/raid1/www/Hosts/bankrupt/TCR_Public/210329.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, March 29, 2021, Vol. 25, No. 87
Headlines
AADVANTAGE LOYALTY: Fitch Rates $10-Bil. Debt 'BB', Outlook Neg.
ACADIA HEALTHCARE: S&P Affirms 'B+' ICR, Outlook Stable
ACRISURE HOLDINGS: S&P Affirms 'B' ICR on Recapitalization
AEGION CORP: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
AERKOMM INC: Incurs $9.1 Million Net Loss in 2020
AIKIDO PHARMA: Widens Net Loss to $12.3 Million in 2020
AIRPORT VAN RENTAL: U.S. Trustee Appoints Creditors' Committee
ALLY FINANCIAL: S&P Affirms 'BB+' Subordinated Debt Rating
ALPHA MEDIA: U.S. Trustee Slams $115 Mil. Ch. 11 Plan Notices
ALTA EQUIPMENT: S&P Assigns 'B' ICR, Outlook Stable
AMERICAN AIRLINES: S&P Affirms 'B-' ICR on Improved Liquidity
AMERICAN NATIONAL: Case Summary & 20 Largest Unsecured Creditors
AMERIDIAN INDUSTRIES: Court Confirms Consensual Plan
ARAMARK SERVICES: S&P Assigns BB+ Rating on New $833MM Term Loan B
ARETEC GROUP: S&P Affirms B- Issuer Credit Rating, Outlook Stable
ASTRIA HEALTH: Blames Cerner RevWorks for Its Bankruptcy
AUTO RECYCLERS: Case Summary & 20 Largest Unsecured Creditors
BCCA LLC: Voluntary Chapter 11 Case Summary
BEAR CREEK: May 6 Plan & Disclosure Hearing Set
BECKER BOILER: Case Summary & 20 Largest Unsecured Creditors
BEE COUNTY: Voluntary Chapter 11 Case Summary
BELFOR HOLDINGS: S&P Affirms 'B' ICR on Incremental Debt Add-On
BIONIK LABORATORIES: Borrows $503,650 From RGD, Other Lenders
BLUE CRATES: Case Summary & 4 Unsecured Creditors
BOY SCOUT: Downplays Victims' Covid Issues Over Meeting
BRIGHT HORIZONS: S&P Alters Outlook to Positive, Affirms 'B+' ICR
BROUSSARD INVESTMENT: Unsecured Creditors to Get 10.5% in Plan
BSL TRANSPORT: Case Summary & 7 Unsecured Creditors
BULLDOGGE FITNESS: May Use Cash Collateral on Interim Basis
BURFORD CAPITAL: S&P Rates New $350MM Senior Unsecured Notes 'BB-'
C2R GLOBAL: Court Extends Plan Exclusivity Thru December 31
CADIZ INC: Posts $37.8 Million Net Loss in 2020
CADIZ INC: Susan Kennedy Appointed to Board of Directors
CAJUN COMPANY: Case Summary & 20 Largest Unsecured Creditors
CALAIS REGIONAL: Anthem Says Disclosure Inadequate
CARBONLITE HOLDINGS: U.S. Trustee Appoints Creditors' Committee
CARRIAGE SERVICES: S&P Upgrades ICR to 'B+', Outlook Stable
CARVANA CO: Plans to Offer $500M of Senior Notes Due 2027
CBL & ASSOCIATES: Reaches Chapter 11 Deal With Bank Lenders
CENTRAL GARDEN: S&P Affirms 'BB' ICR, Outlook Stable
CENTRAL SIGNS: Case Summary & 14 Unsecured Creditors
CHESAPEAKE APPALACHIA: Penalized for Ignoring Wetlands
CITY BREWING: S&P Assigns 'B+' ICR on Strong Growth Prospects
CORECIVIC INC: S&P Lowers ICR to 'BB-' on Heightened Business Risk
COSMOLEDO LLC: Wants Plan Exclusivity Extended Until April 12
CUSHMAN & WAKEFIELD: S&P Downgrades ICR to 'B+', Outlook Stable
CYPRUS MINES: Claimants Seek to Reconstitute Tort Committee
DYCOM INDUSTRIES: S&P Affirms 'BB' ICR, Outlook Stable
EMERA INC: S&P Assigns 'BB+' Rating on J First Preferred Shares
FARMACIA NUEVA: Asks for 90-Day Extension for Plan
FIELDWOOD ENERGY: Kasowitz Represents Bardin Hill, 3 Others
FIELDWOOD ENERGY: Unsecureds' Recovery Hiked to 0.8% to 14.3%
FLEXOGENIX GROUP: Avoidance Actions Filed; May 11 to Confirm Plan
FLYNN RESTAURANT: S&P Raises ICR to 'B', Outlook Stable
FORD STEEL: Court OKs Deal on Cash Collateral Use Thru April 22
FOSSIL EXHIBITS: Gets Cash Collateral Access Thru July 31
FRONTERA HOLDINGS: Unsecured Creditors Unimpaired in Plan
FULL HOUSE: Buys $1 Million in NDAU
GEO GROUP: S&P Downgrades ICR to 'B' on Heightened Refinancing
GIRARDI & KEESE: Founder & Wife Owe Former Clients, Says Trustee
GREAT WESTERN PETROLEUM: S&P Upgrades ICR to 'B-' on Refinancing
GREATER HOUSTON POOL: Case Summary & 20 Top Unsecured Creditors
GREATER HOUSTON: Case Summary & 7 Unsecured Creditors
GREEN SIDE UP: May 19 Plan & Disclosure Hearing Set
GREEN SIDE UP: Secured Creditors to be Paid in Installments in Plan
H-CYTE INC: Lowers Net Loss to $6.5 Million in 2020
HAMPTON ROADS: Fitch Affirms B+ Rating on $8.5MM Housing Bonds
HEARTWISE INC: All Creditors Will be Paid in Full Under Plan
HEXAGON AUTOMOTIVE: Cash Collateral Access OK'd on Interim Basis
HEXION INC: S&P Alters Outlook to Stable, Affirms 'B-' ICR
HIGHPOINT RESOURCES: Joint Prepackaged Plan Confirmed by Judge
HOFFMASTER GROUP: S&P Alters Outlook to Stable, Affirms 'CCC+' ICR
HOP-HEDZ INC: Unsecureds Will be Paid 100% of Their Claims
ICONIX BRAND: Red Diamond Completes Sale of Chinese Unit for $16M
IMERYS TALC: Arnold, Pachulski Update on Talc Personal Claimants
IMPRESA HOLDINGS: Slated to Seek Plan Confirmation April 28
INDUSTRIAL REPAIR: Case Summary & 15 Unsecured Creditors
INGRAM MICRO: Fitch Lowers LT IDR to 'BB-', Outlook Stable
INSTANT BRANDS: Moody's Affirms Ba3 CFR, Rates $450M Term Loan Ba3
INTEGRATED GROUP: Case Summary & 20 Largest Unsecured Creditors
IRM EXPRESS: Case Summary & 7 Unsecured Creditors
J&J VENTURES: S&P Assigns 'B' ICR on High Degree of Competition
J.H. BRYANT: Case Summary & 20 Largest Unsecured Creditors
KINGS SUPERMARKET: Case Summary & 20 Largest Unsecured Creditors
LA DHILLON: April 22 Disclosure Statement Hearing Set
LATAM AIRLINES: Appointment of Equity Committee Sought
LD HOLDINGS: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
LINEAR MOLD: Case Summary & 20 Largest Unsecured Creditors
LIONS GATE: S&P Affirms 'B' Issuer Credit Rating, Outlook Negative
LS MOTORCARS: Case Summary & 9 Unsecured Creditors
MACOM TECHNOLOGY: S&P Alters Outlook to Positive, Affirms 'B' ICR
MATRIX INTERNATIONAL: Gets Cash Collateral Access
MBM SAND: Plan Confirmation Hearing Continued to April 27
MED EQUITY: Case Summary & Unsecured Creditor
MED PARENTCO: S&P Alters Outlook to Stable, Affirms 'B-' ICR
MEDALLION MIDLAND: Fitch Hikes LongTerm IDR to 'B+', Outlook Stable
MEHR GROUP: Case Summary & 2 Unsecured Creditors
MICROVISION INC: Yalon Farhi to Step Down as Board Member
MIKEN OIL: Case Summary & 13 Unsecured Creditors
NATIONAL RIFLE: Bonds Ellis Updates on Judge Journey, 3 Others
NEW FORTRESS: Fitch Assigns First-Time 'BB-' LongTerm IDR
NEW FORTRESS: Moody's Rates Sr. Secured Notes 'B1', Outlook Stable
NEW FORTRESS: S&P Affirms 'B+' Ratings on Expected Growth
NORDAM GROUP: S&P Downgrades ICR to 'B-', Outlook Stable
NORDSTROM INC: S&P Alters Outlook to Stable, Affirms 'BB+' ICR
NOVABAY PHARMACEUTICALS: Posts $11 Million Net Loss in 2020
OAKSHIRE MUSHROOM: Gets Cash Collateral Access Thru April 24
OER SERVICES: Case Summary & 20 Largest Unsecured Creditors
OLMA-XXI INC: Unsecured Creditors Will Recover 15% Under Plan
OMEGA SPORTS: Case Summary & 20 Largest Unsecured Creditors
OPTIMUMBANK HOLDINGS: Incurs $782K Net Loss in 2020
ORGANON & CO: S&P Assigns 'BB Long-Term Issuer Rating
PACIFIC DRILLING: To Merge With Noble After Bankruptcy
PAUL F. ROST: Updates Administrative Tax Claims Pay Details
PB 6 LLC: U.S. Trustee Unable to Appoint Committee
PBS BRAND: April 28 Plan Confirmation Hearing Set
PETIQ INC: S&P Assigns 'B-' Issuer Credit Rating, Outlook Positive
PHILADELPHIA PARKING: Fitch Cuts $44MM Parking Bonds to 'BB+'
PHIO PHARMACEUTICALS: Incurs $8.8 Million Net Loss in 2020
PINNACLE DEMOLITION: Gets Cash Collateral Access
PROFESSIONAL FINANCIAL: Unsecureds to Get 35% to 50% in Joint Plan
RAM DISTRIBUTION: Unsec. Creditors to Recover 1% in Plan
RELMADA THERAPEUTICS: Widens Net Loss to $59.4 Million in 2020
RENAISSANCE RESTORATION: Voluntary Chapter 11 Case Summary
ROCK CREEK: Unsecureds Owed $713K to Get 100% in 48 Months
ROCKIES EXPRESS: S&P Alters Outlook to Stable, Affirms 'BB+' ICR
ROOSEVELT UNIVERSITY: Fitch Affirms 'B' Issuer Default Rating
ROYAL CARIBBEAN: S&P Rates New $1.25BB Senior Unsecured Notes 'B'
RUBIE'S COSTUME: Amended Liquidating Plan Confirmed by Judge
S & A RETAIL: Case Summary & 10 Unsecured Creditors
S & H HARDWARE: Unsecureds Will Recover 11.1% in Amended Plan
SALEM MEDIA: S&P Upgrades ICR to 'CCC+' on Improved Liquidity
SC SJ HOLDINGS: Unsec. Creditors Get Share of GUC Cash Pot
SEADRILL PARTNERS: Amends MSA; Unsecureds to Recover Up to 0.9%
SEADRILL PARTNERS: April 30 Plan Confirmation Hearing Set
SENIOR PRO SERVICES: May 7 Plan & Disclosure Hearing Set
SHILO INN: Gets Cash Collateral Access Thru May 31
SM ENERGY: S&P Upgrades ICR to 'B-', Alters Outlook to Stable
SOUTHLAND ROYALTY: May 12 Plan Confirmation Hearing Set
SOUTHLAND ROYALTY: Royalty Plaintiffs Request Reserve in Plan
SPLASH NEWS: Bankrupted by Legal Battle With Meghan Markle
STEPS IN HOME: Expects Live Oak's PPP Claim to Be Forgiven
STEWART SUPERMARKET: Case Summary & 7 Unsecured Creditors
STONEMOR INC: Lowers Net Loss to $8.4 Million in 2020
STONEMOR INC: Signs Deal to Acquire 4 Cemeteries for $5.4 Million
TECH DATA: Fitch Puts 'BB+' Issuer Default Rating on Watch Positive
TECH DATA: S&P Places 'BB' Issuer Credit Rating on Watch Positive
TELEMACHUS LLC: Has Until April 27 to File Plan & Disclosures
TERRA-GEN FINANCE: S&P Affirms 'CCC+' ICR on Refinancing Risk
TIGER OAK: Case Trustee Seeks to Use Cash Collateral Thru May 31
TK SKOKIE: Has Until July 20 to File Plan & Disclosure Statement
TPT GLOBAL: Signs Contract to Provide COVID-19 Testing
TRANSOCEAN LTD: Argues With Creditors Again on Default Case
TRILOGY INTERNATIONAL: New Zealand Unit to Explore Public Listing
TRILOGY INTERNATIONAL: Swings to $47.8 Million Net Loss in 2020
TWT LLC: Case Summary & 3 Unsecured Creditors
ULD LOGISTICS: Case Summary & 8 Unsecured Creditors
WASHINGTON STATE CONVENTION: S&P Cuts 2018 Rating to 'BB+'
WATERVILLE-MONCLOVA: Case Summary & 3 Unsecured Creditors
WESTMORELAND COAL: Set $19 Million Black Lung Claims in Chapter 11
WIRTA HOTELS: Plan Exclusivity Period Extended Thru April 15
WOC PACIFIC: Case Summary & 7 Unsecured Creditors
WW INTERNATIONAL: S&P Rates New First-Lien Credit Facility 'BB-'
WYNTHROP PARTNERS: Rutt Family Says Disclosures Insufficient
YOUNGEVITY INTERNATIONAL: Extends Maturity of $1M Notes to 2022
[^] BOND PRICING: For the Week from March 22 to 26, 2021
*********
AADVANTAGE LOYALTY: Fitch Rates $10-Bil. Debt 'BB', Outlook Neg.
----------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating with a Negative Outlook to
the $10 billion in financing co-issued by AAdvantage Loyalty IP
Ltd. (AAdvantage IP) and American Airlines, Inc. (American).
AAdvantage IP is a 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 Coronavirus Aid, Relief, and Economic
Security (CARES) Act and to fund the reserve account. AAdvantage IP
will 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' with a
Negative Outlook.
DEBT RATING PRIOR
---- ------ -----
AAdvantage Loyalty IP Ltd.
Senior Secured Class A Notes LT BB New Rating BB(EXP)
Senior Secured Class B Notes LT BB New Rating BB(EXP)
Senior Secured Term Loan LT BB New Rating BB(EXP)
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 Going Concern Assessment (GCA) Score: Timely
payment on the debt facilities depends on the ongoing performance
of the licensee, American. American 's 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 represents 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 during
the amortization period, years three through eight, is expected to
average approximately 3x with the DSCR falling below 2x only during
the first one to two amortization periods. 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.
Factors 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 the 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.
ACADIA HEALTHCARE: S&P Affirms 'B+' ICR, Outlook Stable
-------------------------------------------------------
S&P Global Ratings assigned a 'BB' issue-level rating and '1'
recovery rating to Acadia Healthcare Co. Inc.'s amended and
restated credit facility due in March 2026, which includes a $425
million term loan A and $600 million revolver, indicating its
expectation for very high (90%-100%; rounded estimate: 95%)
recovery in the event of a payment default. S&P's 'B' issue-level
rating and '5' recovery rating on Acadia's senior unsecured debt
are unchanged.
S&P said, "At the same time, we affirmed our 'B+' issuer credit
rating. We removed all debt ratings from CreditWatch, where we
placed them on Jan. 28, 2021, with negative implications.
"The stable outlook reflects our expectation that the company's
operations will improve and then stabilize in 2021, maintaining
leverage below 4x and using nearly all its free cash flow to fund
growth capital expenditures (capex).
"Our 'B+' long-term issuer credit rating reflects Acadia's narrow
focus as a pure-play behavioral health services provider in the
very fragmented U.S. market and our expectations for leverage to
remain below 4x. The company's scale is smaller than that of
largest competitor Universal Health Services Inc., which is more
than three times larger. Acadia competes with many small local
competitors as services are usually delivered locally.
"We expect debt repayment to reduce leverage to about 3.5x in 2021,
with the company repaying more than we previously expected.
Acadia has also explicitly stated its commitment to maintaining
leverage of 3x-4x. Furthermore, we do not expect it to pursue
mergers and acquisitions that would raise leverage above 4x.
"Demand for behavioral health services will remain strong. We
believe a large rise in social and economic difficulties during the
COVID-19 pandemic only enhanced demand for behavioral services. We
expect demand will remain strong as the pandemic eases, leading to
growth above that of the broader health services industry, however,
limited by reimbursement constraints and behavioral health
professional shortages. We expect same-facility-adjusted admissions
will continue to increase at a mid-single-digit percentage pace,
aided by strong demand for both traditional mental health and
specialty services (including substance abuse and eating disorder
treatment services). Reimbursement risk is ongoing given government
payers reimburse more than 70% of its business. However, Acadia's
good geographic diversity within the U.S. somewhat mitigates the
risk from Medicaid, which is determined on a state-by-state basis.
"We expect slim cash flow in 2021 and 2022 as Acadia refunds the
Medicare Advance program and payroll tax deferrals and reinvests
nearly all its operating cash flow in expansion capex. We expect
the company to support its already above-industry-average growth
rate with significant capital spending for additional beds and
facility additions, supporting our expectation it will invest most
internally generated cash flows into growth projects and some
acquisitions. Acadia plans to use free cash flow to fund organic
growth initiatives including facility expansions, de novos, and
joint ventures, driving increased margin through leveraging bed
additions.
"The stable outlook reflects our expectation that the company's
operations will improve and then stabilize in 2021, maintaining
leverage below 4x and using nearly all its free cash flow to fund
growth capex."
S&P could lower the rating if:
-- Operations are hurt by significant reimbursement cuts;
-- Acadia does not remain committed to leverage below 4x; or
-- S&P expects free cash outflows to begin to moderate despite
continued high capex investments as previous investments begin to
generate cash flow.
While unlikely at this time, S&P could raise the rating if:
-- S&P has increased confidence in the company's expansion model;
and
-- S&P believes Acadia will maintain leverage below 4x and produce
10%-15% free operating cash flow (FOCF) to debt.
The company's expanding scale could also improve business risk,
though S&P views this as unlikely in the next several years.
ACRISURE HOLDINGS: S&P Affirms 'B' ICR on Recapitalization
----------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit ratings on
Acrisure Holdings Inc. and Acrisure LLC (the borrower on all the
company's debt). S&P also affirmed all existing issue ratings. The
outlook is stable.
Acrisure has issued $3.0 billion of new 7% payment-in-kind (PIK)
Preferred Series A securities to refinance its existing 13%
Preferred Series A securities. It has also issued $454 million of
8% Preferred Series B securities to redeem existing warrants and
contribute to balance sheet liquidity.
S&P said, "The ratings affirmation reflects our belief that,
although the proposed recapitalization increases Acrisure's
financial leverage modestly, the resulting incremental change in
credit protection measures will not alter our view of
creditworthiness materially. The PIK structure of the proposed
issuances would not change our assessment of the company's credit
protection measures on a cash-pay basis--an important underlying
consideration for the rating.
"Per the recapitalization, we consider S&PGR adjusted financial
leverage (pro forma adjusted for the 12 months ended Sept. 30,
2020) to be modestly weakened, moving to 11.4x from 10.5x, but
remaining unchanged at 6.6x on a cash pay basis with corresponding
adjusted EBITDA coverage at 2.4x.
"While we recognize the loss-absorbing ability of the preferred
instrument and qualitative benefits the PIK-preferred equity
provides in terms of the lack of debt service in terms of cash
flow, we assigned no equity credit to these securities since their
redemption and interest deferral features conflict with our
criteria requirements.
"The stable outlook reflects our expectation for sustained revenue
growth with stable adjusted EBITDA and reduced borrowing costs that
underlie our run-rate expectations for S&PGR adjusted financial
leverage of 10x-11x (7x-8x, excluding PIK preferred) and adjusted
EBITDA cash interest coverage above 2.0x.
"We could lower the ratings in the next 12 months if Acrisure
sustains pro forma adjusted financial leverage above 12x (above 8x
excluding PIK preferred), or if cash interest coverage falls below
2x and we expect it to remain below that level. This could occur if
management takes a more-aggressive approach to financial policy
than we anticipate and/or through performance deterioration. We
could also lower the rating if the company's business profile
weakens as shown by declining revenues and margins that could
result from poor execution of its acquisition strategy, operational
deficiencies, and producer or client attrition.
"Although unlikely in the next 12 months, we could raise our
ratings if Acrisure's financial policies becomes less aggressive,
resulting in a reduction of adjusted financial leverage to below 7x
(below 5x excluding PIK preferred), while the company expands and
diversifies its business profile."
-- S&P has completed its recovery analysis of Acrisure; the
recovery ratings remain unchanged.
-- S&P has valued Acrisure on a going-concern basis using a 6x
multiple of our projected emergence EBITDA.
-- S&P's simulated default scenario contemplates a default in 2024
stemming from intense competition in the brokerage market, leading
to significantly lower commission and margins.
-- S&P believes lenders would achieve the greatest recovery value
through reorganization rather than liquidation of the business.
-- Emergence EBITDA: $457.9 million
-- Multiple: 6x
-- Gross recovery value: $2.747 billion
-- Net recovery value after (5% administrative expenses): $2.609
billion
-- Obligor/nonobligor valuation split: 95%/5%
-- Estimated first-lien claims: $4.875 billion
-- Value available for first-lien claims: $2.564 billion
-- Recovery range: 50%-70% (rounded estimate: 50%)
-- Estimated senior unsecured notes claims: $1.378 billion
-- Estimated senior secured deficiency claims: $2.311 billion
-- Value available for unsecured claims: $46 million
-- Recovery range: 0%-10% (rounded estimate: 0%).
All debt amounts include six months of prepetition interest.
AEGION CORP: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Aegion
Corp., a St. Louis, Mo.-based backward integrated specialty
construction company. The outlook is stable.
S&P said, "We also assigned our 'B' issue-level rating and '3'
recovery rating to the company's proposed $75 million revolving
credit facility and $650 million first-lien term loan, indicating
our expectation for meaningful (50%-70%; rounded estimate: 50%)
recovery in the event of a payment default.
"The stable outlook reflects our view that the company will benefit
from its stable backlog of work and our expectation that adjusted
debt-to-EBITDA will decline below 6.5x, with free operating cash
flow (FOCF)-to-debt in the mid-single-digit percent area.
"We anticipate the company's adjusted debt to EBITDA will decline
below 6.5x and free operating cash flow (FOCF) relative to adjusted
debt in the mid-single-digit percent area over the next 12 months.
We expect revenues and profitability will grow modestly in 2021,
benefiting from solid demand for maintenance and rehabilitation of
aging infrastructure and positive secular trends. Over the next two
years, our base-case forecast assumes the company will use the
proceeds from the planned sale of its energy services business to
repay debt. In general, our view on Aegion's financial risk
incorporates its controlling ownership by a financial sponsor,
limiting the potential for sustained deleveraging over the long
term.
"Our view of Aegion's business incorporates its position as a
specialty infrastructure solutions provider to the municipal water,
wastewater, utility and energy industries. Aegion benefits from
good market share in the North American pipeline rehabilitation
market, with a focus on maintenance engineering and construction
(E&C) services for existing pipeline infrastructure. Its customer
concentration is limited, with no customer accounting for over 2%
of total revenue. In addition, we believe the company faces less
cyclical demand patterns than other E&C companies, supported by
stable water user fees and ongoing water infrastructure investment
by municipalities." These strengths are offset by project risks,
niche focus on pipelines, and modest scale compared with larger,
multinational players within the broader E&C industry. In addition,
the company's corrosion protection business (23% of revenues) is
exposed to midstream oil and gas end markets, which experienced
decreased project activities in 2020 due to lower customer demand
as a result of COVID-19 and reduced spending in the wake of reduced
oil prices. Still, the planned divestiture of its energy services
business should somewhat help the company reduce its overall
exposure to oil and gas end markets.
Due to the nature of the E&C industry in which it operates, the
company faces some project risk as well as margin erosion from
project delays. S&P said, "We view the E&C industry as fraught
with operating risks, the potential for significant swings in
earnings and cash flow, and possible cost overruns on fixed-price
contracts. In our view the company faces risk of EBITDA margin
erosion if projects are unexpectedly delayed." Project delays can
occur as a result of customer-specific factors, or adverse weather,
for example. While a significant portion of Aegion's projects are
under guaranteed maximum price or fixed-price contracts, the
company has a good track record of risk management on executing
projects, with few job losses over the past several years.
S&P said, "The stable outlook reflects our view that the company
will benefit from its stable backlog of work and our expectation
that adjusted debt-to-EBITDA will decline below 6.5x, with free
operating cash flow (FOCF)-to-debt in the mid-single-digit percent
area. "We could lower our rating on Aegion during the next 12
months if we believed adjusted debt to EBITDA would not decline
below 6.5x or if FOCF-to-debt falls below the mid-single-digit
percent area on a sustained basis. This could occur if the company
experienced meaningful deterioration in its EBITDA margins caused
by the loss of key projects or a material debt-financed
transaction.
"Although unlikely, we could raise the rating if we believed that
the company has demonstrated sustained debt reduction from debt
prepayment along with improved profitability, such that adjusted
debt to EBITDA approaches 4x and FOCF to debt approaches 10% on a
sustained basis, and that the risk of the company's financial
sponsor owners increasing leverage above 5x was low."
AERKOMM INC: Incurs $9.1 Million Net Loss in 2020
-------------------------------------------------
Aerkomm Inc. filed with the Securities and Exchange Commission its
Annual Report on Form 10-K disclosing a net loss of $9.11 million
on $0 of sales for the year ended Dec. 31, 2020, compared to a net
loss of $7.98 million on $1.60 million of sales for the year ended
Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $56.72 million in total
assets, $17.68 million in total liabilities, and $39.03 million in
total stockholders' equity.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1590496/000121390021017392/f10k2020_aerkomminc.htm
About Aerkomm
Headquartered in Nevada, USA, Aerkomm Inc. --
http://www.aerkomm.com-- is a full-service development stage
provider of in-flight entertainment and connectivity (IFEC)
solutions, intended to provide airline passengers with a broadband
in-flight experience that encompasses a wide range of service
options. Those options include Wi-Fi, cellular, movies, gaming,
live TV, and music. The Company plans to offer these core
services, which it is currently still developing, through both
built-in in-flight entertainment systems, such as a seat-back
display, as well as on passengers' own personal devices.
AIKIDO PHARMA: Widens Net Loss to $12.3 Million in 2020
-------------------------------------------------------
Aikido Pharma Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$12.34 million on zero revenue for the year ended Dec. 31, 2020,
compared to a net loss of $4.18 million on $9,000 of revenues for
the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $30.49 million in total
assets, $877,000 in total liabilities, and $29.62 million in total
stockholders' equity.
The Company continues to incur ongoing administrative and other
expenses, including public company expenses, in excess of
corresponding (non-financing related) revenue. While the Company
continues to implement its business strategy, it intends to finance
its activities through:
* managing current cash on hand from its past debt and equity
offerings;
* seeking additional funds raised through the sale of
additional
securities in the future;
* seeking additional liquidity through credit facilities or
other
debt arrangements; and
* increasing revenue from its patent portfolios, license fees
and
new business ventures.
During the first quarter of 2021, the Company consummated a public
offering of 53,905,927 shares of common stock (including the
underwriter overallotment). The Company received gross proceeds of
approximately $86.2 million before deducting underwriting discounts
and commissions and estimated offering expenses payable by the
Company. Therefore, the Company said it has adequate cash to fund
its operations for at least the next twelve months.
Management is currently evaluating the impact of the COVID-19
pandemic on the industry and has concluded that while it is
reasonably possible that the virus could have a negative effect on
the Company's financial position, results of its operations and/or
search for drug candidates, the specific impact is not readily
determinable as of the date of these financial statements. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
For the year ended Dec. 31, 2020 and 2019, net cash used in
operations was $4.0 million and $3.0 million, respectively. The
cash used in operating activities for the year ended Dec. 31, 2020
primarily resulted from a net loss of $12.3 million, and partially
offset by reduction in fair value of investment of $6.8 million and
$1.5 million research and development expense related with license
acquired. The cash used in operating activities for the year ended
Dec. 31, 2019 primarily resulted from a net loss of $4.2 million,
reduced by $1.4 million change in fair value of its investment,
$0.1 million unrealized loss on marketable securities and $0.2
million change in assets and liabilities, and partially offset by
$2.5 million research and development expense related with license
acquisition.
For the year ended Dec. 31, 2020, net cash used in investing
activities was approximately $25.0 million as compared to net cash
provided by investing activities of approximately $1.3 million for
the year ended Dec. 31, 2019. The cash used in investing
activities for the year ended Dec. 31, 2020 primarily resulted from
its purchase of marketable securities of $98.8 million and research
and development expense related with license acquired of $1.5
million, partially offset by its sale of marketable securities of
$74.9 million since the Company invests excess cash into marketable
securities until additional cash is needed. The cash provided by
investing activities for the year ended Dec. 31, 2019 of $10.3
million primarily resulted from its sale of marketable securities,
partially offset by its purchase of marketable securities of $8.5
million.
For the year ended Dec. 31, 2020, cash provided by financing
activities for the year ended Dec. 31, 2020 was $31.6 million,
which reflects the net proceeds of $6.6 million from investors in
exchange of issuance of common stock, common warrants and prefunded
warrants, net proceeds of $17.8 million from investors in exchange
of issuance of common stock, and net proceeds of $7.2 million from
the exercise of common warrants and prefunded warrants. Cash
provided by financing activities for the year ended Dec. 31, 2019
was $1.8 million, which reflects the net proceeds of $0.8 million
from investors in exchange of issuance of common stock and
prefunded common stock warrants, and net proceeds of $1.0 million
from the issuance of common stock as part of its ATM offering.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/12239/000121390021017738/f10k2020_aikidopharma.htm
About Aikido Pharma
Headquartered in New York, NY, Aikido Pharma Inc. fka Spherix
Incorporated -- http://www.spherix.com-- was initially formed in
1967 and is currently a biotechnology company seeking to develop
small-molecule anti-cancer therapeutics. The Company's activities
generally include the acquisition and development of technology
through internal or external research and development. In
addition, the Company seeks to acquire existing rights to
intellectual property through the acquisition of already issued
patents and pending patent applications, both in the United States
and abroad. The Company may alone, or in conjunction with others,
develop products and processes associated with technology
development. Recently, the Company has invested in and helped
develop technology with Hoth Therapeutics, Inc., DatChat, Inc. and
with its recent asset acquisition with CBM BioPharma, Inc. in
December 2019.
AIRPORT VAN RENTAL: U.S. Trustee Appoints Creditors' Committee
--------------------------------------------------------------
The U.S. Trustee for Region 16 appointed Carlos Simon as class
representative to the official committee of unsecured creditors
formed in the Chapter 11 cases of Airport Van Rental, Inc. and its
affiliates.
Meanwhile, Tri Global, Inc. resigned as committee member.
The committee is now composed of:
1. Susan Gardner
c/o The Pep Boys-Manny, Moe & Jack
3111 W. Allegheny Ave.
Philadelphia, PA 19132
Phone: (303) 946-8779
E-mail: susan_gardner@pepboys.com
Represented by:
Jeremy A. Campana, Esq.
Thompson Hine, LLP
127 Public Sq., Suite 3900
Cleveland, OH 44114
Phone: (216) 566-5936
E-mail: Jeremy.campana@thompsonhine.com
2. David Spivak Esq., Class Counsel
c/o Carlos Simon, Class Representative
The Spivak Law Firm
16530 Ventura Blvd., Suite 203
Encino, CA 91436
Phone: (213) 725-9094
E-mail: david@spivaklaw.com
Represented by:
Benjamin Nachimson
Woolf & Nachimson, LLP
1100 Glendon Ave., 15th Floor
Los Angeles, CA 90024
Phone: (310) 474-8776
E-mail: ben.nachimson@wnlawyers.com
About Airport Van Rental
Airport Van Rental -- https://www.airportvanrental.com -- is a van
rental company offering short and long-term rentals for road trips,
weekend journeys, moving, and any other group outings.
