflect the probability of default of the company, as reflected in the Ba3-PD probability of default rating (PDR), an average expected family recovery rate of 50% at default given the mix of secured and unsecured debt in the capital structure, and the particular instruments' rankings in the capital structure. The stable outlook reflects Moody's expectations that despite the disruption caused by COVID-19, Sinclair will continue to operate with metrics commensurate with its Ba3 rating through 2021, in particular leverage (Moody's adjusted on a two-year basis) between 4.25x and 5.5x. The stable outlook also reflects Moody's expectations that the company will maintain a very good liquidity profile in 2021 and beyond. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if: Debt to 2-year average EBITDA (Moody's adjusted) is sustained comfortably below 4.25x and, 2-year average Free cash flow to debt (Moody's adjusted) is sustained above 10% A positive rating action would also be contingent on maintaining good liquidity. Ratings could be downgraded if: Debt to 2-year average EBITDA (Moody's adjusted) rises above 5.5x, or 2-year average free cash flow to debt (Moody's adjusted) falls below 5%. Deterioration in the company's liquidity could also put pressure on the ratings. Sinclair Television Group, Inc., headquartered in Hunt Valley, MD and founded in 1986, is a leading U.S. television broadcaster. As of December 31, 2020, the company owns and/or operates 188 television stations across 88 markets, broadcasting more than 600 channels across the U.S. The station group reaches approximately 25% of the US population (taking into account the UHF discount). The affiliate mix is diversified across primary and digital sub-channels including ABC, CBS, NBC, and FOX. The company also owns a local cable news network in Washington D.C., four radio stations and the Tennis Channel. Members of the Smith family exercise control over most corporate matters of Sinclair Broadcast Group, Inc. ("SBGI"), Sinclair Television Group, Inc.'s ultimate parent, with four of the nine board seats and approximately 81% of voting rights (through the dual class share structure). Consolidated net revenue for FY 2020 was approximately $3.18 billion. The principal methodology used in these ratings was Media Industry published in June 2017. SIRVA WORLDWIDE: Moody's Completes Review, Retains Caa1 CFR ----------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of SIRVA Worldwide, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations SIRVA's Caa1 corporate family rating is supported by the company's global reach and strong positioning in the relocation and moving industry, diversity among customers with strong retention, and solid operating flexibility driven by low capex and fixed costs requirements. The rating is constrained by the cyclical nature of business, its operating history of high levels of financial leverage, relatively small size, impacts from COVID that have caused pressures that may remain for a while, private equity influenced financial policies, funding requirements for mortgage offering service which cause a risk in liquidity, and overall risk in the housing market. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. SITEONE LANDSCAPE: Moody's Rates $300MM First Lien Loan 'B1' ------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to SiteOne Landscape Supply Holding, LLC's $300 million first lien term loan maturing 2028. There is no effect on the company's existing ratings, including the Ba3 Corporate Family Rating and Ba3-PD Probability of Default Rating. The outlook is stable. The first lien term loan proceeds will be used to repay the existing first lien term loan maturing in 2024, resulting in a maturity extension of four years and lower interest cost. Given the proposed term loan will be used to refinance a like amount of debt, Moody's views this transaction as credit neutral. The B1 rating assigned to the proposed first lien term loan is one notch lower than the CFR, reflecting its position in the capital structure relative to a meaningfully large ABL revolving credit facility that has a first priority security interest in current assets. The rating on the existing first lien term loan will be withdrawn upon the close of the transaction. Assignments: Issuer: SiteOne Landscape Supply Holding, LLC Senior Secured Bank Credit Facility, Assigned B1 (LGD4) RATING RATIONALE SiteOne's Ba3 CFR reflects the reoccurring nature of landscape services, low cyclicality of maintenance and repair work, and the company's national presence, breadth of product offerings, and leading position in a fragmented market. The rating also reflects demand fluctuations in residential, commercial, and repair and remodeling end markets and thin operating margins characteristic to distribution businesses. In addition, SiteOne's active acquisition growth strategy may lead to higher debt levels and increased integration risk. The stable outlook reflects MOody's expectations that SiteOne will maintain a good liquidity profile, a conservative financial policy, and adjusted leverage below 3.0x. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The ratings could be downgraded if a more aggressive financial policy is implemented, a fundamental downturn in business conditions results in leverage approaching 4.0x or if liquidity weakens. The ratings could be upgraded if leverage is sustained below 3.0x, free cash flow to debt is maintained above 20%, and the company maintains a good liquidity profile. SiteOne Landscape Supply Holding, LLC, headquartered in Roswell, GA is a national wholesale distributor of landscaping supplies in the US and Canada. The company offers approximately 130,000 SKU's, including irrigation supplies, landscape accessories, fertilizer and nursery products, hardscapes, and maintenance supplies and operates in 180 markets through over 570 branch locations in 45 states in the U.S. and six provinces in Canada. The company's customers include residential and commercial landscape professionals. The principal methodology used in this rating was Distribution & Supply Chain Services Industry published in June 2018. SLM CORP: Fitch Alters Outlook on 'BB+' LT IDRs to Stable --------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of SLM Corporation (SLM) and Sallie Mae Bank (SLM Bank) at 'BB+'. Fitch has also affirmed the Viability Ratings (VR) for SLM and SLM Bank at 'bb+' and the senior unsecured debt rating and preferred stock rating of SLM at 'BB+ and 'B+', respectively. The Rating Outlook has been revised to Stable from Negative. KEY RATING DRIVERS The revision of SLM's Rating Outlook to Stable reflects the stabilization in key macroeconomic indicators and SLM's solid credit performance over the past few quarters following the emergence of the coronavirus pandemic last year. The Outlook revision also reflects increased confidence in a U.S. economic recovery beginning in the second half of 2021, reducing the likelihood that the downside scenario contemplated at the time of Fitch's Negative Outlook assignment in April 2020 will materialize in terms of asset quality and capital ratio degradation. Specifically, Fitch's forecasts for U.S. unemployment and GDP growth, according to the latest 'Global Economic Outlook' (GEO) published in December 2020 improved meaningfully from the GEO published in March 2020, reflecting the Food and Drug Administration's (FDA) approval of highly effective vaccines, the passage of additional fiscal stimulus, and the likelihood that the Federal Reserve will maintain an accommodative monetary policy for the foreseeable future. Furthermore, the nature of the pandemic has had a more severe negative impact on occupations that do not require a college degree, which when coupled with fact that roughly half of SLM's borrowers are still attending college and not in full principal repayment, should help insulate SLM from experiencing a sharp increase in credit losses over the Outlook horizon. Although SLM's loan forbearance rates rose sharply into the double digits in 2Q20 and it experienced weaker loan demand as college enrollments declined in the fall, the company's earnings still increased meaningfully in 2020 as a result of completed and pending loan sales. Higher loan loss provisions and net interest margin (NIM) compression in 1H20 were more than offset by the gain on sale of loans realized in 1Q20 and the reserve release in 4Q20 related to the pending sale of loans in 1Q21. As a result, SLM was able to further strengthen its capital ratios, excluding the effect of the implementation of the current expected credit loss (CECL) accounting standard, which was considerably larger for SLM than its consumer bank peers given the longer duration of student loans. The rating affirmations reflect SLM's leading market position in the U.S. private education loan industry, above average returns and operating performance relative to peer banks, solid asset quality, and sufficient levels of capital and liquidity. Rating constraints include SLM's monoline business model, heightened legislative/regulatory risk associated with the student lending/servicing business, the duration mismatch between demand deposits and longer-term student loans, and SLM's higher proportion of brokered deposits, which are more sensitive to interest rates. In January 2020, the company announced a revised strategy, whereby it plans to sell a cross-section of its private student loans annually, with the gains generated as well as the capital freed up from the loan sales deployed toward share repurchases. In 1Q20, SLM sold $3.1 billion of private education loans, realizing a $239 million gain (7.7%), and completed $558 million of share repurchases, $525 million of which was completed through an accelerated share repurchase program with JP Morgan. In January 2021, the company announced that its board approved an additional $1.25 billion share repurchase program, which it planned to fund with the capital generated from the sale of $4 billion of private education loans. SLM entered into an agreement to sell $3 billion in 1Q21 for a low double-digit percentage gain. Continued loan sales are expected to result in SLM's assets remaining relatively flat over the Outlook horizon. The decision to sell a portion of its loan portfolio was driven by the underperformance of SLM shares in recent years, which management believes provided an arbitrage opportunity whereby there is a dislocation between the pricing in the loan sale market relative to the implied value reflected in its share price. While the gain on sale income will result in higher earnings volatility than holding the loans to term, and the increase in share repurchases is viewed less favorably for debtholders, Fitch expects the impact to SLM's capital ratios and liquidity position to be relatively small. However, the reduction in longer-term profits from selling loans rather than holding them to term is viewed less favorably. SLM's private education loan originations declined 16% in the seasonally strongest third quarter, yoy, and 5% for all of 2020, to $5.3 billion. Likewise, period end loans (including loans classified as held for sale at 4Q20) declined 10.5% in 2020, driven largely by the aforementioned loan sales, as well as the decline in loan originations. Management is forecasting a rebound in loan originations growth to 6%-7% in 2021, which assumes a more normalized return to campuses in the fall relative to the significant disruption from the pandemic last year. In 2020, roughly $1.5 billion in loans were refinanced away from SLM; effectively flat with 2019. Still, Fitch views this amount to be high, particularly given the retrenchment of refi lenders due to heightened uncertainty related to the pandemic in 2Q20, and the disincentive for many borrowers to consolidate their private and federal student loans after the federal government allowed for the suspension of payments and accrued interest on federal student loans following the emergence of the pandemic. Negative ratings pressure could occur should loans being refinanced away from SLM remain elevated and lead to a sustained negative impact on SLM's earnings and credit performance. Asset quality was solid in 2020 as the unprecedented amount of government stimulus and monetary easing coupled with widespread loan forbearance programs and a contraction in consumer discretionary spending helped to counter the rise in unemployment. At Dec. 31, 2020, 49% of the private education loan portfolio was in full principal and interest repayment; up from 46% a year ago. Fitch estimates net charge-offs as a percentage of loans in full principal and interest repayment declined to 1.82% in 2020 from 1.86% in 2019. Reserve coverage on private education loans increased sharply in 2020 to 6.9% of loans at year-end and 7.6x trailing twelve-month (TTM) net charge-offs, compared with 1.6% and 2.0x, respectively, a year ago. The increase was driven by both the deterioration in the macroeconomic outlook as a result of the pandemic and the implementation of CECL, which reflects life of loan loss expectations rather than incurred losses, at the beginning of 2020. Forbearance as a percentage of loans in repayment rose to 4.3% at YE20 from 4.1% a year ago, but declined from the double-digit levels reached in 2Q20. Despite the regulatory exclusion provided to lenders in categorizing forbearance and loan modifications related to the coronavirus from being classified as troubled debt restructurings (TDRs), TDRs remained elevated at 8.9% of loans in repayment at the end of 2020, down slightly from 9.4% a year ago. Student loans tend to have higher TDRs relative to other loans because of the use of forbearance by many students post-graduation. Loans that are in forbearance for more than 90 days are classified as TDRs. Fitch expects delinquencies and credit losses to trend higher over the near term as the portfolio continues to season and the stimulative effect of the actions taken by the federal government and Federal Reserve to counter the effects of the pandemic begin to recede, although additional government stimulus could push the timeframe for credit normalization. SLM's operating performance was strong in 2020 despite the severe effects of the pandemic on the U.S. economy. Pre-tax income increased 55% from the prior year driven by gains and reserve releases from loan sales and pending loan sales, partially offset by a 13% decline in net interest income compared with 2019. SLM's NIM declined to 4.81% from 5.76% in the prior year. The decline was primarily driven by the Fed rate cuts and an increase in cash and short-term liquidity over the past year. As part of its new CEO's outline of SLM's strategic objectives in 3Q20, the company restructured its senior management team and initiated a cost restructuring program to improve operating efficiencies. This resulted in a $24 million restructuring charge aimed at better aligning its organizational structure and targeted headcount reductions, which management believes will result in $50 million of run rate expense savings beginning this year. Fitch views the cost restructuring initiatives as reasonable and prudent in light of a more challenged economic environment. SLM Bank's risk-based capital ratios moved higher in 2020 as loan growth moderated and liquidity increased. SLM Bank's stated common equity Tier 1 (CET1) ratio increased by 180 bps, to 14% at the end of 2020 compared with the prior year. The bank's regulatory capital ratios at Dec. 31, 2020 are unlikely to be sustained in 2021, as the reserves released in 4Q20 that flowed into equity capital are expected to be deployed toward share repurchases this year. Following the emergence of the pandemic in March, regulators allowed banks to exclude the impact of CECL from their regulatory capital ratios through the end of 2021, before phasing it in over the following three years. Excluding the CECL phase-in adjustment, Fitch estimates SLM Bank's CET1 ratio would have been 10.5% at YE20. While this level is considerably below the 12.2% level at the end of 2019, Fitch believes the significantly higher loss reserve coverage created by CECL is a mitigating factor in assessing SLM's capital strength. Still, Fitch expects SLM to maintain its CET1 ratio above 10% following the full phase in of CECL. Whereas SLM's liquidity (cash and short-term investments) as a percentage of assets has historically been low relative to peer banks, at the prompting of its regulators in 2019, SLM increased its liquidity portfolio to 18.8% of assets as of YE19 compared with 10.5% in the prior year. Following the emergence of the pandemic, SLM further increased its liquidity portfolio as a percentage of assets to 21.3%, as the loan portfolio declined and deposit inflows remained strong. While Fitch views the increase in liquidity held at SLM Bank favorably, it is mitigated by the increase in deposits over that time, which are expected to be prioritized relative to unsecured debt in a default scenario. Although SLM has diversified its funding profile over the past couple of years, it remains a relative ratings constraint. SLM has historically targeted a funding mix of 80% deposits and 20% securitization. The company completed its second unsecured debt issuance in October 2020, but the mix of unsecured debt in SLM's capital structure remains relatively low at roughly 2% at YE20. The securitization funding mix was below the targeted level, at 16% of total funding at Dec. 31, 2020, but is expected to trend higher over time. The majority of SLM's deposits are brokered (52%), which are more price sensitive than traditional retail deposits. Fitch also believes that the duration of brokered deposits does not align as well with student loan assets as securitizations and unsecured debt, particularly during periods of rising interest rates. Although the company does enter into swaps to hedge a portion of the repricing risk, Fitch views SLM's deposit franchise as weaker than its online bank and regional bank peers. SUPPORT RATING AND SUPPORT RATING FLOOR SLM has a Support Rating of '5' and Support Rating Floor of 'NF'. In Fitch's view, SLM is not systemically important, and therefore the probability of sovereign support is unlikely. SLM's IDRs and VRs do not incorporate any support. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Fitch's 'B+' rating on the series B preferred shares reflect their linkage to the VR. The notching reflects the subordinated payment priority and weaker recovery prospects for these instruments, in accordance with Fitch's "Global Bank Rating Criteria." The series B preferred shares are rated three notches below the VR, reflecting the instrument's non-performance and relative loss severity risk profile in addition to their non-cumulative nature. DEPOSIT RATINGS SLM Bank's uninsured long-term deposit ratings are rated one-notch higher than SLM's Long-Term IDR and senior unsecured debt because U.S. uninsured deposits benefit from depositor preference. U.S. depositor preference gives deposit liabilities superior recovery prospects in the event of default. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade include: -- A sustained erosion in SLM's CET1 ratio (fully phased in for CECL) below 10%, meaningful deterioration in portfolio credit quality, a greater emphasis on brokered deposits and secured funding, or legislative actions aimed at reducing demand and/or profitability for private education loans. Negative ratings momentum could also be driven by significant erosion in the importance of the school financial aid office channel for student loan originations that could be detrimental to SLM's franchise, or further increases in loans being refinanced from SLM that would result in meaningful margin pressure and/or weaker credit performance. Positive ratings momentum is unlikely in the near term but factors that could, individually or collectively, lead to positive rating action include: -- An improvement in the company's funding profile, with a de emphasis on brokered deposits in relation to retail deposits, and/or an increase in unsecured debt issuance. Positive momentum could also be supported by more meaningful revenue diversification without a corresponding increase in SLM's risk profile, and credit performance that is consistent with management's cumulative loss expectations through a full credit cycle. SUPPORT RATING AND SUPPORT RATING FLOOR Since SLM's Support Rating and Support Rating Floor are '5' and 'NF', respectively, there is limited likelihood that these ratings will change over the foreseeable future. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES The preferred stock ratings are sensitive to any changes in SLM's VR and would be expected to move in tandem. DEPOSIT RATINGS The long- and short-term deposit ratings are sensitive to any change in SLM's Long- and Short-Term IDRs and would be expected to move in tandem. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond 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. ESG CONSIDERATIONS SLM's has an ESG Relevance Score of 4 for Exposure to Social Impacts due to its exposure to shift in social or consumer preferences as a result of an institution's social positions, or social and/or political disapproval of core activities which, in combination with other factors, impacts the rating. 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. SMG US MIDCO 2: Moody's Completes Review, Retains Caa1 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of SMG US Midco 2, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations SMG US Midco's Caa1 corporate family rating is constrained by its relatively small size, narrow business lines with cyclical exposure, and pressure on earnings as a result of COVID. The rating is supported by the company's reputation as a leader in the outsourced venue management market, contracts that support consistent earnings, and solid relationships with popular entertainment and sports entertainment providers. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. SOFT FINISH: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Soft Finish, Inc. FDBA U. S. Garment, LLC 1370 Esperanza St. Los Angeles, CA 90023 Chapter 11 Petition Date: March 15, 2021 Court: United States Bankruptcy Court Central District of California Case No.: 21-12038 Judge: Hon. Barry Russell Debtor's Counsel: M. Jonathan Hayes, Esq. RESNIK HAYES MORADI, LLP 17609 Ventura Blvd., Suite 314 Encino, CA 91316 Tel: 818-285-0100 Fax: 818-855-7013 E-mail: jhayes@rhmfirm.com Total Assets as of December 31, 2020: $203,316 Total Liabilities as of December 31, 2020: $1,404,553 The petition was signed by Jae K. Chung, 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/7CHK4MA/Soft_Finish_Inc__cacbke-21-12038__0001.0.pdf?mcid=tGE4TAMA SOUTHERN GRAPHICS: Moody's Completes Review, Retains Caa1 CFR ------------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Southern Graphics Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Southern Graphics Inc's Caa1 Corporate Family Rating reflects pricing pressures faced by the consumer packaging industry, high financial leverage and modest operating scale. Southern Graphics specializes in marketing solutions, digital imaging and design-to-print graphics and derives most of its revenue from North America. The company operates with very high leverage and has emphasized cost saving and restructuring initiatives which, if able to be executed, should relieve high debt levels and improve margins. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. SPECIALTY ORTHPODEIC: Hires Lefkovitz & Lefkovitz as Legal Counsel ------------------------------------------------------------------ Specialty Orthpodeic Group Tennessee, PLLC and Specialty Orthopedic Group Properties, PLLC seek approval from the U.S. Bankruptcy Court for the Middle District of Tennessee to hire Lefkovitz & Lefkovitz, PLLC as their legal counsel. The firm will provide these services: a. advise the Debtors as to their rights, duties and powers under the Bankruptcy Code; b. prepare and file statements and schedules, Chapter 11 plan and other documents; c. represent the Debtors at hearings, meetings of creditors and other court proceedings; and d. perform other legal services in connection with the Debtors' Chapter 11 cases. Lefkovitz & Lefkovitz will be paid at hourly rates as follows: Steven L. Lefkovitz $575 Associate Attorneys $350 Paralegals $125 Steven Lefkovitz, Esq., a partner at Lefkovitz & Lefkovitz, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Lefkovitz & Lefkovitz can be reached at: Steven L. Lefkovitz, Esq. Lefkovitz & Lefkovitz, PLLC 618 Church Street, Suite 410 Nashville, TN 37219 Tel: (615) 256-8300 Fax: (615) 255-4516 Email: slefkovitz@lefkovitz.com About Specialty Orthpodeic Group Specialty Orthpodeic Group Tennessee, PLLC and Specialty Orthopedic Group Properties, PLLC sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Tenn. Lead Case No. 21-00514) on Feb. 24, 2021. At the time of the filing, Specialty Orthpodeic Group Tennessee had estimated assets of less than $50,000 and liabilities of between $100,001 to $500,000. Specialty Orthopedic Group Properties had estimated assets of less than $50,000 and liabilities of between $50,001 and $100,000. Judge Marian F. Harrison oversees the Debtors' cases. Lefkovitz & Lefkovitz, PLLC is the Debtors' legal counsel. SPENCER SPIRIT: Moody's Completes Review, Retains B1 CFR -------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Spencer Spirit IH LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 4, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Spencer Spirit's B1 corporate family rating is supported by the company's solid execution, which has driven consistent revenue growth in Spirit Halloween sales over the past 15 years and good recent performance in Spencer Gifts despite mall traffic challenges. The rating is also supported by the company's relatively low funded debt/EBITDA compared to similarly rated retail peers, at 1.8 times. Moody's expects Spencer Spirit to have good liquidity over the next 12-18 months, including high cash balances except for peak seasonal working capital periods, a lack of near-term maturities, and reduced revolver reliance in peak borrowing periods. The rating is constrained by Spencer Spirit's limited scale and significant reliance on mall traffic and discretionary spending by 18-24 year-olds in Spencer Gifts. The company is catching up with digital and omnichannel investments, which had been lagging, and remains exposed to the secular shift to online spending. In addition, Moody's expects revenues and earnings to decline in 2021 relative to the strong performance in 2020, as a result of lower store productivity in Spirit Halloween given day-of-week variations (from Saturday to Sunday). As a result, lease-adjusted leverage is expected to increase to 3.4-3.7 times from 2.8 times. Spencer Spirit's very high seasonality, with the vast majority of earnings and cash flow generated in the third quarter, also constrains its credit profile. As a retailer, the company also needs to make ongoing investments in social and environmental drivers, including responsible sourcing, product and supply sustainability, privacy and data protection. The principal methodology used for this review was Retail Industry published in May 2018. SPOKANE INT'L: Moody's Gives Ba2 Rating on $19.4MM Revenue Bonds ---------------------------------------------------------------- Moody's Investors Service has assigned an initial Ba2 to Spokane International Academy, WA's $19.4 million Nonprofit Revenue Bonds (Spokane International Academy Project) Series 2021A and Taxable Nonprofit Revenue Bonds (Spokane International Academy Project) Series 2021B. The outlook is stable. RATINGS RATIONALE The Ba2 rating reflects the charter school's relatively competitive profile with unique curriculum offerings and solid academic performance relative to competitors in the area. The rating incorporates the school's expanding scope of operations, specifically the opening of a high school, and adequate financial position that relies somewhat on a combination of enrollment per pupil funding growth and contributions/grants to achieve projected coverage ratios and liquidity. The rating further incorporates the higher leverage and fixed costs resulting from the new debt issuance, though this is expected to remain fairly manageable given limited additional debt plans and a generally level debt service schedule. The pension liability associated with participation in the statewide pension plan is expected to remain manageable. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action and Moody's do not see any material immediate credit risks stemming from the coronavirus pandemic for Spokane International Academy. As of February 25, 2021, the school had roughly 400 students in grades K - fifth attending in person learning with the remaining students continuing distance learning instruction. The school anticipates its sixth, seventh, and eighth graders will begin in person instruction on March 22, 2021. However, the situation surrounding coronavirus is rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis. If B1 Moody's view of the credit quality of Spokane Academy changes, Moody's will update the rating and/or outlook at that time. RATING OUTLOOK The stable outlook reflects Moody's expectation that the school's financial position will gradually improve given anticipated growth through expansion, a relatively competitive profile that has resulted in a solid waitlist, and projected operating surpluses through fiscal 2026. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS Material and sustained growth in debt service coverage and liquidity Continued growth in enrollment, inclusive of high school, that meets projected targets with a strong waitlist FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS Declines in enrollment from current and/or projected levels Weakening of liquidity and/or debt service coverage below projections Poor academic performance that jeopardizes the school's ability to renew charter and impacts competitiveness relative to competitors in the area LEGAL SECURITY The Series 2021A and 2021B bonds are special, limited obligations of the Washington State Housing Finance Commission secured solely by revenues derived from a loan agreement with Spokane International Academy. Under the loan agreement, the academy has pledged to make payments derived from revenues received from the operation of the financed facility. The academy has also executed a deed of trust covering its real and personal property interests associated with the financed facility as security for the debt. Additionally, a debt service reserve fund is to be funded with bond proceeds at the maximum annual debt service. USE OF PROCEEDS The Series 2021A & B bonds will finance the acquisition of the academy's currently leased school facility and to make various facility renovations and improvements. METHODOLOGY The principal methodology used in these ratings was US Charter Schools published in September 2016. SUNDANCE ENERGY: Latham & Watkins Advises Business in Restructuring ------------------------------------------------------------------- Sundance Energy Inc. (NASDAQ: SNDE) and its affiliates, an onshore independent oil and natural gas company focused on the development of large, repeatable resource plays in North America, announced that it has filed for voluntary Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas to effectuate a transaction that will strengthen the Company's balance sheet and best position Sundance for sustained future success. All operations will continue as usual without interruption and the Chapter 11 process is expected to conclude in approximately 60 days. Latham & Watkins LLP represents Sundance Energy Inc. in the transaction. The team was led New York restructuring and special situations partner David Hammerman, Houston corporate partner David Miller and New York restructuring and special situations counsel Annemarie Reilly. The restructuring and special situations team included New York partner Keith Simon and New York associates Jeffrey Mispagel, Misha Ross and Brian Rosen, Chicago associates Jonathan Gordon and Gabe Pugel and Washington, D.C. associate Mohini Rarrick. The corporate team included Houston partner John Greer and Houston associates Madeleine Neet, Ricardo Alvarado and Matt Cannon. The finance team was led by Houston partner Pamela Kellet and Houston counsel Bryce Kaufman, with Houston associates Brian Flynn and Whitley Johnson. Advice was also provided on tax matters by Houston partners Bryant Lee and Jim Cole, with Houston associates Michael Rowe, Dominick Constantino and Chelsea Muñoz-Patchen; on environmental matters by Los Angeles counsel Joshua Marnitz, with Washington, D.C. associate Jacqueline Yap; on benefits and compensation matters by Los Angeles partner Michelle Carpenter; on hedging and derivatives matters by New York partner Yvette Valdez, with New York associates Ashley Weeks and Adam Fovent; and on oil and gas matters by Houston partner Mike King, with Houston associate Alice Parker. About Sundance Energy Sundance Energy Inc. -- http://www.sundanceenergy.net/-- is an independent energy exploration and production company located in Denver, Colorado. The Company is focused on the acquisition and development of large, repeatable oil and natural gas resource plays in North America. Current activities are focused in the Eagle Ford. On March 9, 2021, Sundance Energy, Inc. and 3 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 21-30882). The Honorable David R. Jones is the case judge. Sundance is represented in this matter by Latham & Watkins LLP, Hunton Andrews Kurth LLP, Miller Buckfire & Co., LLC, and FTI Consulting Inc. Prime Clerk LLC is the claims agent. Haynes & Boone LLP, and Opportune LLP advise Toronto Dominion (Texas) LLC, which currently serves as successor administrative agent under the Prepetition RBL Facility. K&L Gates LLP, is counsel to ABN AMRO Capital USA, LLC. Luskin, Stern & Eisler LLP, is counsel to Credit Agricole Corporate and Investment Bank. Morgan Stanley Capital Administrators, Inc., is advised by Simpson Thacher & Bartlett LLP, Locke Lord LLP, and Houlihan Lokey Capital, Inc. * * * On March 10, 2021, the Debtors filed a joint prepackaged plan of reorganization and a proposed disclosure statement. A combined hearing to consider, among other matters, the adequacy of the Disclosure Statement and confirmation of the Plan will be held on April 19, 2021 at 9:30 a.m., prevailing Central Time, before the Honorable David R. Jones, United States Bankruptcy Court for the Southern District of Texas, Courtroom 400, 4th Floor, 515 Rusk Street, Houston, Texas 77002 via electronic means (audio and video) only. SYNAPTICS INC: Fitch Assigns First-Time 'BB' LongTerm IDR --------------------------------------------------------- Fitch Ratings has assigned a first-time 'BB' Long-Term Issuer Default Rating (IDR) to Synaptics Incorporated. The Rating Outlook is Stable. In addition, Fitch has assigned a 'BB'/'RR4' senior unsecured issue rating to Synaptics' outstanding convertible notes and senior notes expected to be issued in the pending transaction. Synaptics is seeking to issue $400 million of senior unsecured notes with proceeds used to repay the existing $100 million balance under the RCF and to partially prefund the $525 million maturity of the convertible notes in June 2022. Fitch's actions affect approximately $925 million of outstanding debt, pro forma for the issuance. KEY RATING DRIVERS New Management Leads to Improved Margins: After an extended period of underperformance with sustained revenue declines, Synaptics