Airport Van Rental and its affiliates filed their voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
C.D. Calif. Lead Case No. 20-20876) on Dec. 11, 2020. Yazdan Irani,
president and chief executive officer, signed the petitions.
At the time of the filing, Airport Van Rental disclosed assets of
between $10 million and $50 million and liabilities of the same
range.
The Debtors tapped Danning, Gill, Israel & Krasnoff, LLP as their
bankruptcy counsel, CSA Partners LLC as financial consultant, and
Joel Glaser, APC as litigation counsel. Kevin S. Tierney is the
Debtors' chief reorganization officer.
The U.S. Trustee for Region 16 appointed an official committee of
unsecured creditors on Feb. 3, 2021. Elkins Kalt Weintraub Reuben
Gartside, LLP and B. Riley Advisory Services serve as the
committee's bankruptcy counsel and financial advisor, respectively.
ALLY FINANCIAL: S&P Affirms 'BB+' Subordinated Debt Rating
----------------------------------------------------------
S&P Global Ratings revised its long-term rating outlook on Ally
Financial Inc. to stable from negative. S&P also affirmed its
'BBB-' long-term issuer credit and unsecured debt ratings, its
'BB+' subordinated debt rating, and its 'A-3' short-term issuer
credit rating on Ally, as well as its 'BB-' preferred stock rating
on subsidiary GMAC Capital Trust I.
S&P said, "The outlook revision and ratings affirmation reflect
Ally's success in navigating the economic fallout from the COVID-19
pandemic, as well as our view that it is well-positioned to absorb
higher credit losses. Specifically, consumer creditworthiness has
held up better than we initially expected during the past year,
largely because of ongoing fiscal and monetary support by the U.S.
government, despite the economic dislocation and higher
unemployment caused by the COVID-19 pandemic." For 2020, the
company reported lower-than-expected deterioration in credit
quality, which resulted in better-than-expected capital resilience
while building reserves.
Overall consumer creditworthiness has benefited from repeated
infusions of fiscal stimulus by the U.S. government, including a
$1.9 trillion package that became law in March 2021. This has
enabled many debtors with even marginal credit profiles to continue
meeting minimum debt service. Better positioned consumers have been
paying down debt, and overall commercial auto demand for dealer
floorplan credit has declined amid weaker inventory turnover.
The dynamics of stronger consumer balance sheets and prudent credit
risk management were apparent in Ally's excellent recent financial
results, which compared favorably to recent periods of benign asset
quality. The company ended 2020 with just 0.96% in retail net
charge-offs from 1.29% in net charge-offs in 2019. While the
company's profitability deteriorated with a 38% decrease in net
income, this was less of a reduction than we expected. At the same
time, the company was able to build consolidated reserves to 2.78%
of loans from 2.03% on current expected credit losses (CECL) day 1.
S&P believes that robust fiscal stimulus will delay and ultimately
reduce credit losses, which it expects will likely peak toward the
end of 2021 or later.
S&P said, "We believe that management's conservative balance sheet
management and government support measures have positioned Ally to
absorb any remaining fallout from the pandemic, including higher
credit losses. A year ago, retail loans on forbearance peaked at
approximately 30% during the third quarter, much higher than auto
lending peers. Since then, the company was able to transition the
bulk of those customers out of forbearance, finishing the year with
0.5% of loans on forbearance as a percentage of total loans. The
company was also able to terminate its acquisition of CardWorks
Inc., which could have further increased the relative risk of its
consumer loan portfolio, in our view.
"Capital also remained robust and stable despite the build in
reserves. Ally's common equity Tier 1 (CET1) ratio was 10.6% at
year-end 2020, although its regulatory ratios benefit from the
extended recognition period for CECL provisions. We expect Ally to
make share repurchases at a higher level than 2020 as it executes
its $1.6 billion authorized share repurchase program. Over time, we
think Ally will gradually reduce capital but expect the S&P Global
Ratings risk-adjusted capital (RAC) ratio, measured at 8.8% at
year-end 2020, to remain adequate for the rating."
Liquidity resources are substantial at about $40.7 billion, or
almost 25% of total assets, largely because of robust deposit flows
and declining commercial auto balances. Deposits grew 13% to $137
billion for the 12 months ended Dec. 31, 2020. The company's
balances for dealer floorplan loans decreased to $16.6 billion as
of Dec. 31, 2020, from $26.3 billion the year prior. S&P expect
deposit flows to gradually abate and reverse as the Fed eventually
tapers its program of quantitative easing.
Lastly, S&P expects Ally's earnings to improve in 2021, largely
because of lower credit provisions, net interest margin expansion,
and declining liquidity balances. Nonetheless, originations may
be challenged, and provisions may be higher than management
expects. Ally reported net earnings of $1.1 billion for 2020, down
38% from the prior year, attributable to a higher provision for
credit losses and higher expenses. The company expects net interest
margin above 3% for 2021, well above the 2.67% reported for 2020.
S&P said, "The stable outlook reflects our expectation that Ally is
well-positioned to absorb any remaining fallout from the pandemic,
including higher credit losses, which we expect will likely peak
towards the end of 2021 or later. We also expect that Ally's auto
finance and direct banking operations will remain resilient in the
next two years, and that its capital ratios will remain adequate,
including a RAC ratio at the lower end of the 7%-10% range.
"We could lower the ratings if Ally's asset quality deteriorates
substantially beyond a level we currently anticipate (perhaps to
50% of projected Fed stress test losses), or if its risk appetite
increases. We could also lower the ratings if Ally's capital ratios
decline, most notably if its CET1 ratio declines below 9.0% or our
RAC ratio declines below 7.0% on a sustained basis.
"We could raise the ratings if we believe Ally's financial
resilience and risk-adjusted returns are similar to higher rated
peers. An upgrade would also be contingent on improving deposit
quality, continued conservative management of capital and
liquidity, and improving earnings. The company's concentration in
auto lending and partial reliance on deposits with a limited
banking relationship via its online platform limit its upside
potential."
ALPHA MEDIA: U.S. Trustee Slams $115 Mil. Ch. 11 Plan Notices
-------------------------------------------------------------
Law360 reports that the U.S. Trustee's Office objected Wednesday,
March 24, 2021, to the disclosure statements for non-debtor
third-party releases and exculpation clauses in radio station owner
Alpha Media's $115 million Chapter 11 plan in Virginia bankruptcy
court, saying they are overly broad and inconsistent with Fourth
Circuit law.
In his filing, John P. Fitzgerald II, the acting U.S. trustee for
Region Four, said Alpha Media Holdings and its debtor-affiliates
have structured their second amended joint Chapter 11 plan in such
a way that the only class of creditors that would receive an
opportunity to opt out of the third party-releases.
About Alpha Media Holdings
Alpha Media is a privately held radio broadcast and multimedia
company. Formed in 2009 by a veteran radio executive, Alpha Media
grew through acquisitions and now owns or operates more than 200
radio stations that provide local news, sports, music, and
entertainment to a weekly audience of more than 11 million
listeners in 44 communities across the United States.
In addition to its radio stations, Alpha Media provides digital
content through more than 200 websites and countless mobile
applications and digital streaming services.
Alpha Media and its affiliates sought Chapter 11 protection (Bankr.
E.D. Va. Lead Case No. 21-30209) on Jan. 25, 2021. John Grossi,
chief financial officer, signed the petitions. At the time of the
filing, Alpha Media disclosed estimated assets of $10 million to
$50 million and estimated liabilities of $50 million to $100
million.
Judge Kevin R. Huennekens oversees the cases.
The Debtors tapped Sheppard, Mullin, Richter & Hampton LLP as legal
counsel, Kutak Rock LLP as local counsel, Moelis & Company as a
financial advisor, and Ernst & Young LLP as restructuring advisor.
Stretto is the claims and noticing agent.
Wilmington Savings Fund Society, the administrative agent to the
first-lien lenders, is represented by Debevoise & Plimpton, LLP,
and Hunton Andrews Kurth, LLP.
The U.S. Trustee for Region 4 appointed an official committee of
unsecured creditors on Feb. 3, 2021.
The Committee tapped Hahn Loeser & Parks, LLP, as its bankruptcy
counsel, Hirschler Fleischer, P.C. as local counsel, Dundon
Advisers LLC as a financial advisor, and Miller Buckfire & Co.,
LLC, as an investment banker.
ALTA EQUIPMENT: S&P Assigns 'B' ICR, Outlook Stable
---------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Alta
Equipment Group Inc., a Livonia, Mich.-based integrated equipment
dealership platform of mostly Volvo and Hyster-Yale material
handling and construction equipment. The outlook is stable.
S&P said, "At the same time, we assigned our 'B-' issue-level
rating and '5' recovery rating to the company's proposed senior
secured second-lien notes.
"The stable outlook indicates our expectation that continued
e-commerce growth and higher levels of post-recessionary industrial
production will lead to higher volume levels in both Alta's
material handling and construction segments over the next 12 months
after a weak macroeconomic environment in 2020." This should enable
the company to generate moderate EBITDA gains and positive free
cash flow in 2021 while maintaining its S&P Global Ratings-adjusted
leverage in the 4x-5x range.
With about $135 million of expected S&P Global Ratings-adjusted
EBITDA in 2021, Alta is a regional integrated dealer of material
handling and construction equipment operating in the highly
competitive equipment distribution and rental industries. Alta's
equipment base is concentrated in and anchored around Hyster-Yale
manufactured equipment in the material handling segment (about 47%
of 2020 revenue pro forma for completed acquisitions) and Volvo
equipment in the construction segment (53%). In addition, the
company's current footprint, although better diversified across the
eastern U.S., remains regionally concentrated in Michigan (36% of
revenue), Florida (17%), and Illinois (15%).
S&P said, "We view the material handling segment as more stable,
with GDP-type growth, and driven by a long-term shift in consumer
preference to e-commerce and the corresponding expansion of
warehouses, distribution centers, and industrial yards. We view the
construction segment, with its exposure to mostly commercial and
infrastructure construction, as more cyclical, albeit we forecast
gains in the sector over the next 12 months as industrial volumes
consistently rebound in the post-pandemic recovery period and
delayed capital projects restart.
"Still, we believe that due to its high geographic and supplier
concentration and exposure to cyclical construction end markets,
Alta is susceptible to fluctuating demand cycles in the
infrastructure and commercial construction end markets." The
company's overall scale in the highly competitive equipment rental
end market is small (about 14% of overall revenue) and
participation in this market weighs on Alta's overall free
operating cash flow generation because purchases of equipment are
capital intensive and add to net capital expenditure requirements.
Alta's higher-margin parts and service business is key to
consistent EBITDA margin generation. S&P said, "Alta's high-margin
parts and services business consistently grows (although with a
lag) with the growth of installed sold and rented equipment bases,
and we expect similar performance going forward. Our expectations
are supported by the company's focus on acquisition and training of
a base of highly skilled technicians (which we view as a
competitive advantage) who are able to provide recurring timely and
efficient equipment maintenance."
The company's good S&P Global Ratings-adjusted EBITDA margins of
about 11%-12% are also supported by a favorable cost structure as a
majority (two-thirds) of the cost of goods sold is estimated to be
variable. In addition, the typically higher-margin equipment rental
auxiliary business, although a small portion of overall revenue,
provides a favorable contribution to the company's EBITDA margin.
S&P expects Alta to continue to grow, mostly through prudent
opportunistic acquisitions while maintaining its S&P Global
Ratings-adjusted debt-to-EBITDA in the 4x – 5x range.
In 2020, Alta completed seven acquisitions for about $180 million
focusing on filling in its geographical footprint in the eastern
U.S., diversifying away from Michigan, and acquiring smaller
competitors in the equipment distribution space. S&P said, "Since
the company is typically able to make acquisitions at relatively
attractive lower multiples, capitalizing on approvals required from
original equipment manufacturers and a lack of significant presence
of financial sponsors as competition for acquisitions, we don't
expect the merger and acquisition activity to contribute negatively
to the company's leverage, but there is a risk that integration
challenges could materialize and pressure EBITDA margins. We expect
the acquisition activity to continue and to weigh on the business'
prospects of deleveraging to below 4x."
S&P said, "We consider the company's $30 million of preferred stock
as debt in our analysis of its capital structure. This instrument
becomes redeemable at the election of Alta before the remaining
debt in the capital structure matures, material uncertainties
remain around whether it will be outstanding and available for loss
absorption or cash conservation when needed.
"The stable outlook reflects our view that, despite the fragile
macroeconomic recovery, improving industrial production and growing
warehouse capacity in the U.S. should support growing demand for
Alta's material handling and non-residential construction
equipment, allowing the company to expand its higher-margin service
and parts business and support stable EBITDA margin. We also expect
S&P Global Ratings-adjusted debt to EBITDA in the 4x-5x range over
the next 12 months even when accounting for opportunistic
acquisitions."
S&P could lower the rating if Alta's S&P Global Ratings-adjusted
debt to EBITDA trended above 6x on a sustained basis. This could
happen if:
-- The industrial production and construction markets meaningfully
contracted, and Alta were not successful at matching demand for its
equipment with available inventory, leading the company to
increasingly rely on the use of its revolving credit facilities,
thus driving leverage up; or
-- It pursued a more aggressive debt-funded acquisition strategy
with expected leverage of above 6x.
Although unlikely over the next 12 months given the company's
regional and anchor brand concentration and the capital-intensive
nature of the equipment rental part of the overall business, S&P
could raise its ratings on Alta if:
-- The company meaningfully increased its scale and scope as a
national dealer across the U.S. while expanding its EBITDA margin;
or
-- Stronger-than-expected operating performance reduced leverage
comfortably below 4x even when accounting for potential
acquisitions; and
-- S&P expected that Alta would maintain a disciplined capital
investment strategy and the resulting consistent positive free
operating cash flows.
AMERICAN AIRLINES: S&P Affirms 'B-' ICR on Improved Liquidity
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
American Airlines Group Inc. and its subsidiary American Airlines
Inc. The company's liquidity has significantly improved due to the
more than $6 billion of federal cash grants and unsecured loans it
will receive under the second and third rounds of the government's
payroll support programs, as well as its refinancing of the debt
backed by its AAdvantage frequent flyer program, which generated an
additional $2.5 billion.
The AAdvantage refinancing, while positive for the company's
liquidity, added more secured debt to its capital structure and
will reduce the recoveries for some of its other secured creditors,
which caused us to lower our issue-level ratings on selected
issues. S&P also reviewed American Airlines Inc.'s enhanced
equipment trust certificates (EETCs) and changed our ratings on
several series.
The negative outlook reflects the continued uncertainty around the
timing and strength of the recovery in the company's revenue and
earnings.
S&P said, "We expect the company's performance to be weak in the
first half of 2021 before benefitting from a rebound in domestic
leisure traffic in the second half of the year. The resurgence of
COVID-19 cases during the fourth quarter of 2020 and into the first
half of 2021 pushed out our expectations for a recovery in U.S.
airline passenger traffic. However, we still anticipate a surge in
domestic leisure traffic once the U.S. achieves widespread
vaccination and passenger confidence improves. This will cut into a
fair amount of the demand for summer traffic, though we believe
some of this demand may simply be compressed into the latter part
of the summer. That said, we believe it will take longer for the
volume of business traffic to begin to improve and currently
forecast the fourth quarter of this year as a plausible timeframe.
The pace of the recovery in international travel will likely vary.
For example, demand for flights to the Caribbean, Mexico, and
Canada could be fairly healthy, though we anticipate the recovery
in intercontinental travel may be held back by periodic travel bans
on certain routes if there are resurgences in the spread of the
virus."
American's credit measures will likely remain very weak this year
before improving in 2022. S&P said, "We believe the company will
likely report a sizeable, albeit reduced, loss in 2021 before
breaking even in 2022 as the recovery in air traffic continues.
Higher fuel prices are a headwind, though it can use more than $4
billion of the cash grants it received under the second and third
rounds of the federal payroll support programs to partly cover its
labor expenses this year. We see 2023 as a likely timeframe for it
to improve its credit measures beyond the highly leveraged range
under our criteria."
S&P said, "The company has greatly improved its liquidity, which we
now assess as adequate. The second and third rounds of federal
payroll support provided American with more than $6 billion of cash
grants and unsecured loans. In addition, its refinancing of the
$7.5 billion AAdvantage-backed Treasury loan facility with $10
billion in the capital markets added $2.5 billion of incremental
liquidity. Its pro forma liquidity of about $20 billion places
American on a par with its peers United Airlines Holdings Inc. and
Delta Air Lines Inc. and eases our concerns that it will be unable
to face near-term risks. Management plans to maintain a higher
level of liquidity than in the past but will deploy some of its
cash to start paying down debt once the recovery in its revenue and
earnings is more established.
"We expect American to report another sizeable loss in 2021, albeit
much less severe than in 2020, while generating negative funds from
operations (FFO) and a small, but positive, amount of EBITDA. This
is based on our expectation for a weak first half of the year
followed by a significant upturn in the second half as vaccinations
become more widespread in the U.S. The recovery will be led by
lower-yielding domestic and nearby international (Mexico,
Caribbean) traffic, with business and intercontinental travel
taking longer to recover. We anticipate the company's performance
will be far stronger in 2022 and believe its pretax and net results
may reach breakeven. We expect American's credit measures will
likely remain in the highly leveraged range next year but forecast
a potential improvement by 2023.
"We would expect to lower our ratings on American over the next 12
months if we come to believe the recovery will be more prolonged or
weaker than we currently expect, leading to continued high cash
flow burn. This could eventually cause the company's liquidity to
become weak or lead us to view its capital structure as
unsustainable over the long term. In addition, we would lower our
ratings if we come to believe American will pursue transactions we
view as a selective default.
"We could revise our outlook on American to stable if the volume of
airline passenger traffic accelerates, likely due to substantial
progress in the fight against COVID-19, and the global economy
recovers. We would want to see solid evidence of such a turnaround,
which would not likely be apparent before the second half of 2021.
An outlook change would also be conditioned on our confidence that
American will generate positive cash flow by 2022 and positive
earnings by 2023."
AMERICAN NATIONAL: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: American National Carbide Co.
915 South Cherry Street
Tomball, TX 77375
Business Description: American National Carbide Co. --
http://anconline.com-- is a vertically
integrated manufacturer of cemented tungsten
carbide products for a wide range of
industries, including metalworking, oil and
gas, and wood processing, as well as zinc
reclaim powders and ready-to-press grade
powders.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 21-31050
Debtor's Counsel: Donald Wyatt, Esq.
ATTORNEY DONALD WYATT PC
26418 Oak Ridge Drive
The Woodlands, TX 77380
Tel: (281) 419-8733
E-mail: don.wyatt@wyattpc.com
Total Assets: $1,492,225
Total Liabilities: $3,969,983
The petition was signed by Greg Stroud, president.
A full-text 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/QIEPFEY/American_National_Carbide_Co__txsbke-21-31050__0001.0.pdf?mcid=tGE4TAMA
AMERIDIAN INDUSTRIES: Court Confirms Consensual Plan
----------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
has confirmed Ameridian Industries, LLC's Plan of Reorganization.
The Debtor filed a First Amended Plan of Reorganization on March
11, 2021.
On, March 19, 2021, Judge Christopher M. Alston approved the
Disclosure Statement and confirmed the First Amended Plan.
Based upon the files and records in the case and on the Declaration
of Allan Van Ruiter in Support of the Preconfirmation Report, the
Court finds and concludes that the Plan has been proposed with the
legitimate and honest purpose of effectively reorganizing the
Debtor and maximizing the recovery to creditors in accordance with
the priorities set forth in the Bankruptcy Code. The Debtor has
negotiated at arm's length with its various creditors with respect
to treatment of their claims under the Plan, and the Plan proposes
full payment of all claims in full. Further, the Plan is
consensual as to all constituencies.
Each holder of a Claim in an Impaired Class has accepted the Plan.
A copy of the Plan Confirmation Order is available at
https://bit.ly/3lWMwEO
About Ameridian Industries
Ameridian Industries LLC, which conducts business under the name
Pacific Torque, offers sales, services, and support to the
transmission, engine, and powertrain component manufacturers.
Ameridian Industries filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wash. Case No.
20-12550) on Oct. 8, 2020. Allan Van Ruiter, president and chief
executive officer, signed the petition. At the time of the filing,
the Debtor estimated $10 million to $50 million in both assets and
liabilities.
Judge Christopher M. Alston oversees the case.
Bush Kornfeld, LLP, serves as the Debtor's legal counsel.
ARAMARK SERVICES: S&P Assigns BB+ Rating on New $833MM Term Loan B
------------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating to Aramark
Services Inc.'s proposed $833 million senior secured term loan B
due 2028. The recovery rating is '1', reflecting its expectation
for very high (90%-100%; rounded estimate 95%) recovery in the
event of a payment default. The company will use net proceeds from
the proposed term loan to repay its term loan B-2, which aggregate
about $833 million. S&P expects to withdraw its ratings on the B-2
term loan following repayment. The transaction is leverage neutral.
Pro forma total debt outstanding is about $8.3 billion.
S&P said, "All our existing ratings on Aramark, including our 'BB-'
credit rating on the parent company and our 'B+' senior unsecured
note ratings, are unchanged, though recovery expectations for the
senior unsecured notes remain at the low end of our 10% to 30%
range. The outlook is stable.
"Our ratings and outlook on Aramark incorporate our expectation
that pandemic restrictions will continue to ease in the U.S.,
paving the way for a strengthening of credit ratios, including
adjusted leverage falling to below 9x by Sept. 30, 2021 (including
around 7.5x annualized leverage in the second half), with further
improvement to about 5x by Sept. 30, 2022, which we consider to be
commensurate with the rating. Aramark's strong liquidity will
enable it to make the necessary investments in people, working
capital, and equipment to fully participate in what we expect will
be a gradual reopening of the U.S. economy.
"While pandemic risks remain, in our view, the probability for
meaningful downside scenarios has diminished. Our base-case
forecast does not assume significant negative events materialize,
such as virus variants that lead to renewed widespread lockdowns.
We believe the economy will stay on a path to recovery. However,
it's possible small businesses and certain consumers have been
financially damaged by the pandemic, potentially reducing private
sector spending."
ARETEC GROUP: S&P Affirms B- Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit and first-lien
term loan ratings on Aretec Group Inc. The outlook on the issuer
credit rating remains stable. S&P also assigned a 'B-' issue rating
to the firm's first-lien term loan add-on.
Aretec Group is acquiring certain assets related to the independent
financing channel of Voya Financial Advisors from Voya Financial
Inc. (announced in February 2021) through a combination of
incremental first-lien term loan, senior unsecured debt, and cash
on hand.
S&P believes the credit metrics are still commensurate for the
rating, with pro forma leverage (as measured by debt to covenant
EBITDA) of 5.75x-6.25x, a modest deterioration from our previous
expectation of 5.5x-6.0x.
S&P said, "The ratings affirmation reflects our view that while pro
forma leverage and debt service coverage will deteriorate modestly
following the acquisition of certain assets related to the
independent financing channel of Voya Financial Advisors (VFA) from
Voya Financial Inc., these metrics remain commensurate with the
rating.
"The stable outlook reflects our view that over the next 12 months
Aretec will continue to improve earnings and leverage. It also
reflects our expectation the company will maintain sufficient
liquidity and a comfortable cushion relative to the springing
leverage covenant on its revolving credit facility.
"We could downgrade Aretec if its covenant is activated, if we
expect first-lien leverage to weaken beyond our current
expectations (so that the cushion to the leverage covenant
deteriorates), if liquidity worsens, or if there is significant
attrition of advisers."
An upgrade is contingent on a sustained improvement in the
company's debt service capacity and leverage metrics.
ASTRIA HEALTH: Blames Cerner RevWorks for Its Bankruptcy
--------------------------------------------------------
Yakima Herald reports that Washington health system, Astria Health,
Astria Health's former EHR and revenue cycle vendor, Cerner
RevWorks, is to blame for the health system's bankruptcy and the
closure of one of its hospitals last 2020, according to a complaint
filed March 22 in bankruptcy court.
Astria Health, which operates hospitals in Sunnyside and Toppenish,
Wash., filed for Chapter 11 bankruptcy in May 2019. At that time,
Astria comprised three hospitals. In early 2020, the health system
closed its hospital in Yakima, Wash.
In its complaint, filed as part of an adversary proceeding in
bankruptcy court, Astria claims Cerner and its subsidiary, Cerner
RevWorks, made "intentional misrepresentations" before entering a
contract for EHR and billing services, according to the Yakima
Herald. Several times throughout the complaint, Astria alleges
Cerner's revenue collection systems were responsible for its
financial strain.
"Cerner's faulty EHR and billing and collections platforms failed
so spectacularly that they drove Astria, a revered nonprofit
hospital system in Eastern Washington, into bankruptcy in May
2019," the complaint states.
Astria cited issues with its revenue cycle vendor since it filed
bankruptcy, but it didn't initially name Cerner in bankruptcy court
documents. In a press release issued May 6, 2019, the health system
said it was facing a significant shortfall in cash flow due to
issues with the company it contracted with to manage its billing in
August 2018.
In the recently filed complaint, Astria alleges that claims
submitted to government payers were frequently rejected after
switching to Cerner. The system says collections were at 97 percent
of net revenue before installing the billing system in the summer
of 2018, and that fell to 54 percent after the switch, according to
the report.
In a statement to the Yakima Herald, a Cerner spokesperson said the
company will dispute the allegations.
"We categorically deny the allegations made in the lawsuit, we
disagree on the merits and we will vigorously defend the company,"
the statement said, according to the report.
Astria is seeking damages from Cerner and has asked the court to
void any claims the company has filed against the health system
during the bankruptcy process.
About Astria Health
Astria Health and its subsidiaries -- https://www.astria.health --
are a nonprofit health care system providing medical services to
patients who generally reside in Yakima County and Benton County,
Wash., through the operation of Sunnyside, Yakima, and Toppenish
hospitals, as well as several health clinics, home health services,
and other healthcare services. Collectively, they have 315
licensed beds, three active emergency rooms, and a host of medical
specialties. Astria has 1,547 regular employees.
Astria Health and 12 of its subsidiaries filed for bankruptcy
protection (Bankr. E.D.Wash. Lead Case No. 19-01189) on May 6,
2019. In the petitions signed by John Gallagher, president and
CEO, the Debtors estimated assets and liabilities of $100 million
to $500 million.
The Hon. Frank L. Kurtz oversees the cases.
Bush Kornfeld LLP and Dentons US LLP serve as the Debtors' counsel.
Kurtzman Carson Consultants, LLC is the claims and noticing
agent.
Gregory Garvin, acting U.S. trustee for Region 18, on May 24, 2019,
appointed seven creditors to serve on an official committee of
unsecured creditors. The Committee retained Sills Cummis & Gross
P.C. as its legal counsel; Polsinelli PC, as co-counsel; and
Berkeley Research Group, LLC as financial advisor.
AUTO RECYCLERS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Auto Recyclers, LLC
DBA Used to New
1400 Sycamore Avenue
Buena Vista, VA 24416
Business Description: Auto Recyclers, LLC --
http://www.autorecyclersllc.com-- is a
recycler of metals, automobile cores,
batteries, paper, cardboard, computers
fiber, books, and plastic.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Western District of Virginia
Case No.: 21-50158
Judge: Hon. Paul M. Black
Debtor's Counsel: Michael E. Hastings, Esq.
WOODS ROGERS PLC
10 S. Jefferson Street, Suite 1400
Roanoke, VA 24011
Tel: 540-983-7568
Email: mhastings@woodsrogers.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Paul Palma, managing member.
A full-text 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/673HCDY/Auto_Recyclers_LLC__vawbke-21-50158__0001.0.pdf?mcid=tGE4TAMA
BCCA LLC: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: BCCA, LLC
410 First Street
Tynan, TX 78391
Chapter 11 Petition Date: March 25, 2021
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 21-21075
Judge: Hon. David R. Jones
Debtor's Counsel: David R. Langston, Esq.
MULLIN HOARD & BROWN, L.L.P.
P.O. Box 2585
Lubbock, TX 79408
Tel: 806-765-7491
E-mail: drl@mhba.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Aaron Salge, manager/authorized
officer.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/P4GBUJA/BCCA_LLC__txsbke-21-21075__0001.0.pdf?mcid=tGE4TAMA
BEAR CREEK: May 6 Plan & Disclosure Hearing Set
-----------------------------------------------
On March 22, 2021, debtor Bear Creek Trail, Inc., filed with the
U.S. Bankruptcy Court for the District of Wyoming a disclosure
statement with respect to a plan.
On March 23, 2021, Judge Cathleen D. Parker conditionally approved
the disclosure statement and ordered that:
* April 28, 2021, is the last day for filing ballots accepting
or rejecting the plan, and for filing objections to the disclosure
statement and/or the plan.
* May 3, 2021, is the last day for the debtor to file a
compilation of ballots received.
* May 6, 2021 at 10:30 a.m. by video conference is the hearing
on final approval of the disclosure statement, if necessary, and on
confirmation of the plan.
A full-text copy of the order dated March 23, 2021, is available at
https://bit.ly/2O0TcFu from PacerMonitor.com at no charge.
About Bear Creek Trail
Bear Creek Trail, LLC is a Cheyenne, Wyo.-based company whose
primary asset is a vessel located on the east cost of the United
States.
Bear Creek Trail sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Wyo. Case No. 20-20348) on July 20,
2020. The petition was signed by Marvin Keith, president, Elk
Mountain, Inc., the Debtor's owner and CEO of Bear Trail, LLC. At
the time of the filing, the Debtor disclosed total assets of
$615,000 and total liabilities of $1,719,947. Judge Cathleen D.
Parker oversees the case. Ken McCartney, Esq., at The Law Offices
of Ken McCartney, P.C., is the Debtor's legal counsel.
BECKER BOILER: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Becker Boiler Co, Inc.
1785 E. Bolivar Ave
Saint Francis, WI 53235
Business Description: Becker Boiler Co, Inc. provides boiler
equipment and services.
Chapter 11 Petition Date: March 25, 2021
Court: United States Bankruptcy Court
Eastern District of Wisconsin
Case No.: 21-21580
Judge: Hon. Michael G. Halfenger
Debtor's Counsel: Jerome R. Kerkman, Esq.
KERKMAN & DUNN
839 N. Jefferson St., Ste. 400
Milwaukee, WI 53202-3744
Tel: 414-277-8200
Debtor's
Accountant: VRAKAS S.C.
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by David Hollnagel, president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at:
https://www.pacermonitor.com/view/VT6ZI4Y/Becker_Boiler_Co_Inc__wiebke-21-21580__0004.0.pdf?mcid=tGE4TAMA
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/U4KE3LA/Becker_Boiler_Co_Inc__wiebke-21-21580__0001.0.pdf?mcid=tGE4TAMA
BEE COUNTY: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Bee County Cooperative Association
P.O. Box 128
Tynan, TX 78391
Chapter 11 Petition Date: March 25, 2021
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 21-21074
Judge: Hon. David R. Jones
Debtor's Counsel: David R. Langston, Esq.
MULLIN HOARD & BROWN, L.L.P.
P.O. Box 2585
Lubbock, TX 79408
Tel: 806-765-7491
E-mail: drl@mhba.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Aaron Salge, general manager/authorized
officer.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/PVISJZI/Bee_County_Cooperative_Association__txsbke-21-21074__0001.0.pdf?mcid=tGE4TAMA
BELFOR HOLDINGS: S&P Affirms 'B' ICR on Incremental Debt Add-On
---------------------------------------------------------------
S&P Global Ratings affirmed all the ratings on Birmingham,
Mich.-based disaster recovery services provider Belfor Holdings
Inc., including its 'B' issuer credit rating and 'B' first-lien
issue-level rating.
The stable outlook reflects S&P's expectation for steady organic
growth augmented by hurricane-related revenue and stable EBITDA
margins in the low-double-digit area, however, it is forecasting
leverage will remain in the 5x-6x area.