installed a new management team that quickly identified several margin improvement measures that would address past inefficiencies in the company's supply chain and sales strategy. In particular, new management launched an effort to reduce the number of foundry and packaging/test partners from 10 and 21, respectively, to levels consistent with industry norms as higher volumes with partners enable increased manufacturing cost reductions that allow for gross margins expansion. In addition, as opposed to the company's prior use of discrete sales teams covering each product separately, management consolidated the go-to-market efforts into a unified approach to capture synergies available from selling multiple components to a small set of customers. The new strategy, combined with recent divestitures, accretive acquisitions, and mix benefits, has resulted in non-GAAP operating margin expansion from just 10.8% in fiscal 2019, to 17.3% in fiscal 2020, and to 27% in 2Q21. Fitch believes further margin expansion opportunities remain through increased average selling prices (ASPs), additional cost rationalization and operating leverage. Conservative Financial Profile: Synaptics has publicly articulated a net leverage target of 1.5x-2.0x, and a stated willingness to tolerate gross leverage up to 4.0x in pursuit of strategic acquisitions. Synaptics is currently seeking to issue $400 million of senior unsecured notes in order to repay the existing $100 million balance under the RCF and to partially prefund the $525 million maturity of the convertible notes in June 2022. Fitch calculated 2Q21 LTM gross leverage of 2.9x, pro forma for the issuance, but prior to any debt repayments, and forecasts a decline to 1.1x in fiscal 2022 upon the contemplated debt repayments and continuing EBITDA margin expansion. Fitch believes the conservative leverage profile is appropriate given historical operating volatility. Product Leadership: Synaptics has leveraged its fist-mover advantage as the originator of notebook touchpads in 1992 to establish market share leadership in several products. The company maintains dominant market shares ranging 50%-95% in PC fingerprint sensors and touchpads, as well as video interfaces in laptop docking stations, streaming dongles and video adaptors. Additionally, the company maintains strong positions in mobile touch and display drivers, components for voice assistants, automotive infotainment displays, and a growing share in set-top boxes. Fitch believes that the strong market shares are representative of the company's early lead in technological designs. However, Fitch cautions that this leadership does not translate to pricing power, as the low switching costs and replicable technologies enable OEM clients to switch suppliers or seek to in-house design and production of components. High Customer Concentration: Synaptics has significant customer concentration as Fitch estimates the top two current clients of the company represented 45% of fiscal 2020 revenues. Fitch believes Synaptics typically sells a narrow set of components to each of its major customers, resulting in significant potential downside if the company loses a design slot. Management is taking active steps to increase customer diversification through divestitures of non-core assets, as well as through growth in emerging product areas, such as set-top boxes, surveillance cameras, industrial automation, and automotive infotainment systems. However, Fitch believes high customer concentration will persist given the scale of the company's OEM clients and presents risks of significant revenue losses, given the low switching costs for the company's products. Technology Risk and Low Switching Cost: While the company's early lead in touch interfaces established market leadership in PCs/notebooks, Synaptics is faced with continually evolving device interface technologies that necessitates high R&D expenditures and presents risks of missed revenue opportunities or loss of design slots should the company lag innovations in the market. For example, during early development of the iPhone, Apple invested in developing internal capacitive touch capabilities, displacing Synaptics, which had been a long-term supplier for the iPod and would not regain Apple as a client for several years thereafter. Similarly, the mobile handset markets' ongoing shift to OLED-based display, where Synaptics currently lacks a competing display driver, as it had with previous LCD-based display technology, has resulted in ongoing revenue pressure with a 22% decline in aggregate since fiscal 2017. Fitch believes the low switching costs and persistent technology risks constrain the ratings, given the resulting low visibility, intense competition for slots, pricing pressure and operating volatility. Cyclical End-Markets: Synaptics is exposed to cyclical consumer electronics device markets where its components are primarily implemented. Component suppliers for consumer devices experience frequent volatility given variability in consumer spending and tastes, short product lead times, annual product refreshes, concentrated OEM customers, and intermittent supply-demand imbalances that all contribute to deep cyclical troughs. In addition, several of Synaptics's core product offering are utilized in devices that struggle with poor secular outlooks, such as PCs/notebooks that have experienced ongoing declines in unit volumes and mobile handsets that have achieved saturation amongst consumers. Fitch believes Synaptics' struggles to achieve a sustainable growth strategy in these market conditions are a constraint on the credit profile, given the resulting operating volatility and deflationary pressures. DERIVATION SUMMARY Fitch evaluates Synaptics against smaller scale or similarly rated semiconductor peers, including AMD, Maxlinear, Microchip (BB+), and NXP (BBB-), as well as PCB manufacturer TTM Technologies (BB), given historically similar end-market clients and operating profile characteristics. Fitch believes Synaptics is well positioned within its core product categories, as the company's early move advantage in developing device interfaces has led to strong market shares. However, Fitch believes the benefits from leading share are constrained by replicable technology and low switching costs, which limit pricing power and enable OEM clients to switch suppliers or vertically integrate competing capabilities. In addition, Synaptics' long-term growth prospects and potential cyclicality compare unfavorably to peers given its concentration within consumer electronic device markets, while peers experience favorable secular growth tailwinds and longer product cycles through their expansion into attractive markets, such as hyperscale data center, automotive, industrial and aerospace & defense. In contrast, Synaptics scores well across operating metrics, as management has successfully executed on a cost reduction strategy that has resulted in significant margin expansion. Fitch forecasts EBITDA margin expansion to above 25% over the ratings horizon, which is in line with the peer median of 23%, while Fitch forecasts FCF margins to average 17% over the ratings horizon, above the 11% peer median due to the company's low capital intensity. Finally, Synaptics maintains an explicit net leverage target of 1.5x-2.0x, and an expressed willingness to increase gross leverage to 4.0x in pursuit of M&A, which Fitch views as conservative relative to the 3.1x peer median. Incorporating the company's expected issuance of $400 million of unsecured notes, Fitch estimates pro forma leverage of 2.9x as of 2Q21, declining to 1.1x in fiscal 2022, as the company applies proceeds and FCF to upcoming maturities. Management has paused share buybacks until the leverage targets are achieved, and the company does not pay a dividend. Fitch believes the rating is supported by the conservative leverage profile and commitment to forego shareholder returns until leverage targets are attained, while the demonstrated low barriers to entry/exit, the weaker position in the value chain, and the lack of a sustainable competitive advantage act as the leading constraints of the rating in comparison to peers. No country-ceiling, parent/subsidiary or operating environment aspects impacted the rating. KEY ASSUMPTIONS -- Revenue: Decline of 2% in fiscal 2021 due to loss of mobile handset display driver sale and unit volume declines in PC/Notebooks as the industry laps the period of elevated sales levels caused by work-from-home initiatives during the pandemic; growth of 4.5% in fiscal 2022, accelerating to 8.0% 8.5% per annum thereafter, as headwinds are offset by increased sales of video/image interfaces, Wi-Fi connectivity refresh cycle, share gains in streaming and traditional set top boxes/dongles, voice assistant devices, and design wins for automotive infotainment interfaces; -- Margins: EBITDA margin expansion of ~650 bps over the forecast horizon due to increased ASPs in wireless connectivity, set top-box and automotive, as well as declining contribution from low-ASP mobile display and touch drivers, contribution from higher-margin DisplayLink and Broadcom connectivity unit acquisitions, and reduced OPEX from consolidated go-to-market operation and supply chain partner base; -- Capital intensity of 1.6%, consistent with historical average; -- Debt: Issuance of $400 million senior unsecured notes in fiscal 2021 with proceeds to repay $100 million outstanding balance on the RCF in fiscal 2021, and to partially pre-fund 2022 converts maturity; repayment of converts upon maturity using available cash; extension of RCF facility prior to maturity. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Total Debt with Equity Credit / Operating EBITDA leverage sustained below 2.0x; -- Improved diversification through reduced customer concentration and broader end-market mix; Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Total Debt with Equity Credit / Operating EBITDA leverage sustained above 3.0x; -- FCF margins sustained below 10%; -- Sustained revenue declines; -- Loss of design slots or inability to secure new design due to technological disadvantage or lack of competitiveness; -- Increased customer losses. 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 Sufficient Liquidity: Fitch expects Synaptics to maintain adequate liquidity following the transaction given improved FCF margins, reliably positive FCF during cyclical downturns and low capital intensity. Total liquidity of $417 million at Dec. 26, 2020 consists of $317 million of readily available cash and $100 million of availability on the $200 million revolving credit facility. Fitch believes the company relies on FCF as its primary source of liquidity as Fitch forecasts expanding FCF margins will lead to nearly $450 million in aggregate FCF through fiscal 2022. Fitch notes that Synaptics has generated positive FCF in every year since 2008. Proceeds from the pending offering of $400 million of senior unsecured notes are expected to be used to repay the outstanding RCF balance and to partially prefund the 2022 convertible note maturity. Fitch also expects the credit agreement governing the RCF will be amended to extend the maturity past 2022. Following the transaction, and under the expectation that the RCF balance and the convertible notes will be repaid according to Fitch's key assumptions, Synaptics' only remaining significant maturity will be in 2029. Fitch forecasts an increase in liquidity to over $550 million in fiscal 2022 due to the RCF repayment and continued strong FCF, followed by steady growth in liquidity thereafter to over $700 million by fiscal 2023. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. SYNAPTICS INC: Moody's Assigns First Time Ba2 Corp Family Rating ---------------------------------------------------------------- Moody's Investors Service assigned the following first-time ratings to Synaptics, Inc.: a Ba2 Corporate Family Rating, Ba2-PD Probability of Default Rating, and Ba3 rating to the new Senior Unsecured Notes ("New Notes"). In addition, Moody's assigned a Speculative Grade Liquidity rating of SGL-1. The outlook is stable. Net proceeds from the issuance of $400 million of New Notes, along with balance sheet cash, will be used to repay the $100 million balance outstanding under Synaptics' senior secured revolver ("Revolver") and pre fund the repayment of the $525 million principal amount of Convertible Notes due June 2022 ("Convertible Notes"). Assignments: Issuer: Synaptics, Inc. Corporate Family Rating, Assigned Ba2 Probability of Default Rating, Assigned Ba2-PD Senior Unsecured Rating, Assigned Ba3 (LGD4) Speculative Grade Liquidity Rating, Assigned SGL-1 Outlook Actions: Issuer: Synaptics, Inc. Outlook, Assigned Stable RATINGS RATIONALE Synaptics' Ba2 CFR reflects the company's long standing niche leadership position in certain enterprise personal computer (PC) laptop and smartphone segments and modest leverage over the long term. With the nearly 50% increase in debt following the capital raise, leverage will initially increase to about 4.8x from 3.3x adjusted debt to EBITDA (twelve months ended December 26, 2020), though this does not fully capture the annual EBITDA contribution from the DisplayLink and Broadcom acquisitions, which closed in late July 2020. Moody's expects that leverage will improve to below 2x over the next 12 to 18 months driven by the earnings from the two acquisitions, expansion of profits organically, and the repayment of the Convertible Notes. Synaptics strong market position in its enterprise laptop segments, which tend to have longer product cycles than the company's other consumer related segments like mobile, provides a relatively stable base of revenues. Reflecting the niche market leadership positions and outsourced manufacturing model, Synaptics generates strong, consistent free cash flow ("FCF"). Even with revenue declines of over 9% in each of fiscal years 2019 and 2020, Synaptics produced over $100 million in FCF in each year, which Moody's expects will improve to over $200 million over the next year. With the sale in April 2020 to Hua Capital of most of Synaptics' challenged, low profit margin smartphone LCD TDDI business and the purchases of both DisplayLink and the rights to Broadcom's Internet of Things Connectivity business in July 2020, Synaptics profit margins have measurably improved. Moreover, the reduced exposure to the volatile smartphone market and the addition of PC laptop docking products and Broadcom's connectivity assets have improved Synaptics' product diversity and customer concentration, and should reduce revenue volatility. Still, Synaptics' relatively small scale, with annual revenues of less than $2 billion, exposes the company to customer concentration, with the top two customers accounting for about one-third of revenues. Moody's believes that this gives these customers negotiating leverage to seek price and other concessions from Synaptics, since the loss of one or both of these customers would have a material impact on revenues. Due to the small scale, revenue volatility within individual segments can be pronounced. Also, since a large share of the products in the Mobile and Internet of Things segments are consumer products with shorter product cycles than products sold in the PC segment, revenues in these two segments can be volatile, adding variability to Synaptics total revenues. The Mobile segment competes against a number of Asian players who have in the past engaged in price competition to gain share. Pricing wars result in the commoditization of certain smartphone subsegments, such as the smartphone LCD TDDI business that Synaptics largely exited this year. 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 corporate assets from the current weak global economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our 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. Moody's considers Synaptics' governance risk as low since Synaptics is a public company with a broad investor base and an independent board of directors. Given Synaptics exposure to the competitive semiconductor industry, Moody's expect that Synaptics financial policy will remain conservative with limited use of debt financing to fund acquisitions. Synaptics' environmental risk exposure is low, since the company utilizes third party manufacturers such as semiconductor foundries and outsourced assembly and test firms. With the outsourcing, Synaptics is not a direct source of pollution and does not have any unusual exposure to environmental hazards. The stable outlook reflects Moody's expectation that revenue growth will be weak near-term, growing no more than the low single digits percent. This reflects the revenue decline of the retained portion of the LCD TDDI business, which is in secular decline, partially offset by strong growth in the Internet of Things segment. With increasing profits and the repayment of the Convertible Notes, Moody's expects that leverage will decline to less than 2x debt to EBITDA (Moody's adjusted) and FCF to debt (Moody's adjusted) will improve to over 30% over the next 12 to 18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Synaptics: -- increases scale and product diversity with organic revenue growth sustained above the mid-single digits percent level -- expands EBITDA margin (Moody's adjusted) above 25%, and -- maintains a conservative financial policy with debt to EBITDA (Moody's adjusted) sustained below 3x The ratings could be downgraded if Synaptics: -- incurs revenue declines of more than the low single digits percent, or -- does not make progress in expanding EBITDA margin (Moody's adjusted) toward 20%, or -- adopts more aggressive financial policies such that debt to EBITDA (proforma but excluding targeted acquisition synergies, Moody's adjusted) stays above 3.5x -- experiences a deterioration of liquidity, including a large reduction in the cash balance or a material weakening in free cash flow generation The SGL-1 rating reflects Synaptics' very good liquidity, which is supported by consistent FCF and a large cash balance. Moody's expects that Synaptics will generate annual FCF (Moody's adjusted) of at least $200 million over the next year. The Revolver, which is being increased to $250 million and will be fully-available following repayment of the $100 million balance, has two financial maintenance covenants: maximum 3.5x total leverage ratio (net debt to EBITDA as defined in the credit agreement) and minimum 3.0x interest coverage ratio (EBITDA to interest). Moody's expects that Synaptics will maintain a cash balance of at least $250 million, which should provide Synaptics with very good liquidity given the consistent FCF levels. The Ba3 rating of the New Notes reflects the effective subordination to the Revolver, which benefits from a first lien on the assets of Synaptics and the company's wholly-owned domestic subsidiaries. The rating on the New Notes also reflects the anticipated repayment of the Convertible Notes due 2022. The New Notes benefit from the upstream guarantees of wholly-owned material domestic subsidiaries and from a cushion of unsecured liabilities. Synaptics, Inc., based in San Jose, California, develops PC, smartphone, and automotive infotainment human interface hardware and software products. Products include PC laptop touchpads, smartphone display drivers, edge computing processors used in digital assistants, among others, which serve the industrial, mobile telecommunication, personal computing, and automotive markets. The principal methodology used in these ratings was Semiconductor Methodology published in December 2020. SYNDIGO LLC: Moody's Completes Review, Retains B3 CFR ----------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of Syndigo LLC. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Syndigo LLC's B3 Corporate Family Rating reflects the company's small scale, large debt burden and high software development costs. The high leverage level limits upward potential of the rating; the company will have to drive growth through acquiring new customers and cross-selling products while maintaining high retention rates. High EBITDA margins are a credit positive and the company benefits from a large percentage of costs being variable. The principal methodology used for this review was Software Industry published in August 2018. TCNR LLC: Voluntary Chapter 11 Case Summary ------------------------------------------- Two affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- TCNR, LLC 21-10310 20 Laura Road Waban, MA 02468 LRNCT, LLC 21-10311 707-725 Huse Road Manchester, NH 03103 Business Description: The Debtors are engaged in nonresidential building construction. Chapter 11 Petition Date: March 11, 2021 Court: United States Bankruptcy Court District of Massachusetts Judge: Hon. Janet E. Bostwick Debtors' Counsel: John M. McAuliffe, Esq. JOHN M. MCAULIFFE & ASSOCIATES, P.C. 2000 Commonwealth Ave, Suite 305 Auburndale, MA 02466 Tel: 617-558-6889 Email: john@jm-law.net - and - Francis C. Morrissey, Esq. MORRISSEY, WILSON & ZAFIROPOULOS, LLP 45 Braintree Hill Office Park, Suite 304 Braintree, MA 02184 Tel: 781-353-5500 Email: fcm@mwzllp.com LRNCT, LLC's Estimated Assets: $10 million to $50 million LRNCT, LLC's Estimated Liabilities: $10 million to $50 million TCNR,LLC's Estimated Assets: $10 million to $50 million TCNR,LLC's Estimated Liabilities: $10 million to $50 million The petitions were signed by Nicholas Heras, Jr., manager & member. The Debtors failed to include in the petition a list of its 20 largest unsecured creditors. Copies of the petitions are available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/JH2RK2Y/LRNCT_LLC__mabke-21-10311__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/77WKNMQ/TCNRLLC__mabke-21-10310__0001.0.pdf?mcid=tGE4TAMA TD HOLDINGS: Issues $3.3 Million Unsecured Note to Streeterville ---------------------------------------------------------------- TD Holdings, Inc. entered into a securities purchase agreement with Streeterville Capital, LLC, a Utah limited liability company, pursuant to which the Company issued the Investor an unsecured promissory note on March 4, 2021 in the original principal amount of $3,320,000, convertible into shares of common stock, $0.001 par value per share, of the Company, for $3,000,000 in gross proceeds. The Note bears interest at a rate of 10% per annum compounding daily. All outstanding principal and accrued interest on the Note will become due and payable twelve months after the purchase price of the Note is delivered by Purchaser to the Company. The Note includes an original issue discount of $300,000 along with $20,000 for Investor's fees, costs and other transaction expenses incurred in connection with the purchase and sale of the Note. The Company may prepay all or a portion of the Note at any time by paying 125% of the outstanding balance elected for pre-payment. The Investor has the right to redeem the Note at any time three months after the Purchase Price Date, subject to maximum monthly redemption amount of $375,000. Redemptions may be satisfied in cash or registered stock at the Company's election during the period three months after the Purchase Price Date and six months after the Purchase Price Date. At any point after the six-month anniversary of the Purchase Pried Date, redemptions may be satisfied in cash, unregistered stock or registered stock at the Company's election. However, the Company will be required to pay the redemption amount in cash, in the event there is an Equity Conditions Failure. If Company chooses to satisfy a redemption in registered stock or unregistered stock, such stock shall be issued at 80% of the average of the lowest VWAP during the 15 trading days immediately preceding the redemption notice is delivered. Under the Purchase Agreement, while the Note is outstanding, the Company agreed to keep adequate public information available and maintain its Nasdaq listing. Upon the occurrence of an Event of Default, the Investor shall have the right to increase the balance of the Note by 15% for major defaults and 5% for minor defaults (as defined in the Note). In addition, the Note provides that upon occurrence of an Event of Default, the interest rate shall accrue on the outstanding balance at the rate equal to the lesser of 22% per annum or the maximum rate permitted under applicable law. About TD Holdings Headquartered in Beijing, People's Republic of China, TD Holdings, Inc., (formerly known as Bat Group, Inc.) is a service provider currently engaging in commodity trading business and supply chain service business in China. Its commodities trading business primarily involves purchasing non-ferrous metal product from upstream metal and mineral suppliers and then selling to downstream customers. Its supply chain service business primarily has served as a one-stop commodity supply chain service and digital intelligence supply chain platform integrating upstream and downstream enterprises, warehouses, logistics, information, and futures trading. For the year ended Dec. 31, 2019, the Company incurred net loss from continuing operations of approximately $6.94 million, and reported cash outflows of approximately $2.17 million from operating activities. The Company said these factors caused concern as to its liquidity as of Dec. 31, 2019. TEMPUR SEALY: Fitch Rates Proposed $800MM Unsecured Notes 'BB' -------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDR) of Tempur Sealy International, Inc. (TPX) and Tempur-Pedic Management, LLC at 'BB' and affirmed all the issue level ratings at these entities. Fitch has also assigned a 'BB'/'RR4' rating to TPX's proposed $800 million senior unsecured notes offering. Net proceeds of the new notes will be used to redeem the company's existing 5.50% $600 million senior unsecured notes due 2026 with the balance for general corporate purposes. The Rating Outlook is Stable. TPX's ratings reflect its leading market position as a vertically integrated global bedding company with well-known, established brands across a wide variety of price points offered through broad distribution channels. TPX has experienced strong operating momentum that began pre-pandemic, with stronger than expected results in 2020. TPX's improved operating performance has been driven by market share gains supported by operating initiatives that expanded TPX's omni-channel presence, enhanced the brand/product portfolio and improved manufacturing capabilities. Fitch believes this has led to a sustainable competitive advantage with increased confidence in TPX's ability to sustain share gains with EBITDA of around $800 million in a normalized demand environment. The ratings reflect the single product focus in a highly competitive, fragmented market that is exposed to potential pullbacks in discretionary consumer spending during periods of macroeconomic weakness. The mattress industry has been susceptible to periods of irrational pricing, secular shifts in consumer preferences and bankruptcies in both the supplier and distribution side, which could lead to some volatility in TPX top line and EBITDA performance. Fitch believes the material improvement in TPX's operating and credit profile should help mitigate potential volatility in earnings. The ratings also consider TPX long-term leverage targets of net debt/EBITDA target of 2.0x-3.0x. TPX's net leverage calculation is comparable to Fitch's gross leverage, defined as total debt to operating EBITDA after associates and minorities. Fitch expects gross leverage in 2021 of 1.7x, which is roughly similar to 2020. Over the medium term, Fitch projects gross leverage will be maintained between 2.0x to 3.0x and adjusted debt/EBITDAR between 3x to 4x, driven by capital allocation toward share repurchases and acquisitions. KEY RATING DRIVERS Strong Operating Momentum: TPX materially outperformed Fitch's expectations with revenue increasing approximately 18% to $3.7 billion and EBITDA, based on Fitch adjustments, increasing 54% to $740 million in 2020. TPX effectively managed sharp top-line declines due to store closures in late March and April 2020, shifting a portion of sales to the e-commerce channel and undertaking aggressive cost-cutting actions. TPX's cost structure is highly variable, at roughly three-quarters of overall costs. Mattress sales rebounded strongly beginning in May, supported by government stimulus checks and the shift in consumer spending from travel/leisure/ entertainment toward home-related purchases. The outperformance was driven by broad-based volume increases across TPX's North American retail partners, new distribution wins, and growth in its e-commerce business, somewhat offset by flat international wholesale sales due to uneven retail re-openings and Sealy/Sherwood supply constraints. The higher EBITDA reflects margins of 20%, an increase of almost 500 basis points, due to improved operating expense leverage on higher unit volumes, favorable floor model costs and lower customer related charges. This was partially offset by increased advertising investments, input cost headwinds, and brand mix from the Sherwood OEM business which is slightly dilutive to gross margins. The strong operating momentum has continued into 2021, supported by similar trends from 2020, including healthy underlying industry fundamentals reflecting consumers' increased focus on at-home spending with the company expecting first quarter growth rate similar to 4Q20 of approximately 20%. TPX's growth rate in North America at over 20% for 2020 was materially higher than the overall industry growth rate. ISPA (as disclosed in BedTimes) indicated dollar growth of mattresses, stationary and motion foundations from U.S. producers and imports increased by 4.1% during 2020. For 2021, ISPA projects (as disclosed in BedTimes) dollar growth in the total mattress market of 3.5%. Accelerating Growth Pre-pandemic: Prior to the coronavirus pandemic, TPX experienced strong top-line growth that was broad-based, across multiple distribution channels. Growth was driven primarily by the expansion of the retail distribution network, supported by strong North American share gains of the higher margin Tempur-Pedic brand. TPX also experienced direct channel growth exceeding 55% in 2019 reflecting increases in ecommerce sales, same-store sales and company-owned locations. Direct sales accounted for 12.5% of revenue in 2019 and 13.4% in 2020, reflecting 26% yoy growth. Following Mattress Firm's emergence from bankruptcy protection in late 2018, TPX re-entered into supply agreements with Mattress Firm, the largest specialty mattress retailer in North America, in June 2019 to reintroduce its product lines in 2,500 stores beginning 4Q19. TPX also announced an expansion of its supply agreement with Big Lots, a 1,400-store retailer, to expand entry level Sealy products. Both of these new agreements contributed to strong growth and market share gains during 2020. Fitch believes a significant portion of TPX's market share gains have likely come at the expense of Serta Simmons Bedding, LLC, TPX's main competitor as the two companies hold a significant portion of overall mattress industry sales. Serta Simmons has experienced material operating and financial stress reflected by a highly leveraged capital structure. Sustained EBITDA Around $800 Million: For 2021, Fitch projects revenue growth of 15% to $4.2 billion and EBITDA increasing by 16% to $857 million. Given the market share gains supported by operating initiatives that have expanded TPX's omni-channel presence, enhanced the brand/product portfolio and improved manufacturing capabilities, Fitch believes this has led to a sustainable competitive advantage with increased confidence in TPX's ability to sustain share gains and maintain EBITDA of around $800 million in a normalized demand environment. Fitch's projections for 2022 assumes a normalization in demand with moderation in consumer at-home spending and increased costs related to commodity inflation and intensified competitive environment that results in revenue declining in the low single digits and EBITDA declining around 10% to the upper $700 million range. Beyond 2022, Fitch assumes revenue and EBITDA growth in the 2%-3% range. There could be upside to Fitch's revenue and EBITDA expectations if TPX continues good operating momentum, supported by strength in consumer spending for mattresses on a global basis, good execution on new revenue growth opportunities and further market share gains with positive product mix. Leading Global Position: TPX maintains a strong global market position that leverages a distribution model operating through an omnichannel strategy across wholesale and direct channels for a portfolio of well-known, established brands with a wide variety of price points, anchored by the Tempur-Pedic brand. The wholesale channel, including third-party distribution, hospitality and healthcare, represented 86.6% of net sales in 2020, while company-owned stores, e-commerce and call centers and represented 13.4% of net sales. The company benefits from some geographical diversification, with approximately 14.1% of sales in international markets outside of North America, down from 16.7% in 2019 due in part to elevated disruptions with store reopenings due to the pandemic. Competitive Industry Environment: The mattress industry has been susceptible to irrational pricing, secular shifts in consumer preferences and bankruptcies in the supplier and distribution side. Over the past few years, TPX faced intense competition from the e-commerce/"bed-in-a-box" space (i.e. Casper, Amazon, other mattress e-tailers). Sales have increased rapidly from this segment during the past five years, reaching roughly 10% of industry sales. In addition to convenience, attractively-priced e-commerce mattresses have fueled price competition. Fitch believes the material improvement in TPX's operating and credit profile should help mitigate potential volatility in earnings. To ensure ongoing success, TPX must maintain a strong innovation pipeline that requires product line refreshes every three to five years with on-trend innovation supported by significant investments in marketing and promotion to sustain its competitive position. The Tempur-Pedic and Steans & Foster lines were completely refreshed in 2019, while Sealy is in the fourth year of its product line, with a refresh planned in 2021. TPX has also responded by selling "bed-in-a-box" alternatives across several price points, expanding offerings on its e-commerce platform and acquiring Sherwood Bedding in early 2020, a major manufacturer in the U.S. private label and OEM bedding market. Past Earnings Volatility: TPX experienced earnings pressure in 2017 and 2018, with EBITDA based on Fitch adjustments declining to around $400 million from approximately $500 million, driven by the distribution loss of the Mattress Firm contract and competitive pressures. In January 2017, TPX terminated the contract with Mattress Firm, its largest customer, which accounted for approximately $670 million in revenue, or roughly 21% of 2016 revenue, due to disagreements on contract terms. Consequently, TPX focused on expanding distribution to existing and new retailers and channels, building out company-owned stores, and sharpening its e-commerce strategy to recapture North America market share. In addition, the company implemented expense-management programs and focused on improving manufacturing quality. Revenues stabilized in 2018 and increased by approximately 15% in 2019, with EBITDA growing to $480 million. Leverage Expectations: Fitch expects TPX's capital allocation over the medium to longer term will be focused on capital investments, bolt-on acquisitions and