S&P expects leverage to remain in the 5x-6x area pro forma for the
transaction, partly because of its private equity ownership. Belfor
will use proceeds from the $130 million incremental add-on to its
first-lien facility, along with cash from the balance sheet, to
repay its outstanding $150 million second-lien term loan (not
rated), fund a $100 million shareholder dividend, and
finance-related fees and expenses.
The fragmented nature of the disaster recovery services market has
allowed Belfor to pursue several acquisitions, as it continues to
be the consolidator of choice in the space. Although it mostly
engages in small tuck-in acquisitions (targets with revenue of less
than $25 million), Belfor's free cash flow profile and growing cash
balance could offer an opportunity to engage in larger
transactions.
S&P said, "Given the company's private equity ownership by American
Securities presents, we incorporate the risk associated with a more
aggressive financial policy in line with our general view of
sponsor-owned companies. We expect adjusted debt to EBITDA to
remain in the mid-5x area by year-end 2021, compared with the
low-5x area as of Dec. 31, 2020, and the company to generate free
operating cash flow (FOCF) to debt in the mid single-digit
percentage area."
S&P expects Belfor's operating performance to remain steady over
the next 12 to 24 months with a slight decline in margins as it
reverts to performing a higher percentage of reconstruction
projects compared to its higher margin environmental service
offering. While Belfor was not immune to the shutdowns resulting
from the COVID-19 pandemic, the company effectively managed the
resulting impact by leveraging its sanitizing solution services for
a variety of commercial customers in times of need. Despite a
challenging economic landscape, Belfor grew its total North
American (approximately 75% of total revenues) daily job count in
the mid- to high-single-digit percentage area as it continues to be
a service provider of choice. Although the core recovery and
restoration business experienced a temporary delay in projects in
certain geographic pockets, majority of the work is on track given
its designation as an essential business.
Belfor's operating performance should remain steady over the next
12 to 24 months as it executes its growth strategy and benefits
from key industry trends, including higher property values,
increasing deductibles, and benefit from insurance companies and
corporations consolidating providers, for these types of services.
S&P expects earnings and cash flow generation to expand in 2021
supported by low-single-digit organic revenue growth driven in
large part by higher daily job count and partially offset by lower
average job claims.
S&P said, "Our ratings on Belfor incorporate among other things,
its private equity ownership, participation in a highly fragmented
market with low barriers to entry, and average profitability given
the volatility of higher margin damage restoration and
reconstruction projects associated with major hurricanes.
"The stable outlook reflects our expectation for steady organic
growth augmented by hurricane-related revenue and stable EBITDA
margins in the low-double-digit area however leverage will remain
in the 5x-6x area.
"While unlikely over the next year, we could lower our ratings on
Belfor if deteriorating operating trends or aggressive financial
policy decisions raise adjusted debt to EBITDA toward 7x with no
clear prospects for recovery.
"We could raise our ratings on Belfor if operating trends continue
to improve and leverage remains below 5x on a sustained basis. This
would include an acquisition strategy in line with a track record
of and commitment to maintaining leverage at such levels."
BIONIK LABORATORIES: Borrows $503,650 From RGD, Other Lenders
-------------------------------------------------------------
Bionik Laboratories Corp. borrowed an additional $503,650 from new
and existing investors, including from RGD Investissements S.A.S.,
an affiliate of Remi Gaston-Dreyfus, a director of the Company,
pursuant to its existing Term Loan and Security Agreement dated as
of Feb. 12, 2021, and pursuant to which, among other things, the
Company may borrow up to $3,000,000 from lenders from time to time.
Through March 18, 2021, the Company has borrowed an aggregate of
$1,003,650 under the Agreement.
RGD Investissements S.A.S. is acting as collateral agent under the
Agreement on behalf of the Lenders with customary rights and
obligations.
Pursuant to the terms of the Agreement, the Company may elect to
borrow up to $3,000,000 in the aggregate from time to time,
provided (a) an event of default shall not have occurred or be
occurring before or immediately after each such additional loan is
given effect; (b) additional loans are only to be provided by
existing Lenders (or their respective affiliates) and other lenders
approved by the Collateral Agent; and (c) any Lender may elect or
decline, in its sole discretion, to provide any amount of any
requested additional loan.
Each additional loan is to be executed pursuant to one or more
joinder agreements.
The principal amount of and interest on the Loan will be due and
payable on the earlier of: (i) Feb. 12, 2023 and (ii) the date of
receipt by the Company of a minimum of $3,000,000 in equity.
The Loan bears interest at a fixed rate of 1% per month. Without
penalty, the Company may prepay the Loan in whole or in part.
The Loan contains customary events of default, which entitles the
Lenders holding a majority of the principal amount of the Loan to
declare the unpaid principal amount of, and all accrued and unpaid
interest on, the Loan, due and payable.
Pursuant to the Agreement, the Company (a) granted to the
Collateral Agent, for the ratable benefit of the Lenders and to
secure the payment and performance in full of the payment
obligations of the Company under the Agreement, security interests
in, and (b) pledged and collaterally assigned to the Collateral
Agent, for the ratable benefit of the Lenders, the Company's
inventory.
Notwithstanding the foregoing, the Security Interest shall remain
fully subordinated for all purposes to the security interests of
certain existing lenders of the Company, until March 31, 2021.
About BIONIK Laboratories
BIONIK Laboratories -- http://www.BIONIKlabs.com-- is a robotics
company focused on providing rehabilitation and mobility solutions
to individuals with neurological and mobility challenges from
hospital to home. The Company has a portfolio of products focused
on upper and lower extremity rehabilitation for stroke and other
mobility-impaired patients, including three products on the market
and three products in varying stages of development.
Bionik reported a net loss and comprehensive loss of US$25.02
million for the year ended March 31, 2020, compared to a net loss
and comprehensive loss of US$10.56 million for the year ended March
31, 2019. As of Sept. 30, 2020, the Company had $17.19 million in
total assets, $6.89 million in total current liabilities, and
$10.30 million in total shareholders' equity.
MNP LLP, in Toronto, Ontario, the Company's auditor since 2015,
issued a "going concern" qualification in its report dated June 25,
2020, citing that the Company's accumulated deficit, recurring
losses and negative cash flows from operations raise substantial
doubt about its ability to continue as a going concern.
BLUE CRATES: Case Summary & 4 Unsecured Creditors
-------------------------------------------------
Debtor: Blue Crates, LLC
159 N Sangamon
Suite 200
Chicago, IL 60607
Business Description: Blue Crates, LLC provides warehousing and
storage services.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 21-03984
Judge: Hon. Carol A. Doyle
Debtor's Counsel: John Hiltz, Esq.
HITLZ ZANZIG & HEILIGMAN LLC
53 West Jackson Blvd. 1301
Chicago, IL 60604
Tel: 312-566-9008
E-mail: jhiltz@hzhlaw.com
Estimated Assets: $50,000 to $100,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael Walker, authorized agent.
A copy of the petition containing, among other items, a list of the
Debtor's four unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/MYJY6UA/Blue_Crates_LLC__ilnbke-21-03984__0001.0.pdf?mcid=tGE4TAMA
BOY SCOUT: Downplays Victims' Covid Issues Over Meeting
-------------------------------------------------------
Alex Wolf of Bloomberg Law reports that the Boy Scouts of America
insisted that it can host bankruptcy claims mediation sessions from
its lawyer's office in Miami in person, pushing back on sexual
abuse victim claimants' efforts to conduct them over Zoom due to
Covid-19 concerns.
Wild-partying, maskless college students on spring break at Florida
beaches will pose no threat to attorneys and others negotiating a
Chapter 11 plan for the Boy Scouts, the organization said in a
Tuesday court filing.
The non-profit organization urged the U.S. Bankruptcy Court for the
District of Delaware to reject an earlier request made by the
official committee of tort claimants to require mediation be
conducted exclusively by Zoom.
"The assertion that White & Case's Miami office is an unsafe
meeting place based on weekend headlines about young people on
spring break at Miami Beach spreading COVID-19 is unfounded. Miami
Beach and Miami, Florida are separate municipalities. Miami Beach
is located on a separate island from Miami over five miles away,
and requires crossing a bridge from Miami. Moreover, Miami Beach
authorities have curbed these spring break activities, and in any
event such activities will end prior to the occurrence of any
meeting in White & Case's Miami office, which is outside the throes
of spring break activities," the Debtor said.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BRIGHT HORIZONS: S&P Alters Outlook to Positive, Affirms 'B+' ICR
-----------------------------------------------------------------
S&P Global Ratings revised the outlook on Massachusetts-based
Bright Horizons Family Solutions LLC to positive from negative and
affirmed the 'B+' issuer credit rating. The issue-level and
recovery ratings are unchanged.
The positive outlook reflects the potential for an upgrade if
revenue and EBITDA increase toward pre-recession levels this year
and it becomes more certain that Bright Horizons will sustain
leverage below the mid-4x area.
S&P said, "While Bright Horizons has reopened a majority of its
centers, we expect the occupancy rates will lag competitors and
will return to pre-pandemic levels by the end of 2021. The company
continued reopening its childcare centers starting in mid-2020 and
currently has around 910 centers operating, representing about 90%
of its total centers as of December 2020, which we expect will
likely increase over the first few months of 2021. However, we
expect enrollment rates to remain below pre-pandemic levels mainly
due to uncertainties related to remote work, and COVID-19 vaccine
deployment strategies. While the company's focus on more stable
employer-sponsored centers (representing about half of its center
base globally) typically lowers occupancy risks and produces higher
margins, it has weighed on its recovery trajectory, because
reopening depends on client discretion in returning to the office.
Many of its majority retail-based peers, such as Learning Care
Group No. 2 and KUEHG Corp., retain sole discretion on centers
reopening and have more aggressively opened their center bases,
resulting in higher overall occupancies as of Dec. 31, 2020.
However, we expect sustained positive improvement as more of Bright
Horizons' customers return from remote work practices and resume
historical childcare usage rates. We note that Bright Horizons has
a larger exposure to urban-based centers, which we expect will have
a longer ramp-up period due to population density concerns. We
expect recovery to be more pronounced in the second half of 2021
with improving macroeconomic conditions and increasing distribution
of vaccines."
S&P Global Ratings believes there remains high, albeit moderating,
uncertainty about the evolution of the coronavirus pandemic and its
economic effects. Vaccine production is ramping up and rollouts are
gathering pace around the world. Widespread immunization, which
will help pave the way for a return to more normal levels of social
and economic activity, looks to be achievable by most developed
economies by the end of the third quarter. However, some emerging
markets may only be able to achieve widespread immunization by
year-end or later. S&P uses these assumptions about vaccine timing
in assessing the economic and credit implications associated with
the pandemic.
S&P said, "While the back-up care segment surged in 2020, we expect
the segment's margins and growth rate to decrease in 2021 as
full-service options return to historical levels. Bright Horizons
was able to grow its back-up care segment to over 1,000 clients
during 2020 due to the decreased availability of full-service
centers stemming from the pandemic's fallout. While many of its
clients expanded their consumption of back-up care in 2020, we
expect a decline this year as consumers shift back to full-service
centers as they reopen. We also expect that pricing mix, lower
crisis care assistance, and fewer new credit purchases from
employers to lower the segments' margins in 2021 to the 25%-30%
area, down from the mid-40% area in 2020. Longer term, we believe
the segment could continue to grow in revenue from 2021 levels as
the company looks to establish its digital platform for households
and corporate clients, albeit at lower EBITDA margins.
"We expect Bright Horizons to maintain its historical financial
policy during its recovery, while maintaining sufficient liquidity.
Bright Horizons has historically maintained adjusted leverage in
the 3x-4x range, a practice we believe it will return to as its
recovery continues over the next 12 months. We expect management to
prioritize acquisitions and debt repayment over resuming the
existing $300 million share repurchase authorization that was
suspended after the first quarter of 2020. The company's liquidity
is also supported by our expectations for cash flow growth over the
next two years and full borrowing availability under the company's
$400 million revolver. The revolver matures on July 31, 2022, and
we anticipate the company will extend in advance of the maturity
date. Although Bright Horizons' employer-sponsored center base and
back-up care segment differentiate it from its peers, we expect
that governmental support will also help to offset certain
pandemic-related expenses and mitigate headwinds on cash flow
generation.
"The positive outlook reflects our expectation that Bright
Horizons' sequential revenue growth, improving operations, and
operational leverage will result in adjusted leverage returning to
the high-3x area over the next 12 months. We also expect that
Bright Horizons will continue to produce adjusted free operating
cash flow to debt of at least 10%."
S&P could raise the ratings on Bright Horizons if:
-- The company outperforms our forecast, such that profitability
and occupancy trends recover toward historical levels over the next
12 months;
-- Adjusted leverage will remain below 4.5x even with the
potential for acquisitions and share buybacks with cash on hand.
S&P could revise its outlook to stable on Bright Horizons if:
-- A prolonged economic downturn, new COVID-19 variants, and
increased restrictions cause revenue and EBITDA to remain at
depressed levels; and
-- The company adopts an aggressive financial policy with
shareholder returns that result in adjusted leverage remaining
above 4x.
BROUSSARD INVESTMENT: Unsecured Creditors to Get 10.5% in Plan
--------------------------------------------------------------
Broussard Investment Properties, LLC, submitted a Third Amended
Chapter 11 Subchapter V Plan.
The general premise of the Plan is that Broussard Investment will
pay secured and unsecured creditors over time using funds from the
rental and/or sale of the houses.
The Plan treats claims as follows:
* Class 1: Secured Claim of Washington State Bank. WSB has two
secured claims against the Debtor in the total approximate amount
of $882,384. The Debtor will pay Washington State Bank monthly
payments in the amount of $4,873, which will be sufficient to
amortize the $882,384.00 secured claim in 30 years with 5.25%
interest per annum. The first payment will be due on the Effective
Date. Subsequent payments will be made on the first day of each
month thereafter. Class 1 is impaired and is entitled to vote on
the plan.
* Class 2: Secured Claim of MC Bank. MC Bank has a secured
claim against the Debtor in the total approximate amount of
$220,656. The Debtor will pay MC Bank monthly payments in the
amount of $1,388, which will be sufficient to amortize the $220,656
secured claim in 25 years with 5.75% interest per annum. The first
payment was due on the Effective Date. Subsequent payments will be
made on the first day of each month thereafter. The remaining
balance of the claim will become due on the 60th month in a balloon
payment in the approximate amount of $197,720. Class 2 is impaired
and is entitled to vote on the plan.
* Class 3: Secured Claim of HomeBank. HomeBank has a secured
claim against the Debtor in the total approximate amount of
$162,433.32. The Debtor will pay HomeBank monthly payments in the
amount of $1,361.94, which will be sufficient to amortize the
$162,433.32 secured claim in fifteen (15) years with 5.9% interest
per annum. The Debtor will also pay $3,356.57 in accrued interest
upon the Effective Date. The first payment will be due on the
Effective Date. Subsequent payments will be made on the first day
of each month thereafter. Class 3 is impaired and is entitled to
vote on the plan.
* Class 4: Secured Claim of First Guaranty Bank. First Guaranty
has a secured claim against the Debtor in the total approximate
amount of $135,904.13. The Debtor will pay First Guaranty monthly
payments in the amount of $810.45, which will be sufficient to
amortize the $135,904.13 secured claim in thirty (30) years with
5.95% interest per annum. The first payment will be made on the
Effective Date. Subsequent payments will be due on the first day of
each month thereafter. The remaining balance of the claim will
become due on the 60th month in a balloon payment in the
approximate amount of $126,386.36. Class 4 is impaired and is
entitled to vote on the plan.
* Class 5: Secured Claim of Doug Ashy Building Materials, Inc.
Doug Ashy has a claim against the Debtor in the approximate amount
of $72,155. The Debtor will pay Doug Ashy monthly payments in the
amount of $421.20, which will be sufficient to amortize the
$52,396.00 secured claim in 15 years with 5.25% interest per annum.
The first payment will be due on the Effective Date. Subsequent
payments will be made on the first day of each month thereafter.
Class 4 is impaired and is entitled to vote on the plan.
* Class 7: Secured Claim of Giam Properties, LLC. Giam has a
claim against the Debtor in the approximate amount of $18,370.
Giam's claim will be allowed as an unsecured claim in the amount of
$9,185 and evidenced by a new promissory note in the names of
Amanda Jane Lafleur and Steve Giambrone, Giam's members. The note
will be payable over six years with 0% interest, and monthly
installments of $127.57. The first payment will be due on the
Effective Date. Subsequent payments will be made on the first day
of each month thereafter. The mortgage of Giam will be cancelled.
Class 7 is impaired and is entitled to vote on the plan.
* Class 8: Secured Claim of Christine Ackal. Ackal has a claim
against the Debtor in the approximate amount of $6,075. The Debtor
will pay Ackal monthly payments in the amount of $48.84, which will
be sufficient to amortize the secured claim in 10 years with 5.25%
interest per annum. The first payment will be due on the Effective
Date. Subsequent payments will be made on the first day of each
month thereafter. Class 8 is impaired and is entitled to vote on
the plan.
* Class 11: Second Secured Claim of OEL Inc. OEL has a disputed
claim against the Debtor in the approximate amount of $15,000 for
alleged contractor's fees. The mechanic's lien of OEL will be
canceled, because of the facts that the lien was untimely filed and
there is no basis for the underlying claim. Class 11 is impaired
and is entitled to vote on the plan.
* Class 12: Secured Claim of Rosewood Estates Homeowners'
Association. Rosewood has a disputed claim against the Debtor in
the approximate amount of $1,173 for alleged homeowners'
association dues. Rosewood's claim will either be disallowed in
its entirety, allowed as a Class 15 unsecured claim, or paid in
full. If the lien is found to be valid or not contested, the
Debtor will also pay the homeowner's dues to Rosewood on a
going-forward basis. Class 12 is impaired and is entitled to vote
on the plan.
* Class 13: Secured Claim of Sunset Heights Homeowners'
Association. Sunset has a disputed claim against the Debtor in the
approximate amount of $750 for alleged homeowners' association
dues. Sunset's claim will either be disallowed in its entirety,
allowed as a Class 15 unsecured claim, or paid in full. If the
lien is found to be valid or not contested, the Debtor will also
pay the homeowner's dues to Sunset on a going-forward basis. Class
13 is impaired and is entitled to vote on the plan.
* Class 14: Secured Claim of Simon Estates Homeowners'
Association. Simon has a disputed claim against the Debtor in the
approximate amount of $2,550 for alleged homeowners' association
dues. Simon's claim will either be disallowed in its entirety,
allowed as a Class 15 unsecured claim, or paid in full. If the
lien is found to be valid or not contested, the Debtor will also
pay the homeowner's dues to Simon on a going-forward basis. Class
14 is impaired and is entitled to vote on the plan.
* Class 15: Unsecured Claims. All allowed unsecured claims will
be paid a pro-rata portion of $15,000, payable at the rate of $250
per month over 60 months. The first payment will be due on the
Effective Date and subsequent payments will be made on the first
day of each month thereafter. The payments will be completed in
five years. No distribution will be made on account of a disputed
claim until it is allowed. If any disputed claim is allowed and not
paid by insurance proceeds, then that creditor will receive a
pro-rata share of $250 per month and the payments on all other
allowed claims will be reduced accordingly. Based on undisputed
non-insider unsecured claims not covered by insurance proceeds of
$199,398, these payments will result in an approximate 10.5%
dividend to unsecured creditors.
Attorney for the Debtor:
Tom St. Germain
WEINSTEN & ST. GERMAIN, LLC
1414 Evangeline thwy
Lafayette, LA 70501
Phone: (337) 235-4001
Fax: (337) 235-4020
A copy of the Third Amended Chapter 11 Subchapter V Plan is
available at https://bit.ly/3w02B0X from PacerMonitor.com.
About Broussard Investment
Broussard Investment Properties, LLC, owner of 9 single-family
houses located in Lafayette, St. Martin, and St. Landry Parishes,
in Louisiana, filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. W.D. La. Case No. 20-50665) on
Sep. 4, 2020. The petition was signed by Adam Broussard, the
member. At the time of filing, the Debtor disclosed $1,571,744 in
assets and $1,741,195 in liabilities. Tom St. Germain, Esq., at
Weinstein & St. Germain, LLC, is the Debtor's legal counsel.
BSL TRANSPORT: Case Summary & 7 Unsecured Creditors
---------------------------------------------------
Debtor: BSL Transport Leasing Inc.
1140 E. Main St.
Delta, OH 43515
Business Description: Formed in 2007, BSL Transport Leasing Inc.'s
primary assets are trucks and trailers which
it then leases to a related company, IRM
Express, LLC. Its sole business activity is
the leasing of its trucks and trailers to
IRM Express, LLC.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Northern District of Ohio
Case No.: 21-30507
Judge: Hon. John P. Gustafson
Debtor's Counsel: Steven L. Diller, Esq.
DILLER AND RICE, LLC
124 East Main Street
Van Wert, OH 45891
Tel: 419-238-5025
Fax: 419-238-4705
E-mail: Steven@drlawllc.com;
Kim@drlawllc.com;
Eric@drlawllc.com
- and -
Eric R. Neuman, Esq.
DILLER AND RICE
1105-1107 Adams Street
Toledo, Ohio 43604
Tel: (419) 724-9047
Fax: (419) 238-4705
E-mail: eric@drlawllc.com
Total Assets: $654,700
Total Liabilities: $5,957,352
The petition was signed by Peggy Toedter, treasurer.
A copy of the petition containing, among other items, a list of the
Debtor's seven unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/PWRZBHY/BSL_Transport_Leasing_Inc__ohnbke-21-30507__0001.0.pdf?mcid=tGE4TAMA
BULLDOGGE FITNESS: May Use Cash Collateral on Interim Basis
-----------------------------------------------------------
Bulldogge Fitness Group, Inc., sought and obtained authority from
the U.S. Bankruptcy Court for the Northern District of Illinois to
use cash collateral on an interim basis.
The Debtor believes the use of its Cash Collateral will allow it to
operate as a going concern, and thus maximize the value of the
estate for all creditors. In the absence of immediate
authorization of the use of the Cash Collateral, the Debtor could
not continue to operate its business and will incur immediate and
irreparable harm to its estate.
Prior to the Petition Date, the Debtor borrowed money from Wells
Fargo Bank, National Association, pursuant to promissory notes,
business loan agreements, security agreements, pledge agreements,
collateral assignments, and other agreements, instruments,
certificates and documents. As of the Petition Date, there was and
remains due and owing from the Debtor to the Secured Lender under
the Secured Lender Loan Documents, the total amount, including
principal and interest of $1,219.414.31.
As of the Petition Date, the Secured Lender held a perfected lien
on substantially all of the Debtor's pre-petition assets, including
but not limited to, cash on hand, inventory, accounts, accounts
receivable, and general intangibles, together with the proceeds
thereof.
As adequate protection for the Secured Lender's interest in the
Cash Collateral, the Debtor proposes to use the Cash Collateral
solely for the purposes outlined in the Interim Cash Collateral
Order. The Debtor further proposes to: (1) for any diminution in
value of the Secured Lender's interests in the Cash Collateral from
and after the Petition date, grant the Secured Lender a replacement
lien on all of the Debtor's assets; (2) for any diminution in value
of the Secured Lender's interests in the Cash Collateral from and
after the Petition date, grant the Secured Lender an administrative
expense claim pursuant to Section 507(b) of the Bankruptcy Code.
The Court will hold another hearing on the matter on April 5 at
2:00 p.m.
Wells Fargo may be reached at:
Chris Hazelton
Credit Management Group
Wells Fargo
21 1st St SW
Rochester, MN 55902
Email: chris.r.hazelton@wellsfargo.com
- and -
Charles Schraf, President
Wells Fargo & Company
420 Montgomery St.
San Francisco, CA 94104
A copy of the Debtor's request is available for free at
https://bit.ly/3cOm4Jw from PacerMonitor.com.
About Bulldogge Fitness Group, Inc.
Bulldogge Fitness Group, Inc. operates a gymnasium and fitness
center in Downers Grove, Illinois, which is open to the general
public. Bulldogge has been adversely affected by the COVID-19
crisis and the disruption of business due to numerous State imposed
restriction on its operations.
Bulldogge sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. N.D. Ill. Case No. 21-03336) on March 15, 2021. In the
petition signed by Scott Schroeder, president, the Debtor disclosed
up to $50,000 in assets and up to $10 million in liabilities.
Judge Timothy A. Barnes oversees the case.
Richard G. Larsen, Esq. at SPRINGERLARSENGREENE, LLC is the
Debtor's counsel.
BURFORD CAPITAL: S&P Rates New $350MM Senior Unsecured Notes 'BB-'
------------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' debt rating to Burford
Capital Global Finance LLC's proposed issuance of $350 million
senior unsecured notes due 2028. Burford Capital Global Finance LLC
is a financing subsidiary of Burford Capital Ltd. (Burford). S&P
expects Burford's leverage, measured by debt to adjusted total
equity, will be about 0.7x after the transaction, though it
believes the company could use some of the proceeds to repay a
portion of the senior unsecured notes due 2022 over the medium
term.
S&P said, "The stable outlook reflects our expectation that as
Burford continues to grow both its balance sheet and investment
management segment, the company will maintain its currently
favorable investment return profile where, despite a relatively
high number of failed investments, successful investments provide
more than sufficient compensation because of their asymmetric
return profile. The stable outlook also reflects our expectation
that the company will maintain leverage below 1.0x over the next 12
months.
"We could lower our ratings on Burford if leverage increases beyond
1.0x on a sustained basis. We could also lower the ratings if we
believe that Burford's investment performance weakens considerably,
which could be indicated by lowered investment realizations over a
six to 12 month period or by a rise in the ratio of cases that are
concluded with a return less than invested principal.
"Over the longer term, we could upgrade the company if its
portfolio reaches a maturity and diversification that would reduce
potential lumpiness of revenues and provide a more stable and
predictable flow of earnings while maintaining leverage sustainably
below 1.0x."
C2R GLOBAL: Court Extends Plan Exclusivity Thru December 31
-----------------------------------------------------------
At the behest of the Debtor C2R Global Manufacturing, Inc., Judge
Beth E. Hanan of the U.S. Bankruptcy Court for the Eastern District
of Wisconsin extended the period in which the Debtor may file a
plan and disclosure statement to December 31, 2021.
The Debtor and the Verde Environmental Technologies, Inc., one of
the Debtor's largest creditors, continued to litigate their
dispute, and the basic posture is unchanged. The Debtor told the
Court that the resolution of the Verde Environmental Technologies'
claim is necessary to move the bankruptcy case forward and to allow
for filing and confirmation of a plan. With the extension, the
Debtor will now have additional time to address the issues of their
bankruptcy case.
A copy of the Court's Extension Order is available at
https://bit.ly/3tT4x9Y from PacerMonitor.com.
About C2R Global Manufacturing
Headquartered in Burlington, Wisconsin, C2R Global Manufacturing,
Inc. -- http://www.c2r-globalmfg.com/-- specializes in developing,
manufacturing, and marketing products for small to medium-sized
customers. Its products include tooling and electronics (software
and circuit design), metal castings, sheet metal fabrications, and
molding all forms of plastics and rubbers.
C2R Global Manufacturing, Inc. sought protection under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Wis. Case No. 18-30182) on
October 29, 2018. At the time of the filing, the Debtor estimated
assets of $1 million to $10 million and liabilities of $1 million
to $10 million.
The case is assigned to Judge Beth E. Hanan. The Debtor tapped
Kerkman & Dunn as its legal counsel.
CADIZ INC: Posts $37.8 Million Net Loss in 2020
-----------------------------------------------
Cadiz Inc. filed with the Securities and Exchange Commission its
Annual Report on Form 10-K disclosing a net loss and comprehensive
loss applicable to common stock of $37.82 million on $541,000 of
total revenues for the year ended Dec. 31, 2020, compared to a net
loss and comprehensive loss applicable to common stock of $29.53
million on $441,000 of total revenues for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $74.36 million in total
assets, $99.66 million in total liabilities, and a total
stockholders' deficit of $25.30 million.
As of Dec. 31, 2020, the Company had total indebtedness outstanding
to its lenders of approximately $78.6 million which is secured by
itsr assets. Approximately $78.5 million of the Company's
indebtedness is due in May 2021 which can be extended to November
2022 at the Company's option.
Cadiz said, "To the extent that we do not make principal and
interest payments on the indebtedness when due, or if we otherwise
fail to comply with the terms of agreements governing our
indebtedness, we may default on our obligations. Additionally, the
completion of the acquisition of the 124-mile extension of our
Northern Pipeline will require a $19 million payment prior to June
30, 2021. If we cannot fund the payment and complete the
acquisition of the 124-mile segment, our Northern Pipeline
opportunities will be limited to the 96-mile segment already
owned."
"We will continue to require additional working capital to meet our
cash resource needs until such time as our asset development
programs, including the Water Project, produce revenues sufficient
to fund operations. If we cannot raise funds if and when needed,
we might be forced to make substantial reductions in our operating
expenses, which could adversely affect our ability to implement our
current business plan and ultimately our viability as a company.
We cannot assure you that our current lenders, or any other
lenders, will give us additional credit should we seek it. If we
are unable to obtain additional credit, we may engage in further
financings. Our ability to obtain financing will depend, among
other things, on the status of our asset development programs and
general conditions in the capital markets at the time funding is
sought. Any further equity or convertible debt financings would
result in the dilution of ownership interests of our current
stockholders."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/727273/000143774921007331/cdzi20201231_10k.htm
About Cadiz
Founded in 1983 and headquartered in Los Angeles, California, Cadiz
Inc. -- http://www.cadizinc.com-- is a natural resources
development company dedicated to creating sustainable water and
agricultural opportunities in California. The Company owns
approximately 45,000 acres of land with high-quality, naturally
recharging groundwater resources in three areas of Southern
California's Mojave Desert.
CADIZ INC: Susan Kennedy Appointed to Board of Directors
--------------------------------------------------------
Cadiz Inc.'s Board of Directors appointed Susan P. Kennedy as a new
member, expanding the size of the Board to 10 members.
Kennedy brings more than 30 years of relevant public and private
experience, including her roles as former Commissioner of the
California Public Utilities Commission, former chief of staff and
cabinet secretary to two California governors, former member of the
California Bay-Delta Authority, and as founder and CEO of renewable
energy start-up Advanced Microgrid Solutions, which was acquired by
AES/Siemens in 2020.
"I am extremely pleased to welcome Susan to the Company's Board of
Directors," said Scott Slater, Cadiz CEO and Board Member. "Susan
is an accomplished and well-respected leader with a diverse
background as a CEO, government regulator and consensus builder,
particularly in the water and renewable resources sectors. That
experience will help guide Cadiz in our commitments to provide
clean, reliable, and affordable water to Californians and be of
significant benefit to our Board and our shareholders."
"I am delighted to join the Cadiz Board at this exciting time,"
said Kennedy. "The Company has great potential to make meaningful
contributions to addressing California's water challenges
particularly in communities underserved by the State's traditional
water supply system. I am excited to get to work and contribute my
expertise to this important effort."
Kennedy's appointment to the Board comes as Cadiz also announced
that Board members Murray Hutchison and Richard Nevins, who have
honorably served since 1997 and 2016 respectively, will retire at
this year's Annual Meeting of Stockholders in June and not stand
for re-election.
"We warmly welcome Susan to our Board and also want to express our
sincere thanks to Murray Hutchison and Richard Nevins for their
distinguished service and the outstanding contributions they both
made to Cadiz during their tenure," said Keith Brackpool, chairman
of the Board.
Kennedy's appointment to the Board is effective immediately and
comes at an important time for Cadiz, as the Company continues to
expand its water and agricultural footprint in California. Cadiz
is focused on advancing its commitments to provide sustainable
water and groundwater storage to communities who would benefit from
additional access to reliable water supplies.
Kennedy will join the Board's Compensation Committee and the
Corporate Governance and Nominating Committee, which oversees the
Company's public affairs and environmental, social and governance
policy practices.
In a separate action, the Board of Directors also re-aligned its
committee membership, naming Maria Echaveste the new Chair of the
Corporate Governance and Nominating Committee, Winston Hickox the
new Chair of the Compensation Committee and Steven Courter as
continuing Chair of the newly named Audit and Risk Committee, which
amended its Charter to provide specific risk oversight duties.