shareholder returns within the context of targeting net debt/EBITDA of 2.0x-3.0x. TPX's net leverage calculation is comparable to Fitch's gross leverage, defined as total debt to operating EBITDA after associates and minorities, assuming cash levels around $50 million-$75 million. Gross leverage was 1.7x and total adjusted debt to EBITDAR was 2.6x at the end of 2020. This compares to gross leverage and total adjusted debt to EBITDAR of 3.0x and 3.9x respectively in 2019. The material improvement in leverage was driven by EBITDA growth and debt reduction. In 2021, Fitch's projects leverage will be roughly in line with 2020 absent material acquisitions. Over the medium term, Fitch projects gross leverage will be maintained between 2.0x to 3.0x, and adjusted debt/EBITDAR between 3x to 4x, driven by capital allocation toward share repurchases and acquisitions. Capital Allocation: Fitch expects annual FCF of around $400 million annually the next two years. This reflects capital spending of $130 million to $140 million annually during the next two years due to investments in stores, manufacturing capacity and ERP systems. The company also instituted a new dividend in 2020 targeted at 15% of net income, which would equate to around $60 million in 2020, based on Fitch's projections. Fitch's assumes FCF combined with incremental debt will be directed toward share buybacks and small, opportunistic bolt-on acquisitions. Fitch assumes share buybacks in 2021 will be in-line with the new guidance at approximately 6% shares outstanding or roughly $500 million and could increase in 2022 to $600 million absent a material acquisition, within the context of targeting net debt/EBITDA of 2.0x-3.0x DERIVATION SUMMARY TPX's 'BB'/Stable ratings reflects its leading market position as a vertically integrated global bedding company with well-known, established brands across a wide variety of price points offered through broad distribution channels. The ratings are tempered by the single product focus in a highly competitive, fragmented market that is exposed to potential pullbacks in discretionary consumer spending during periods of macroeconomic weakness. For 2021, Fitch projects a significantly higher operating results for TPX compared to previous expectations with revenue increasing by 15% to $4.2 billion and EBITDA increasing by 16% to $857 million with leverage at similar levels as 2020. Fitch expects TPX's capital allocation over the medium to longer term will be focused on capital investments, bolt-on acquisitions and shareholder returns while maintaining its net debt/EBITDA between the range of 2.0x-3.0x. TPX's net leverage calculation is comparable to Fitch's gross leverage calculation and equates to 3.0x-4.0x on Fitch's adjusted debt/EBITDAR calculation. TPX has a materially stronger financial profile compared to its main competitor, Serta Simmons Bedding, LLC's, which is private equity owned. Serta Simmons has experienced material operating and financial stress reflected by a highly leveraged capital structure. Similarly rated credits in Fitch's consumer portfolio include Spectrum Brands, Inc. (BB/Stable), ACCO Brands Corporation (BB/Stable), Levi Strauss & Co. (BB/Negative) and Mattel, Inc (BB/Stable). TPX and Levi Strauss & Co. share similar distribution strategies across specialty retailers and department stores along with self-distribution through company-operated stores and ecommerce with Levi having greater scale in revenues (more than $5 billion pre pandemic) and reliance on self-distribution. Levi's ratings reflect 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. Mattel's 'BB'/Stable rating 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. Mattel is one of the largest companies in the approximately $90 billion (at retail) global toy industry. ACCO's IDR of 'BB'/Stable 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. Spectrum's 'BB'/Stable 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. KEY ASSUMPTIONS -- Revenue and EBITDA growth in 2021 of approximately 15% and 16%, respectively, resulting in revenue of approximately $4.2 billion and EBITDA in the mid $800 million range. Fitch's projections for 2022 assumes a normalization in demand with moderation in consumer at-home spending with increased costs due to commodity inflation and competitive environment that results in revenue declining in the low single digits and EBITDA declining around 10% to the upper $700 million range; -- Annual capital spending between $130 million to $140 million; -- Annual FCF of around $400 million; -- Gross leverage in 2021 of approximately 1.7x and adjusted debt/EBITDAR in the mid 2x range. Over the medium term, Fitch projects gross leverage will be maintained between 2.0x to 3.0x and adjusted debt/EBITDAR between 3.0x to 4.0x, driven by capital allocation toward share repurchases and acquisitions. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade could be considered with sustained EBITDA levels above $800 million supported by mid-single digit revenue growth, sustained market share gains, demonstrated operating resiliency through shifts in the competitive environment and economic cycles with sustained gross leverage (total debt/operating EBITDA after associates and minorities) under 2.5x and total adjusted debt/operating EBITDAR below 3.5x. This would require the company to commit to maintaining TPX's long-term net leverage (similar to Fitch gross leverage calculation) target at 2.5x or less versus its current publicly stated leverage net target of 2.0x to 3.0x. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- EBITDA levels trending below $500 million caused by sales and/or margin declines, debt-funded shareholder-friendly policies and/or large debt-financed acquisitions leading to gross leverage sustained above 3.0x and total adjusted debt/operating EBITDAR above 4.0x. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Liquidity was $490 million as of Dec. 31, 2020 consisting of $65 million in cash and approximately $424.9 million of availability (after netting $0.1 million of outstanding letters of credit) on a $425 million revolving credit facility maturing 2024. Subsequent to the quarter ending, TPX upsized the credit facility by $300 million to $725 million and redeemed the remaining $250 million outstanding senior notes due 2023. Fitch expects TPX will use the revolving credit facility from time to time to finance working capital needs and for general corporate purposes. The company also maintains an accounts receivable securitization program maturing April 2021 that is subject to an overall limit of $120 million. TPX had availability of approximately $29.3 million (subject to a borrowing base net of $33.9 outstanding) as of Dec. 31, 2020. The company is in the process of refinancing this facility. TPX was in compliance with all of its covenant requirements as of Dec. 31, 2020 including consolidated total net leverage ratio in the credit agreement of less than 5x. TPX's total net leverage ratio, per the bank calculation, was 1.7x at the end of 2020. Long-term debt maturities through 2022 are modest and include $21 million in annual term loan amortization. TPX does not have a significant maturity until late 2024 when the $425 million senior secured term loan ($409 million outstanding) matures. SUMMARY OF FINANCIAL ADJUSTMENTS -- EBITDA adjusted to exclude stock-based compensation and one time/non-ordinary charges; -- Operating lease expense capitalized by 8x to calculate historical and projected lease-adjusted debt. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. THOUGHTWORKS INC: Moody's Completes Review, Retains B2 CFR ---------------------------------------------------------- Moody's Investors Service has completed a periodic review of the ratings of ThoughtWorks, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. ThoughtWorks, Inc's B2 Corporate Family Rating reflects its concentration in outsourced software development, moderate financial leverage and good overall credit metrics compared to other B2-rated peers. ThoughtWorks benefits from industry trends that include an increased demand of digitalization and ability to interact with customers through virtual platforms. Exposure to several hard-hit sectors by COVID such as travel, transportation and retailers has also created challenges, partially offset by sectors with limited impacts. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. TRIPLE J PARKING: Hires Hashimoto Forensic as Financial Advisor --------------------------------------------------------------- Triple J Parking, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Utah to hire Hashimoto Forensic Accounting, LLC as its accountant and financial advisor. The firm's services include: a. assisting the Debtor in the preparation of monthly financial reports and reports required under Bankruptcy Rule 2015.3 to be filed with the court; b. assisting the Debtor in its reorganization and other business matters; c. preparing any necessary financial projections, including projections of the Debtor's monthly disposable income; d. ensuring distributions are made in accordance with a confirmed Chapter 11 plan; and e. advising the Debtor on any other financial matters that may arise in the Debtor's Chapter 11 case. The rates charged by the firm's accountants who will assist the Debtor range from $185 to $325 per hour. The firm received a pre-bankruptcy retainer in the amount of $7,000. Mark Hashimoto, a partner at Hashimoto, 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. Hashimoto Forensic can be reached at: Mark D. Hashimoto Hashimoto Forensic Accounting, LLC 9980 South 300 West, Suite 200 Sandy, Utah 84070 Tel: (801) 990-1120 About Triple J Parking Triple J Parking, Inc. has served customers of the Salt Lake International Airport with off-site parking services for more than 30 years. It is a small, family-owned, customer-oriented business. In addition, Triple J Parking offers services such as covered parking spots, monthly parking programs, and car washing and detailing services. Triple J Parking sought protection under Chapter 11 of the U.S. Bankruptcy Court (Bankr. D. Utah Case No. 21-20800) on March 5, 2021. In the petition signed by Elizabeth Woods, president, the Debtor disclosed up to $10 million in assets and up to $1 million in liabilities. Judge Joel T. Marker oversees the case. The Debtor tapped Cohne Kinghorn, P.C. as its bankruptcy counsel; Jones, Waldo, Holbrook & McDonough, P.C. as special counsel; and Hashimoto Forensic Accounting, LLC as accountant and financial advisor. TRIPLE J PARKING: Seeks to Hire Jones Waldo as Special Counsel -------------------------------------------------------------- Triple J Parking, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Utah to hire Jones, Waldo, Holbrook & McDonough, P.C. as its special counsel. The firm will represent the Debtor in its complaint against Mark Paulson, David Paulson, and Cathleen Davis for their alleged breaches of fiduciary duty and misappropriation of the Debtor's cash while they served as board members and officers of the Debtor. The firm will be paid at these rates: Matthew Muir (shareholder) $350 per hour Spencer Topham (shareholder) $300 per hour Matthew Muir, Esq., a shareholder of Jones Waldo, 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 through: Matthew Muir, Esq. Spencer Topham, Esq. Jones, Waldo, Holbrook & McDonough, P.C. 170 South Main Street, Suite 1500 Salt Lake City, UT 84101 Phone: 801-534-7483 Email: mmiur@joneswaldo.com About Triple J Parking Triple J Parking, Inc. has served customers of the Salt Lake International Airport with off-site parking services for more than 30 years. It is a small, family-owned, customer-oriented business. In addition, Triple J Parking offers services such as covered parking spots, monthly parking programs, and car washing and detailing services. Triple J Parking sought protection under Chapter 11 of the U.S. Bankruptcy Court (Bankr. D. Utah Case No. 21-20800) on March 5, 2021. In the petition signed by Elizabeth Woods, president, the Debtor disclosed up to $10 million in assets and up to $1 million in liabilities. Judge Joel T. Marker oversees the case. The Debtor tapped Cohne Kinghorn, P.C. as its bankruptcy counsel; Jones, Waldo, Holbrook & McDonough, P.C. as special counsel; and Hashimoto Forensic Accounting, LLC as accountant and financial advisor. US SILICA: Moody's Raises CFR to B3 on Improved Credit Profile -------------------------------------------------------------- Moody's Investors Service upgraded US Silica Company, Inc.'s Corporate Family Rating to B3 from Caa1, Probability of Default Rating to B3-PD from Caa1-PD, and senior secured credit facility rating to B3 from Caa1. The outlook remains stable. Moody's also maintained the company's Speculative Grade Liquidity Rating at SGL-3. "The rating upgrade reflects Moody's expectation for a continued improvement of US Silica's credit profile following sequential strengthening of US economic activity and a stable outlook for the oil and gas industry," said Emile El Nems, Moody's Vice President. Upgrades: Issuer: US Silica Company, Inc: Corporate Family Rating, Upgraded to B3 from Caa1 Probability of Default Rating, Upgraded to B3-PD from Caa1-PD Senior Secured Bank Credit Facility, Upgraded to B3 (LGD3) from Caa1 (LGD3) Outlook Actions: Outlook, Remains Stable RATINGS RATIONALE US Silica's 's B3 CFR reflects the company's high leverage, vulnerability to cyclical end markets, the competitive nature of the business it operates in and significant revenue exposure to the oil and gas industry. At the same time, Moody's takes into consideration US Silica's (i) solid market position as one of the largest providers of industrial and frac sand in the US, (ii) strategic footprint, (iii) distribution capability and (iii) broad customer base. In addition, the rating reflects Moody's expectation that the company's credit profile will benefit from sequential improvement in economic and business activity. At year-end 2022, Moody's projects US Silica's total debt-to-EBITDA (inclusive of Moody's adjustments) will be 5.8x. The stable outlook reflects Moody's expectation that US Silica will steadily grow revenue organically, improve profitability, and improve its credit metrics. This is largely driven by Moody's views that the long term fundamentals of the US economy will improve sequentially and be supportive of the company's underlying growth drivers. US Silica's SGL-3 Speculative Grade Liquidity Rating reflects Moody's expectation that the company will maintain an adequate liquidity profile resulting from its ability to fund operations, service its debt and invest in capital expenditures from cash flow. The liquidity profile is also supported by approximately $151 million in cash on hand and the lack of near-term debt maturities. However, Moody's notes that the principal financial covenant under the company's $100 million revolving credit facility severely limits access to external liquidity. The facility incudes a maximum net total leverage ratio covenant test of 3.75x that is triggered whenever usage under the revolver exceeds 30% of the revolving commitment. Noncompliance with this financial ratio covenant could result in the acceleration of US Silica's obligations to repay all amounts outstanding under the revolver and the term loan. As of December 31, 2020, US Silica's net leverage was 6.07x and its revolver usage was $25.0 million (other than $23 million in undrawn letters of credit) leaving only $5 million of available liquidity before triggering the covenant test, which the company could not comply with. Moody's does not expect the company to need to draw additional amounts under the revolver in the next twelve to eighteen months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if: - Adjusted debt-to-EBITDA is below 5.5x for a sustained period of time - EBIT-to-interest expense is above 2.0x for a sustained period of time - The company improves its free cash flow and liquidity profile The rating could be downgraded if: - The company fails to reduce adjusted debt-to-EBITDA from current levels - EBIT-to-interest expense is below 1.0x for a sustained period of time - The company's liquidity profile deteriorates The principal methodology used in these ratings was Building Materials published in May 2019. Based in Katy, Texas, US Silica operates 23 silica mining and processing facilities. It is one of the largest producers of commercial silica and engineered materials derived from minerals in North America. The company holds approximately 489 million tons of reserves of commercial silica, which can be processed to make 197 million tons of finished products that meet API (American Petroleum Institute) frac sand specifications, and 79 million tons of reserves of diatomaceous earth, perlite, and clays. US Silica is currently organized into two segments: (1) Oil & Gas Proppants (oil & gas), which accounts for 49% of total revenue and serves the oil & gas exploration and production industry, and (2) Industrial & Specialty Products (ISP), which accounts for 51% and serves the foundry, automotive, building products, sports and recreation, glass making and filtration industries. VANTAGE POINT: Plan Payments to be Funded by Future Income ---------------------------------------------------------- Vantage Point Apparel Software, Inc., submitted an Amended Disclosure Statement describing its Chapter 11 Small Business Plan on March 9, 2021. The Amended Disclosure Statement added this paragraph: "Aside from being the only shareholder of the debtor, Mr. Lonnie Tee is also a debtor in his own personal Chapter 13 bankruptcy case—In re Lonnie M Tee, United States Bankruptcy Court for the Central District of California, Case Number 8:19-bk-14950-ES. He is currently performing under the terms of the confirmed Chapter 13 Plan in his personal case. His Chapter 13 