Richard Nevins and Murray Hutchison will continue to serve on the
Board until the Annual Meeting of Stockholders scheduled for June
2021.
About Cadiz
Founded in 1983 and headquartered in Los Angeles, California, Cadiz
Inc. -- http://www.cadizinc.com-- is a natural resources
development company dedicated to creating sustainable water and
agricultural opportunities in California. The Company owns 70
square miles of property with significant water resources in
Southern California and are the largest agricultural operation in
San Bernardino, California, where we have sustainably farmed since
the 1980s. The Company is also partnering with public water
agencies to implement the Cadiz Water Project, which was named a
Top 10 Infrastructure Project that over two phases will create a
new water supply for approximately 400,000 people and make
available up to 1 million acre-feet of new groundwater storage
capacity for the region.
Cadiz Inc. reported a net loss and comprehensive loss applicable to
common stock of $37.82 million for the year ended Dec. 31, 2020,
compared to a net loss and comprehensive loss applicable to common
stock of $29.53 million for the year ended Dec. 31, 2019. As of
Dec. 31, 2020, the Company had $74.36 million in total assets,
$99.66 million in total liabilities, and a total stockholders'
deficit of $25.30 million.
CAJUN COMPANY: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: The Cajun Company, Inc.
307 Wilcox St.
Lafayette, LA 70508
Business Description: The Cajun Company -- http://cajunco.net--
is a family-owned and operated business that
provides industrial insulation services.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Western District of Louisiana
Case No.: 21-50174
Judge: Hon. John W. Kolwe
Debtor's Counsel: H. Kent Aguillard, Esq.
H. KENT AGUILLARD
P.O. Box 391
Eunice, LA 70535
Debtor's
Special
Counsel: James L. Pate, Esq.
Brandon W. Letulier, Esq.
Jeffrey K. Coreil, Esq.
Jed Mestayer, Esq.
NEUNER PATE
Debtor's
Accountants: DARNALL, SIKES & FREDERICK, INC.
Debtor's
Financial
Consultant: STEVE GARDES
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Julia E. Davis, corporate
secretary/comptroller.
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/LNI6PHQ/The_Cajun_Company_Inc__lawbke-21-50174__0001.0.pdf?mcid=tGE4TAMA
CALAIS REGIONAL: Anthem Says Disclosure Inadequate
--------------------------------------------------
Anthem Health Plans of Maine, Inc., d/b/a Anthem Blue Cross and
Blue Shield ("Anthem"), submitted an objection to the adequacy of
the First Amended Disclosure Statement with Respect to the First
Amended Chapter 11 Plan for Calais Regional Hospital Prepared by
the Official Committee of Unsecured Creditors and Katahdin Trust
Company Dated February 24, 2021
Anthem's objections to the Plan and Disclosure Statement can be
briefly summarized as follows:
Administrative Expenses
* There is inadequate disclosure of the amount of Administrative
Expenses1 and the means to pay such Administrative Expenses. The
lack of disclosure, together with the lack of an adequate reserve
to pay such amounts, calls into question the Plan's compliance with
11 U.S.C. Sec. 1129(a)(9)(A) and 1129(a)(11).
* The Plan's deadline to file a request for allowance of an
Administrative Expense is impractical in light of the need for
Anthem to run-out claims and reconcile the PIP (as defined below)
against adjudicated claims for 2021.
Assumption or Rejection of the Facility Agreement
* The Plan's provisions allowing Calais Regional Hospital (the
"Debtor") to designate contracts for assumption and assignment as
of the Closing Date (which will be after the Confirmation Date and
Effective Date) do not comply with 11 U.S.C. Sec. 1123(a) and
1129(a)(3) because it would cause Anthem to be unable to give its
members advance notice that the Debtor will be going out of network
as required under state and federal law.
* In the alternative, this Court should require the Debtor under
11 U.S.C. § 365(d)(2) to give Anthem irrevocable notice of the
assumption or rejection of the Facility Agreement (defined below)
at least 70 days before the Closing Date to avoid harm to its
members and allow Anthem to comply with applicable law.
Setoff, Recoupment, and Discharge
* The Plan violates Sec. 1129(a)(1) and (a)(3) because it
enjoins creditors from exercising rights of recoupment or setoff,
and otherwise attempts to grant a discharge in violation of 11
U.S.C. Sec. 1141(d)(3) in light of the fact that it is a plan of
liquidation and the Debtor will not be engaged in business
post-consummation.
Counsel for Anthem Health Plans of Maine, Inc.,
d/b/a Anthem Blue Cross and Blue Shield:
Eric S. Goldstein
Jaime A. Welsh
SHIPMAN & GOODWIN LLP
One Constitution Plaza
Hartford, CT 06103-1919
Telephone: (860) 251-5000
Facsimile: (860) 251-5218
E-mail: egoldstein@goodwin.com
jwelsh@goodwin.com
About Calais Regional Hospital
Based in Calais, Maine, Calais Regional Hospital operates as a
non-profit organization offering cardiac rehabilitation, emergency,
food and nutrition, home health, inpatient care unit, laboratory,
nursing, radiology, respiratory care and stress testing, surgery,
and social services. Visit https://www.calaishospital.org/ for more
information.
Calais Regional Hospital filed a Chapter 11 petition (Bankr. D.
Maine Case No. 19-10486) on Sept. 17, 2019. At the time of the
filing, the Debtor disclosed assets of between $10 million and $50
million and liabilities of the same range.
Judge Michael A. Fagone oversees the case.
The Debtor tapped Murray Plumb & Murray as its bankruptcy counsel,
Spinglass Management LLC as financial advisor; and Kelly, Remmel &
Zimmerman and Norman Hanson Detroy LLC as special counsel.
CARBONLITE HOLDINGS: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------------
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of CarbonLite
Holdings, LLC and its affiliates.
The committee members are:
1. Niagara Bottling, LLC
Attn: John Breedlove, Esq.
1440 Bridgegate Drive
Diamond Bar, CA 91765
Phone: (909) 218-8003
E-mail: jbreedlove@niagarawater.com
2. Everrank Investment Group, Inc.
Attn: David Ha
17450 Silica Drive
Victorville, CA 92395
Phone: (909) 974-2889
E-mail: davidha@everrankca.com
3. Bantam Materials International
Attn: Vytas Gruodis
4207 Sainte Catherine Street West, Suite 202
Westmount, Quebec
Canada H3Z1P6
Phone: (514) 418-2528
E-mail: vytas.gruodis@bantaminc.com;
4. Replenysh, Inc.
Attn: Mark Armen
P.O. Box 515381, PMB 83530
Los Angeles, CA 90051-6681
Phone: (310) 780-0061
E-mail: mark@replenysh.com
5. rPlanet Earth Los Angeles LLC
Attn: Robert Daviduk
5300 South Boyle Avenue
Vernon, CA 90058
Phone: (213) 320-0612
E-mail: bob@rplanetearth.com;
6. Banyan Plastics LLC
Attn: Sloan Sherman
2393 South Congress Avenue
West Palm Beach, FL 33406
Phone: (401) 952-6261
E-mail: sloan@banyanplastics.com
7. Exact Staff, Inc.
Attn: Gordon Smith
23901 Calabasas Road, Suite 1085
Calabasas, CA 91302
Phone: (424) 249-0044
E-mail: gordonsmith17@yahoo.com
E-mail: kgoodwin@exactstaff.com.
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About CarbonLite Holdings
CarbonLite processes post-consumer recycled polyethylene
terephthalate (rPET) plastic products and produces rPET and
polyethylene terephthalate (PET) beverage and food packaging
products through its two business segments, the Recycling Business
and PinnPack.
CarbonLite Holdings, LLC and 10 of its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-10527) on March 8,
2021. CarbonLite P, LLC, an affiliate, estimated assets of $100
million to $500 million and debt of $50 million to $100 million.
The Hon. John T. Dorsey is the case judge.
Pachulski Stang Ziehl & Jones LLP and Reed Smith LLP serve as the
Debtors' bankruptcy counsel and corporate counsel, respectively.
Stretto is the claims agent.
CARRIAGE SERVICES: S&P Upgrades ICR to 'B+', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings raised its ratings on death care company
Carriage Services Inc. (CSV), including the issuer credit rating to
'B+' from 'B'.
The stable outlook reflects S&P's expectation that CSV will
maintain a balanced approach in its capital deployment, such that
S&P Ratings-adjusted leverage will remain in the 4x-5x area.
CSV has reduced leverage through a combination of EBITDA growth and
debt repayment amid the COVID-19 pandemic. After some initial
disruptions, the COVID-19 pandemic has been a material tailwind for
CSV (and the death care industry). The average selling price per
funeral contract recovered quickly and the company put in place
proactive cost controls. The company paid down nearly $40 million
of the revolver through cash from operations in 2020. Adjusted
leverage declined to 4.7x for the last twelve months period ended
Dec. 31, 2020.
M&A remains a risk to the rating, although we expect leverage will
remain under 5x. S&P said, "We expect the company to reduce
leverage to around 4x in first quarter 2021 driven by a
continuation of strong operating performance in the first quarter
and allocation of free cash flow to debt repayment. Lower leverage
and increasing cash flow has increased the company capacity for
acquisitions. We now expect that the S&P adjusted leverage to
generally stay in the 4x-5x area, even with some acquisition
spending (about $80 million annually) built in our model as a
placeholder. This lower leverage range drives the upgrade."
The death care industry is highly fragmented and acquisitions are
an important component of the company's growth strategy. While
acquisition multiples generally have stayed in the 6x-8x range in
the past few years, competition could drive up the multiples and
large, debt-financed acquisitions could cause leverage to rise.
Also, acquisitions raise integration risks. Integration-related
issues at CSV in late 2018 contributed to a delay of deleveraging.
These issues are behind the company now. Management improved
performance of the acquired assets within a year and the
integration for some more recent acquisitions has gone well.
CSV's deleveraging pace was also delayed in late 2019/early 2020,
when it made four acquisitions with total consideration of
approximately $170 million, raising proforma leverage to 6.0x (per
the company's calculation) at peak immediately after the company
purchased Oakmont. Although the company had publicly articulated a
target of 4x-4.5x before these events and leverage was elevated,
management has since delivered on that goal and reduced leverage
back down to 4x-4.5x. In addition, leverage is much lower now and
cash flow has improved, therefore, despite our expectation that the
company will make acquisitions, S&P expects leverage will generally
remain under 5x.
The company has a narrow focus and limited scale in the fragmented
death care market. The $20 billion North American death care
industry is highly fragmented with nearly 80% of the market
operated by independent owners. One operator, Service Corp.
International (SCI), controls 15%-16% market share. CSV and
StoneMor Inc. are the second- and third-largest market
participants, each commanding only about 1% of the market. In
addition, CSV (along with the rest of the industry) has high fixed
cost structure and therefore its profits are sensitive to any
revenue decline.
S&P said, "The stable outlook reflects our expectation that CSV
will generally maintain an S&P Global Ratings-adjusted leverage of
4x-5x on a sustained basis.
"We could consider a lower rating if we believe that the company's
leverage will stay above 5x on a sustained basis. The most likely
path would be aggressive acquisition spending coupled with
significant integration problems or a decline in revenue.
"We could consider a higher rating if we gain comfort that the S&P
Global Ratings-adjusted leverage will sustainably stay below 4x."
CARVANA CO: Plans to Offer $500M of Senior Notes Due 2027
---------------------------------------------------------
Carvana Co. said it is planning to offer, subject to market
conditions and other factors, up to $500 million in aggregate
principal amount of Senior Notes due 2027. Carvana intends to use
the net proceeds for general corporate purposes.
The notes will not be registered under the Securities Act of 1933,
as amended, or the securities laws of any other jurisdiction, and
will not be offered or sold in the United States or to U.S. persons
absent registration or an applicable exemption from the
registration requirements. The offering of the notes will be made
only to persons reasonably believed to be qualified institutional
buyers in accordance with Rule 144A under the Securities Act and to
non-U.S. persons in accordance with Regulation S under the
Securities Act.
About Carvana
Founded in 2012 and based in Tempe, Arizona, Carvana Co. --
http://www.carvana.com-- is a holding company that was formed as a
Delaware corporation on Nov. 29, 2016. Carvana is an e-commerce
platform for buying and selling used cars. The Company owns and
operates Carvana.com, which enables consumers to quickly and easily
shop vehicles, finance, trade-in or sell the ir current vehicle to
Carvana, sign contracts, and schedule as-soon-as-next-day delivery
or pickup at one of Carvana's patented, automated Car Vending
Machines.
Carvana reported a net loss attributable to the Company of $171.14
million for the year ended Dec. 31, 2020, compared to a net loss
attributable to the Company of $114.66 million for the year ended
Dec. 31, 2019. As of Dec. 31, 2020, the Company had $3.03 billion
in total assets, $2.23 billion in total liabilities, and $801.50
million in total stockholders' equity.
* * *
As reported by the TCR on May 24, 2019, S&P Global Ratings affirmed
its 'CCC+' issuer credit rating on Carvana Co. to reflect the
company's improved liquidity after it raised $480 million by
issuing about $230 million of common stock and a $250 million
add-on to its existing senior unsecured notes due 2023.
CBL & ASSOCIATES: Reaches Chapter 11 Deal With Bank Lenders
-----------------------------------------------------------
Law360 reports that retail space owner CBL & Associates told a
Texas bankruptcy judge on Wednesday, March 24, 2021, that it has
reached a deal with almost all of its bank lenders to support its
Chapter 11 plan of reorganization, creating a smooth path out of
bankruptcy.
During a virtual trial hearing over a separate dispute involving an
alleged default by the debtor on $1.1 billion in loans from bank
lender Wells Fargo NA, CBL attorney Ray C. Schrock of Weil Gotshal
& Manges LLP said that the litigation would be stayed in light of
the deal reached on its plan.
About CBL Properties
Headquartered in Chattanooga, TN, CBL Properties, previously CBL &
Associates, -- http://www.cblproperties.com/-- is a self-managed,
self-administered, fully integrated real estate investment trust
(REIT) that is engaged in the ownership, development, acquisition,
leasing, management and operation of regional shopping malls,
open-air and mixed-use centers, outlet centers, associated centers,
community centers, and office properties.
CBL's portfolio is comprised of 107 properties totaling 66.7
million square feet across 26 states, including 65 high-quality
enclosed, outlet and open-air retail centers and 8 properties
managed for third parties. It seeks to continuously strengthen its
company and portfolio through active management, aggressive leasing
and profitable reinvestment in its properties.
CBL, CBL & Associates Limited Partnership and certain other related
entities filed voluntary petitions for reorganization under Chapter
11 of the U.S. Bankruptcy Code in Houston, Texas, on Nov. 1, 2020
(Bankr. S.D. Tex. Lead Case No. 20-35226).
The Debtors have tapped Weil, Gotshal & Manges LLP as their legal
counsel, Moelis & Company as restructuring advisor and Berkeley
Research Group, LLC as financial advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
CENTRAL GARDEN: S&P Affirms 'BB' ICR, Outlook Stable
----------------------------------------------------
S&P Global Ratings affirmed all its ratings on U.S.-based Central
Garden & Pet Co., including its 'BB' issuer credit rating.
Moreover, S&P has an improved view of its business risk because it
believes healthy demand will continue for its core garden and pet
segments.
S&P said, "Our issue-level rating on the senior unsecured notes
remains unchanged. However, we are revising the recovery rating to
'3' from '4' due to the increase in emergence enterprise value to
mainly account for the EBITDA contribution from the recent
acquisitions as well as the better business growth prospects.
The stable outlook reflects our expectation that Central will
increase its top line and EBITDA over the next year, driven by
continued momentum in both pet and garden, while maintaining its
financial policy such that adjusted leverage stays in the low- to
mid-2x area.
"The rating affirmation reflects our expectation for continued
strong operating performance, driven by volume growth in both the
garden and pet segments. Strong momentum has continued both in the
lawn and garden and pet segments, driven by more consumer
activities in lawns and gardens and growing pet ownership.
Operating performance in the first quarter was very strong despite
it typically being a seasonally weak period, including 23% net
sales growth and over 160% EBITDA expansion. We expect strong
momentum to continue in 2021 and homeowners to spend more time on
their lawns, gardens and pets as people move from cities to suburbs
and increasingly work from home than before the COVID-19 pandemic.
"We expect Central to continue to expand via acquisitions in the
next few years. The company made three acquisitions recently for a
total of around $740 million. Green Garden Products is a leading
provider of vegetable, herb and flower seed packets, and we expect
this acquisition to expand Central's product portfolio and
strengthen its footprint with key retail customers. DoMyOwn.com is
a fast-expanding online retailer of professional-grade control
products, which should strengthen Central's position in the
category and increase its digital capabilities. The Hopewell
Nursery Inc. acquisition should expand Central's product portfolio
and bolster its position in live goods.
"We expect the company to continue to use cash to make acquisitions
after integrating these targets. Central has a stated gross
leverage target of 3x-3.5x. We expect S&P Global Ratings-adjusted
leverage to remain in the low- to mid-2x area in the next few years
as we now net cash against our adjusted debt figure because of our
more favorable view of its business risk. However, we cannot rule
out a large, transformational acquisition that could lead to
leverage above the upper end of the company's stated target and our
forecast adjusted ratios.
"Our forecast assumes Central continues to effectively manage its
supply chain and raw material, labor, and freight costs. Central's
supply chain remains stressed due to strong consumer demand
increases. To address that, Central is investing more through
capital expenditure (capex), increasing its digital marketing
expenses, adding automation, and accelerating a capacity expansion
plans. It also has increased some prices, which should partially
offset pressure from raw material inflation, labor shortage, and
increasing freight cost.
"The stable outlook reflects our expectation over the next year
that the company will increase its top line and EBITDA, driven by
continued momentum in both pet and garden, and maintain its
financial policy such that adjusted leverage stays in the low- to
mid-2x area."
S&P could raise the ratings if:
-- S&P has a more favorable view of the business. This could
happen if the company significantly expands and diversifies its
products, geographic footprint, and customer base while increasing
and sustaining adjusted EBITDA margin to above 15%; and
-- The company maintains its current financial policy such that
adjusted leverage stays in the low- to mid-2x area.
S&P could lower the ratings if:
-- Operating performance declines considerably, leading to weaker
profitability, cash flow generation, and adjusted debt to EBITDA
sustained in the high-3x area. This could occur if the company
cannot manage its growth strategy including integrating
acquisitions, unfavorable weather conditions persist over multiple
years, it can't absorb potentially meaningfully higher input costs,
or it loses key retail customers; and
-- Its financial policy becomes more aggressive, including
significant debt-financed shareholder distributions or
acquisitions.
CENTRAL SIGNS: Case Summary & 14 Unsecured Creditors
----------------------------------------------------
Debtor: Central Signs, LLC
517 Mason Ave.
Daytona Beach, FL 32117
Business Description: Central Signs, LLC -- https://www.central-
signs.com -- designs, manufactures,
installs, and maintains custom signage and
lighting. The Company is the fee simple
owner of a warehouse/factory located at 517
Mason Ave., Daytona Beach, Florida having a
comparable value of $650,000.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 21-01312
Debtor's Counsel: Anne-Marie L. Bowen, Esq.
ANNE-MARIE L. BOWEN, P.A.
816 N. Thornton Ave.
Orlando, FL 32803
Tel: 407-228-1300
Fax: 407-228-6605
Email: courtdocs@bowenbankruptcylaw.com
- and -
Justin M. Luna, Esq.
LATHAM, LUNA, EDEN & BEAUDINE, LLP
111 N. Magnolia Ave. #1400
Orlando, FL 32801
Tel: 407-481-5804
Email: jluna@lathamluna.com
Total Assets: $987,080
Total Liabilities: $3,597,627
The petition was signed by Charles H. Hutcherson, manager.
A copy of the petition containing, among other items, a list of the
Debtor's 14 unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/CKUWNXI/Central_Signs_LLC__flmbke-21-01312__0001.0.pdf?mcid=tGE4TAMA
CHESAPEAKE APPALACHIA: Penalized for Ignoring Wetlands
------------------------------------------------------
Sylvia Carignan of Bloomberg Law reports that gas producer,
Chesapeake Appalachia LLC, will pay a penalty for ignoring wetlands
in its well plans.
The natural gas producer will pay a $1.9 million civil penalty to
address claims by Pennsylvania and the EPA that it failed to
protect wetlands at its well sites throughout the state, according
to a proposal filed in federal district court Wednesday, March 24,
2021.
Chesapeake Appalachia LLC voluntarily disclosed probable violations
to the state and Environmental Protection Agency in 2014. The
company's internal environmental audit showed a systemic failure to
identify wetlands in its applications to build new oil and gas
facilities in the state between 2005 and 2014, according to the
proposed consent decree filed in U.S. District Court.
Chesapeake Appalachia, LLC is an Oklahoma-based company that
engages in the exploration, production, processing, and
transportation of natural gas.
CITY BREWING: S&P Assigns 'B+' ICR on Strong Growth Prospects
-------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issuer credit rating to La
Crosse, Wis.-based City Brewing Co. LLC and 'B+' rating to the
proposed $950 million secured bank credit facility. The '3'
recovery rating indicates creditors could expect meaningful
(50%-70%; rounded estimate: 55%) recovery in the event of a payment
default.
Through its ultimate parent Caiman Holdco LLC, City Brewing will be
majority-owned by BRH with Charlesbank Capital Partners and Oaktree
Capital as minority owners. The majority owner BRH also owns Blue
Ribbon Intermediate Holdings LLC (Pabst). S&P's 'B+' rating on City
Brewing is two notches above S&P's group credit profile on the BRH
group (b-). S&P's stand-alone credit profile (SACP) on City Brewing
is 'b+'.
City Brewing Co. LLC announced it is refinancing $276 million of
debt, funding a $479 million dividend to Blue Ribbon Holdings LLC
(BRH), purchasing brewing operations in Irwindale, Calif., for $45
million, and buying out minority shareholders for $367 million.
The financing includes $400 million of equity from minority owners
Charlesbank Capital Partners and Oaktree Capital Management and
will result in pro forma leverage of 5.2x.
S&P said, "The stable outlook reflects our expectation that demand
trends will remain favorable, resulting in annual EBITDA growth
over 40%, allowing the company to quickly reduce debt leverage to
below 4x in 2021.
S&P's ratings reflect City Brewing's significant but not aggressive
leverage (including pro forma leverage of 5.2x that should decline
to 3.6x-3.8x over the next year), good market share,
well-established customer relationships, and leading innovation
capabilities, albeit with a small size, and narrow product
breadth.
City Brewing participates in an attractive category with favorable
growth rates and trends that support earnings growth and EBITDA
margins. City Brewing is the largest full-service co-manufacturer
of flavored-malt-beverage (FMB) and ready-to-drink (RTD) products
with an approximate 64% share of the U.S. market. The fast-growing
FMB category share of the total beer/FMB/cider category grew from
7% in 2017 to 15% in 2020. According to Euromonitor, the growth in
FMB is underpinned by the hard seltzer category that S&P expects to
have a compounded annual growth rate (CAGR) of 24% over next five
years. The "better-for-you" alcoholic beverages represent an
overall change in consumer preference for beverages with less
alcohol, carbs, and calories. In 2020, large brewers such as AB
InBev, Molson Coors, and Constellation all launched new hard
seltzer brands, garnering further category support through its
market leadership and marketing support.
Still, the company has significant customer concentration with its
top three customers, albeit with established positions as leaders
in the hard seltzer market and a more than 18-year relationship
with City Brewing. S&P nonetheless believes this concentration
could potentially impact the company's profitability if one of
these customers decides to take brewing in house; for example in
2016 and 2017, the company lost volumes when one of its largest
customers took seasonal drinks back to in-house manufacturing.
The company benefits from pass-through contracts that result in
lower exposure to commodity price volatility versus larger brewers
such as Molson Coors and AB Inbev. The company also benefits from
lower operating leverage as it is operating at high capacity
utilization rates. S&P said, "Moreover, we believe the company's
FMB and RTD brewing capacity coupled with innovation capabilities
in packaging and processing enable it to maintain its market share
and meet customer needs. During the pandemic as on-premise demand
shut down, FMBs and RTDs benefited considerably as consumers stayed
home. We believe consumer demand for hard seltzer will remain
strong even as on-premise starts to recover due to the shift in
consumer preference. This, coupled with the required upfront volume
commitments from customers and a favorable mix shift to
more-profitable slim cans and variety packs, supports the forecast
revenue growth of over 40% in 2021 and over 30% in 2022, and
healthy EBITDA margins with average EBITDA growth of over 40% over
the next two years. The strong EBITDA growth also supports our
expectations that the company will reduce debt leverage quickly
from 2020 pro forma leverage of 5.2x to 3.6x-3.8x range by the end
of 2021."
City Brewing plans to spend $240 million on capital expenditures
(capex) in 2021 (up from $135 million estimated in 2020), which
will cause its free operating cash flow (FOCF) generation to turn
negative. S&P said, "Although there is execution risk inherent in
such a high level of investment, we expect the projects to generate
material revenue and EBITDA upon completion. In 2020, the company
embarked on new capital projects that involve adding sleek can
lines, packaging capabilities to its manufacturing facilities, and
acquiring and relaunching the Molson Coors Irwindale, Calif.,
facility from Pabst, which will expand its network to four
facilities from three currently. City Brewing funds a portion of
its capex through upfront commitment fees from its customers, who
want to ensure there is capacity to meet underlying demand. The
Irwindale facility relaunch will be the larger portion of capex
spending in 2021 and 2022. Given the substantial upfront investment
costs, we believe the company faces some execution risk if the
projects are delayed and it is not able to meet customer demand,
which could reduce its profitability."
City Brewing is funding the majority of the capital costs of the
projects, which we expect will cause it to generate negative FOCF
for the year before returning to positive FOCF generation in 2022.
Management expects the projects to generate meaningful incremental
EBITDA related to capacity expansions in 2021 and higher EBITDA
from volume contribution of the Irwindale facility in 2022. S&P
expects the company to generate significant positive FOCF in 2022
as capex starts decline modestly to $155 million and higher assumed
level of EBITDA growth.
S&P said, "We assume City Brewing will exercise good financial
discipline despite its minority ownership by Charlesbank and
Oaktree. City Brewing will be majority-owned by BRH, which also
owns beer and alcoholic beverage marketer Pabst. City Brewing is
being established as a separate credit group from Pabst. No credit
support will be provided between City Brewing and Pabst. Through
Caiman Holdco LLC, the ultimate parent company of City Brewing,
Charlesbank Capital Partners and Oaktree Capital will own a
minority share in the company. We note that Charlesbank has a
record of taking dividends from its portfolio companies; this risk
is mitigated somewhat due to shared corporate governance amongst
shareholders. As such, we expect the company to have a disciplined
financial policy that includes a prudent approach to shareholder
returns and mergers and acquisitions.
"We also believe there are factors that mitigate the risk of City
Brewing's resources to be used to support Pabst (CCC/Negative/--),
including significant minority shareholders with an active economic
interest with seats on City Brewing's board of directors. We
believe the minority shareholders have rights to veto certain
material transactions by controlling owner BRH.
"The stable outlook on City Brewing reflects our expectation that
the company will quickly reduce leverage and manage debt leverage
below 4x in 2021. This is supported by our expectation for revenue
growth of 40% in 2021 as demand for hard seltzer and RTD cocktails
continues to be strong in the alcoholic beverage sector, with
higher-margin sleek can and variety packs supporting higher EBITDA
contribution.
"We could raise our rating on City if it successfully increases
size, manages its rapid growth, maintains its profitability, and
sustains leverage comfortably below 4x. This could occur if revenue
growth and operating performance exceed our base-case expectations.
We would also expect the company to maintain a disciplined
financial policy.
"We could lower our ratings on City if its profitability drops,
causing leverage to be sustained above 4x. We believe the company's
EBITDA would need to decrease below our current expectation for
this to occur at its current debt levels." S&P believes this would
likely occur if:
-- City were to lose significant business with its largest
customers, causing plant utilization rates to decline and costs to
increase;
-- If there is a significant run-up in costs related to the
Irwindale facility that the company fails to pass through; or
-- Level of profitability that results in leverage sustained above
4x.
S&P said, "We could also lower the ratings if the company's
financial policy becomes more aggressive than we expect and it
increases its leverage above 5x for debt-funded acquisitions or
excess returns to its shareholders. We estimate it would need to
raise approximately $500 million of debt at current EBITDA levels
for this to occur."
CORECIVIC INC: S&P Lowers ICR to 'BB-' on Heightened Business Risk
------------------------------------------------------------------
S&P Global Ratings lowered all its ratings by one notch, including
its issuer credit rating to 'BB-' from 'BB'.
The negative outlook reflects the uncertain operating environment
and the risk that S&P could lower ratings if operating conditions
or debt repayments are weaker-than-expected.
S&P's rating on CoreCivic reflects the following keys risk and
credit strengths.
Key Risks:
-- Public policy change or increased insourcing risk (e.g., a
similar executive order is issued to the U.S. Immigration and
-- Customs Enforcement (ICE) agency, or criminal justice reform
results in a sharp reduction in inmate populations).
-- Significant revenue concentration with top 5 federal agencies
and state governments (about 66% of 2020 revenue).
-- High refinancing risk in 2023 given the sizable maturity wall
and elevated capital costs.
-- Limited alternate repurposing potential for detention centers.
Key Strengths:
-- Supportive financial policies, with expectation for debt
repayment from free cash flow and asset sales proceeds until
CoreCivic reaches its net adjusted leverage target of 2.25x to
2.75x.
-- High barriers to entry, multi-year contracts, and lack of a
viable substitute for current detention demand in the
short-to-intermediate term.
-- One of the largest private detention center operators,
rehabilitation, and re-entry services in the U.S.
S&P said, "The company faces a less supportive operating
environment and consequently we have revised our assessment of its
business risk. In our view, the use of U.S. privately operated
criminal detention facilities is at a crossroad. Unless various
political constituents agree in a common policy framework or
guidelines for the use of these government service providers, which
we don't expect in the coming years, industry participants will
face uncertain operating conditions. We expect increasingly
volatile earnings, or lower financing availability as the weight of
changing political administrations, rhetoric, and environmental
social and governance (ESG) mandates impact business prospects.
Accordingly, we revised our business risk assessment to weak, to
reflect our diminished view of the company's revenue visibility,
earnings quality, and cash flow stability."
Large debt maturities that start in early 2023 are manageable if
the company executes on its debt repayment policies. The company
has about $1 billion of debt maturing by mid-2023 (of which $749
million matures in the second quarter of 2023), and about $113
million of available cash balances at Dec. 31, 2020. In S&P's
base-case forecast, which includes our assumption the company uses
about $150 million to $200 million of annual free operating cash
flow (FOCF) generation to repay debt, we believe the company has a
viable path to refinance its near-term debt maturities in a timely
manner. Nevertheless, the debt markets could remain volatile for
the company if operating performance or debt repayments are weaker
than expected.
On August 5, 2020 the company announced its intent to revoke its
real estate investment trust (REIT) election and become a taxable C
corporate, effective Jan. 1, 2021. Concurrently, the company
announced its intentions to allocate a substantial portion of its
free cash flow towards debt reduction, with a target total leverage
ratio of 2.25x to 2.75x, excluding project-specific non-recourse
debt. In S&P's opinion, it demonstrates a prudent financial risk
management policy, reduces the 2023 refinancing risk, and provides
the company the financial flexibility to execute on its key
business initiatives after it reaches its leverage target.
S&P said, "Although the ultimate impact of recent public policy
actions is hard to predict; we believe the company's services are
essential and difficult to replace in the short term. Our
preliminary view is that revenues decline at a low-single-digit
compound annual growth rate (CAGR) over the next three years. Our
key forecast assumptions include."
Bureau of Prisons (BOP; about 3% of 2020 revenue) contracts will be
terminated at the time of expiration. Overall system-wide crowding
was negative 6% as of Sept. 30, 2020 at BOP operated facilities
which should allow for increased insourcing. However, utilization
at reentry centers contracts could improve as COVID-19 concerns
decrease.
U.S. Marshals Services (USMS; about 21% of revenue) bed capacity is
reduced by 50% at contract expiration. USMS does not own or
operated detention centers. S&P said, "Our assumption reflects our
view that the DOJ will implement President Biden's executive order
in earnest, but will eventually have to balance logistical factors
or higher costs of housing inmates in county or municipal jails
into its investment and outsourcing decisions. In some cases, pass
through agreements with local jails and governments could soften
the impact. We have assumed USMS contracts with perpetual
maturities are not terminated."
ICE contracts (about 28% of revenue) and state contracts (about 43%
of revenue) are unaffected. The company's ICE revenue could benefit
in the short term from the current surge of migrants at the
U.S.-Mexico border.
Longer term, as long as earnings prospects rely on capacity
utilization or inmate population, the industry's growth prospects
or reputation could remain challenged. Nevertheless, services such
as facility design and construction, facility leasing, inmate
reentry, electronic monitoring, inmate health and education
services could be viewed as more favorable and become a greater
percentage of the business mix.
The controversial topic of human rights, combined with evolving
public sentiment and policy views on criminal justice reform,
expose privately operated criminal detention facilities operators
to ongoing social and governance risks. Both of the companies we
rate, CoreCivic and GEO, are often criticized for various human
rights issues, including confinement practices, prisoner violence,
and mistreatment, and are subject to ongoing litigation. In recent
years, as a result of pressure from activist advocacy groups,
select banks have chosen to end their lending relationship with
CoreCivic and GEO once their commitments mature.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Social benefits.
The negative outlook reflects the uncertain operating environment
and the likelihood that S&P's could lower the ratings over the next
12 months if weaker-than-expected operating performance adversely
affects the company's cash flow generation or ability to refinance
its 2023 debt maturities in a timely manner.
S&P's could lower its ratings if:
-- Contract termination rates are greater than expected and S&P
revises its forecast downward;
-- If expect adjusted leverage to rise and remain above 4x;
-- Financing conditions do not improve, constraining liquidity or
a timely refinancing of 2023 maturities;
-- Occupancy rates remain low because of changes in state, local,
federal enforcement immigration policies, or sentencing
guidelines;
-- Per diem rates decline because of stress on state budgets or
administrative changes; or
-- Sharp decline in operating conditions results in a negative
reassessment in S&P's view of the business.
S&P could revise the outlook to stable if:
-- The company successfully refinances its 2023 maturities;
-- S&P expects adjusted leverage to remain comfortably below 4x;
-- S&P gains increased clarity on the industry outlook; and
-- The company demonstrates solid operating performance, despite
industry headwinds.
COSMOLEDO LLC: Wants Plan Exclusivity Extended Until April 12
-------------------------------------------------------------
Cosmoledo, LLC and its affiliates ask the U.S. Bankruptcy Court for
the Southern District of New York to extend the Debtors' exclusive
period to file a Chapter 11 Plan through and including April 12,
2021, and to solicit acceptances through and including June 14,
2021. This is the Debtors' second request for extension of the
Exclusive Periods.
The Debtors are unable to propose a fair and complete liquidation
plan without resolution of the issues raised in the PPP Motion.
Funds in the Debtors' possession that are directly attributable to
the PPP Loan (the "PPP Loan Funds") represent a substantial source
of recovery to creditors in this case. As of the date of this
motion, PPP Loan Funds represent over 60% of the funds available
for distribution to creditors. Although the Bar Date has not
passed, the Debtors have initially recovered some preliminary
recovery estimates.
Those estimates show that creditor recoveries (including those to
any potential separate PPP class of creditors) would decline by
over 20% if the PPP Loan were repaid in full, without distribution
of any portion of the PPP Loan Funds. This makes any non-consensual
resolution of the PPP Motion a $5 million gamble for creditors and
the SBA alike. Any plan the Debtors could propose before the
expiration of the current Exclusive Deadlines would be incomplete
and subject to wholesale revision depending on how the issues in
the PPP Motion are resolved.
As stated, the position of the Creditors' Committee is that the PPP
Loan is a general unsecured obligation of the Debtors and that the
PPP Loan Funds should be distributed to all creditors pro-rata. The
Debtors and the SBA have posited the opposite–that the PPP Loan
Funds should be distributed in accordance with the aims of the
CARES Act or repaid to the SBA to be distributed to other parties
in need of assistance. As set forth on the record of the hearing on
December 21, 2020, the parties believe there are grounds to resolve
this dispute in a way that benefits all creditors and respects the
Congressional intent of the CARES Act.
The Debtors expect that the extension requested in this Motion will
provide more than enough time to complete their negotiations with
the Committee, Santander, and the SBA. In the unlikely event that
the parties' negotiations fail, the requested extension provides
sufficient notice and preparation time to have the Court determine
the PPP Motion on the merits.
And since the filing of the First Extension Motion, the Debtors
continue to make significant progress towards resolving the myriad
issues necessary to file and confirm a plan. Notably, the passage
of the Bar Date and the Governmental has allowed the Debtors and
their professionals to evaluate the filed claims and come to more
concrete conclusions regarding the structure of a plan and
resolution of the PPP Motion. The Debtors have also engaged in
negotiations to resolve issues surrounding certain large creditor
claims, including those of Maison Eric Kayser Medatlantique, Ltd.
("MEKM").
The unresolved issues remaining, in this case, make it unlikely
that the Debtors will be able to obtain the Court's approval of a
disclosure statement under § 1125 of the Bankruptcy Code, without
rancor. The requested extensions are thus warranted to allow the
Debtors to develop a disclosure statement that will be far less
conditional and provide parties in interest the information they
need to determine whether to vote in favor of the plan.
The further extension of the Exclusivity Periods requested herein
will not prejudice creditors. Rather, it will provide the Debtors
the opportunity to negotiate, or the Committee to secure a ruling,
that provides substantial enhancement of the estate to the benefit
of all creditors through a resolution of the PPP Motion. Since the
Debtors are not operating and have rejected all outstanding leases
of non-residential real property, administrative expenses during
the requested extension period do not present any significant
diminution of the estates.
A copy of the Debtors' Motion to extend is available at
https://bit.ly/3tMm7fL from donlinrecano.com.
About Cosmoledo
Cosmoledo, LLC and affiliates own and operate 16 fine-casual
bakery-cafes in New York City under the trade name "Maison Kayser."
Maison Kayser -- https://maison-kayser-usa.com/ -- a global brand,
is an authentic artisanal French boulangerie that has been doing
business in New York since 2012.
Cosmoledo and its affiliates, including Breadroll, LLC, sought
Chapter 11 protection (Bankr. S.D.N.Y Lead Case No. 20-12117) on
September 10, 2020.
In the petitions signed by CEO Jose Alcalay, Debtors were estimated
to have assets in the range of $10 million to $50 million, and $50
million to $100 million in debt.
Judge Michael E. Wiles oversees the case. The Debtors have tapped
Mintz & Gold LLP as their bankruptcy counsel, and CBIZ Accounting,
Tax and Advisory of New York LLC as their financial advisor,
accountant, and consultant. Donlin Recano & Co., Inc., is the
claims agent.
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in the Debtors' Chapter 11 cases. The committee
is represented by Hahn & Hessen LLP.
CUSHMAN & WAKEFIELD: S&P Downgrades ICR to 'B+', Outlook Stable
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Cushman &
Wakefield (C&W) to 'B+' from 'BB-'. The outlook is stable.
S&P said, "At the same time, we also lowered our secured debt
rating to 'B+' from 'BB-'. The recovery rating on the senior debt
remains '3', reflecting our expectation of a meaningful recovery
(50%-70%; rounded estimate 55%) in the event of default.
"The downgrade reflects our expectation that leverage will remain
well above 5.0x through 2021. C&W ended 2020 with debt to adjusted
EBITDA of 8.3x versus 4.1x in 2019. The COVID-19 pandemic severely
reduced transaction volume from capital markets and fee revenue
from leasing activity, hurting operating performance. In 2020,
C&W's total fee revenue declined by 15% to about $5.5 billion.
Adjusted EBITDA declined by 42% to $470.6 million. Additionally,
the majority of the company's EBITDA came from add-backs for
interest expense ($197.6 million) and depreciation and amortization
($263.6 million), which we view as lower quality compared with core
earnings.
"The stable outlook on C&W over the next 12 months reflects our
expectation that leverage will remain well above 5.0x. The outlook
also factors in the company's market position, financial
sponsorship, ample liquidity, and our expectation of improving
operating performance.
"We could lower the ratings over the next 12 months if we expect
EBITDA interest coverage to fall below 2.0x on a sustained basis or
if the firm engages in a large debt-funded acquisition.
"We could raise the ratings over the next 12 months if leverage
normalizes to historical levels (less than 5.0x) or we begin to net
surplus cash from leverage. We will likely net surplus cash when
C&W's financial-sponsor ownership and control falls below 40%."
CYPRUS MINES: Claimants Seek to Reconstitute Tort Committee
-----------------------------------------------------------
A group of personal injury claimants asked the U.S. Bankruptcy
Court for the District of Delaware to issue an order directing the
U.S. Trustee for Region 3 to reconstitute the official committee of
tort claimants appointed in Cyprus Mines Corp.'s Chapter 11 case.
In court papers, Steven Kazan, Esq., at Kazan, McClain, Satterley &
Greenwood, PLC, the group's attorney, said appointing four
additional members to the seven-member tort claimants' committee is
necessary "so that a majority of its members are not conflicted."
"In order to adequately meet its fiduciary duties to its
constituency, a committee must be independent and effective. In
this case, the committee of tort claimants appointed by the Office
of the U.S. Trustee does not meet those standards," Mr. Kazan said,
pointing out that the law firms representing five of the seven
members of the official tort claimants' committee had previously
voted in favor of a settlement on which Cyprus Mines' Chapter 11
plan of reorganization is based.
Cyprus Mines and its parent companies, Cyprus Amax Minerals Company
and Freeport-McMoRan Inc., reached an agreement with Imerys Talc
America in December last year to settle all of their talc-based
personal injury liabilities. To aid in the implementation of the
settlement, Cyprus Mines formed and funded an ad hoc committee of
tort claimants prior to its Chapter 11 filing. This ad hoc
committee consisted of eight law firms, five of which currently
represent members of Cyprus Mines' official tort claimants'
committee.
"This conflict leaves two disinterested committee members to vote
on the central issues of whether the consideration proposed by the
plan is the maximum available recovery and whether further
investigation of the Cyprus parties' assets and financial condition
are necessary," Mr. Kazan said.
"A functioning committee of two is not adequate to address the most
significant case issues," Mr. Kazan said, adding that this can be
addressed either by increasing the membership of the official tort
claimants' committee or by appointing a separate "tort claimants
conflict committee."
Mr. Kazan can be reached at:
Steven Kazan, Esq.
Kazan, McClain, Satterley & Greenwood, PLC
55 Harrison Street, Suite 400
Oakland, CA 94607
Tel: (877) 995-6372
About Cyprus Mines Corp.
Cyprus Mines Corporation is a Delaware corporation and a
wholly-owned subsidiary of Cyprus Amax Minerals Co., which is an
indirect subsidiary of Freeport-McMoRan Inc. It currently has
relatively limited business operations, which include the ownership
of various parcels of real property, certain royalty interests that
generate de minimis revenue (e.g., less than $1,500 in each of the
past two calendar years), and the ownership of an operating
subsidiary that conducts marketing activities.
Cyprus Mines is a predecessor in interest of Imerys Talc America,
Inc. In June 1992, Cyprus Mines sold its talc-related assets to
RTZ America Inc. (later known as Rio Tinto America, Inc.) through a
two-step process. First, Cyprus Mines transferred its talc-related
assets and liabilities (subject to minor exceptions) to Cyprus Talc
Corporation, a newly formed subsidiary of Cyprus Mines, pursuant to
an Agreement of Transfer and Assumption, dated June 5, 1992.
Second, Cyprus Mines sold the stock of Cyprus Talc Corporation to
RTZ pursuant to a Stock Purchase Agreement, also dated June 5, 1992
(as amended, the "1992 SPA"). The purchase price was approximately
$79.5 million. Cyprus Talc Corporation was later renamed Imerys
Talc America, Inc. By virtue of the 1992 ATA, the entity now named
Imerys expressly and broadly assumed the talc liabilities of Cyprus
Mines and its former subsidiaries that were in the talc business.
Cyprus Mines filed for Chapter 11 bankruptcy protection (Bankr. D.
Del. Case No. 21-10398) on Feb. 11, 2021, listing between $10
million and $50 million in assets, and between $1 million and $10
million in liabilities.
The Hon. Laurie Selber Silverstein is the case judge.
The Debtor tapped Reed Smith LLP, led by Kurt F. Gwynne, Esq., as
bankruptcy counsel; Kasowitz Benson Torres, LLP as special
conflicts counsel; and Prime Clerk LLC as claims agent.
James L. Patton, Jr. was appointed as the future claimants'
representative in the Debtor's Chapter 11 case. The FCR tapped
Young Conaway Stargatt & Taylor, LLP as his bankruptcy counsel and
Gilbert, LLP as his special insurance counsel.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee of tort claimants on March 4, 2021. The committee is
represented by Campbell & Levine, LLC and Caplin & Drysdale,
Chartered.
DYCOM INDUSTRIES: S&P Affirms 'BB' ICR, Outlook Stable
------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on Dycom
Industries Inc. The outlook remains stable.
S&P said, "At the same time, we assigned our 'BB' issue-level
rating and '3' recovery rating to the unsecured notes. The '3'
recovery rating indicates our expectation that lenders would
receive meaningful (50%-70%; rounded estimate: 50%) recovery of
their principal in the event of a payment default.
"The stable outlook reflects our view that Dycom will benefit from
solid demand from several large customers, and we expect its
adjusted debt to EBITDA will remain about 2x over the next year."
Dycom Industries Inc. plans to issue $400 million senior unsecured
notes due 2029 to repay its convertible notes at maturity in
September 2021, repay a portion of its term loan, and repay
revolving credit facility borrowings outstanding, with the
remaining proceeds for working capital and general corporate
purchases.
Customers' multi-year capital spending programs, with strong
industry fundamentals, should benefit Dycom, with stable revenue in
fiscal 2022 (ending January). Telecommunications companies
constructing or upgrading their wireline networks in the U.S. is
likely to support Dycom's topline revenue. In addition, industry
participants endeavor to deploy high-capacity fiber networks. Over
the long term, larger industry participants, including Dycom, are
likely to continue to benefit from vendor consolidation and
outsourcing.
The company's customer concentration is somewhat offset by its
long-standing relationships and contracts. Dycom's customer base is
concentrated, with its top five customers accounting for about 74%
of contract revenue in fiscal 2021. However, this risk is somewhat
offset by the company's established relationships with leading
telecommunications providers, including telephone companies, cable
multiple system operators, wireless carriers, telecommunications
equipment and infrastructure providers, and electric and gas
utilities. In addition, Dycom performs over 85% of its services
under master service agreements and other long-term contracts that
contain customer-specified service requirements.
The timing of projects can affect free operating cash flow (FOCF).
Dycom's revenue is influenced by the capital expenditure (capex)
and maintenance budgets of its customers as well as the related
timing of approvals and seasonal spending patterns. Also,
variations and fluctuations in revenue and job-specific costs can
affect profitability. In addition, working-capital swings can be
significant due to the timing of projects. Although fiscal 2020
working-capital outflows were significant, this has reversed in
fiscal 2021, resulting in strong FOCF relative to debt.
S&P said, "Our rating outlook on Dycom is stable. Dycom will
benefit from solid demand from several large customers, and we
expect its adjusted debt to EBITDA will remain about 2x over the
next year.
"We could raise our ratings over the next 12 months if it appeared
likely that the company would sustain debt to EBITDA below 1.5x
with an FOCF-to-debt ratio consistently above 25%. This could occur
if operating prospects remained positive and would provide adequate
cushion for underperformance in the event of unanticipated cost
increases on contracts and lead to an improved assessment of cash
flow adequacy. At the same time, we would expect Dycom to
demonstrate financial policies in line with a higher rating by
continuing to pursue a disciplined acquisition and share repurchase
strategy.
"Though unlikely over the next 12 months, we could lower our
ratings if free cash flow turned negative and debt leverage
increased above 4x in a stress scenario. Although not expected,
this could occur if there were significant delays and weaker-
than-expected profitability on a large customer project."
EMERA INC: S&P Assigns 'BB+' Rating on J First Preferred Shares
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' on the global scale and 'P-3
(High)' on the Canada National Preferred Share Scale issue-level
ratings to Halifax, N.S.-based utility holding company Emera Inc.'s
C$200 million series J cumulative minimum rate reset first
preferred shares, with an option of up to C$250 million. Emera
intends to use the net proceeds from these preferred shares for
general corporate purposes.
S&P said, "We expect to assign intermediate equity credit (50%
equity) to the shares based on the proposed terms. Our intermediate
equity treatment is largely premised on the instrument's
permanence, subordination, and deferability features, as defined
under our criteria for hybrid securities."
The series J first preferred stock is perpetual, with no maturity
date and no incentive to redeem the issue for a long-dated period,
meeting our standards for permanence. In addition, the dividend
payments are deferrable, fulfilling the deferability element in our
criteria. Furthermore, the instrument is subordinated to all
existing and future senior debt obligations, satisfying S&P's
condition for subordination.
For these reasons and based on our review of the proposed terms of
these instruments, S&P rates the securities two notches below its
'BBB' issuer credit rating on Emera at 'BB+' on the global scale or
'P-3 (High)' under the Canada National Preferred Share Scale
Ratings.
FARMACIA NUEVA: Asks for 90-Day Extension for Plan
--------------------------------------------------
Farmacia Nueva Borinquen, Inc., is asking the Court to extend by 90
days its March 22, 2021 deadline to file a plan and a disclosure
statement.
Nilda M. Gonzales-Cordero explains that she has begun working with
the analysis of the case and the drafting of the disclosure
statement and Chapter 11 plan, however, concluded that at this
moment the case is not ready for its filing.
She narrated that the extension of the pandemic has hurt sales and
the tax season has delayed meetings for plans to increase sales and
identify business opportunities.
"We are positive that the sales could increase with the appropriate
modifications made in the business together with the opening of the
schools and other business in the pharmacy's neighborhood.
Nevertheless, the Debtor will need additional time to investigate
the schedule of the schools to be opened and to finish the planning
with the accountants," Ms. Gonzales-Cordero explains.
Legal counsel for Farmacia Nueva Borinquen:
NILDA M. GONZALEZ-CORDERO
Guaynabo, Puerto Rico 00970
Tel: (787) 721-3437
Fax:(787) 724-2480
E-mail: ngonzalezc@ngclawpr.com
About Farmacia Nueva Borinquen
Farmacia Nueva Borinquen, Inc. sought protection for relif under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 20-03715)
on Sept. 21, 2020, listing under $1 million in both assets and
liabilities.
Nilda Gonzalez Cordero, Esq. represents the Debtor as counsel.
FIELDWOOD ENERGY: Kasowitz Represents Bardin Hill, 3 Others
-----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Kasowitz Benson Torres LLP submitted a verified
statement to disclose that it is representing Bardin Hill
Investment Partners LP, Barings LLC, Ellington Management Group
LLC, and Mudrick Capital Management L.P. in the Chapter 11 cases of
Fieldwood Energy LLC, et al.
As of March 24, 2021, members of the SLTL Ad Hoc Committee and
their disclosable economic interests are:
Bardin Hill Investment Partners LP
299 Park Avenue, 24th Floor
New York, NY 10171
* Nature of Claim: Aggregate principal amount of loans under the
Prepetition SLTL Credit Agreement
* Amount of Claim: $55,605,683.29
Barings LLC
300 South Tryon Street Suite 2500
Charlotte, NC 28202
* Nature of Claim: Aggregate principal amount of loans under the
Prepetition SLTL Credit Agreement
* Amount of Claim: $66,218,674.59
Ellington Management Group LLC
53 Forest Avenue, 3rd Floor
Old Greenwich, CT 06870
* Nature of Claim: Aggregate principal amount of loans under the
Prepetition SLTL Credit Agreement
* Amount of Claim: $20,550,000.00
Mudrick Capital Management L.P.
527 Madison Avenue 6th Floor
New York, NY 10022
* Nature of Claim: Aggregate principal amount of loans under the
Prepetition FLTL Credit Agreement
* Amount of Claim: $37,541,497.46
* Nature of Claim: Aggregate principal amount of loans under the
Prepetition SLTL Credit Agreement
* Amount of Claim: $136,720,906.35
* Shares of Stock: 3,700,082
Counsel for SLTL Ad Hoc Committee can be reached at:
KASOWITZ BENSON TORRES LLP
Constantine Z. Pamphilis, Esq.
1415 Louisiana-Suite 2100
Houston, TX 77002
Telephone: (713) 220-8851
Facsimile: (713) 583-8765
E-mail: DPamphilis@kasowitz.com
- and -
KASOWITZ BENSON TORRES LLP
David S. Rosner, Esq.
Matthew B. Stein, Esq.
1633 Broadway
New York, NY 10019
Telephone: (212) 506-1700
Facsimile: (212) 506-1800
E-mail: DRosner@kasowitz.com
MStein@kasowitz.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2QMo0Lj
About Fieldwood Energy
Fieldwood Energy -- https://www.fieldwoodenergy.com/ -- is a
portfolio company of Riverstone Holdings focused on acquiring and
developing conventional assets, primarily in the Gulf of Mexico
region. It is the largest operator in the Gulf of Mexico owning an
interest in approximately 500 leases covering over two million
gross acres with 1,000 wells and 750 employees.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 18-30648) on Feb. 15,
2018, with a prepackaged plan that would deleverage $3.286 billion
of funded debt by $1.626 billion.
On Aug. 3, 2020, Fieldwood Energy and its 13 affiliates again filed
voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case No.
20-33948). Mike Dane, senior vice president, and chief financial
officer signed the petitions.
At the time of the filing, Debtors disclosed $1 billion to $10
billion in both assets and liabilities.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as their legal
counsel, Houlihan Lokey Capital, Inc. as an investment banker, and
AlixPartners, LLP as financial advisor. Prime Clerk LLC is the
claims, noticing, and solicitation agent.
The first-lien group employed O'Melveny & Myers LLP as its legal
counsel and Houlihan Lokey Capital, Inc. as its financial advisor.
The RBL lenders employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA Advisors, LLC as their financial advisor.
Meanwhile, the cross-holder group tapped Davis Polk & Wardwell LLP
and PJT Partners LP as its legal counsel and financial advisor,
respectively.
On Aug. 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan,
LLPand Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively.
FIELDWOOD ENERGY: Unsecureds' Recovery Hiked to 0.8% to 14.3%
-------------------------------------------------------------
Fieldwood Energy LLC, et al., filed a Second Amended Joint Chapter
11 Plan and a corresponding Disclosure Statement on March 23,
2021.
The Bankruptcy Court has scheduled May 4, 2021 to consider
Confirmation of the Plan. April 26, 2021 at 4:00 p.m. is the voting
deadline and deadline to objection to confirmation of Plan. May 3,
2021 is the deadline to file reply to Plan objections.
Subject to the terms and provisions of that certain Restructuring
Support Agreement dated as of August 4, 2020 (as may be modified,
amended, or supplemented from time to time, and together with all
exhibits and schedules thereto, the "RSA"), the following parties
have agreed to vote in favor of or otherwise support the Plan:
* holders of approximately 87% in aggregate principal amount
of Claims under the Debtors' Prepetition FLTL Credit Agreement;
* holders of approximately 88.71% in aggregate principal
amount of Claims under the Debtors' Prepetition SLTL Credit
Agreement; and
* Apache Corporation.
Class 4 consists of FLTL Claims with $1,142,688,815.28 estimated
allowed amount and 44.7% to 45.4% recovery. Each holder of an
Allowed FLTL Claim shall receive its Pro Rata Share of: a Share of:
(i) 100% of the New Equity Interests, subject to dilution by (w)
the Backstop Commitment Equity Premium Interests, (x) the New
Equity Interests issued upon exercise of the Subscription Rights,
(y) any New Equity Interests issued upon the exercise of the New
Money Warrants, SLTL Warrants, or the GUC Warrants, and (z) any New
Equity Interests issued pursuant to the Management Incentive Plan;
and (ii) the FLTL Subscription Rights.
Class 5 consists of SLTL Claims with $517,500,000.00 allowed amount
and 16.7% to 35.4% recovery. Each holder of an Allowed SLTL Claim
shall receive its Pro Rata Share of the SLTL Warrants; and the SLTL
Subscription Rights.
Class 6A consists of Unsecured Trade Claims with $43.2 million -
$51.9 million allowed amount and 14% recovery. Each holder of an
Allowed Unsecured Trade Claim that has executed a Trade Agreement
shall receive: if 14% of the aggregate amount of all Allowed
Unsecured Trade Claims is less than or equal to $8,000,000, Cash in
an amount equal to 14% of the Allowed amount of such holder's
Allowed Unsecured Trade Claim; or if 14% of the aggregate amount of
Allowed Unsecured Trade Claims is greater than $8,000,000, its Pro
Rata share of $8,000,000.
Class 6B consists of General Unsecured Claims with $963 million -
$1,138 million allowed amount and 0.8% to 14.3% recovery. Each
holder of an Allowed General Unsecured Claim shall receive, up to
the full amount of such holder's Allowed General Unsecured Claim,
its Pro Rata Share of: the GUC Warrants; and any Residual
Distributable Value.
To facilitate the implementation of the Plan, the Plan provides for
the funding of a claims reserve for Allowed Administrative Expense
Claims, Allowed Priority Tax Claims, Allowed Priority Non Tax
Claims, and Allowed Other Secured Claims, Allowed Unsecured Trade
Claims, and Cure Amounts; the Professional Fee Escrow; the Plan
Administrator Expense Reserve; and the payment of other fees and
expenses, such as fees and expenses incurred under the DIP Order,
fees and expenses incurred in connection with implementing the
Apache Transactions, and the fees and expenses of the Ad Hoc
Secured Lenders' advisors.
Attorneys for the Debtors:
WEIL, GOTSHAL & MANGES LLP
Alfredo R. Perez
Clifford Carlson
700 Louisiana Street, Suite 1700
Houston, Texas 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511
WEIL, GOTSHAL & MANGES LLP
Matthew S. Barr (admitted pro hac vice)
Jessica Liou (admitted pro hac vice)
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
About Fieldwood Energy
Fieldwood Energy is a portfolio company of Riverstone Holdings
focused on acquiring and developing conventional assets, primarily
in the Gulf of Mexico region. It is the largest operator in the
Gulf of Mexico owning an interest in approximately 500 leases
covering over two million gross acres with 1,000 wells and 750
employees. Visit https://www.fieldwoodenergy.com/ for more
information.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 18-30648) on Feb. 15,
2018, with a prepackaged plan that would deleverage $3.286 billion
of funded by $1.626 billion.
On Aug. 3, 2020, Fieldwood Energy and its 13 affiliates again file
voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case No.
20-33948). Mike Dane, senior vice president and chief financial
officer, signed the petitions.
At the time of the filing, the Debtors disclosed $1 billion to $10
billion in both assets and liabilities.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as their legal
counsel, Houlihan Lokey Capital, Inc. as investment banker, and
AlixPartners, LLP as financial advisor. Prime Clerk LLC is the
claims, noticing, and solicitation agent.
The first-lien group employed O'Melveny & Myers LLP as its legal
counsel and Houlihan Lokey Capital, Inc. as its financial advisor.
The RBL lenders employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA Advisors, LLC as their financial advisor.
Meanwhile, the cross-holder group tapped Davis Polk & Wardwell LLP
and PJT Partners LP as its legal counsel and financial advisor,
respectively.
On Aug. 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan, LLP
and Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively.
FLEXOGENIX GROUP: Avoidance Actions Filed; May 11 to Confirm Plan
-----------------------------------------------------------------
Debtors Flexogenix Group, Inc. ("Flex Group"), Flexogenix Oklahoma,
P.C. ("Flex OK"), Flexogenix Georgia, P.C. ("Flex GA"), Flexogenix
North Carolina, P.C. ("Flex NC"), and Whalen Medical Corporation
("WMC,") filed a Third Amended Joint Plan of Reorganization and a
corresponding Disclosure Statement on March 23, 2021.
The hearing where the Court will determine whether or not to
confirm the Plan will take place on May 11, 2021, at 10:00 a.m., in
Courtroom 1668 (via Zoom.gov), U.S. Bankruptcy Court, 255 East
Temple Street, Los Angeles, CA, 90012. All Ballots must be received
on April 13, 2021 to be counted as votes. Objections to the
confirmation of the Plan must be filed by April 13, 2021.
On March 18, 2021, the Debtors filed complaints seeking avoidance
and recovery of fraudulent and/or preferential transfers pursuant
to sections 547 and 548 of the Bankruptcy Code against six of the
Lenders, thereby commencing the adversary proceedings
(collectively, the "Avoidance Actions").
Because of the nature of the relationship between and among Flex
Group and the PC Debtors, Flex Group was the title owner of all
assets for the Flexogenix family of companies, other than the PC
Debtors' accounts receivable for medical services provided. As of
February 28, 2021, the estimated value (at cost) of Flex Group's
assets totals approximately $1,009,516. In addition, as of February
28, 2021, Flex Group held approximately $90,040 in Cash in its bank
accounts.
As of February 28, 2021, Flex NC held approximately $379,712 in
Cash in its bank accounts. In addition, the estimated value of the
outstanding accounts receivable for Flex NC totals approximately
$554,543, of which approximately $164,850 is aged more than 120
days, rendering these amounts less likely to be collected.
As of February 28, 2021, Flex OK held approximately $17,877 in Cash
in its bank accounts. In addition, the estimated value of the
outstanding accounts receivable for Flex OK totals approximately
$79,506, of which approximately $15,237 is aged more than 120 days,
rendering these amounts less likely to be collected.
As of February 28, 2021, Flex GA held approximately $1,176 in Cash
in its bank account. In addition, the estimated value of the
outstanding accounts receivable for Flex GA totals approximately
$18,467, all of which is aged more than 120 days, rendering these
amounts less likely to be collected.
As of February 28, 2021, WMC held approximately $895 in Cash in its
bank account. In addition, the estimated value of the outstanding
accounts receivable for WMC totals approximately $37,500, all of
which is aged more than 120 days, rendering these amounts less
likely to be collected.
Like in the prior iteration of the Plan, Holders of convenience
claims will be paid in cash, in full, on, or as soon as reasonably
practicable after, the Effective Date. No interest will be paid on
the claims. The Debtors estimate that $17,640 will be paid on the
Effective Date to holders of convenience claims.
Holders of Allowed Class 4 General Unsecured Claims will receive
pro-rata distributions of $88,000, until the earlier of the date on
which all Allowed Class 4 Claims have been paid in full, and 48
months following the date of the first distributions to Holders of
Allowed Class 4 Claims under the Plan. Based on the projected
Effective Date of June 1, 2021, it is anticipated that payments to
Holders of Allowed Class 4 Claims will begin to receive
distributions under the Plan on or about Oct. 1, 2024.
A full-text copy of the Third Amended Joint Plan dated March 23,
2021, is available at https://bit.ly/31nSB3F from PacerMonitor.com
at no charge.
Counsel for the Debtors:
Jeremy W. Faith
Monsi Morales
MARGULIES FAITH LLP
16030 Ventura Blvd., Suite 470
Encino, CA 91436
Telephone: (818) 705-2777
Facsimile: (818) 705-3777
E-mail: Jeremy@MarguliesFaithLaw.com
Monsi@MarguliesFaithLaw.com
About Flexogenix Group
Flexogenix Group, Inc. -- https://flexogenix.com/ -- offers non
surgical solutions for knee pain, osteoarthritis, and injuries.
Flexogenix treatments have options for acute injuries as well as
chronic overuse conditions. The company has locations in Atlanta,
Cary, Raleigh, Charlotte, Greensboro, Los Angeles, and Oklahoma
City.
Flexogenix Group and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. C.D. Cal. Lead Case No. 19 12927)
on March 18, 2019. At the time of the filing, Flexogenix Group was
estimated to have assets between $1 million and $10 million and
liabilities of between $10 million and $50 million. Judge Barry
Russell oversees the cases.