case is currently funded by his income from the Debtor, Vantage Point, as well as Social Security income he receives. While the Vantage Point plan is underway, Mr. Tee and his wife will both be receiving Social Security income in the combined amount of approximately $5,000 per month to use toward his Chapter 13 obligations." If the Debtor finds itself in a position where it needs to reduce its expenses in order to pay the increasing obligations under the plan, it can do so. Lonnie Tee's wife can assume the position that is currently occupied by an employee of the Debtor, thereby dramatically reducing the expenses of the Debtor. If Lonnie Tee's wife was to assume this position, it would reduce the expenses of the Debtor by approximately $60,000 per year. This could be done, but it is not the best course of action as it would result in the loss of talent for the Debtor. However, it is possible in the event of a dire need to reduce expenses in order to perform under the plan. Like in the prior iteration of the Plan, Class 4 general unsecured creditors will be paid a dividend of 2.9% of their allowed claims, with quarterly payments for 60 months following the Effective Date, in the escalating quarterly amounts. Each class member will be paid on a pro rata basis together with all other members of Class 4. In other words, each Class 4 member will be distributed its share of the whole quarterly distribution in proportion to its share of the total of Class 4 claims. In the event that the Plan is confirmed, the Debtor will create a distribution fund of $25,000 ("Class 4 Incentive Fund") in year 5 of the plan. All Class 4 creditors will then receive an additional distribution from the Class 4 Incentive Fund on a pro rata basis derived from the valuation of said creditor's allowed claim. Distribution of the Class 4 Incentive Fund will be made to creditors as provided no later than 60 months following the Effective Date. These payments will ensure that the general unsecured creditors will receive no less than 2.9% of the allowed claims. If the Plan is confirmed as a consent plan, an additional $25,000 will be paid to the Class 4 creditors, providing them with 5.5% of their allowed claims. The funding of the Plan will be accomplished through available cash on the Effective Date of the Plan and future disposable income obtained through the Debtor's business activities. A full-text copy of the Amended Disclosure Statement dated March 9, 2021, is available at https://bit.ly/3cpAway from PacerMonitor.com at no charge. Attorneys for the Debtor: Michael Jones, CA M. Jones & Associates, PC 505 North Tustin Ave, Suite 105 Santa Ana, CA 92705 Telephone: (714) 795-2346 Facsimile: (888) 341-5213 E-mail: mike@MJonesOC.com About Vantage Point Apparel Software Vantage Point Apparel Software is a software company that creates software for use in the apparel industry. It has developed a base software package that is used for wholesale sales and Vantage Point Apparel Software, Inc., manufacturing of apparel. The only shareholder and principal is Mr. Lonnie Tee. Vantage Point Apparel Software, Inc., filed a Chapter 11 bankruptcy petition (Bankr. C.D. Cal. Case No. 20-10936) on March 16, 2020. The Debtor tapped M. Jones and Associates, PC, as counsel. VBI VACCINES: Partners with CEPI to Develop COVID-19 Vaccines ------------------------------------------------------------- The Coalition for Epidemic Preparedness Innovations, and VBI Vaccines Inc. have partnered to develop VBI's enveloped virus like particle (eVLP) vaccine candidates against SARS-CoV-2 variants, including the B.1.351 variant, also known as 501Y.V2, first identified in South Africa. CEPI will provide up to $33 million to support the advancement of VBI-2905, a monovalent eVLP candidate expressing the pre-fusion form of the spike protein from the B.1.351 strain, through Phase 1 clinical development. As part of the agreement, this funding will also support preclinical expansion of additional multivalent vaccine candidates designed to evaluate the potential breadth of VBI's eVLP technology. This preclinical expansion is intended to develop clinic-ready vaccine candidates capable of addressing emerging variants. "Remarkable progress has been made to develop safe and effective vaccines against COVID-19, but in parallel to the global roll out of vaccines we must now redouble our R&D efforts so we have the tools we need to tackle emerging variants of the virus. I am delighted that CEPI will support the development of VBI's promising vaccine candidates against variants of concern, which crucially can be made globally accessible through COVAX if proven to be safe and effective," Dr. Richard Hatchett, chief executive officer of CEPI, said. "CEPI also launches its 5-year plan to substantially reduce, and in the long-term even eliminate, the risk of epidemic and pandemic diseases, including coronaviruses. If we are to achieve this future, we must act now by investing in crucial R&D to optimise our vaccination strategies and technologies," Mr. Hatchett said. Jeff Baxter, president and chief executive officer of VBI, said, "We are grateful for CEPI's partnership, support, and confidence in our eVLP approach to vaccine development. We look forward to working with CEPI, who has played a crucial role in the development of COVID-19 vaccines over the last 12 months, and we remain steadfast in our mission to contribute to the end of the ongoing pandemic and the long-term protection against coronaviruses." VBI's eVLP technology has been supported by investment from the Government of Canada, which is a long-standing and vital CEPI supporter and investor. "Canada is deeply committed to its vaccine partnerships. The innovative collaboration announced today will help to ensure that millions will have access to safe vaccines against COVID-19 and future infectious disease threats," Karina Gould, Canadian Minister of International Development, said. About VBI Vaccines Inc. Cambridge, Massachusetts-based VBI Vaccines Inc. -- http://www.vbivaccines.com-- is a biopharmaceutical company driven by immunology in the pursuit of powerful prevention and treatment of disease. Through its innovative approach to virus-like particles, including a proprietary enveloped VLP platform technology, VBI develops vaccine candidates that mimic the natural presentation of viruses, designed to elicit the innate power of the human immune system. VBI is committed to targeting and overcoming significant infectious diseases, including hepatitis B, coronaviruses, and cytomegalovirus (CMV), as well as aggressive cancers including glioblastoma (GBM). VBI is headquartered in Cambridge, Massachusetts, with research operations in Ottawa, Canada, and a research and manufacturing site in Rehovot, Israel. VBI Vaccines reported a net loss of $46.23 million for the year ended Dec. 31, 2020, compared to a net loss of $54.81 million for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $209.37 million in total assets, $17.35 million in total current liabilities, $20.32 million in total non-current liabilities, and $171.70 million in total stockholders' equity. VERICAST CORP: Moody's Lowers CFR to Caa3 on Cancelled Refinancing ------------------------------------------------------------------ Moody's Investors Service downgraded Vericast Corp.'s corporate family rating to Caa3 from Caa1, probability of default rating to Caa3-PD from Caa1-PD and downgraded the ratings on the existing debt instruments due 2022/2023 to Caa3 from Caa1. The rating outlook was changed to negative from stable. Moody's withdrew the ratings assigned to Vericast's cancelled refinancing, including the B3 rating on the amended and extended term loan due 2026, the B3 rating on the first lien senior secured note due 2026 and the Caa3 rating on the second lien secured note due 2027. The rating actions follow Vericast's decision to terminate its previously proposed refinancing transaction. The ratings downgrade and outlook change to negative is prompted by Vericast's termination of the proposed refinancing and reflects risks to the sustainability of the capital structure given near-term debt maturities, the expectation of high leverage and negative pressure on earnings. Absent a meaningful improvement in operating performance, asset sales or sponsor's support, secular industry declines make it difficult for the company to materially reduce its high leverage and address its significant $2.2 billion of 2022/2023 maturities, thereby elevating default risk. Vericast remains exposed to significant business risk stemming from the secular decline in the check and print advertisement business, and Moody's considers leverage high given these secular risks. Vericast's $800 million senior secured notes come due in August 2022. The company's existing $1.7 billion first lien term loan ($1,434 million outstanding balance at year-end 2020) comes due in November 2023 and has a springing maturity in May 2022, if the secured notes maturing in 2022 are still outstanding. The company's $250 million ABL facility (with a $96 million balance as of December 31, 2020) is now current, expiring in February 2022 and has a springing maturity in November 2021 if certain conditions are met. Downgrades: Issuer: Vericast Corp. Corporate Family Rating, Downgraded to Caa3 from Caa1 Probability of Default Rating, Downgraded to Caa3-PD from Caa1-PD Senior Secured Bank Credit Facility, Downgraded to Caa3 (LGD4) from Caa1 (LGD3) Senior Secured Regular Bond/Debenture, Downgraded to Caa3 (LGD4) from Caa1 (LGD3) Withdrawals: Issuer: Vericast Corp. Senior Secured Bank Credit Facility, Withdrawn , previously rated B3 (LGD3) Senior Secured 1st Lien Regular Bond/Debenture, Withdrawn , previously rated B3 (LGD3) Senior Secured 2nd Lien Regular Bond/Debenture, Withdrawn , previously rated Caa3 (LGD5) Outlook Actions: Issuer: Vericast Corp. Outlook, Changed To Negative From Stable RATINGS RATIONALE The Caa3 corporate family rating reflects Vericast's significant level of business risk due to secular declines in both its check and Valassis' print based advertisement, a shareholder-friendly financial strategy, governance risks associated with private-equity ownership and its debt-heavy capital structure that may be unsustainable. Vericast's refinancing risk is high given significant near term maturities. The company's high leverage and heavy debt service costs limit financial flexibility to effectively mitigate the structural business risks. The company has limited product diversity and a concentrated customer base in the Harland Clarke business. Check order volumes face secular pressures that Moody's believes will continue and would likely accelerate due to the wide and growing adoption of less costly and more convenient electronic, on-line and mobile payment alternatives. This trend is evidenced by Vericast's financial institutions check volumes declining at an average rate of 6.1% for the past three years and 7.5% drop in 2020. Moody's believes that continued pricing increases will ultimately render check usage prohibitively expensive, with the potential to accelerate volume declines that will likely lead to erosion in the company's revenue base. The on-going shift to new technologies continues to pose a threat to the check printing businesses. The Valassis division faces pressure from the secular demand shift of advertisers' marketing spend to internet-based / digital media channels, as well as the ensuing pricing pressure on traditional print-based media, that was further exacerbated by the COVID-19 outbreak. The company's digital revenue is growing but is still small, representing less than 10% of its 2020 revenues. Moody's does not expect the structural pressures on the company's business to ease in the future. Any acceleration in the pace of decline in check or print advertising revenue could exceed any growth in the much smaller digital revenue. Vericast's leverage, with Moody's adjusted Debt/EBITDA at 6.4x at 2020 year-end, is high, particularly in light of a business model that is in a secular decline. Moody's projects that the company's leverage will not change materially from its current level absent aggressive cost reduction, although some volume recovery from the COVID-related pandemic will support EBITDA and revenue growth in late 2021 and 2022. The ratings continues to garner support from the company's large scale, strong relationships with its clients and multi-year contracts varying between 2-4 years for most of its clients, and strong market positions in the print advertisement and check printing businesses. Management demonstrated its ability to cut costs and grow revenues notwithstanding the pressure from declining check volumes in the past, which had resulted in a good track record of cash flow generation historically. Vericast believes its focus on helping financial institution clients grow deposit accounts creates a value added relationship that improves customer retention. Following the cancellation of the proposed refinancing, Moody's views Vericast liquidity as weak due to significant debt maturities over the next 18-24 months. The company faces expiration of its $250 million ABL facility in February 2022 (subject to a springing maturity in November 2021 if certain conditions are met). As of December 31, 2020 Vericast had $51 million cash and $121 million availability under its $250 million ABL facility, giving effect to a $96 million drawn against it and $11 million in letters of credit. During calendar 2021, Moody's expect that Vericast will likely need to rely on its revolver borrowing to fund its basic cash needs, including capital expenditures in the $50-$60 million range, working capital, mandatory debt amortization of $100 million. Moody's expects the company to generate break-even to negative free cash flows in 2021. ESG CONSIDERATIONS Social risks taken into Vericast's ratings include the aforementioned evolving trends and changing consumer preferences. In addition, the rating also takes into account social risk from potential data privacy breaches from a cyber breach. Given its private equity ownership, Vericast's corporate governance risk is high. Vericast has a track record of sponsor friendly transactions that have continued even as the company had underperformed expectations. STRUCTURAL CONSIDERATIONS The instrument ratings reflect the probability of default of the company, as reflected in the Caa3-PD Probability of Default Rating, an average expected family recovery rate of 50% at default given the largely first lien secured debt capital stack and the particular instruments' ranking in the capital structure. The $800 million first lien senior secured note due August 2022 and the $1.7 billion first lien secured term loan due November 2023 are rated Caa3, same as the CFR. Moody's rank the term loan behind the ABL revolver (unrated) in Moody's loss given default notching framework due to the revolver's first lien on receivables, inventory and related assets with a second lien on other material assets. The $800 million senior secured note and the $1.7 billion term loan are pari passu with the $325 million 12.5% senior secured note due 2024 (unrated). The term loan does not have any financial covenants. The negative rating outlook reflects the elevated risk of default unless the company can refinance debt maturities on commercially viable terms, ensure uninterrupted access to a revolving line of credit and reverse its weak operating performance. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Heightened near-term risk of default including through distressed exchange transactions, or a reduction in the recovery assumption could lead to further downgrades. The inability to secure uninterrupted access to a revolving credit facility or weakening of liquidity would also pressure the company's ratings including through such factors as significant ABL usage or weaker or negative free cash flow. An upgrade or a shift to a stable rating outlook is unlikely unless the company is able to proactively address its 2022/2023 debt maturities at commercially viable terms. The principal methodology used in these ratings was Media Industry published in June 2017. Headquartered in San Antonio, TX, Vericast Corp. ("Vericast") is a provider of check and check related products, direct marketing services and customized business and home office products. Its Valassis division offers clients mass delivered and targeted programs to reach consumers primarily consisting of shared mail, newspaper and digital delivery in addition to coupon clearing and other marketing and analytical services. The company's 2020 annual revenue was $2.6 billion. Vericast is owned by MacAndrews & Forbes Holdings, Inc. ("MacAndrews"), a wholly owned entity controlled by Ronald O. Perelman. VILLAS OF WINDMILL: Amends Plan to Resolve Homeowners' Objections ----------------------------------------------------------------- Leslie Osborne, Chapter 11 trustee for debtor Villas of Windmill Point II Property Owners Association, Inc., submitted an Amended Disclosure Statement with respect to the Chapter 11 Plan on March 9, 2021. The Trustee aggressively marketed the properties and initially obtained a stalking horse offer of $3,000,000. After additional marketing and a robust auction with many potential buyers, a gross sum of $4,450,000 was received from the sale of all 53 units. This was an average of $89,000 per unit in a community where no property had been sold for more than $50,000 in years. The closing on the sale took place March 3, 2020 and the Estate received $3,232,975 after payment of valid mortgages and expenses. The U.S. Trustee and two owners have filed Objections to the Disclosure Statement. The Trustee has resolved those objections, resulting in the changes that have been made in this Amended Disclosure Statement. The Former Board of Directors has filed an Objection to the Disclosure Statement. * The Trustee claims that the records of the Debtor were in complete disarray. The Trustee requested documents from Lesko to substantiate Thomas Lesko's claims and while some documents were provided, the information that would allow the Trustee to pursue accounts receivable was not. * The Trustee cites that approximately $49,000 for 2018 and 2019 assessments has been collected from owners selling their property. The Trustee has also begun to collect regular quarterly assessments from the owners. * The Trustee has negotiated a resolution with Santulli and Patti. The Former Board of Directors were sued in the Adversary Proceedings; were insiders and were part of the fraud and self-dealing and should not be treated the same. To the extent the Court awards any sums to the Former Board of Directors, said sum will be paid as set forth in the Plan. * The Trustee responds to administrative expenses that the Plan specifically states that all administrative expenses shall be paid from the funds being held by the Trustee, and to the extent that the Former Board of Directors are awarded any sums, such sums shall be paid as set forth in the Plan. * The taxes have already been reduced as set forth in this Amended Disclosure Statement. The Debtor is a not-for-profit entity and any surplus will be used for repairs and reserves. In addition, Section 5.6 specifically states the nature of the tax debt. The Trustee has on hand approximately $2,000,000. The funds necessary to make all payments due on the Effective Date shall be derived from those funds. Future payments, if any, owed to Class 2 shall be derived from the collection of monthly HOA dues and/or assessments. Once the Board of Directors is appointed, the Board will manage collection of dues and pay the regular operating bills from the dues. The Trustee will continue to hold the funds now in his possession until all litigation is concluded. Like in the prior alteration of the Plan, the Trustee proposes to pay Class 3 Unsecured Claimants 100% of the allowed amount of their claims. A full-text copy of Trustee's Amended Disclosure Statement dated March 9, 2021, is available at https://bit.ly/3tiyXCg from PacerMonitor.com at no charge. Attorneys for Chapter 11 Trustee: RAPPAPORT, OSBORNE & RAPPAPORT, PLLC LES OSBORNE, ESQ. Suite 203, Squires Building 1300 North Federal Highway Boca Raton, Florida 33432 Telephone: (561) 368-2200 About Villas of Windmill Point II Property Based in Port Saint Lucie, Fla., Villas of Windmill Point II Property Owners Association, Inc., is a non-profit corporation with volunteers that self manages 89 separately deeded, single family residential villa units that are attached in four and five unit clusters within a Planned Unit Development (PUD). Villas of Windmill filed a Chapter 11 petition (Bankr. S.D. Fla. 19-20400) on August 2, 2019. At the time of filing, the Debtor was estimated to have $1 million to $10 million in assets and $1 million to $10 million in liabilities. The Debtor is represented by Brian K. McMahon, Esq., in West Palm Beach, Fla. Leslie S. Osborne was appointed as the Debtor's Chapter 11 trustee. The Trustee is represented by Rappaport Osborne Rappaport. VITALIBIS INC: Defers Plan Confirmation Hearing to April 7 ---------------------------------------------------------- Vitalibis, Inc., and Triton Funds, LLC, stipulate and agree to continue the hearing on Final Approval of Disclosure Statement and Confirmation of Debtor's Chapter 11 Plan of Reorganization, currently scheduled for March 10, 2021 at 1:30 p.m., to April 7, 2021, at 10:00 a.m. Proposed Counsel for the Debtor: Ryan A. Andersen, Esq. ANDERSEN LAW FIRM, LTD. 3199 E Warm Springs Rd, Suite 400 Las Vegas, Nevada 89120 Attorneys for Triton Funds, LLC: Ogonna M. Brown, Esq. LEWIS ROCA ROTHGERBER CHRISTIE LLP 3993 Howard Hughes Pkwy, Suite 600 Las Vegas, Nevada 89169 About Vitalibis Inc. Vitalibis, Inc. -- https://www.vitalibis.com/ -- is in the business of developing, selling and distributing hemp oil-based products that contain naturally occurring cannabinoids, including cannabidiol and other products containing CBD-rich hemp oil. Vitalibis, Inc., filed its voluntary petition for relief under chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case No. 20-12865) on June 15, 2020, listing under $1 million in both assets and liabilities. Matthew C. Zirzow, Esq., at LARSON & ZIRZOW, LLC, represents the Debtor as counsel. WILDBRAIN LTD: Fitch Rates New Secured Credit Facilities 'BB+' -------------------------------------------------------------- Fitch Ratings has assigned a 'BB+'/'RR1' rating to WildBrain Ltd.'s new senior secured revolving credit and term loan credit facilities. Proceeds will be used to repay WildBrain's existing secured Term Loan B outstandings (there are no revolver outstandings). The Rating Outlook is Negative. Fitch views the proposed credit facilities positively, as they extend the existing June 30, 2022 revolver maturity into 2026, and the existing Dec. 29, 2023 term loan maturity into 2028. Both facilities will be modestly larger, and Fitch-calculated pro forma leverage will increase less than 0.1x. Fitch adjusted its leverage calculations during 2020 to account for the treatment of leases as required under IFRS 16. While the accounting change did not directly impact WildBrain's cash flow profile, it increased Fitch-calculated leverage at Dec. 31, 2020 to 9.3x from 6.9x, if calculated as it was prior to the lease treatment change (in line with Fitch expectations). Accordingly, Fitch has revised the sensitivities to be more consistent with Fitch's new treatment of operating leases, placing greater emphasis on cash flow-based metrics. Fitch will revisit the rating over the next 12 months to assess management's deleveraging progress in the context of the existing rating and Outlook. KEY RATING DRIVERS Coronavirus Impact: The coronavirus pandemic has had a targeted, but material, impact on WildBrain's operating performance, primarily the WildBrain Spark segment. The pandemic's impact on the overall advertising market, coupled with changes to YouTube's Made for Kids advertising policies resulted in a 10% revenue decline in fiscal 2020. The company overall had minimal business continuity interruptions, as it successfully transitioned its content production capabilities to a remote work environment. Excluding the impact of IFRS 16 and the 'Peanuts'-related minority interest distributions, LTM ended Dec. 31, 2020 EBITDA was flat on a yoy basis at CAD118 million. However, in the quarter ended Dec. 31, 2020, WildBrain returned to revenue and EBITDA growth as economic and operating conditions normalized, in line with Fitch expectations. The improvement was driven by continued increasing value for children's programming and expanding viewership via advertising-based video on demand (AVOD) and subscription video on demand (SVOD) platforms. Significant Debt Repayment: WildBrain has reduced debt from a peak of CAD1.109 billion at June 30, 2017 to CAD571 million at Dec. 31, 2020. The debt peak was driven by the debt-funded acquisition of an 80% interest in the 'Peanuts' brand (20% continues to be owned by members of the Charles Schulz family who maintain final strategic input) and 100% of the 'Strawberry Shortcake' brand for CAD466 million, or 12x EBITDA. The debt reductions have been primarily funded by asset sale net proceeds and free cash flow. Although leverage as previously defined had declined from a peak of 9.3x at June 30, 2018, it remains elevated above Fitch's prior 6.0x negative leverage sensitivity. However, although prior term loan prepayments eliminated required amortization through maturity, the company has publicly committed to using FCF to continue further debt prepayments. Vertically Integrated Platform: WildBrain develops and creates content for itself and others, delivering between 175 to 225 half hours annually to more than 500 global broadcasters and streaming services. This fresh content expands the world's largest independent children's programming library, with more than 13,000 half hours of children's programming and more than 3,000 consumer product licensees. The company distributes programming globally to linear and digital video outlets, including WildBrain Spark, the largest proprietary network of children's content on YouTube, and four pay-TV Canadian channels. Fitch notes WildBrain Spark showed sequential revenue improvement for the second consecutive quarter in the quarter ended Dec. 31, 2020, as the company adjusts to changes in YouTube's advertising policies. The company also provides licensing and merchandising for intellectual property (IP) it both owns and represents. Strong Defensible Brand Recognition: WildBrain owns some of the industry's most iconic children's programming brands representing unique IP with global exposure that is virtually impossible to recreate. Brands include 'Strawberry Shortcake', 'Caillou', 'Yo Gabba Gabba!', and 'Inspector Gadget'. WildBrain currently holds a 41% interest in 'Peanuts' (it sold a 39% interest to Sony Music Entertainment (Japan) Inc. (Sony) for CAD236 million, or 14x WildBrain's interest in 'Peanuts'), the world's sixth largest character brand. WildBrain's vertically integrated platform provides diversification across a broad product and content offering, expansive geographic reach and deep customer base. Children's Programming Growth: WildBrain is well-positioned to capitalize on continued growth in spending on children's programming by linear and digital platforms. Spending on children's/family programming grew at an 18% four-year CAGR through 2019, continuing to exceed overall total content growth. Over-the-top (OTT) networks have also made significant children's programming investments as part of their destination branding efforts; the company has relationships with several, including Netflix and Apple TV+. Finally, children are increasingly directly accessing content on the internet with YouTube becoming a centralized destination for online children's viewing. Content Production Costs: Many competitors have deeper funding access as they are part of larger better-capitalized conglomerates. However, while WildBrain has increased content production to refresh and expand its library, the company aims to cover 85% of hard production costs with government tax credits, only available to Canadian content producers, and licensing contract receivables. To account for cash variances, the company uses IPFs to fund shortfalls until the tax credits are collected and the IPF is repaid as required. IPF's are nonrecourse subordinated loans made to special purpose vehicles (SPVs) specifically created for each show's season and are secured by tax credits associated with the season. WildBrain has reduced its overall reliance on IPFs, which has further reduced debt. As of Dec. 31, 2020, the company had CAD62.4 million of IPFs, secured by licensing contract and tax credit receivables, which Fitch includes in its leverage calculations. This compares to the company's historical IPF levels that have ranged from approximately CAD90 million to CAD110 million. The reduction is primarily driven by WildBrain's growing focus on creating premium content for SVOD providers that cover in excess of the full production costs. Leverage Exceeds Sensitivities: Fitch-defined total leverage, calculated as Total Debt with Equity Credit/Operating EBITDA, at Dec. 31, 2020 was 9.3x, which represents an increase from pro forma leverage of 7.5x as of June 30, 2019. However, Fitch notes the increase is primarily attributable to Fitch's revised treatment of leases under IFRS 16, and that Fitch-calculated leverage excluding the lease change is 6.9x, in line with Fitch's previous expectations. Regardless, Fitch has revised the Rating Sensitivities to reflect the impact of the accounting change on Fitch-calculated credit protection metrics, adding additional cash flow-based metrics. DERIVATION SUMMARY WildBrain is weakly positioned against major global peers on most comparatives given its relative lack of scale and elevated leverage. Many of its competitors have deeper access to production funding as part of larger, better capitalized diversified conglomerates. However, the company benefits from its broad collection of iconic global brands, diverse revenue sources and customer base, strong industry position within its business segments and vertically integrated platform. Fitch believes the company is well positioned overall to continue exploiting the ongoing positive growth characteristics of the children's programming subsector. As a Canadian company, WildBrain has access to Canadian incentive programs and tax credits to fund a significant portion of their content production costs. However, WildBrain's reliance on this funding source is declining, and with it the risk to its own balance sheet, as the company has increased its focus on creating premium content for SVOD providers that cover in excess of the full production costs . No Country Ceiling or parent/subsidiary aspects impact the rating. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Fitch assumes low single digit revenue growth in fiscal year 2021, as a recovery in digital advertising and growth from new distribution deals is offset by continued weakness in broadcasting revenue and consumer products sales. -- Beyond fiscal 2021, Fitch assumes mid- to high-single digit revenue growth driven by: 1) the company's strategic focus on premium content production for internal and external use; 2) continued growth at WildBrain Spark; 3) owned IP Consumer Products, primarily 'Peanuts'; and 4) mid-single digit declines in Broadcasting as overall softness in Cable Networks more than offsets the increased commercial load. -- Margin improvement driven by cost cutting efforts and increased economies of scale. -- Mid-to-high single digit FCF margins supported by a stable EBITDA margin profile and limited capital investment requirements. Fitch assumes a significant portion of FCF will be used for additional debt repayment, in line with management's strategic review and public comment. -- No new M&A over the rating horizon. -- Total Debt with Equity Credit / Operating EBITDA, as adjusted for IFRS 16, declines below 6.0x during the fiscal year ended June 30, 2023. Key Recovery Rating Assumptions The recovery analysis assumes that WildBrain would be considered a going concern in bankruptcy and that the company would be reorganized rather than liquidated. Fitch assumed a 10% administrative claim. Fitch's recovery analysis estimates a going concern enterprise value for a reorganized firm of approximately CAD504 million. Fitch assumes a mid-single-digit decline in revenues driven by the loss of a major OTT contract and a decline in consumer product sales driven by a recession. Fitch also assumes the company is unable to quickly reduce costs, leading to a 150bps margin decline to 21%. EBITDA after minority interests therefore declines to CAD63 million. Fitch assumes WildBrain will receive a going concern multiple of 8x EBITDA, reflecting several factors. WildBrain owns some of the industry's most iconic children's programing brands representing unique IP with global exposure that is virtually impossible to recreate. Brands include 'Strawberry Shortcake', 'Caillou', 'Yo Gabba Gabba!' and 'Inspector Gadget'. WildBrain also has a 41% interest in 'Peanuts', the world's sixth-largest character brand. Fitch notes the company initially purchased an 80% interest in 'Peanuts' at an 11x multiple in 2017, and sold 49% of the interest to Sony for 14x in 2018. Content creators are acquired at lofty multiples, especially if their IP is difficult to recreate. Children's programming creators are especially valuable, as spending on children's and family programming by U.S. linear cable networks grew at a 7.9% four-year CAGR through 2016, exceeding overall total content growth of 6.3%. In addition, OTT networks have made significant investments in children's programming as part of their destination branding efforts. Content acquisition examples include several by The Walt Disney Company — Pixar for USD7.4 billion, at 23x Fitch-calculated EBITDA, in 2006; Marvel Entertainment, Inc. for USD4 billion, at high-teens market multiple estimates, in 2009; Lucasfilm Limited for USD4.1 billion, at low-teens estimates, in 2012; and certain Twenty-First Century Fox assets, primarily content creation, for USD85 billion, at low-teens estimates, in 2018. Comcast acquired DreamWorks Animation SKG, Inc. for USD4.1 billion, at mid-twenties estimates, in 2016. The NBCUniversal acquisition is excluded, as it included broadcast and cable channels and the NBC network along with Universal Studios' content creation arm. Other acquisitions include the two recent 'Peanuts' brand acquisitions — WildBrain's initial acquisition of an 80% interest for USD345 million (12x) in 2017 and Sony's acquisition of 49% of WildBrain's 80% ownership for USD185 million (14x) in 2018. The 8x multiple also reflects the fact that children are increasingly directly accessing content on the internet, with YouTube becoming a centralized destination for online children's programming viewing. To that end, 'WildBrain', the company's digital network and studio, is one of YouTube's largest children's programming networks, and grew total watch time by a 112% five-year CAGR through 2018. Fitch assumes a fully drawn revolving credit facility of CAD40 million in its recovery analysis, as credit revolvers are tapped while companies are under distress. As of June 30, 2020, the company had USD10 million outstanding borrowings under its revolving facility, CAD377 million in secured term-loan debt, CAD140 million of unsecured debentures and CAD16.6 million of exchangeable debentures. Fitch excludes WildBrain's IPFs, totaling CAD67 million, from the recovery analysis, as they are secured by assets directly related to specific programming content. IPFs are nonrecourse subordinated loans made to SPVs specifically created for each show's season that are used to fund content creation cash shortfalls until associated tax credits are collected and the IPF is repaid as required. Each IPF is secured by assets associated with that particular season, including Canadian federal and provincial tax credits and licensing contract receivables covering approximately 85% of WildBrain's content creation cash outlays, along with any restricted cash held in the SPV. The recovery analysis results in an 'RR1' Recovery Rating for the company's secured credit facilities, implying expectations for 100% recovery. The 'RR1' Recovery Rating corresponds to a three-notch uplift from WildBrain's IDR of 'B+', resulting in a 'BB+' issue rating. Fitch does not rate the IPFs or the unsecured debentures. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- (Cash Flow from Operations - Capex)/Total Debt sustained near or above 7.5%; -- The Negative Outlook could be stabilized if the company demonstrates significant progress in moving Fitch-calculated total leverage (Total Debt with Equity Credit/Operating EBITDA) toward 6.0x; -- Favorable sector tailwinds leading to strong revenue growth and EBITDA and FCF expansion as the company benefits from economies of scale. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- (Cash Flow from Operations - Capex)/Total Debt below 5%; -- Fitch-calculated total leverage not moving toward 6.0x over the next 12 months; -- Sustained weakness of the operating profile, particularly within the WildBrain Spark segment, evidence by continued revenue declines and limited margin expansion. 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, the company had CAD74 million of cash and full capacity under its CAD40 million (USD30 million) revolver. Since acquiring Peanuts in 2017, the company has prepaid roughly CAD538 million of debt, reducing interest payments and eliminating required term loan amortization through maturity. The lower interest payments, coupled with low capex requirements of less than 2.0% of revenues and the elimination of the dividend, generates improved FCF conversion metrics. Fitch believes the company will generate enough cash over the ratings case to cover internal operating and investment needs and repay additional debt. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. WIREPATH LLC: Moody's Completes Review, Retains B3 CFR ------------------------------------------------------ Moody's Investors Service has completed a periodic review of the ratings of Wirepath LLC and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on March 2, 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since January 1, 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. Key rating considerations. Wirepath's B3 corporate family rating is supported by steady demand for high-end home AV equipment, a unique business model that offers economics that are favorable to customers and thus creates a stable customer base, and Moody's expectations of strong performance in a good economy. The rating is constrained by the competitive environment that is growing, cyclical nature of business and demand, and operating with a high leverage profile. The principal methodology used for this review was Business and Consumer Service Industry published in October 2016. WYNTHROP PARTNERS: Sale of Assets to Pay Off Claims --------------------------------------------------- Wynthrop Partners, LP, filed a First Amended Plan of Reorganization on March 5, 2021. The Debtor is the owner of 54.78 acres of land in York County, Pennsylvania, and certain Real Estate Development Rights, and Equipment as set forth in the Debtor's schedules. The Plan proposes to pay creditors holding allowed claims with the proceeds from the sale of substantially all of the Debtor's Real Estate, Real Estate Development Rights, and Equipment as set forth in the Bidding Procedures. Class 3 Non-priority, unsecured claims are impaired. The total amount of general, unsecured claims is not yet determined as litigation against the Debtor's largest creditor remains pending. The Debtor proposes to pay general, unsecured claims in an amount not less than allowed general unsecured claim holders as a class would receive in a Chapter 7 liquidation. The source of the payment will be from the sale of the Debtor's real estate and other assets. Class 4 Equity Holders are impaired. Equity holders will receive a distribution only to the extent that all creditors have been paid in full for their allowed claim. A copy of the First Amended Plan of Reorganization is available at https://bit.ly/2OMZSa2 from PacerMonitor.com. About Wynthrop Partners Wynthrop Partners, LP, is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). It owns three real estate properties located in Windsor Borough, Pennsylvania, having a total current value of $2.25 million. Wynthrop Partners sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Pa. Case No. 19-00197) on Jan. 17, 2019. At the time of the filing, the Debtor disclosed $2,345,811 in assets and $640,696 in liabilities. The case is assigned to Judge Henry W. Van Eck. The Debtor tapped CGA Law Firm as its legal counsel. ROCK Commercial is the real estate broker. 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INTERNA G6G GR 1,432.7 (329.4) 431.1 GRAFTECH INTERNA EAFEUR EU 1,432.7 (329.4) 431.1 GRAFTECH INTERNA G6G TH 1,432.7 (329.4) 431.1 GRAFTECH INTERNA G6G QT 1,432.7 (329.4) 431.1 GRAFTECH INTERNA EAFUSD EU 1,432.7 (329.4) 431.1 GREEN PLAINS PAR GPP US 105.3 (46.5) (101.1) GREENSKY INC-A GSKY US 1,523.1 (175.5) 841.6 GT BIOPHARMA INC OXI GR 0.9 (29.8) (29.9) GURU ORGANIC ENE GUROF US 0.0 (0.0) (0.0) GURU ORGANIC ENE GURU CN 0.0 (0.0) (0.0) H&R BLOCK - BDR H1RB34 BZ 3,168.4 (534.6) 529.2 H&R BLOCK INC HRB US 3,168.4 (534.6) 529.2 H&R BLOCK INC HRB GR 3,168.4 (534.6) 529.2 H&R BLOCK INC HRB TH 3,168.4 (534.6) 529.2 H&R BLOCK INC HRB QT 3,168.4 (534.6) 529.2 H&R BLOCK INC HRBEUR EU 3,168.4 (534.6) 529.2 HERBALIFE NUTRIT HOO GR 3,076.1 (856.1) 648.5 HERBALIFE NUTRIT HLF US 3,076.1 (856.1) 648.5 HERBALIFE NUTRIT HLFEUR EU 3,076.1 (856.1) 648.5 HERBALIFE NUTRIT HOO QT 3,076.1 (856.1) 648.5 HERBALIFE NUTRIT HOO TH 3,076.1 (856.1) 648.5 HERBALIFE NUTRIT HOO GZ 3,076.1 (856.1) 648.5 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INC HPQ TE 34,737.0 (3,235.0) (7,442.0) HP INC 7HP TH 34,737.0 (3,235.0) (7,442.0) HP INC 7HP GR 34,737.0 (3,235.0) (7,442.0) HP INC HPQ US 34,737.0 (3,235.0) (7,442.0) HP INC HPQ SW 34,737.0 (3,235.0) (7,442.0) HP INC 7HP QT 34,737.0 (3,235.0) (7,442.0) HP INC HPQ* MM 34,737.0 (3,235.0) (7,442.0) HP INC HPQ CI 34,737.0 (3,235.0) (7,442.0) HP INC HPQ AV 34,737.0 (3,235.0) (7,442.0) HP INC HPQUSD SW 34,737.0 (3,235.0) (7,442.0) HP INC HPQEUR EU 34,737.0 (3,235.0) (7,442.0) HP INC 7HP GZ 34,737.0 (3,235.0) (7,442.0) IDERA PHARMACEUT HXXB GR 42.4 (91.2) 34.3 IDERA PHARMACEUT HXXB TH 42.4 (91.2) 34.3 IDERA PHARMACEUT IDRA US 42.4 (91.2) 34.3 IDERA PHARMACEUT HXXB QT 42.4 (91.2) 34.3 IMMUNOME INC IMNM US 12.0 (0.7) 2.1 INFINITY PHARMAC INFI US 47.0 (14.1) 33.6 INFRASTRUCTURE A IEAEUR EU 729.1 (72.7) 102.8 INFRASTRUCTURE A 5YF GR 729.1 (72.7) 102.8 INFRASTRUCTURE A IEA US 729.1 (72.7) 102.8 INHIBRX INC 1RK GR 143.6 91.7 97.1 INHIBRX INC INBXEUR EU 143.6 91.7 97.1 INHIBRX INC 1RK TH 143.6 91.7 97.1 INHIBRX INC 1RK QT 143.6 91.7 97.1 INHIBRX INC INBX US 143.6 91.7 97.1 INSEEGO CORP INO TH 227.4 (27.9) 38.4 INSEEGO CORP INO QT 227.4 (27.9) 38.4 INSEEGO CORP INO GZ 227.4 (27.9) 38.4 INSEEGO CORP INSG US 227.4 (27.9) 38.4 INSEEGO CORP INO GR 227.4 (27.9) 38.4 INSEEGO CORP INSGEUR EU 227.4 (27.9) 38.4 INSPIRED ENTERTA INSE US 324.1 (88.7) 27.1 INSPIRED ENTERTA 4U8 GR 324.1 (88.7) 27.1 INSPIRED ENTERTA INSEEUR EU 324.1 (88.7) 27.1 INTERCEPT PHARMA I4P GZ 580.5 (166.9) 366.7 INTERCEPT PHARMA I4P TH 580.5 (166.9) 366.7 INTERCEPT PHARMA I4P SW 580.5 (166.9) 366.7 INTERCEPT PHARMA I4P GR 580.5 (166.9) 366.7 INTERCEPT PHARMA ICPT US 580.5 (166.9) 366.7 INTERCEPT PHARMA ICPT* MM 580.5 (166.9) 366.7 JACK IN THE BOX JBX GR 1,913.6 (749.1) 62.7 JACK IN THE BOX JACK US 1,913.6 (749.1) 62.7 JACK IN THE BOX JACK1EUR EU 1,913.6 (749.1) 62.7 JACK IN THE BOX JBX GZ 1,913.6 (749.1) 62.7 JACK IN THE BOX JBX QT 1,913.6 (749.1) 62.7 JOSEMARIA RESOUR JOSE SS 19.7 (12.4) (24.7) JOSEMARIA RESOUR NGQSEK EU 19.7 (12.4) (24.7) JOSEMARIA RESOUR JOSES EB 19.7 (12.4) (24.7) JOSEMARIA RESOUR JOSES IX 19.7 (12.4) (24.7) JOSEMARIA RESOUR JOSES I2 19.7 (12.4) (24.7) JUST ENERGY GROU JE CN 1,069.0 (215.8) (0.5) KEMPHARM INC 1GDA TH 11.2 (62.3) (62.7) KEMPHARM INC 1GDA QT 11.2 (62.3) (62.7) KEMPHARM INC KMPH US 11.2 (62.3) (62.7) KEMPHARM INC KMPHEUR EU 11.2 (62.3) (62.7) KEMPHARM INC 1GDA GR 11.2 (62.3) (62.7) L BRANDS INC LB US 11,571.4 (658.7) 2,715.9 L BRANDS INC LTD TH 11,571.4 (658.7) 2,715.9 L BRANDS INC LTD GR 11,571.4 (658.7) 2,715.9 L BRANDS INC LBEUR EU 11,571.4 (658.7) 2,715.9 L BRANDS INC LB* MM 11,571.4 (658.7) 2,715.9 L BRANDS INC LTD SW 11,571.4 (658.7) 2,715.9 L BRANDS INC LBRA AV 11,571.4 (658.7) 2,715.9 L BRANDS INC LTD QT 11,571.4 (658.7) 2,715.9 L BRANDS INC-BDR LBRN34 BZ 11,571.4 (658.7) 2,715.9 LA JOLLA PHARM LJPC US 80.7 (85.5) 23.4 LAREDO PETROLEUM 8LP1 GR 1,442.6 (21.4) (61.0) LAREDO PETROLEUM LPI US 1,442.6 (21.4) (61.0) LAREDO PETROLEUM LPI1EUR EU 1,442.6 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13,382.0 (995.0) 2,183.0 SINCLAIR BROAD-A SBTA GR 13,382.0 (995.0) 2,183.0 SINCLAIR BROAD-A SBTA TH 13,382.0 (995.0) 2,183.0 SINCLAIR BROAD-A SBTA QT 13,382.0 (995.0) 2,183.0 SINCLAIR BROAD-A SBGIEUR EU 13,382.0 (995.0) 2,183.0 SINCLAIR BROAD-A SBTA GZ 13,382.0 (995.0) 2,183.0 SINO UNITED WORL SUIC US 0.3 (0.1) (0.2) SIRIUS XM HO-BDR SRXM34 BZ 10,333.0 (2,285.0) (2,200.0) SIRIUS XM HOLDIN RDO GR 10,333.0 (2,285.0) (2,200.0) SIRIUS XM HOLDIN RDO TH 10,333.0 (2,285.0) (2,200.0) SIRIUS XM HOLDIN SIRI US 10,333.0 (2,285.0) (2,200.0) SIRIUS XM HOLDIN RDO QT 10,333.0 (2,285.0) (2,200.0) SIRIUS XM HOLDIN SIRI AV 10,333.0 (2,285.0) (2,200.0) SIRIUS XM HOLDIN SIRIEUR EU 10,333.0 (2,285.0) (2,200.0) SIRIUS XM HOLDIN RDO GZ 10,333.0 (2,285.0) (2,200.0) SIX FLAGS ENTERT 6FE GR 2,772.7 (635.2) (145.7) SIX FLAGS ENTERT 6FE QT 2,772.7 (635.2) (145.7) SIX FLAGS ENTERT SIX US 2,772.7 (635.2) (145.7) SIX FLAGS ENTERT 6FE TH 2,772.7 (635.2) (145.7) SIX FLAGS ENTERT SIXEUR EU 2,772.7 (635.2) (145.7) SLEEP NUMBER COR SNBR US 800.1 (224.0) (474.1) SLEEP NUMBER COR SL2 GR 800.1 (224.0) (474.1) SLEEP NUMBER COR SNBREUR EU 800.1 (224.0) (474.1) SQL TECHNOLOGIES SQFL US 7.0 (22.9) (19.6) STARBUCKS CORP SBUXCL CI 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX* MM 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SRB GR 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SRB TH 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX SW 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SRB QT 29,968.4 (7,904.0) 473.6 STARBUCKS CORP USSBUX KZ 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX US 29,968.4 (7,904.0) 473.6 STARBUCKS CORP 0QZH LI 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX CI 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX AV 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUXEUR EU 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX TE 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX IM 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUXUSD SW 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SRB GZ 29,968.4 (7,904.0) 473.6 STARBUCKS CORP SBUX PE 29,968.4 (7,904.0) 473.6 STARBUCKS-BDR SBUB34 BZ 29,968.4 (7,904.0) 473.6 STARBUCKS-CEDEAR SBUX AR 29,968.4 (7,904.0) 473.6 STARBUCKS-CEDEAR SBUXD AR 29,968.4 (7,904.0) 473.6 TELOS CORP TLS US 85.8 (133.8) (11.3) THUNDER BRIDGE C TBCPU US 0.1 (0.0) (0.1) TRANSDIGM - BDR T1DG34 BZ 18,557.0 (3,721.0) 5,511.0 TRANSDIGM GROUP TDG US 18,557.0 (3,721.0) 5,511.0 TRANSDIGM GROUP T7D GR 18,557.0 (3,721.0) 5,511.0 TRANSDIGM GROUP TDG* MM 18,557.0 (3,721.0) 5,511.0 TRANSDIGM GROUP T7D TH 18,557.0 (3,721.0) 5,511.0 TRANSDIGM GROUP T7D QT 18,557.0 (3,721.0) 5,511.0 TRANSDIGM GROUP TDGEUR EU 18,557.0 (3,721.0) 5,511.0 TRAVEL + LEISURE WD5A GZ 7,613.0 (968.0) 1,545.0 TRAVEL + LEISURE TNL US 7,613.0 (968.0) 1,545.0 TRAVEL + LEISURE WD5A GR 7,613.0 (968.0) 1,545.0 TRAVEL + LEISURE WD5A TH 7,613.0 (968.0) 1,545.0 TRAVEL + LEISURE WYNEUR EU 7,613.0 (968.0) 1,545.0 TRAVEL + LEISURE WD5A QT 7,613.0 (968.0) 1,545.0 TRIUMPH GROUP TGI US 2,401.9 (1,069.8) 699.1 TRIUMPH GROUP TG7 GR 2,401.9 (1,069.8) 699.1 TRIUMPH GROUP TG7 TH 2,401.9 (1,069.8) 699.1 TRIUMPH GROUP TGIEUR EU 2,401.9 (1,069.8) 699.1 TUPPERWARE BRAND TUP GR 1,219.9 (204.7) (363.6) TUPPERWARE BRAND TUP US 1,219.9 (204.7) (363.6) TUPPERWARE BRAND TUP QT 1,219.9 (204.7) (363.6) TUPPERWARE BRAND TUP TH 1,219.9 (204.7) (363.6) TUPPERWARE BRAND TUP1EUR EU 1,219.9 (204.7) (363.6) TUPPERWARE BRAND TUP GZ 1,219.9 (204.7) (363.6) UBIQUITI INC UI US 781.2 (181.8) 374.7 UBIQUITI INC 3UB GR 781.2 (181.8) 374.7 UBIQUITI INC UBNTEUR EU 781.2 (181.8) 374.7 UBIQUITI INC 3UB GZ 781.2 (181.8) 374.7 UNISYS CORP UISCHF EU 2,707.9 (312.1) 570.9 UNISYS CORP USY1 TH 2,707.9 (312.1) 570.9 UNISYS CORP USY1 GR 2,707.9 (312.1) 570.9 UNISYS CORP UIS US 2,707.9 (312.1) 570.9 UNISYS CORP UIS1 SW 2,707.9 (312.1) 570.9 UNISYS CORP UISEUR EU 2,707.9 (312.1) 570.9 UNISYS CORP USY1 GZ 2,707.9 (312.1) 570.9 UNISYS CORP USY1 QT 2,707.9 (312.1) 570.9 UNITI GROUP INC UNIT US 4,731.8 (2,072.4) - UNITI GROUP INC 8XC TH 4,731.8 (2,072.4) - UNITI GROUP INC 8XC GR 4,731.8 (2,072.4) - UWM HOLDINGS COR UWMC US 425.8 406.4 (4.0) VALVOLINE INC 0V4 TH 3,156.0 (55.0) 708.0 VALVOLINE INC VVVEUR EU 3,156.0 (55.0) 708.0 VALVOLINE INC 0V4 GR 3,156.0 (55.0) 708.0 VALVOLINE INC 0V4 QT 3,156.0 (55.0) 708.0 VALVOLINE INC VVV US 3,156.0 (55.0) 708.0 VECTOR GROUP LTD VGR GZ 1,343.4 (659.7) 380.6 VECTOR GROUP LTD VGR US 1,343.4 (659.7) 380.6 VECTOR GROUP LTD VGR GR 1,343.4 (659.7) 380.6 VECTOR GROUP LTD VGR QT 1,343.4 (659.7) 380.6 VECTOR GROUP LTD VGR TH 1,343.4 (659.7) 380.6 VECTOR GROUP LTD VGREUR EU 1,343.4 (659.7) 380.6 VERANO HOLDINGS VRNO CN 0.1 (0.0) (0.0) VERANO HOLDINGS VRNOF US 0.1 (0.0) (0.0) VERISIGN INC VRS TH 1,766.9 (1,390.2) 229.2 VERISIGN INC VRSN US 1,766.9 (1,390.2) 229.2 VERISIGN INC VRS GR 1,766.9 (1,390.2) 229.2 VERISIGN INC VRS QT 1,766.9 (1,390.2) 229.2 VERISIGN INC VRSN* MM 1,766.9 (1,390.2) 229.2 VERISIGN INC VRSNEUR EU 1,766.9 (1,390.2) 229.2 VERISIGN INC VRS GZ 1,766.9 (1,390.2) 229.2 VERISIGN INC-BDR VRSN34 BZ 1,766.9 (1,390.2) 229.2 VERISIGN-CEDEAR VRSN AR 1,766.9 (1,390.2) 229.2 VERY GOOD FOOD C VRYYF US 15.8 9.1 8.1 VERY GOOD FOOD C 0SI TH 15.8 9.1 8.1 VERY GOOD FOOD C 0SI GZ 15.8 9.1 8.1 VERY GOOD FOOD C 0SI QT 15.8 9.1 8.1 VERY GOOD FOOD C 0SI GR 15.8 9.1 8.1 VERY GOOD FOOD C VERY1EUR EU 15.8 9.1 8.1 VERY GOOD FOOD C VERY CN 15.8 9.1 8.1 VISION HYDROGEN VIHD US 0.3 (0.3) (0.5) VITASPRING BIOME VSBC US 0.0 (0.1) (0.1) VIVINT SMART HOM VVNT US 2,877.5 (1,487.3) (316.5) W&T OFFSHORE INC WTI US 949.5 (199.5) (16.8) W&T OFFSHORE INC UWV GR 949.5 (199.5) (16.8) W&T OFFSHORE INC WTI1EUR EU 949.5 (199.5) (16.8) W&T OFFSHORE INC UWV TH 949.5 (199.5) (16.8) WAYFAIR INC- A W US 4,569.9 (1,191.9) 880.2 WAYFAIR INC- A 1WF GR 4,569.9 (1,191.9) 880.2 WAYFAIR INC- A 1WF TH 4,569.9 (1,191.9) 880.2 WAYFAIR INC- A WEUR EU 4,569.9 (1,191.9) 880.2 WAYFAIR INC- A W* MM 4,569.9 (1,191.9) 880.2 WAYFAIR INC- A 1WF GZ 4,569.9 (1,191.9) 880.2 WAYFAIR INC- A WUSD EU 4,569.9 (1,191.9) 880.2 WAYFAIR INC- A 1WF QT 4,569.9 (1,191.9) 880.2 WIDEOPENWEST INC WU5 QT 2,487.0 (212.4) (121.1) WIDEOPENWEST INC WOW1EUR EU 2,487.0 (212.4) (121.1) WIDEOPENWEST INC WU5 TH 2,487.0 (212.4) (121.1) WIDEOPENWEST INC WU5 GR 2,487.0 (212.4) (121.1) WIDEOPENWEST INC WOW US 2,487.0 (212.4) (121.1) WINGSTOP INC EWG GZ 211.6 (341.3) 22.1 WINGSTOP INC WING1EUR EU 211.6 (341.3) 22.1 WINGSTOP INC WING US 211.6 (341.3) 22.1 WINGSTOP INC EWG GR 211.6 (341.3) 22.1 WINMARK CORP WINA US 31.3 (11.4) 6.9 WINMARK CORP GBZ GR 31.3 (11.4) 6.9 WW INTERNATIONAL WW US 1,481.2 (548.2) (40.9) WW INTERNATIONAL WW6 GR 1,481.2 (548.2) (40.9) WW INTERNATIONAL WW6 TH 1,481.2 (548.2) (40.9) WW INTERNATIONAL WTWEUR EU 1,481.2 (548.2) (40.9) WW INTERNATIONAL WW6 QT 1,481.2 (548.2) (40.9) WW INTERNATIONAL WW6 SW 1,481.2 (548.2) (40.9) WW INTERNATIONAL WTW AV 1,481.2 (548.2) (40.9) WW INTERNATIONAL WW6 GZ 1,481.2 (548.2) (40.9) WYNN RESORTS LTD WYR GR 13,869.5 (737.3) 1,932.3 WYNN RESORTS LTD WYR TH 13,869.5 (737.3) 1,932.3 WYNN RESORTS LTD WYNN* MM 13,869.5 (737.3) 1,932.3 WYNN RESORTS LTD WYNN US 13,869.5 (737.3) 1,932.3 WYNN RESORTS LTD WYNN SW 13,869.5 (737.3) 1,932.3 WYNN RESORTS LTD WYR QT 13,869.5 (737.3) 1,932.3 WYNN RESORTS LTD WYNNEUR EU 13,869.5 (737.3) 1,932.3 WYNN RESORTS LTD WYR GZ 13,869.5 (737.3) 1,932.3 WYNN RESORTS-BDR W1YN34 BZ 13,869.5 (737.3) 1,932.3 YELLOW CORP YEL GR 2,185.8 (223.3) 329.1 YELLOW CORP YEL1 TH 2,185.8 (223.3) 329.1 YELLOW CORP YELL US 2,185.8 (223.3) 329.1 YELLOW CORP YEL QT 2,185.8 (223.3) 329.1 YELLOW CORP YRCWEUR EU 2,185.8 (223.3) 329.1 YUM! BRANDS -BDR YUMR34 BZ 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC TGR TH 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC TGR GR 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC YUMEUR EU 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC TGR QT 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC YUM SW 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC YUM* MM 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC YUM US 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC YUM AV 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC TGR TE 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC YUMUSD SW 5,852.0 (7,891.0) 14.0 YUM! BRANDS INC TGR GZ 5,852.0 (7,891.0) 14.0 ZHEN DING RESOUR RBTK US 0.0 (10.1) (10.1) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog, Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***