The Debtors tapped Margulies Faith LLP as legal counsel; Levy,
Sapin, Ko & Freeman, as tax accountant; Nelson Hardiman, LLP as
special counsel; and Grobstein Teeple LLP as accountant and
financial advisor.
FLYNN RESTAURANT: S&P Raises ICR to 'B', Outlook Stable
-------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on
California-based operator Flynn Restaurant Group L.P. to 'B' and
revised the outlook to stable from negative. This reflects S&P's
expectation that the proposed transaction will improve the
company's leverage profile and further solidify its position as the
largest restaurant franchise operator in the U.S.
S&P said, "At the same time, we raised our issue-level rating on
its first-lien senior secured debt to 'B' and our issue-level
rating on its second-lien senior secured debt to 'CCC+'. Our '3'
and '6' recovery ratings on the first- and second-lien debt,
respectively, are unchanged.
"The stable outlook reflects our view that Flynn's operating
performance will continue to improve in the next 12 months in its
restricted group QSR segments (Taco Bell and Arby's), in addition
to EBITDA expansion from the newly acquired Pizza Hut and Wendy's
units.
"We expect Flynn's leverage will improve to mid- to high-5x on a
pro forma basis given its consistently positive performance and the
addition of the more profitable Wendy's and Pizza Hut businesses.
Flynn signed a definitive agreement to acquire the Wendy's and
Pizza Hut units from NPC International Inc. (NPC). We expect the
acquisition will close in March 2021 and the acquired assets will
be purchased and financed in separate unrestricted subsidiaries,
Wend American Group LLC (Wendy's) and Hut American Group LLC (Pizza
Hut). Flynn is funding the nearly $580 million acquisition through
a $117 million term loan at Wend American Group, a $170 million
term loan at Hut American Group, and new equity totaling over $300
million (including $156 million of preferred equity, which we treat
as debt in our adjusted leverage calculation). Pro forma for the
transaction, we expect operating margins to improve after
integration expenses roll off in 2021 due to the higher margins at
both Wendy's and Pizza Hut relative to the existing consolidated
group. In addition, Flynn's operating performance year to date at
its quick-service restaurant (QSR) business has been better than
expected, and we forecast positive comparable sales growth at its
Taco Bell and Arby's segments to partially offset the declines at
Applebee's and Panera due to social distancing mandates and the
remote working arrangements. We now expect leverage to further
improve to the mid- to high-5x area in fiscal 2022 as integration
costs moderate, profitability improves, and the company benefits
from full-year EBITDA contribution of the acquired units.
Nonetheless, we continue to view Flynn's financial policy as
aggressive given its track record of debt-financed acquisitions and
majority ownership by financial sponsors Ontario Teachers' Pension
Plan (35% ownership interest) and Main Post Partners (39% ownership
interest).
"We believe Flynn's acquisition of the NPC assets diversifies its
restaurant brand portfolio and improves it operating efficiency
given its recent success integrating other new concepts." The
acquisition nearly doubles Flynn's total restaurant count and adds
two brands with strong growth prospects, higher margin profiles,
and good name recognition in the QSR space. With 194 units, Flynn
is acquiring half of NPC's Wendy's restaurants as part of the
Wendy's consent process to become the fifth-largest Wendy's
franchisee in the country. These restaurants generally outperform
the system given their positioning in high-volume markets, which
has been compounded by the strong demand for off-premise food
during COVID. S&P anticipates Flynn will continue to benefit from
this due to its scale and the off-premise orientation of the
Wendy's brand.
As part of the transaction, Flynn will also become the largest
Pizza Hut franchisee in the U.S. Pizza Hut has been recently
underperforming its large national peers such as Domino's due to
less compelling food and service offerings, but recent leadership
changes and the COVID-spurred shift to off-premise food consumption
has buoyed recent performance with double-digit comparable sales
growth during the past few quarters. Historically, the Pizza Hut
brand under NPC's operations suffered from strategic missteps,
dated operations, and vintage red roofs that were capital-intensive
and generated a substantial EBITDA drag. During the bankruptcy
process, 290 underperforming Pizza Hut units of the original 1,200
unit portfolio closed, positioning Flynn's portfolio with over 70%
of the more profitable delivery-only units. S&P anticipates this
percentage to further increase moving forward.
S&P said, "In our view, the company's successful integration of 368
acquired Arby's restaurants in 2018 supports its track record of
leveraging its platform and expertise to execute operational
initiatives and generate synergies. However, Flynn generates lower
margins than peers with partially or fully franchised restaurant
portfolios. The company also modestly underperforms most other
restaurant operators given historical franchisor missteps at the
Applebee's brand and its portfolio of Arby's units, which had
historically underperformed the system when they were acquired.
Although we anticipate a modest uplift to Flynn's consolidated
margins from the acquisition of Wendy's and Pizza Hut's
higher-margin businesses and recently positive operating trends in
its QSR brands, we continue to expect Flynn's profitability to
remain somewhat lower than many of its restaurant peers."
The greater exposure to QSR operations and adequate liquidity
should enable the company to withstand continued industry headwinds
due to the pandemic and the current recessionary environment. S&P
said, "While the trajectory of the virus is still uncertain, Flynn
has shown resilience and we believe it will continue to navigate
through challenging macroeconomic conditions. QSR operators are
somewhat less exposed to the effects of the pandemic because
take-out offerings account for a higher percentage of their sales.
The company's QSR brands outperformed our expectations in the third
quarter (ending Sept. 30, 2020), including positive comparable
sales growth of 7.2% and 13.6% at Taco Bell and Arby's,
respectively. Still, we anticipate a consolidated decline in the
mid-teens percent area for fiscal 2020, reflecting the
disproportionate impact of the pandemic on dine-in operations at
Panera and Applebee's, which experienced comparable sales declines
in the mid-20% area. We believe that Flynn's post-acquisition
portfolio, in which QSR operations make up 60% of revenues (from
approximately 40% before the acquisition), will position it well
relative to peers that only carry casual dining concepts. Our
consolidated revenue forecast for 2021 reflects low- to
mid-single-digit positive comparable sales growth across QSR
operations, and recovery of fast casual and casual dining segments
to about 90% of 2019 sales."
S&P said, "We believe the company's pro forma liquidity position,
including cash of approximately $100 million, funds from operations
of over $100 million, and $50 million of availability under its
revolving credit facilities at the new unrestricted subsidiaries,
further supports the company's financial position.
"The stable outlook on Flynn reflects our expectation that
operating performance will continue to improve as it expands its
EBITDA from its newly acquired Pizza Hut and Wendy's units and
stable performance in its restricted group QSR segments (Taco Bell
and Arby's). We anticipate that Flynn's pro forma leverage will
improve to the mid- to high-5x area over the next 12 months."
S&P could lower the rating on Flynn over the next year if:
-- Management missteps related to the acquisition result in
integration challenges or declining profitability. This would
likely result in margins declining around 100 basis points (bps)
below S&P's base case, leading to leverage above 6.5x on a
sustained basis.
-- S&P expects the company to generate less than $50 million of
annual free operating cash flow.
-- Performance at the existing brands is challenged by heightened
competition or pandemic-related pressures, resulting in negative
comparable sales growth or deteriorating operating margins.
Although unlikely over the next year, S&P could raise the rating
if:
-- Operating performance is significantly stronger than S&P
expects such that it believes it will maintain adjusted debt to
EBITDA of less than 5x or better. This could occur from continued
positive sales trends across all concepts, leading to margin
improvement of more than 200 bps over our base case.
-- S&P believes the company will maintain a less aggressive
financial policy such that its leverage will remain below 5x.
FORD STEEL: Court OKs Deal on Cash Collateral Use Thru April 22
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, has authorized Ford Steel, LLC to use cash
collateral on a final basis in accordance with the budget through
April 22, 2021, with allowable variances of up to 10% in aggregate
expenses during a particular month.
The Debtor, First Financial Bank, Inc., f/k/a Bank & Trust of
Bryan/College Station, the Internal Revenue Service and the Small
Business Administration agreed that relief is necessary to avoid
immediate and irreparable harm to the Debtor's estate because,
without the use of Cash Collateral, the Debtor will not have the
funds necessary to maintain its assets, sell or otherwise liquidate
its assets, provide financial information, pay necessary employees,
payroll taxes, charges of vendors, overhead, and other expenses
necessary to maintain the value of the Debtor's assets.
Pursuant to the Loan Documents and applicable law, FFIN holds
valid, enforceable, and allowable claims against the Debtor, as of
the Petition Date, in an aggregate amount equal to approximately
$475,764.241 in unpaid principal, plus any and all other fees,
costs, expenses, charges, and other debts or obligations of the
Debtors to FFIN under the Loan Documents and applicable law.
On December 6, 2010, Bank & Trust of Bryan/College Station now
FFIN, H.C. Jeffries Tower Company, Inc., and Ford executed a
promissory note evidencing indebtedness in the amount of
$671,871.12 secured by personal and real property described in an
Extension and Modification of Promissory Note and Real Estate Lien
dated June 23, 2011, and recorded as Document No. 2011085662 in the
Public Records of Montgomery County, Texas. Herbert C. Jeffries
executed a personal guaranty of the Bank Note.
The Bank filed an amendment to the Texas Enterprise Bank's UCC-1
Financing Statements on July 21, 2010. The Bank also filed its own
UCC-1 Financing Statements on September 17, 2010, and January 3,
2011. The UCC-1 Filings were against both Tower and Ford and
constitute a blanket lien on all of the Debtors' assets.
On February 28, 2013, the Bank, Tower, Ford and Jeffries entered
into a Standstill Agreement whereby the Bank agreed to forego all
remedies under the Bank Note in return for payments of $20,000 per
month until the earlier of September 1, 2013 or the date the Bank
gave Tower and Ford a termination notice. Tower and Ford defaulted
under the Standstill Agreement. On June 28, 2017, the Bank filed
suit in Montgomery County, Texas in a case styled The FFIN of
Bryan/College Station v. H.C. Jeffries Tower Company, Inc., Ford
Steel, L.L.C. and Herbert C. Jeffries, Case No. 17-001700-CV-85 in
the 85th Judicial District Court of Brazos County, Texas to collect
on the Bank Note.
The Pre-Petition Claim evidenced by the Loan Documents is secured
by perfected first priority liens and security interests in, inter
alia, substantially all of the assets of the Debtors as more fully
described in the Loan Documents, except that Equitable Life &
Casualty Insurance Company has a first priority lien on the Ford
real property, improvements and fixtures.
Ford is indebted to the U.S. Internal Revenue Service, and the IRS
has filed Notices of Federal Tax Liens against Ford to secure part
of all of the IRS's claims. The Notices of Federal Tax Liens
perfected a valid lien in favor of the IRS and encumbering all
assets of the Debtor, including but not limited to the Cash
Collateral and the Pre-Petition Collateral.
Ford is indebted to the U.S. Small Business Administration, and the
SBA filed a UCC-1 Financing Statement giving it a lien on assets as
set forth in the UCC-1 Financing Statement, including against the
PrePetition Collateral.
The liens of FFIN, the IRS and the SBA will attach to Cash
Collateral, the Pre-Petition Collateral, and any other assets of
Ford in the same extent, validity, and priority to which they
attached before the filing of the Bankruptcy Case.
The Debtor is authorized to use Cash Collateral in accordance with
the terms and conditions of the Fifth Interim Order and will
perform any and all acts required to comply with the terms and
conditions.
The Debtor is directed to immediately segregate, remit, and deposit
all of the Cash Collateral in the Debtor's accounts, possession,
custody or control, and which the Debtor may receive in the future,
into an account specifically and solely designated to hold Cash
Collateral. The Debtor will continue to remit and deposit all of
the Cash Collateral currently in its accounts, possession, custody
or control, and which the Debtor may receive in the future, into
the Cash Collateral Account.
Ford bids on projects in the ordinary course of business which may
require an immediate purchase of steel, galvanize, or other
products outside the amounts set forth in the budget. On large
projects, the Debtor will receive an advance deposit for the
purchase of Products which will be deposited into separate Special
DIP Deposit Accounts. The Debtor may only use the funds in the
Special DIP Deposit Account to purchase Products for the project
for which the deposit was received.
As adequate protection of FFIN's, the IRS's, and SBA's interest in
the Pre-Petition Collateral and Cash Collateral and for the
Debtor's use of Cash Collateral, FFIN, the IRS, and the SBA are
granted pursuant to Bankruptcy Code sections 361 and 363, effective
as of the Petition Date, and subject and subordinate only to Prior
Liens (if any), valid and automatically perfected replacement liens
and security interests—in the same extent, validity, and priority
as existed on the Petition Date—in and upon all of the properties
and assets of the Debtor and its estate, real or personal.
Notwithstanding any provision of the Cash Collateral Motion or any
final orders pertaining to the use of cash collateral, the liens
currently held by Montgomery County will neither be primed by nor
subordinated to any liens granted thereby.
The Debtor is also directed to maintain, with financially sound and
reputable insurance companies, insurance of the kind covering the
Collateral, and in accordance with the Loan Documents and timely
file the Monthly Operating Reports.
As further adequate protection, Ford will make monthly payments to
Equitable in the amount of $24,306.81 per month, to FFIN in the
amount of $8,270.44 per month and to the IRS in the amount of
$10,000 per month.
FFIN, and the U.S. consent to a carve out of their Collateral
interests for the payment of professional fees and expenses of
Cooper & Scully, P.C., in the amount of $2,500 per month, but not
to exceed a total of $50,000. However, notwithstanding the
foregoing, no professional fees for the purpose of challenging,
attempting to challenge, subordinating, or attempting to
subordinate the liens of FFIN, the IRS, and/or the SBA will be paid
with funds from the Carve-Out without the written consent by both
counsel for FFIN and counsel for the U.S.
A telephonic hearing on the Debtor's continued use of cash
collateral is scheduled for April 20 at 10 a.m.
A copy of the order is available at https://bit.ly/2OYVIMW from
PacerMonitor.com.
About Ford Steel, LLC
Ford Steel, LLC -- http://www.fordsteelllc.com/-- is in the
business of steel product manufacturing from purchased steel. It
fabricates for a wide variety of industries including the
petrochemical industry, waste water treatment, transmission
communication and broadcast towers, mining, and oil and gas
industries.
Ford Steel filed a voluntary petition under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Tex. Case No. 20-34405) on Sept. 1,
2020. Herbert C. Jeffries, managing member, signed the petition.
The Debtor was estimated to have $1 million to $10 million in both
assets and liabilities at the time of the filing.
Judge Eduardo V. Rodriguez oversees the case. Cooper & Scully, PC,
serves as the Debtor's legal counsel. Muskat Mahony & Devine, LLP,
and Currin Wuest Mielke Paul & Knapp, PLLC, as special counsel.
First Financial Bank, Inc., f/k/a Bank & Trust of Bryan/College
Station, as lender, is represented by:
Baili Rhodes, Esq.
West, Webb, Allbritton & Gentry, PC.
15 Emerald Plaza
College Station, TX 777845
E-mail: Baili.Rhodes@westwebblaw.com
FOSSIL EXHIBITS: Gets Cash Collateral Access Thru July 31
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, has authorized Fossil Exhibits International, LLC
to use cash collateral on a final basis in accordance with the
budget through July 31, 2021.
The Debtor requires the use of cash collateral to pay operating
expenses and obtain goods, services or equipment needed to carry on
its business.
The Debtor acknowledges and stipulates that substantially all of
its assets are subject to valid and perfected pre-petition liens
and security interests of Cadence Bank, N.A., including liens on
Cash Collateral, including, but not limited to, all cash,
inventory, accounts, accounts receivable, equipment, furniture,
fixtures, and the proceeds thereof, provided however, that PPP Loan
Proceeds in the sum of $244,370.29 held by the Debtor at Allegiance
Bank as of the bankruptcy petition date are not claimed as
collateral by Cadence. The PPP Loan Proceeds is the remaining
proceeds from a loan from Allegiance to the Debtor pursuant to the
Small Business Act, 15 U.S.C. section 636(a), as added by Section
1102 of the Coronavirus Aid, Relief and Economic Security Act. The
PPP Loan is guaranteed by the Small Business Association.
The Debtor also acknowledges and stipulates that substantially all
of its assets are subject to valid and perfected pre-petition liens
and security interests of the SBA that are subordinate to the liens
of Cadence, including liens on Cash Collateral, including, but not
limited to, all cash, inventory, accounts, accounts receivable,
equipment, furniture, fixtures, and the proceeds thereof, provided
however, that the PPP Loan Proceeds are not claimed as collateral
by SBA.
The Debtor is authorized to use cash collateral in the approximate
amounts and for the expenses of the types set forth in the Final
Budget, not to exceed 110% of the aggregate amount thereof on a
cumulative basis. The Debtor may also use Cash Collateral for
expenses and/or expense amounts that are not consistent with those
set forth in the Final Budget, so long as the Debtor obtains the
prior written consent of Cadence.
The Debtor is directed to maintain insurance coverage in compliance
with the terms of the pre-petition loan documents the Debtor
executed with Cadence.
As adequate protection to the extent of any diminution in value of
Cadence's or the SBA's collateral, Cadence and the SBA are granted,
from and after the Petition Date, security interests in the
Debtor's post-petition assets with the same nature, extent,
priority, and validity as the pre-petition security interests held
by Cadence and the SBA.
As additional adequate protection to the extent of any diminution
in value of Cadence's and SBA's collateral, Cadence and SBA are
granted, from and after the Petition Date, security interests and
replacement liens in all assets of the Debtor, including cash,
accounts, receivables, furniture, fixtures, equipment, and
inventory acquired by the Debtor after the Petition Date,
specifically including all cash and cash proceeds arising from such
accounts, receivables, inventory, and other assets acquired by the
Debtor after the Petition Date, but excluding the PPP Loan
Proceeds, with the same nature, extent, priority, and validity as
the pre-petition security interests held by Cadence and the SBA.
As additional adequate protection to the extent of any diminution
in value of Cadence's and SBA's collateral, Cadence and SBA are
granted superpriority administrative expense claims, which will
have priority under sections 503(b) and 507(b) of the Bankruptcy
Code and otherwise over all administrative expense claims and
unsecured claims against the Debtor and its estate of any kind or
nature, to the extent of the diminution in value of their
collateral.
As of the Petition Date, the security interests and replacement
liens granted to Cadence and SBA are valid, perfected, and
enforceable against the Debtor, its successors, and assigns,
including any trustee or receiver in the case or converted Chapter
7 case, without any further action by the Debtor or Cadence or the
SBA, and without the execution, delivery, filing, or recordation of
any promissory notes, financing statements, security agreements, or
other documents.
A copy of the order and the Debtor's 16-week final budget through
the week of June 11 is available for free at https://bit.ly/3col6EP
from PacerMonitor.com.
About Fossil Exhibits International, LLC
Houston-based Fossil Exhibits International LLC --
http://fossil-exhibits.com-- provides its clients with trade show
booths, permanent installations, and event management services. It
sought protection under Chapter 11 of the U.S. Bankruptcy Court
(Bankr. S.D. Tex. Case No. 21-30714) on February 26, 2021. In the
petition signed by Cherie Quentin, president, the Debtor disclosed
up to $10 million in both assets and liabilities.
Judge Christopher M. Lopez oversees the case.
Ravi Patrick Ratnala, Esq., at The Ratnala Law Firm, PLLC is the
Debtor's counsel.
FRONTERA HOLDINGS: Unsecured Creditors Unimpaired in Plan
---------------------------------------------------------
Frontera Holdings LLC, et al., filed a First Amended Joint Plan of
Reorganization and a corresponding Disclosure Statement.
The ballots accepting/rejecting the Plan and objections to the Plan
are due April 21, 2021. The hearing to consider confirmation of
the Plan is April 26, 2021, at 9:00 a.m. prevailing Central Time.
Pursuant to the Restructuring Support Agreement, the Debtors have
secured key stakeholder support for the Plan and the
value-maximizing transactions contemplated therein. Holders of
approximately 92% of the OpCo Claims, 100% of the HoldCo Notes,
Morgan Stanley (in its capacities as OpCo Agent, lender, and letter
of credit issuer), Lonestar Generation, Kindle Energy, and Fisterra
Energy are party to the Restructuring Support Agreement and have
agreed to support the Plan. This consensus will save the Debtors
material delay, expense, and value degradation that could have
resulted from a less consensual restructuring process. The
Restructuring Support Agreement, as implemented through the Plan,
contemplates a comprehensive financial restructuring of the
Debtors that will substantially deleverage the Debtors’ balance
sheet.
The key financial components and commitments of the Restructuring
Transactions are as follows. On the Effective Date:
* each Allowed Administrative Claim, Other Secured Claim, and
Other Priority Claim will be paid in full in Cash or receive such
other treatment that renders such Claims Unimpaired;
* each Allowed Priority Tax Claimwill either be paid in full
in Cash or otherwise treated in accordance with the terms set forth
in section 1129(a)(9)(C) of the Bankruptcy Code;
* each Holder of an Allowed DIP Facility Claim shall receive its
Pro Rata share of(a) the New First Lien Facility and (b) 87.5% of
the New Equity Interests in connection with the conversion of the
DIP Facility into the New First Lien Facility, so long as such
Holder is also a Consenting Lender, subject to dilution on account
of the New Warrants and the Management Incentive Plan (if any);
* each Holder of an Allowed OpCo Claim shall receive its Pro
Rata share of and/or interest in (a) 12.5% of the New Equity
Interests, subject to dilution by the Management Incentive Plan
(if any) and the exercise of the New Warrants; and (b) the New
Second Lien Facility;
* each Holder of an Allowed HoldCo Notes Claim shall receive its
Pro Rata share of (a)the New Warrants, and (b) the proceeds of the
Consenting Sponsor Cash Payment in cash;
* each Allowed General Unsecured Claim will either (a) be
Reinstated and satisfied in full either (i) on the Effective Date
or (ii) in the ordinary course of business in accordance with the
terms and conditions of the particular transaction giving rise
to such Allowed General Unsecured Claim or (b) such other
treatment that renders such Allowed General Unsecured Claim
Unimpaired in accordance with section 1124 of the Bankruptcy Code;
* all Intercompany Claims will either be (a) Reinstated; (b)
compromised, canceled, set off, settled, canceled and released,
contributed or distributed; or (c) otherwise addressed at the
election of the Debtors such that Intercompany Claims are treated
in a tax-efficient manner;
* all Intercompany Interests shall receive no recovery or
distribution and shall be Reinstated solely to the extent
necessary, and with the consent of the Required Consenting Lenders,
to maintain the Debtors' corporate structure;
* all Existing Equity Interests shall be canceled, released, and
extinguished without any distribution, and will be of no further
force or effect;
* the Debtors shall obtain the New First Lien Facility and the
New Second Lien Facility; and
* the parties to the Restructuring Support Agreement and certain
other parties will grant full, mutual releases, as set forth in the
Plan.
The Plan provides for full, mutual releases for the Consenting
Sponsor. In exchange for the releases, among other things, the
Consenting Sponsor has agreed to (1) forgo contesting the full
discharge and cancellation of the Existing Equity Interests, (2)
waive entitlement to any recovery on account of the Waived
Management Party Claims,(3) provide the Consenting Sponsor Cash
Payment, and (4) otherwise support the restructuring on the terms
set forth in the Restructuring Support Agreement. The
Restructuring Support Agreement contains settlements of disputes
that, if litigated, could delay the Debtors' emergence from chapter
11 and impose significant costs that would divert funds from
operations and inhibit growth. Instead, the Debtors have secured
an expedited path to Confirmation of the Plan that will minimize
the administrative costs to their Estates and hasten the Debtors’
ability to capitalize on their new, lower debt profile and focus on
their ongoing operations. The Debtors believe the Consenting
Sponsors' commitments under the RestructuringSupport Agreement are
essential to the Debtors' successful reorganization.
Finally, the Debtors maintain a broad "fiduciary out" under Section
7 of the Restructuring Support Agreement, which provides, in
relevant part, that nothing in the RSA "shall require a Company
Party or the board of directors, board of managers, or similar
governing body of a Company Party, after consulting with external
counsel, to take any action or to refrain from taking any action
with respect to the Restructuring Transactions to the extent such
person or persons determines in good faith that taking or failing
to take such action would be inconsistent with applicable Law or
its fiduciary obligations under applicable Law."
As part of the RSA, certain of the Consenting Lenders agreed to
fund a $70 million new money DIP term loan, $30 million of which
became available upon the entry of the Interim DIP Order and $40
million of which was drawn following entry of the Final DIP Order.
The $12 million of the DIP Facility was held in a blocked account
and released to the Debtors as needed in connection with a
potential shortfall to CENACE or to the Debtors' balance sheet
after resolution of the dispute (if any amounts remain). The DIP
Facility also requires the Debtors to meet certain case milestones,
including Confirmation of the Plan within 84 days of the Petition
Date and emergence from chapter 11 within 105 days of the Petition
Date. Failure to meet the milestones is an event of default under
the DIP Facility.
About Frontera Holdings
Frontera Holdings, LLC operates a 526-MW combined-cycle natural gas
plant near Mission, Texas, and exports power to Mexico.
On Feb. 3, 2021, Frontera Holdings LLC and five affiliated debtors
each filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. No. 21-30354) to
seek confirmation of a debt-for-equity plan that would reduce debt
by $800 million. At the time of the filing, Frontera Holdings had
estimated assets of between $100 million and $500 million and
liabilities of between $1 billion and $10 billion.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Kirkland & Ellis and Jackson Walker L.L.P. as
their legal counsel, Alvarez & Marsal as a financial advisor, and
PJT Partners LP as an investment banker. Prime Clerk LLC is the
claims agent.
The term loan lenders' advisors include Houlihan Lokey Inc. and
Akin Gump Strauss Hauer & Feld LLP.
The noteholders' advisors include Silver Foundry, LP and Morgan,
Lewis & Bockius LLP.
FULL HOUSE: Buys $1 Million in NDAU
-----------------------------------
Investview, Inc. bought $1 million worth of NDAU -- the World's
First Adaptive Digital Currency -- a new category of digital asset
optimized for a long-term store of value with attractive staking
income. NDAU is a decentralized digital asset, with a trusted
ecosystem where NDAU holders digitally self-govern and where NDAU
has the freedom to rise with increasing demand while mitigating
downside volatility.
"This decision came when institutional adoption of Bitcoin is at
its peak, and many corporations such as Tesla and Investview have
added Bitcoin to their balance sheet. We bought both Bitcoin and
NDAU adding it to our treasury balance sheet because we are
confident that both these crypto currencies will provide our
company more flexibility to further diversify and maximize returns
on our cash," said Mario Romano, director of Finance.
"Digital currencies have now fully emerged into the mainstream with
Bitcoin as the pioneer. The increase in value of cryptocurrencies
such as Bitcoin, Ethereum, NDAU and others have created significant
interest from individuals and institutions alike," said Joe
Cammarata, Investview CEO.
Joseph Cammarata, CEO added, "Although crypto currencies and
blockchain technologies are pretty much in their infancy, we see
certain crypto currencies and blockchains such as Bitcoin and NDAU
having the potential to become the greatest technological advances
since the internet. NDAU is a new category of digital asset
technology designed as the world's first adaptive digital currency
optimized for a long-term store of value with attractive staking
rewards for holders of NDAU. It is viewed by crypto enthusiasts as
a calmer, gentler 'conservative digital currency' appealing to the
masses, one that's specifically designed to be less volatile when
held over the course of many years. It is also a virtual currency
that is well suited to being held along with Bitcoin to help smooth
out the ride. NDAU has built-in monetary policy mechanisms which
aim to help stabilize their value, as demand changes over time."
NDAU has rocketed higher, climbing almost 22% over the last 30 days
to a high of $18.22 on CoinMarketCap. NDAU price has increased
over 100% since November 2020.
"NDAU's price continues its run higher largely driven by greater
social acceptance along with extraordinary interest from
institutions, corporate treasuries, retail investors, and other big
investors are warming to cryptocurrencies. Additionally, NDAU's
price has been bolstered by interest from the likes of public
companies such as Investview Inc. ("INVU"), a top leader in digital
asset technologies with a focus on Bitcoin mining and the new
generation of digital assets, which this month announced it had
added $1 million of NDAU to its corporate treasury balance sheet.
Recent institutional interest in NDAU "cannot be overstated," said
Ciaran Hynes, director at Oneiro the company who built the original
ndau Blockchain.
"Another reason for NDAU's continued rise in social acceptance is
NDAU's wallet design where 'staking' is enabled by the user versus
a third party staking middleman. Staking has become a popular
concept within the blockchain and crypto currency space, especially
in blockchain networks that implement proof-of-stake consensus
algorithms. The idea is that owners of the crypto currency
("Digital Assets") can earn additional currency, usually paid in
the crypto currency itself ("Rewards") by locking their Digital
Assets for a certain period of time. This makes the staking
process much easier for the end user and is proving extremely
popular," added Hynes.
About Investview
Headquartered in Salt Lake City, Utah, Investview, Inc., is a
diversified financial technology organization that operates through
its subsidiaries, to provide financial products and services to
individuals, accredited investors and select financial
institutions.
Investview reported a net loss of $21.28 million for the year ended
March 31, 2020, compared to a net loss of $4.98 million for the
year ended March 31, 2019. As of Dec. 31, 2020, the Company had
$10.77 million in total assets, $23.79 million in total
liabilities, and a total stockholders' deficit of $13.02 million.
Haynie & Company, in Salt Lake City, Utah, the Company's auditor
since 2017, issued a "going concern" qualification in its report
dated June 29, 2020, citing that the Company has suffered losses
from operations and its current cash flow is not enough to meet
current needs. This raises substantial doubt about the Company's
ability to continue as a going concern.
GEO GROUP: S&P Downgrades ICR to 'B' on Heightened Refinancing
--------------------------------------------------------------
S&P Global Ratings lowered all its ratings on Florida-based The GEO
Group Inc. by two notches, including its issuer credit rating, to
'B' from 'BB-'.
On Jan. 26, 2021, President Biden instructed The U.S. Department of
Justice (DOJ) to not renew contracts with privately operated
criminal detention facilities (e.g., prison operators). DOJ
detention facility contracts with GEO accounted for about 27% of
its 2020 revenue.
S&P said, "We believe industry and operating conditions have
worsened and we have lowered our assessment of GEO's business
profile. We are also concerned that GEO could struggle to refinance
about $1.7 billion of 2024 debt maturities.
"The negative outlook reflects, among other things, our opinion
that GEO faces heightened refinancing risks in early 2024, and that
we could lower our ratings over the next 12 months if the company
does not make meaningful progress mitigating the risk."
S&P's rating on GEO reflects the following keys risk and credit
strengths.
Key Risks:
-- Significant refinancing risk in 2024 given the company's high
debt leverage, onerous maturity wall, and high capital costs.
-- Public policy change or increased insourcing risk (e.g., a
similar executive order is issued to the U.S. Immigration and
Customs Enforcement (ICE) agency, or criminal justice reform
results in a sharp reduction in inmate populations).
-- Significant revenue concentration with top 5 federal agencies
and state governments (about 64% of 2020 revenue).
-- Limited alternate repurposing potential for detention centers.
Key Strengths:
-- High barriers to entry, multi-year contracts, and lack of a
viable substitute for current detention demand in the
short-to-intermediate term.
-- One of the largest private detention center operators,
rehabilitation, and re-entry services in the U.S.
GEO could struggle to address its looming debt maturities starting
in early 2024. GEO has a $1.7 billion of debt maturity wall in
2024 starting on March 23, 2024 when its senior secured term loan
matures. S&P said, "Based on our expectation for challenging
operating conditions, the current below-par debt trading levels,
and the expected industry financing exit of many lenders given new
ESG mandates, we believe the company could struggle to meet its
redemption needs. Furthermore, the company also has about $300
million of debt that matures in 2022 and 2023 (after accounting for
the February 2021 financing) that will likely limit large cash
builds prior to 2024. Over the next 12 months, absent our increased
confidence in GEO's ability to address its 2024 maturity wall, we
could lower our rating. Additionally, large sub-par debt
repurchases, if viewed as distressed, could also result in a
selective default (SD) rating."
On Feb. 24, 2021, the company demonstrated that it could access the
private capital markets when it issued $230 million of 6.50%
exchangeable senior notes due 2026. Although S&P views the all-in
capital cost of the notes as high, the notes continue to trade at
par and could provide momentum for additional note issuance.
S&P said, "The company faces a less supportive operating
environment and consequently we have revised our assessment of its
business risk. In our view, the use of U.S. privately operated
criminal detention facilities is at a crossroad. Unless various
political constituents agree on a common policy framework or
guidelines for the use of these government service providers, which
we don't expect in the coming years, industry participants will
face uncertain operating conditions. We expect increasingly
volatile earnings, or lower financing availability as the weight of
changing political administrations, rhetoric, and environmental
social and governance (ESG) mandates impact business prospects.
Accordingly, we revised our business risk assessment to weak, to
reflect our diminished view of the company's revenue visibility,
earnings quality, and cash flow stability.
"Although the ultimate impact of recent public policy actions is
hard to predict, we believe the company's services are essential
and difficult to replace in the short term. Our preliminary view
is that revenues decline at a low- to mid-single-digit compound
annual growth rate (CAGR) over the next three years." S&P's key
forecast assumptions include:
-- Bureau of Prisons (BOP; about 14% of 2020 revenue) contracts
will be terminated at the time of expiration. Overall system-wide
crowding was negative 6% as of Sept. 30, 2020 at BOP operated
facilities which should allow for increased insourcing. However,
utilization at reentry centers contracts could improve as COVID-19
concerns decrease.
-- U.S. Marshals Services (USMS; about 12.7% of revenue) bed
capacity is reduced by 50% at contract expiration. S&P said, "USMS
does not own or operated detention centers. Our assumption reflects
our view that the DOJ will implement President Biden's executive
order in earnest, but will eventually have to balance logistical
factors or higher costs of housing inmates in county or municipal
jails into its investment and outsourcing decisions. In some cases,
pass through agreements with local jails and governments could
soften the impact. We have assumed USMS contracts with perpetual
maturities are not terminated."
-- ICE contracts (about 28.2% of revenue) and state and other
contracts (about 45.1% of revenue) are unaffected. The company's
ICE revenue could potentially benefit in the short term from the
current surge of migrants at the U.S.-Mexico border.
-- Longer term, as long as earnings prospects rely on capacity
utilization or inmate population, the industry's growth prospects
or reputation could remain challenged. Nevertheless, services such
as facility design and construction, facility leasing, inmate
reentry, electronic monitoring, inmate health and education
services could be viewed as more favorable and become a greater
percentage of the business mix.
-- The controversial topic of human rights, combined with evolving
public sentiment and policy views on criminal justice reform,
expose privately operated criminal detention facilities operators
to ongoing social and governance risks. Both of the companies S&P
rates, GEO and CoreCivic, are often criticized for various human
rights issues, including confinement practices, prisoner violence,
and mistreatment, and are subject to ongoing litigation. In recent
years, as a result of pressure from activist advocacy groups,
select banks have chosen to end their lending relationship with GEO
and CoreCivic once their commitments mature.
Environmental, social, and governance (ESG) factors relevant to the
rating action
-- Social benefits
S&P said, "The negative outlook reflects the risk we could lower
our ratings over the next 12 months if GEO fails to make sufficient
progress addressing its 2024 debt maturities, its covenant headroom
narrows below 15%, or if we believe the risk of a payment default
has increased. Given the uncertain and challenging operating and
financing environment, we believe the company's capital structure
could become unsustainable without proactive debt repayments or
maturity extension. If the company does not make meaningful
progress mitigating its 2024 refinancing risk or fails to establish
a credible refinancing plan, we will likely view GEO's liquidity
and financial flexibility as more constrained."
S&P could lower its ratings if:
-- The company fails to make meaningful process toward addressing
its refinancing needs, increasing our concern that the company will
struggle to refinance its large 2024 debt maturities in a timely
manner;
-- Contract termination rates are greater than expected, resulting
in expectations that covenant headroom cushion falls and remains
below 15%;
-- The company executes a large below-par debt repurchase (which
we could view as a selective default); or
-- If S&P views the company's capital structure as increasingly
unsustainable.
Although unlikely over the next 12 months, S&P could revise its
outlook to stable if:
-- The company demonstrates strong operating performance; and
-- Successfully executes a comprehensive refinancing and maturity
extension of its 2024 maturities.
GIRARDI & KEESE: Founder & Wife Owe Former Clients, Says Trustee
----------------------------------------------------------------
Law360 reports that Girardi Keese founder Thomas Girardi and his
reality-star wife are both on the hook for millions he allegedly
stole from clients, among other bills, a bankruptcy trustee claimed
in a new court filing that catalogs at least $56.8 million in
Girardi's personal liabilities.
The bankruptcy trustee in charge of liquidating Thomas Girardi's
personal estate claims he has $74. 5 million in assets, $51 million
of which he loaned to Girardi Keese. Documents lodged Wednesday,
March 24, 2021, night in Los Angeles offer a hazy glimpse at
Girardi's personal finances and draw lines for battles to come.
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
GREAT WESTERN PETROLEUM: S&P Upgrades ICR to 'B-' on Refinancing
----------------------------------------------------------------
S&P Global Ratings raised the issuer credit rating on Great Western
Petroleum LLC, a Denver-based oil and gas exploration and
production (E&P) company, to 'B-' from 'CCC-' and removed it from
CreditWatch, where it was placed with positive implications on Feb.
1, 2021. The outlook is stable.
S&P said, "We also raised our rating on the company's 12% senior
secured second-lien notes due in 2025 to 'B' from 'B-'. The '2'
recovery rating is unchanged and reflects our expectation for
substantial (70%-90%; rounded estimate: 80%) recovery of principal
in the event of a payment default.
"At the same time, we withdrew our rating on the company's senior
unsecured notes due in 2021 as the notes have now been repaid.
The stable outlook reflects our expectation that Great Western will
maintain a moderate level of capital spending and generate a modest
amount of positive free operating cash flow (FOCF) to repay
borrowings on the reserve-based lending (RBL) facility, while also
maintaining funds from operations (FFO) to debt of about 45% over
the next 12 months."
Great Western Petroleum has completed its previously announced debt
refinancing and equity recapitalization transactions, which
alleviate its near-term refinancing and liquidity strains.
The company issued $310 million of 12% senior secured second-lien
notes due 2025 and used the proceeds to repay its $252 million
outstanding of 9% senior unsecured notes due 2021 and its $75
million 8.5% senior unsecured notes due 2025 (unrated).
The refinancing and recapitalization transactions clean-up the
capital structure and alleviate near-term debt maturities. Great
Western used a portion of its proceeds from the new 12% senior
secured second-lien notes to repay its $252 million 9% senior
unsecured notes, which had a September 2021 maturity date. As a
result, the company will no longer trigger the springing maturity
on its RBL facility, which would have brought the maturity date
forward to March 2021, from June 2024. The company is drawn $330
million on its RBL (pro forma for $9 million repayment made as part
of the refinancing), which has an elected commitment of $485
million. Holders of the company's $75 million 8.5% senior unsecured
notes due 2025 were rolled into the new secured notes.
Equity recapitalization eliminated annual distributions and
resulted in new ownership. The company also completed its
previously announced equity recapitalization, whereby its $400
million (as of Dec. 31, 2020) of existing preferred units were
converted into new common units. S&P said, "This eliminates
preferred distributions of about $24 million per year and improves
the company's credit measures as we previously considered the
preferred units as debt in our ratios. As a result of the
recapitalization, Great Western is now about 80% owned by EIG and
TPG, who also hold four of the five board seats. Given the
ownership and board representation, we consider the company
financial-sponsor owned and reflect this in our financial policy
assessment."
S&P said, "Credit measures improve based on our revised crude oil
price assumptions and Great Western's lower debt. We recently
revised our West Texas Intermediate (WTI) crude oil price
assumption to $55 per barrel (/bbl) for the remainder of 2021 and
2022, from $45/bbl, and held our assumption of $50/bbl in 2023 and
beyond. We now project average FFO to debt of about 45% and debt to
EBITDA of 1.8x-2x, over the next 12-24 months. Based on a more
modest level of capital spending of about $230 million in 2021, we
anticipate Great Western will generate about $50 million in
positive FOCF, which we expect it will use to repay RBL
borrowings.
"The regulatory environment in Colorado continues to be a
significant risk factor considered in our rating. Great Western has
proactively obtained about 230 drilling permits, which we expect
would provide about three to four years of drilling at the
company's current development pace. However, the risk of potential
regulatory changes for the oil and gas industry in Colorado remains
elevated.
"The stable outlook reflects our expectation that Great Western
will continue its moderate pace of development and maintain FFO to
debt of around 45% over the next 12 months. We anticipate the
company will generate about $50 million in FOCF, which we expect it
will use to repay RBL borrowings.
"We could lower the ratings on Great Western if we no longer
anticipated a sustained improvement in the company's liquidity,
which would most likely occur if the company incurred higher
capital expenditures than we currently anticipate without
offsetting higher production, or if its RBL size was significantly
reduced. Furthermore, we could lower the rating if the Colorado
regulatory environment had a material negative effect on the
development of the company's assets.
"We could raise the rating if the company demonstrates its ability
to generate sustained positive FOCF and reduce its RBL borrowings,
while improving its scale of proved developed reserves and
production in line with higher-rated peers. We would expect credit
measures to remain strong, including FFO to debt of at least 30%."
GREATER HOUSTON POOL: Case Summary & 20 Top Unsecured Creditors
---------------------------------------------------------------
Debtor: Greater Houston Pool Management, Inc.
aka Greater Houston Pool; aka Greater Houston Pool
Management
322 Present St
Stafford, TX 77477
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 21-31047
Judge: Hon. Eduardo V. Rodriguez
Debtor's Counsel: Donald Wyatt, Esq.
ATTORNEY DONALD WYATT PC
26418 Oak Ridge Drive
The Woodlands, TX 77380
Tel: (281) 419-8733
Fax: (281) 419-8703
Email: don.wyatt@wyattpc.com
Total Assets: $878,683
Total Liabilities: $3,026,960
The petition was signed by Daniel McInnis, 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/3LVP6XQ/Greater_Houston_Pool_Management__txsbke-21-31047__0001.0.pdf?mcid=tGE4TAMA
GREATER HOUSTON: Case Summary & 7 Unsecured Creditors
-----------------------------------------------------
Debtor: Greater Houston Pool Builders, LLC
322 Present St.
Stafford, TX 77477
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 21-31049
Debtor's Counsel: Donald Wyatt, Esq.
ATTORNEY DONALD WYATT PC
26418 Oak Ridge Drive
The Woodlands, TX 77380
Tel: (281) 419-8733
Email: don.wyatt@wyattpc.com
Total Assets: $1,120
Total Liabilities: $2,302,053
The petition was signed by Daniel McInnis, president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/AEHAKKQ/Greater_Houston_Pool_Builders__txsbke-21-31049__0001.0.pdf?mcid=tGE4TAMA
GREEN SIDE UP: May 19 Plan & Disclosure Hearing Set
---------------------------------------------------
Green Side Up Rental, LLC filed with the U.S. Bankruptcy Court for
the Western District of Louisiana, Alexandria Division, a
Disclosure Statement and Chapter 11 Plan.
On March 23, 2021, Judge Stephen D. Wheelis conditionally approved
the Disclosure Statement and ordered that:
* May 19, 2021 at 9:30 a.m., in the United States Bankruptcy
Courtroom, 300 Jackson Street, Alexandria, Louisiana is the hearing
on final approval of the Disclosure Statement, together with a
hearing on Confirmation of the Chapter 11 Plan.
* The last day for holders of claims and interests to submit
ballots accepting or rejecting the Chapter 11 Plan is 7 days prior
to hearing date.
* Objections to the Disclosure Statement and/or Chapter 11
Plan shall be in writing and filed on or before 7 days prior to
hearing date.
A full-text copy of the order dated March 23, 2021, is available at
https://bit.ly/3daZdbc from PacerMonitor.com at no charge.
About Green Side Up Rental
Green Side Up Rental LLC sought protection for relief under Chapter
11 of the Bankruptcy Code (Bankr. W.D. La. Case No. 20-80421) on
Aug. 7, 2020, listing under $1 million in both assets and
liabilities. L. Laramie Henry, Esq., at L. LARAMIE HENRY, is the
Debtor's counsel.
GREEN SIDE UP: Secured Creditors to be Paid in Installments in Plan
-------------------------------------------------------------------
Green Side Up Rental LLC submitted a Small Business Chapter 11 Plan
and a Disclosure Statement.
Since 2003, the Debtor has been in the business of real estate
rentals, owning multiple residential real estate properties which
it rents out to individuals. The Debtor had several properties
that became vacant and in need of repair. But, have no means of
capital to make all repairs as well as the mortgages securing the
properties. Subsequently, the mortgage notes came into default and
creditors began foreclosure proceedings against Green Side Up. That
precipitated the instant filing of the Plan.
The Plan will be funded by ongoing rental operations, insurance
proceeds, and equity contributions as needed to fund the Plan.
Under the Plan, secured creditors will be paid in installments
until paid in full. They will retain their liens until they are
paid in full.
There are no unsecured claims in the case.
The equity holders are unimpaired under the Plan.
A copy of the Disclosure Statement dated March 19, 2021, is
available at https://bit.ly/3wgJEYi
About Green Side Up Rental
Green Side Up Rental LLC sought protection for relief under Chapter
11 of the Bankruptcy Code (Bankr. W.D. La. Case No. 20-80421) on
Aug. 7, 2020, listing under $1 million in both assets and
liabilities. L. Laramie Henry, Esq., at L. LARAMIE HENRY, is the
Debtor's counsel.
H-CYTE INC: Lowers Net Loss to $6.5 Million in 2020
---------------------------------------------------
H-Cyte, Inc. filed with the Securities and Exchange Commission its
Annual Report on Form 10-K disclosing a net loss of $6.46 million
on $2.15 million of revenues for the year ended Dec. 31, 2020,
compared to a net loss of $29.81 million on $8.35 million of
revenues for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $2.20 million in total assets,
$3.25 million in total liabilities, and a total stockholders'
deficit of $1.05 million.
Tampa, Florida-based Frazier & Deeter, LLC, issued a "going
concern" qualification in its report dated March 25, 2021, citing
that the Company has negative working capital, has an accumulated
deficit, has a history of significant operating losses, and has a
history of negative operating cash flow. These factors raise
substantial doubt about the Company's 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/1591165/000149315221006836/form10-k.htm
About H-CYTE, Inc.
Headquartered in Tampa, Florida, H-CYTE -- http://www.HCYTE.com--
is a hybrid-biopharmaceutical company dedicated to developing and
delivering new treatments for patients with chronic respiratory and
pulmonary disorders.
HAMPTON ROADS: Fitch Affirms B+ Rating on $8.5MM Housing Bonds
--------------------------------------------------------------
Fitch Ratings has affirmed the following classes of Hampton Roads
PPV, LLC (VA) military housing taxable revenue bonds (Hampton Roads
Unaccompanied Project), 2007 series A:
-- Approximately $197 million class I bonds at 'A-';
-- Approximately $55 million class II bonds at 'BB';
-- Approximately $8.5 million class III bonds at 'B+'.
The Rating Outlook is Negative on all series of bonds.
SECURITY
The bonds are special limited obligations of the issuer and are
primarily secured by a first lien on all receipts from the
operation of the unaccompanied housing project known as Hampton
Roads, located at Norfolk Naval Complex. The absence of a
cash-funded reserve fund limits protections afforded bondholders.
KEY RATING DRIVERS
FINANCIAL PROFILE
Sufficient Debt Service Coverage: The affirmations reflect current
DSC levels at 1.75x, 1.35x, and 1.29x for classes I, II, and III
bonds, respectively, based on fiscal 2020 audited financial
statements. This is an increase from 1.55x, 1.20x, and 1.15x for
the class I, II and III bonds in fiscal 2019, and in line with
fiscal years 2016-2018 DSC levels. The fiscal 2020 increase in the
DSC was due to a 5% increase in rental revenue and an 8% decline in
operating expenses. The Negative Outlook reflects the risk in the
current environment of a combined scenario of higher operating
expenses, declines in BAH rates, and/or declines in occupancy rates
and the potential negative impact on the DSC.
BAH Rate Fluctuation: Hampton Roads' BAH rates have experienced
fluctuations over the past several years, though the BAH allocation
percentage has remained stable. The one-year BAH increase of 11.5%
(for E-1 through E-4 tenants) in 2021 follows two years of declines
of 4.0% in 2020 and 0.7% in 2019. The reversal in BAH rate trends
mitigates some of the ongoing credit concerns surrounding the
project's BAH rate volatility in recent years. However, continued
fluctuating BAH rates that trend negative, potentially as a result
of coronavirus-related stress on community rental rates, could
impact the stability of operating revenues. The BAH rates assessed
and reported are primarily for E-1 to E-4, given this is the
majority of Hampton Roads' tenant mix.
OPERATING PROFILE
Volatile Operating Expense History: The Negative Outlook reflects
the three-year trend of significantly increased operating expenses
(7%, 12%, and 6% in fiscal years 2019, 2018 and 2017,
respectively), particularly for maintenance and repair expenses.
Management noted that significant maintenance issues were addressed
in 2019, and though fiscal 2020 demonstrated an improvement in the
operating expense profile with a decline of 8%, there is the
potential for continued elevated expenses for ongoing maintenance
and repair needs. Fitch will continue to monitor key developments
at both the project and federal level that directly or indirectly
impact the project's overall operating performance and determine
whether the positive trend continues and operating expenses
stabilize.
Fluctuating Occupancy: Overall, the project has experienced
sufficient occupancy rates with average occupancy rates of 94.1%
for fiscal 2020, an increase from 93.3% in fiscal 2019. The
occupancy fluctuated throughout the year with a decrease to 88.7%
in January 2020 following a major deployment, followed by an
increase to 98% in June and then decline to 90% in December. The
periods of lower occupancy are related to deployments. As of Jan.
2021, the project had a wait list of 319 applicants.
High Turnover Levels: The project continues to experience high
turnover levels as a result of deployments, putting ongoing
potential negative pressure on project operations. The turnover
rate for 2020 was 74.7%, similar to the rate of 73.1% in 2019.
BASE REALIGNMENT AND CLOSURE (BRAC) RISK: While not expected in the
near term, BRAC risk cannot be eliminated over the long term. Any
resulting impact on the project's DSC could impact the rating. The
high essentiality of Hampton Roads, and the fact that historically
in prior BRAC commissions, none of the key facilities have been
recommended for closure by the Navy, lessens the possibility of
closure and contributes to bondholder security.
OTHER CONSIDERATIONS:
Project Management Critical: The past several years presented
operating challenges related to management oversight of Hampton
Roads, in particular with regard to controlling expenses and
increasing occupancy rates. The project remains sensitive to
management's ability to maintain and grow current occupancy levels
and control project expenses.
Absence of Cash Reserve: The absence of a cash-funded debt service
reserve fund detracts from bondholder security for all classes of
bonds; however, the class III bonds are the most vulnerable.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A continued trend, as demonstrated in fiscal 2020, of
declining operating expenses and vacancy rates, which lead to
higher project DSC could put positive pressure on the ratings.
-- A positive trend in BAH rates and/or a higher allocation of
BAH, with other factors trending positive, could lead to
increased project DSC and put positive pressure on the
ratings.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Though BAH rates experienced a large increase in 2021, this
follows two years of declines, and future decreases in BAH
could put negative pressure on the ratings. The project could
sustain a decrease in BAH of approximately 23.5%, 13%, and 11%
(using 2021 BAH and fiscal 2020 operating expenses and average
vacancy rates) before classes I, II and III bonds,
respectively would reach 1.0x coverage. Over the last 10
years, the steepest decline in BAH for E-1 to E-4 was 5.8% in
2014.
-- Management's inability to maintain high occupancy levels and
control operating expenses could also put negative pressure on
the ratings, particularly for classes II and III. Based on
2021 BAH rates, a 59%, 32% and 27% increase to operating
expenses and a 28%, 18% and 16% increase to vacancy rates
would cause the class I, II and III bonds, respectively to
reach 1.0x coverage (all other factors remaining the same).
The cumulative increase in operating expenses over the 2017
2019 period was approximately 22%.
While not expected in the near term, BRAC risk cannot be eliminated
over the long term. Significant personnel reduction, declining base
essentiality or complete closure could have a severely negative
impact on the project's operations and financial performance,
thereby reducing DSCRs and ultimately negatively weighing on the
project's bond ratings.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT PROFILE
Hampton Roads/Norfolk Naval Complex (HRNC), located in southeastern
Virginia, is the largest naval base in the world, covering
approximately 4,631 acres. The housing project located on Norfolk
Naval Complex base (known as Hampton Roads) provides apartment
residences for single (i.e. unaccompanied) U.S. Navy enlisted
personnel. As part of the original development plan, 1,190 new
units were added and 722 existing residential units were renovated.
Bond proceeds provided a portion of the total development costs,
funding for reserves and a capitalized interest account and funds
to pay costs of issuance. In addition, the U.S. Navy provided an
equity contribution of $37 million, and the developer provided $4
million in capital. Hampton Roads LLC is managed by American Campus
Communities, Inc.
ANALYTICAL CONCLUSION
The affirmation of the ratings assigned to the 2007 series A bonds
reflects the sufficient debt service coverage (DSC) as demonstrated
in the fiscal 2020 audit, and the recent increase in BAH rates and
stabilization of the project's operating profile. The Negative
Outlook reflects the three-year trend (from 2017-2019) of
significant increases to operating expenses and the potential for
elevated ongoing maintenance and repair expenses as a result of the
Tenant Bill of Rights and reforms under the 2020 National Defense
Authorization Act.
Continued operating expense increases, combined with the project's
high turnover rates and fluctuating occupancy, could weaken net
income, thereby stressing DSC and potentially putting negative
pressure on the ratings. Fitch will monitor the project to
determine whether the stabilized operations, and positive BAH and
occupancy rates demonstrated in fiscal 2020, continue to trend
positive.
The ongoing coronavirus pandemic creates uncertainty about the
continued impact on military housing project vacancy rates in the
near term, and on BAH rates in the longer term. The overall
near-term revenue impact is expected to be limited given the
uninterrupted continuation of BAH without the unemployment risks
facing the broader multifamily market. However, pandemic-related
delays to Permanent Change of Station (PCS) moves may add temporary
uncertainty to project vacancy rates, and have a subsequent impact
on rental income.
From a longer-term revenue perspective, the degree to which the
coronavirus pandemic affects future BAH rates, and therefore rental
income, depends on the broader impact on the community rental rates
and longevity of the pandemic. Further, given the reliance on
federal appropriations, BAH may be impacted in the longer-term by
the uncertainty of future federal programmatic spending on housing
programs during an economic downturn. Fitch's ratings are
forward-looking in nature, and Fitch will monitor developments in
the sector as a result of the virus outbreak as it relates to
severity and duration, and incorporate revised base and rating case
qualitative and quantitative inputs based on expectations for
future performance and assessment of key risks.
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.
HEARTWISE INC: All Creditors Will be Paid in Full Under Plan
------------------------------------------------------------
Heartwise, Inc., submitted a Plan and a Disclosure Statement.
The Debtor, through the Plan, shall pay creditors of the Debtor's
estate, in full, on the Effective Date, from three sources. First,
Robinson and Alpha are in possession of prepetition deposits
totaling $4,200,000. Net of Robinson's pre-petition claim
($940,864), and net of Alpha's pre-petition claim ($497,991), the
total deposits remaining are $2,761,145. On the Effective Date,
Robinson and Alpha will return to the Debtor $2,559,136, and Alpha
will return to the Debtor $202,009. Second, there will be a new
value injection by Earnesty and/or Doyle of $9,425,855 on the
Effective Date. Third, the Debtor will have approximately $3
million in cash on the Effective Date that will be partly used to
pay pre-confirmation creditors.
While the bar date to file proofs of claim has not yet passed, the
Debtor believes the estate has the following claims: (1)
outstanding priority tax claims of $120,5901; (2) administrative
expense priority claims (excluding Robinson's prepetition
administrative claim) of approximately $320,650; and (3) unsecured
claims of $14,745,760 (excluding the claims of Robinson and Alpha,
which will be offset from the prepetition deposits they are each in
possession of). Ergo, the Debtor believes that the total amount of
claims that will be asserted against its estate will be $15,187,000
(again, excluding the prepetition claims of Robinson and Alpha).
The total cash that will be available to fund immediate payments on
the Effective Date will be no less than $15,187,000, which amount
will allow the Debtor to repay creditors in full, on the Effective
Date.
The Plan requires a new value contribution of its current equity.
All equity interests as of the Petition Date will be cancelled, and
new shares shall be issued in the Reorganized Debtor based on
Earnesty's and Doyle's new value contributions. Specifically, the
new value contribution will total $9,425,855. Earnesty will be
entitled to 51% of the shares in the Reorganized Debtor should it
contribute $4,807,185.89 of the new value, and Doyle will be
entitled to 49% of the shares in the Reorganized Debtor should he
contribute $4,618,669 of the new value. If either Earnesty or
Doyle is unable to meet the new value contribution share as
outlined, the other party may purchase the entirety of the
Reorganized Debtor's equity for $9,425,855.
General Insolvency Counsel for Heartwise, Inc.:
Ronald A. Clifford
BLAKELEY LLP
18500 Von Karman Ave, Suite 530
Irvine, California 92612
Telephone: (949) 260-0611
Facsimile: (949) 260-0613
E-Mail: RClifford@BlakeleyLLP.com
A copy of the Disclosure Statement is available at
https://bit.ly/3d5Q9UT from PacerMonitor.com.
About Heartwise Inc.
Heartwise Incorporation -- https://www.naturewise.com/ -- is a
retail store that sells wellness and health-related supplements.
Heartwise filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-13335) on Dec.
4, 2020. Tuong V. Nguyen, chief executive officer, signed the
petition. In its petition, the Debtor disclosed $7,653,717 in
assets and $12,030,563 in liabilities.
Judge Mark S. Wallace oversees the case.
The Law Offices of Michael Jay Berger and Trojan Law Offices serve
as the Debtor's bankruptcy counsel and special counsel,
respectively.
HEXAGON AUTOMOTIVE: Cash Collateral Access OK'd on Interim Basis
----------------------------------------------------------------
Hexagon Automotive, LLC, sought and obtained permission from the
U.S. Bankruptcy Court for the Central District of California, Los
Angeles Division, to use cash collateral in which its secured
creditors, the United States Small Business Administration and
Civic Financial Services, LLC, may assert an interest.
The Debtor requires the use of cash collateral for payroll,
purchase of parts and supplies, rent, utilities, mortgage payment
and other expenses incurred in the ordinary course of business. If
use of cash collateral is not authorized, the Debtor will be unable
to preserve and maximize the value of its estate, pursue a plan of
reorganization, and administer the chapter 11 case, which would
cause immediate and irreparable harm to the value of the Debtor's
estate to the detriment of all creditors, including SBA and CFS.
All of the Debtor's cash on hand from the operation of its auto
repair shop is subject to SBA's lien up to $54,000 by virtue of SBA
having a recorded UCC-Financing Statement filed with the Secretary
of State on June 28, 2020, Document No.: 91455930002; Filing No.:
20-7797232069, and thus constitutes the cash collateral of the
SBA.
The Debtor owns a residential real estate investment property
located at 8166 Mannix Drive, Los Angeles, CA 90046. The Mannix
Property is encumbered by a mortgage loan in favor of CFS with an
outstanding loan balance of approximately $1,160,460.
On July 27, 2018, CFS advanced a loan to the Debtor for the
principal sum of $1,152,800. In connection with obtaining CFS'
loan, the Debtor executed a Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Fixture Filing, which were recorded
in the Los Angeles County Recorder's Office on July 31, 2018,
Filing No.: 2018076264.
In addition to CFS' loan, the Debtor's remaining secured creditors
are the Los Angeles Tax Collector, owed $25,709.29 against the
Mannix Property, and SBA. Including CFS' loan, the secured claims
total $1,240,169.99.
The Debtor has no unsecured priority claims.
The Debtor's general unsecured creditor includes Bank of America
with a Paycheck Protection Loan in the amount of $12,000.
The son of the Debtor's principal occupies the Mannix Property. The
Mannix Property is a 2-bedroom, 1-bathroom, 1,077-square foot house
located on a 4,502-square foot lot. The Tenant has been making a
monthly estimated $9,126 payment to CFS until approximately
February 2020 when the COVID-19 pandemic started. In February 2020,
the Debtor requested a six-month extension from CFS and a loan
modification. In mid-June 2020, the Debtor received a loan
modification application and submitted the required paperwork to
CFS in August 2020. The Debtor did not receive any response from
CFS, other than the notice of foreclosure sale, which precipitated
the bankruptcy filing. Effective April 1, 2021, the Debtor will
start collecting $5,000 in rental income from the Mannix Property
to pay monthly adequate protection payments to CFS while the Debtor
negotiates a plan treatment stipulation with CFS.
Challenges led to the filing of the bankruptcy case. COVID-19
completely disrupted the automobile repair business in multiple
ways. Due to the Safer at Home order issued in the state of
California on March 19, 2020, by Governor Gavin Newsom, California
residents have been staying home more and not driving their cars.
This led to a decline in business for auto mechanics.
In addition, due to COVID-19, the Mannix Property Tenant fell
behind on the monthly mortgage payment of $9,126.33. As a result,
CFS moved to foreclose on the Mannix Property. The Debtor believes
that a $260 adequate protection payment proposed to SBA and $5,000
adequate protection payment proposed to CFS are fair and reasonable
to induce SBA and CFS to consent to the Debtor's use of cash
collateral, satisfy the requirements of sections 363(c)(2) of the
Bankruptcy Code, and in the best interests of the Debtor and its
estate.
A copy of the Debtor's request and its 12-month budget through
March 2022 is available for free at https://bit.ly/3bX1cjT from
PacerMonitor.com.
The Debtor projects a yearly net operating income of $59,438 and
total expenses of $281,791.
A continued hearing on the matter is set for April 7 at 9 a.m.
About Hexagon Automotive, LLC
Hexagon Automotive, LLC -- http://www.hexagoncompleteauto.com--
owns and operates a full-service auto repair shop in Los Angeles.
The Debtor also owns a residential investment property and collects
rental income.
It sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. C.D. Calif. Case No. 21-11880) on March 9, 2021. In the
petition signed by Ahmad P. Nawabi, the managing member, the Debtor
disclosed $1,163,500 in assets and $1,252,169 in liabilities.
Judge Deborah J. Saltzman oversees the case.
Michael Jay Berger, Esq. at LAW OFFICES OF MICHAEL JAY BERGER is
the Debtor's counsel.
HEXION INC: S&P Alters Outlook to Stable, Affirms 'B-' ICR
----------------------------------------------------------
S&P Global Ratings revised the outlook to stable from negative and
affirmed its 'B-' issuer credit rating on Hexion Inc. S&P also
affirmed all its issue-level ratings on Hexion. The recovery
ratings are unchanged.
S&P said, "The outlook revision reflects our expectations for
improvements in EBITDA and free cash flow in 2021, following weak
earnings in 2020. Hexion's fourth-quarter earnings provided early
indications of a potential recovery in 2021 with earnings
improvement in several segments, including the adhesives and
specialty epoxy segments. Our base case is for this improvement to
pick up in 2021 and show in credit metrics that are comfortably
within our range of expectations. This includes debt to EBITDA of
6.5x-7.0x and funds from operations (FFO) to debt of about 9%. We
also expect cash flow generation will turn meaningfully positive in
2021, though we anticipate this will happen toward the end of the
year."
Hexion previously announced the sale of part of its phenolic
specialty resins business and forest products resin business for
total consideration of $425 million, including $305 million in
cash. S&P said, "We expect this transaction to close over the near
term. As part of our projections for an improving credit profile,
if the divestiture closes as planned, we would expect Hexion to use
the proceeds to pay down a portion of its first-lien term loan
instead of using it for purposes such as share repurchases. As part
of our base-case scenario, we also expect the company to pursue
possible bolt-on and/or more transformational transactions that may
be leveraging in nature."
S&P said, "Our assessment of Hexion's business incorporates its
exposure to several diversified but cyclical end markets. These
include home construction, general construction, industrial,
marine, furniture, oil and gas, and auto. The company is also
exposed to volatile raw material costs for key inputs, such as
phenol, methanol, and urea. Despite a portion of the company's
sales made under contracts that allow it to recover raw material
costs, Hexion has below-average profitability among specialty
chemical producers, with expected adjusted EBITDA margins for the
next two years of about 10%. We believe the company operates in a
competitive market and is constrained in its pricing capability,
which affects its profitability. We anticipate end markets could be
cyclical, and EBITDA could weaken during troughs. Partially
offsetting some of these weaknesses are Hexion's good geographic
diversity--more than half of its revenues are generated abroad."
S&P said, "Our stable outlook reflects our expectation for an
economic recovery in 2021 that we believe will help strengthen
metrics such that they are comfortably within our range of
expectations for the rating. We expect S&P Global Ratings-adjusted
debt to EBITDA of 6.5x-7.0x on a weighted average basis, a level we
view as appropriate for the rating. Our base case assumes
mid-single-digit percent growth in the U.S. and European economies,
which would grow demand for the company's products.
"We could lower the rating over the next 12 months if credit
measures unexpectedly deteriorate such that debt to EBITDA
approaches the high-single-digit area. We could also lower the
rating if liquidity weakens such that we believe sources of funds
will decline to less than 1.2x uses or if we believe Hexion has no
prospects of generating positive free cash flow.
"We could raise our rating on Hexion if we believe that the
company's earnings will strengthen more than we anticipate in 2021.
We will consider quarterly earnings improvement, and free cash flow
generation in 2021 in reviewing the prospects for stronger 2021
annual earnings, or free cash flows, than we assume at the rating.
We could raise the rating if Hexion improves business strength and
performance exceeds our expectations, resulting in improved debt to
EBITDA of about 6.0x on a sustained basis. We would also expect
liquidity sources to remain above 1.2x uses."
HIGHPOINT RESOURCES: Joint Prepackaged Plan Confirmed by Judge
--------------------------------------------------------------
Judge Christopher S. Sontchi has entered findings of fact,
conclusions of law and order confirming the Joint Prepackaged Plan
of Reorganization of Debtors HighPoint Resources Corporation,
HighPoint Operating Corporation, and Fifth Pocket Production LLC.
The Debtors have proposed the Plan in good faith and not by any
means forbidden by law. In so determining, the Court has examined
the totality of the circumstances surrounding the filing of the
Chapter 11 Cases, the Plan, the Merger Agreement, the TSA, the
process leading to Confirmation, including the overwhelming support
of Holders of Claims and Interests in the Voting Classes for the
Plan, and the transactions to be implemented pursuant thereto.
The Plan is the product of extensive, good faith, arm's-length
negotiations among the Debtors, and certain of the principal
constituencies, including BCEI, the Consenting Noteholders, and the
Consenting Shareholders.
The Debtors modified the Plan pursuant to this Confirmation Order
to address concerns raised by certain parties in interest and made
certain clarifications that are either not material or not adverse
to Holders of Claims and Interests in the Voting Classes. The Plan
modifications comply with section 1127 of the Bankruptcy Code and
Bankruptcy Rule 3019.
Moreover, the Debtors' key constituents, including the TSA parties
and BCEI, affected by such modifications support these changes.
Accordingly, no additional solicitation or disclosure was required
on account of the modifications and all Holders of Claims and
Interests who voted to accept the Plan or who are conclusively
presumed to accept the Plan are deemed to have accepted the Plan as
modified, revised, supplemented, or otherwise amended.
Proposed Co-Counsel to the Debtors:
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
E-mail: joshua.sussberg@kirkland.com
- and -
W. Benjamin Winger, Esq.
300 North LaSalle Street
Chicago, Illinois 60654
Tel: (312) 862-2000
Fax: (312) 862-2200
E-mail: benjamin.winger@kirkland.com
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
E-mail: dpacitti@klehr.com
- and -
Morton R. Branzburg, Esq.
1835 Market Street, Suite 1400
Philadelphia, Pennsylvania 19103
Tel: (215) 569-3007
Fax: (215) 568-6603
E-mail: mbranzburg@klehr.com
About HighPoint Resources
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.
HOFFMASTER GROUP: S&P Alters Outlook to Stable, Affirms 'CCC+' ICR
------------------------------------------------------------------
S&P Global Ratings revised its outlook on paper and tissue-based
disposable tableware company Hoffmaster Group Inc. to stable from
negative. At the same time, S&P affirmed all ratings, including its
'CCC+' issuer credit rating and issue-level ratings.
The stable outlook reflects S&P's expectation that demand for the
company's products will begin to recover. It also reflects the
company's amendment and extension of its revolving credit facility,
which addresses its upcoming maturity, and waiver of its financial
covenant requirement through 2022.
Hoffmaster has addressed its upcoming revolver maturity waived its
financial covenant requirement through 2022. The company has
amended and extended its existing $50 million revolving credit
facility, now maturing in 2023. In addition, the company has waived
its financial covenant requirement through the end of 2022 while
also fully repaying its revolver balance, giving the company full
access to the facility in 2021.
S&P said, "We expect continued performance recovery, supported by
macroeconomic environment improvement, especially in the second
half of the year. Moreover, we believe Hoffmaster's performance
will continue to benefit from increased social activity, a broader
market shift from linen to linen-like, as disposable products have
been favored in restaurants due to hygienic benefits, and a new
anti-microbial product line within the foodservice segment. We
forecast leverage improving to the low-9x area by 2021 year end on
modest revenue and EBITDA growth while generating modest free
operating cash flow. As the company has addressed our
covenant-related questions and should have stable to positive
operations throughout the year, we believe this supports a stable
outlook."
Capital structure continues to be unsustainable, given very high
leverage. As of the third quarter of fiscal 2020, adjusted leverage
had increased to just above 10x, from roughly 6x 12 months earlier.
S&P said, "While we believe a modest improvement in leverage is
likely in fiscal 2021, we forecast leverage above 9x, resulting in
very limited cushion. Though the company has amended its first-lien
credit agreement which provides a waiver of the springing 6.5x
leverage ratio through fourth-quarter 2022 and has no near-term
debt maturities, we continue to view the capital structure as
unsustainable in the long term and the company is dependent on the
recovery of the economy to meet its financial commitments."
Pandemic risks remain, though the probability has diminished.
COVID-19 virus variants could derail the company's expected path to
recovery, especially if they prove significantly more lethal,
damaging to health, contagious, or vaccine-resistant than the
original strain. S&P said, "Our base-case forecast does not assume
such events to materialize however we acknowledge the risks remain
to some extent. We also believe the economy will stay on a path to
recovery; however, small businesses and certain consumers that have
been financially damaged by the pandemic could potentially have
some impact on private-sector spending."
S&P said, "The stable outlook reflects our expectation that demand
for Hoffmaster's products will begin to recover this spring,
resulting in a modest improvement profit and credit metrics
thereafter. The company has also addressed its tight covenant
headroom with a waiver of the springing 6.5x net first-lien
leverage ratio covenant through the fourth quarter of 2022. We
expect adjusted leverage of around 9x by the end of 2021 and
further improvement to about 7x by 2022 if there are no disruptions
in the overall recovery."
Potential downside catalysts include an unexpected resurgence of
the pandemic, possibly due to vaccine-resistant variants or
vaccines that prove to be less effective than expected, sustained
depressed demand for paper and tissue-based disposable tableware
(such as coronavirus-induced hesitancy, substantially increased
work-from-home employment policies, or a material increase in
pandemic related restaurant restrictions), or a meaningful economic
downturn.
S&P could lower its rating on the company if:
-- Sales and EBITDA decline resulting in negative free operating
cash flow such that we believe the company may initiate a
distressed exchange or restructuring that it deems tantamount to
default over the next 12 months; or
-- The company fails to address its maturing capital structure
maturities in 2023 in a timely manner.
S&P could raise its rating on the company if:
-- The foodservice rebounds faster than expected, resulting in
sales and EBITDA growth that supports leverage below 8x;
-- The company generates consistent positive free operating cash
flow; and
-- The end markets in which the company participates in
meaningfully improve such that refinancing the capital structure is
less of an issuer.
HOP-HEDZ INC: Unsecureds Will be Paid 100% of Their Claims
----------------------------------------------------------
Hop Hedz, Inc., filed an Amended Disclosure Statement.
Holders of allowed Class 5 general unsecured claims will receive a
distribution of interest only on the allowed amount of their
unsecured claim for 36 months at the rate of 6% per annum. At the
end of the 36 months, the unsecured creditors will receive an
interest in the Reorganized Debtor, as described in this Plan, or
at the Debtor's option may be paid in cash 100% of the allowed
amount of their unsecured claim.
Then, by virtue of rental totaling $3,000 per month, from three
tenants under written parking leases, the Debtor can easily make
the payments due to unsecured and other creditors under the Plan.
The Debtor's principal asset is the Property which the Debtor
believes has a fair market value of approximately $700,000. The
Debtor earned gross revenue of $9,000 in 2018, $9,000 in 2019, and
$9,000 in 2020. The Debtor earned gross revenue of $6,000 from
Jan. 1, 2021, through Feb. 28, 2021. The Debtor will not have to
pay any amount to Allstate under the Plan as it did not receive any
loan proceeds and acted as a conduit for the Hyde Park Cafe to
receive funds from Allstate.
The cash payments under this Plan have been and/or will be
generated from the Confirmation Deposit, the Monthly Payment
agreement with Hyde Park Cafe, LLC, the rents generated, the
capital contributed by Lewis Mustard, and cash on hand on the
Effective Date. The Debtor estimates there will be excess proceeds
exceeding $15,000 that will come into the estate to pay priority
and administrative claims. Subject to the Debtor's appeals and
rights thereunder, the Debtor will pay the postpetition attorneys'
fees that Allstate included in its Proof of Claim as part of its
claim.
Counsel for the Debtor:
W. Bart Meacham, Esquire
308 E. Plymouth St.
Tampa, FL 33603-5957
Tel: (813) 223-6334
Fax: (813) 425-6969
Email: wbartmeacham@yahoo.com
A copy of the Amended Disclosure Statement is available at
https://bit.ly/3tPfKbx from PacerMonitor.com.
About Hop-Hedz
Hop-Hedz, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Florida Case No. 20-09249) on Dec. 20,
2020. At the time of the filing, the Debtor disclosed assets of
between $1 million to $10 million and liabilities between $500,000
to $1 million. W. Bart Meacham, Esq., is the Debtor's counsel.
ICONIX BRAND: Red Diamond Completes Sale of Chinese Unit for $16M
-----------------------------------------------------------------
Iconix Brand Group, Inc.'s indirect wholly-owned subsidiary, Red
Diamond Holdings S.a r.l., completed the previously announced sale
of all of the equity interests of its wholly-owned subsidiary, Lee
Cooper China Limited, for $16 million. Included in the sale is the
Lee Cooper brand in the People's Republic of China, Hong Kong,
Taiwan and Macau.
Iconix Brand Group anticipates using the net proceeds from the sale
to repay amounts due under its existing financing arrangements, and
otherwise for general corporate purposes.
About Iconix Brand
Iconix Brand Group, Inc., owns, licenses and markets a portfolio of
consumer brands including: CANDIE'S, BONGO, JOE BOXER, RAMPAGE,
MUDD, MOSSIMO, LONDON FOG, OCEAN PACIFIC, DANSKIN, ROCAWEAR,
CANNON, ROYAL VELVET, FIELDCREST, CHARISMA, STARTER, WAVERLY, ZOO
YORK, UMBRO, LEE COOPER, ECKO UNLTD., MARC ECKO, ARTFUL DODGER, and
HYDRAULIC. In addition, Iconix owns interests in the MATERIAL
GIRL, ED HARDY, TRUTH OR DARE, MODERN AMUSEMENT BUFFALO and PONY
brands. The Company licenses its brands to a network of retailers
and manufacturers. Through its in-house business development,
merchandising, advertising and public relations departments, Iconix
manages its brands to drive greater consumer awareness and brand
loyalty.
Iconix Brand reported a net loss attributable to the company of
$111.5 million for the year ended Dec. 31, 2019, compared to a net
loss attributable to the company of $100.52 million for the year
ended Dec. 31, 2018. At Sept. 30, 2020, the Company had $445.59
million in total assets, $662.37 million in total liabilities,
$25.50 million in redeemable non-controlling interest, and a total
stockholders' deficit of $242.27 million.
BDO USA, LLP, in New York, NY, the Company's auditor since 1998,
issued a "going concern" qualification in its report dated March
30, 2020 citing that the Company has suffered recurring losses and
has certain debt agreements which require compliance with financial
covenants. The COVID 19 pandemic is expected to have a material
adverse effect on the Company's results of operation, cash flows
and liquidity, including compliance with future debt covenants.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
IMERYS TALC: Arnold, Pachulski Update on Talc Personal Claimants
----------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Arnold & Itkin LLP and Pachulski Stang Ziehl &
Jones LLP submitted a supplement amended verified statement to
disclose an updated list of Talc Personal Injury Claimants that
they are representing in the Chapter 11 cases of Imerys Talc
America, Inc., et al.
Each of the Arnold & Itkin Plaintiffs has, individually, retained
Arnold & Itkin to represent him or her as counsel in connection
with, among other things, Talc Personal Injury Claims against one
or more of the above-captioned debtors or certain of their
subsidiaries and affiliates.
On June 5, 2020, Arnold & Itkin retained Pachulski Stang Ziehl &
Jones LLP, as special bankruptcy counsel.
Arnold & Itkin does not represent the Arnold & Itkin Plaintiffs as
a "committee" or a "group" and does not undertake to represent the
interests of, and are not fiduciaries for, any creditor, party in
interest, or other entity that has not signed a retention agreement
with Arnold & Itkin.
As of March 25, 2021, each of the Arnold & Itkin Plaintiffs and
their disclosable economic interests are:
Abbie Watts
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Abby Maxwell
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Abebech Ebba
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Abigail Memis
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Ada Bucchioni
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Ada Greenwald
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Adamo F. Callei
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Addie Massey
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Adela G. Garcia
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Adelaida Marzan
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Adelina Arzapalo
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Adeline Pasaribu
* Nature of Claim: Talc Personal Injury
* Amount of Claim: Undetermined
Special Bankruptcy Counsel to Arnold & Itkin LLP can be reached
at:
PACHULSKI STANG ZIEHL & JONES LLP
Laura Davis Jones, Esq.
Debra I. Grassgreen, Esq.
John A. Morris, Esq.
Peter J. Keane, Esq.
919 N. Market Street, 17th Floor
P.O. Box 8705
Wilmington, DE 19899-8705 (Courier 19801)
Telephone: (302) 652-4100
Facsimile: (302) 652-4400
E-mail: ljones@pszjlaw.com
dgrassgreen@pszjlaw.com
jmorris@pszjlaw.com
pkeane@pszjlaw.com
Counsel to the Arnold & Itkin Plaintiffs can be reached at:
ARNOLD & ITKIN LLP
Jason A. Itkin, Esq.
6009 Memorial Drive
Houston, TX 77007
Tel: 713.222.3800
Fax: 713.222.3850
E-mail: jitkin@arnolditkin.com
A copy of the Rule 2019 filing is available at
https://bit.ly/3w6c86I at no extra charge.
About Imerys Talc America
Imerys Talc America, Inc. and its subsidiaries --
https://www.imerys-performance-additives.com/ -- are in the
business of mining, processing, selling and distributing talc. Its
talc operations include talc mines, plants and distribution
facilities located in Montana (Yellowstone, Sappington, and Three
Forks); Vermont (Argonaut and Ludlow); Texas (Houston); and
Ontario, Canada (Timmins, Penhorwood, and Foleyet). It also
utilizes offices located in San Jose, Calif., and Roswell, Ga.
Imerys Talc America and its subsidiaries, Imerys Talc Vermont, Inc.
and Imerys Talc Canada Inc., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 19-10289) on Feb. 13, 2019. The Debtors were
estimated to have $100 million to $500 million in assets and $50
million to $100 million in liabilities as of the bankruptcy
filing.
Judge Laurie Selber Silverstein oversees the cases.
The Debtors tapped Richards, Layton & Finger, P.A., and Latham &
Watkins LLP as their legal counsel, Alvarez & Marsal North America,
LLC as financial advisor, and CohnReznick LLP as restructuring
advisor. Prime Clerk, LLC is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
tort claimants in the Debtors' Chapter 11 cases. The tort
claimants' committee is represented by Robinson & Cole, LLP.
IMPRESA HOLDINGS: Slated to Seek Plan Confirmation April 28
-----------------------------------------------------------
Judge Brendan L. Shannon has entered an order approving on an
interim basis for solicitation purposes the Combined Disclosure
Statement and Plan of Impresa Holdings Acquisition Corporation, et
al.
The Combined Hearing is scheduled for April 28, 2021, at 10:00 a.m.
(prevailing Eastern Time) and will be held via videoconference.
Objections to confirmation of the Combined Disclosure Statement and
Plan shall be filed and served on or before April 22, 2021, at
4:00 p.m. (prevailing Eastern Time).
Ballots must be received by the Voting Agent on or before April 22,
2021 at 4:00 p.m. (prevailing Eastern Time)
If any Claimholder seeks allowance of its Claim for voting purposes
or to challenge the allowance of its Claim for voting purposes in
accordance with the Tabulation Procedures, such Claimholder must
file a motion, for an order temporarily allowing its Claim or
allowing its Claim in a different amount or classification for
purposes of voting to accept or reject the Combined Disclosure
Statement and Plan and serve the Rule 3018 Motion on the Plan
Proponents so that it is received no later than April 7, 2021, at
4:00 p.m. (prevailing Eastern Time). The Plan Proponents shall then
have until April 14, 2021, at 4:00 p.m. (prevailing Eastern Time)
to file and serve any objections to such Rule 3018 Motions and
coordinate with the Court to adjudicate and resolve all pending
Rule 3018 Motions prior to the Combined Hearing.
Impresa Holdings Acquisition Corporation, et al., Twin Haven
Special Opportunities IV, L.P., the debtors' prepetition secured
lender, and the Official Committee of Unsecured Creditors jointly
propose the following combined Disclosure Statement and Plan of
liquidation.
Treatment of Claims
Class 2: Other Secured Claims totaling $50,000 are unimpaired.
Class 3: Prepetition Secured Claims totaling $32.5 million will
recover 32.5% of their claims. "Prepetition Secured Claims
Distribution Amount" shall mean Cash in an amount equal to the Cash
portion of the Retained Assets on the Effective Date minus the GUC
Recovery, the CAP Recovery, the Liquidating Trust Budget, and the
Plan Funding Amount.
Class 4: General Unsecured Claims totaling $2,000,000 to $5,000,000
will recover 5% to 12.5% of their claims. Each allowed unsecured
claim will receive its pro rata share of the GUC Recovery
Class 5: Class Action Claim will recover 6.2% of their claims.
Each claimant will receive who does not opt out of the CAP Recovery
a distribution pursuant to the terms of the Class Action
Settlement.
Counsel to the Debtors:
Robert J. Dehney
Matthew B. Harvey
Paige N. Topper
Taylor M. Haga
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 N. Market Street, 16th Floor
Wilmington, Delaware 19801
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
E-mail: rdehney@morrisnichols.com
mharvey@morrisnichols.com
ptopper@morrisnichols.com
thaga@morrisnichols.com
A copy of the Order is available at https://bit.ly/3d4CI7M from
Stretto, the claims agent.
A copy of the Combined Disclosure Statement and Plan of Liquidation
is available at https://bit.ly/39dmCrs from Stretto, the claims
agent.
About Impresa Holdings
Impresa Holdings designs, manufactures, and supplies precision
sheet metal parts, CNC-machined components, and assemblies for
commercial jets, regional and business aircraft, military aircraft,
and civil/military helicopters. The company's services include
sheet metal fabrication, hydroform pressing, brake.
Impresa began operating in 1973 as Venture Aircraft and expanded
through a 2012 acquisition of Swift-Cor Aerospace. It then changed
its name Impresa Aerospace.
Operating from a production facility in Gardena, California,
Impresa provides machined parts, fabricated components, assembled
parts and tooling for the aerospace and defense industries. In
addition to Boeing, the debtor's customers include Spirit
AeroSystems, Raytheon, Northrop Grumman, Cessna, Lockheed Martin
and Gulfstream. It has provided parts and components for Boeing's
major airframes, including the 787, 777 and 747 as well as the
Airbus A380 and Gulfstream's G550 and G650 planes.
On Sept. 24, 2020, Impresa Holdings Acquisition Corp. and its
affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case
No. 20-12399). At the time of the filing, Impresa Holdings had
estimated assets of less than $50,000 and liabilities of between
$10 million and $50 million.
Robert J. Dehney, Matthew B. Harvey, Paige N. Topper and Taylor M.
Haga of Morris Nichols Arsht & Tunnell LLP, serve as counsel to
Impresa. Duff & Phelps Securities, LLC, is the investment banker.
Stretto is the claims agent.
INDUSTRIAL REPAIR: Case Summary & 15 Unsecured Creditors
--------------------------------------------------------
Debtor: Industrial Repair and Manufacturing, Inc.
1140 East Main Street
Delta, OH 43515
Business Description: Industrial Repair and Manufacturing
provides warehousing and storage services.
The Company is the fee simple owner of a
storage warehouse located at 265 Rogers St.,
Delta, Ohio, valued at $1.42 million.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Northern District of Ohio
Case No.: 21-30505
Judge: Hon. Mary Ann Whipple
Debtor's Counsel: Steven L. Diller, Esq.
DILLER AND RICE, LLC
124 East Main Street
Van Wert, OH 45891
Tel: 419-238-5025
Fax: 419-238-4705
Email: Steven@drlawllc.com;
Kim@drlawllc.com;
Eric@drlawllc.com
Total Assets: $1,926,975
Total Liabilities: $5,756,050
The petition was signed by Peggy Toedter, secretary.
A copy of the petition containing, among other items, a list of the
Debtor's 15 unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/JZGR67Y/Industrial_Repair_and_Manufacturing__ohnbke-21-30505__0001.0.pdf?mcid=tGE4TAMA
INGRAM MICRO: Fitch Lowers LT IDR to 'BB-', Outlook Stable
----------------------------------------------------------
Upon the announcement of a definitive agreement to be acquired by
Platinum Equity Partners in a leveraging transaction, Fitch Ratings
has downgraded Ingram Micro, Inc.'s (IM) Long-Term Issuer Default
Rating (IDR) to 'BB-' from 'BBB-'. Fitch has removed the IDR from
Rating Watch Negative (RWN) and assigned a Stable Rating Outlook.
Fitch has also assigned first lien senior secured issue ratings of
'BB'/'RR1' to IM's proposed issuance of a $3.5 billion undrawn
asset-based loan (ABL) revolving credit facility (RCF), a $500
million ABL term loan, a $2 billion term loan B, and $2 billion of
senior secured notes. The action follows the announcement that
Platinum Equity had entered into a definitive agreement to acquire
IM from current owner, HNA Group, in a transaction valued at $7.2
billion.
KEY RATING DRIVERS
Market Leadership and Scale: IM is the largest global technology
distributor, offering customers and suppliers a global footprint
that optimizes logistics and enables suppliers to reach fragmented
demand. IM's large scale with revenue of nearly $50 billion is
likely to sustain its leadership position due to a broad product
portfolio and an extensive distribution footprint that would be
difficult to replicate given the fragmented nature of its customer
base.
High FCF Scale and Low Capital Intensity: IM has generated nearly
$2 billion of pre-dividend FCF and average FCF margins of 1.3% over
the most recent two-year period as weak macro conditions enabled a
reduction in working capital of approximately $700. In contrast,
Fitch expects a normalizing demand environment during 2021 - 2022
will necessitate investment into working capital that will likely
result in break-even FCF over the ratings horizon. However, while
the company has historically averaged break-even FCF over a cycle,
Fitch expects increased EBITDA margins resulting from improved
geographic and product mix to lead to an improved average FCF
margin. In addition, low capital intensity of .3% helps to sustain
positive FCF. Fitch believes the high absolute scale of FCF is
consistent with the rating category.
Countercyclical FCF: IM possesses strong financial flexibility,
supported by its counter-cyclical FCF profile where rapid
contraction in working capital in response to periods of decreased
demand leads to elevated FCF. During the weakening demand
environment that began in late 2019 and extended into 2020 as the
pandemic unfolded, Ingram experienced a 180 bps expansion in FCF
margins to 2.2%, leading to a five-fold increase in aggregate FCF
to over $1 billion. IM's ability to sustain debt servicing capacity
with improved FCF through a downturn supports its stable credit
profile.
New Ownership Improves Growth Prospects: IM's prior ownership
structure under Chinese conglomerate HNA Group included onerous
provisions that often limited the company's ability to invest in
certain growth opportunities. Specifically, the U.S. Committee on
Foreign Investment (CFIUS) requirement that IM remain a standalone
operating company prevented the deeper cooperation with HNA needed
to capture an increased share of Chinese suppliers and customers.
In addition, HNA's credit agreement and increasingly stressed
operations also prevented IM from using its own balance sheet to
pursue growth. The new U.S.-domiciled ownership by Platinum should
allow IM to capture previously missed growth opportunities,
including domestic sales into sensitive product areas and
acquisition targets.
Uncommitted Financial Policies: IM has entered into a definitive
agreement to be acquired by private equity sponsor, Platinum Equity
Partners, in a transaction that values the company at $7.2 billion,
or 6.3x adjusted LTM EBITDA. Fitch does not expect the new
ownership to commit to any formal financial policy and cannot be
certain of Platinum's leverage tolerance over the ratings horizon.
Fitch forecasts FY21 leverage of 5.0x, pro forma for estimated
outstanding balances on the company's A/R factoring facility and
the announced financing terms. Fitch forecasts minimal reduction in
leverage to 4.5x over the ratings horizon due to the absence of a
commitment to prepay debt and a modest EBITDA growth opportunity.
Narrow Profitability Margins: IM's EBITDA margins have consistently
ranged from 1.5% to 2% during the previous four-year period. While
improved mix has led to margin expansion to 2.3% in 2020, the
narrow margins may lead to deteriorating leverage metrics during
cyclical downturns. During the 2009 downturn, EBITDA declined by
29%, which would have resulted in a .4x increase in leverage had
the company not reduced debt by $100 million in the previous year.
Fitch believes the narrow margins and potential for rapid profit
deleverage can amplify deterioration in leverage metrics through a
cycle.
Limited Pricing Power: IM relies on its top suppliers for
approximately one half of product dollar volume sold, which results
in limited pricing power and margin expansion opportunities as
suppliers typically dictate margin terms. Despite the supplier
concentration, Fitch believes the risk of supplier loss is
mitigated due the company's scale, which provides suppliers with
access to broad-based demand.
Evolving Demand Environment: Emerging technology trends present
risks and opportunities that the company must successfully
navigate. Cloud software and hyper-converged infrastructure are
deflationary for overall hardware demand, but may present IT
distributors with new opportunities in services, software
distribution and "hardware-as-a-service." New sources of demand
from Automotive, Industrial and IoT present opportunities to expand
into new end-markets. Customer consolidation presents risks of
reduced need for distributors as clients go direct to vendors. IM
is likely to benefit from these trends relative to peers given its
leading market position, but execution risks are elevated.
DERIVATION SUMMARY
IM is the leading IT distributor rated by Fitch with a strong,
defensible market position in target vertical markets. The company
serves a vital role in the value chain and has achieved critical
mass that contributes to a defensible market position over the long
term. In particular, the company's extensive geographic footprint,
strong market presence and large customer base attracts suppliers
that hope to quickly gain access to demand, ensuring a continuous,
broad supplier base and comprehensive product offering. Dependable
global access to these products as well as value-added services
appeals to customer needs for a one-stop shop that can serve their
operation. Fitch estimates a number one global market share for IM,
which primarily competes against companies such as Tech Data and
SYNNEX Corporation.
Fitch compares IM to direct competitors, Tech Data Corp. (BB+/RWP)
and SYNNEX (not rated), as well as Fitch-rated peers Arrow
Electronics, Inc. (BBB-/Stable) and Avnet, Inc. (BBB-/Negative),
which have moderate product overlap. Fitch estimates FY21 leverage
of 5.0x well above the peer average of 2.6x and Fitch's typical
sensitivity range of 2.0x - 3.0x for investment grade IT
Distributors. Fitch does not expect the company's new ownership, PE
firm Platinum Equity Partners, to commit to any formal financial
policies and cannot be certain of Platinum's leverage tolerance
over the ratings horizon. Fitch believes Ingram has little
opportunity for deleveraging in the intermediate term absent
voluntary debt prepayments, due to a limited EBITDA growth profile
and increased working capital investment to support the improving
demand environment as the impacts of the pandemic gradually
subside.
Fitch forecasts that the company's EBITDA margins will remain
largely in line with the most recent three fiscal years, ranging
2.1%-2.3% over the forecast horizon, as pricing power and margin
expansion opportunities are constrained by the relative strength of
suppliers. Ingram's margins are closely in line with Tech Data but
below both Synnex at 5.1% and the peer median at 4%. In addition,
FCF margins that average slightly above break-even over a cycle are
in line with the long-term break-even FCF of peers but below the
low-single digit levels of Tech Data and Synnex.
Fitch believes a 'BB-' IDR is warranted as the company's defensible
market leadership position and strong financial flexibility are
weighed against elevated leverage and operating metrics that are
lower than peers. Additionally, the ratings reflect the company's
unreplicable operating footprint and favorable long-term demand
trends, and overall scale while ratings constraints include the
company's constrained pricing power and narrow margin profile.
No country-ceiling, parent/subsidiary or operating environment
aspects impact the rating.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Transaction: Platinum acquires IM for $7.2 billion with
financing consisting of a $3.5b undrawn ABL RCF, a $500
million ABL term loan, a $2 billion term loan B, and $2
billion of senior secured notes;
-- Revenue: Growth of 2.2%, gradually accelerating to 3.0%, due
to increased advanced solutions sales, demand for e-Commerce
fulfilment offering, and cloud product sales;
-- Margins: EBITDA margin of 2.1% in 2021, as benefits from
improved mix to support WFH efforts in 2020 reverse; slight
margin expansion thereafter due to mix shift to advanced
solutions sales, increased services offerings, and operating
leverage;
-- Working Capital: Fitch defined net working capital days
gradually increasing to 28.5 days over the forecast horizon to
support stable revenue growth profile and consistent with
historical levels.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Total Debt with Equity Credit/Operating EBITDA sustained below
4.0x;
-- Total Gross Debt/ FCF sustained below 7.5x;
-- Net Debt/ (CFO-Capex) sustained below 4.5x;
-- FCF margins averaging near 1% through a cycle;
-- Introduction of a formal financial policy with explicit
leverage targets in line with the above.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Total Debt with Equity Credit/Operating EBITDA sustained above
4.5x;
-- Total Gross Debt/ FCF sustained above 8.5x;
-- Net Debt/ (CFO-Capex) sustained above 5.0x;
-- Sustained cash burn through a cycle.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity and Financial Flexibility: IM's liquidity is ample
for the rating category. Pro forma for the transaction, liquidity
is expected to be supported by $650 million of cash and $3.5
billion of availability under the undrawn ABL revolving credit
facility. Fitch notes that Ingram typically maintains well over
$10b in aggregate A/R and inventory balances, suggesting that the
borrowing base provides for significant overcollateralization and
full availability on the ABL facility. Fitch believes liquidity is
further enhanced by the company's counter-cyclical working capital
profile that results in improved FCF during a downturn, providing
elevated liquidity support during adverse macro environments.
The company may also access additional sources of liquidity, not
counted in in Fitch's calculation of liquidity, including A/R
factoring facilities and $800 million of uncommitted credit lines.
The company's diversified sources of liquidity provide significant
operating flexibility with no need to access capital markets in the
next 24 months.
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 minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
INSTANT BRANDS: Moody's Affirms Ba3 CFR, Rates $450M Term Loan Ba3
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Instant Brands
Holdings Inc. including the company's Corporate Family Rating at
Ba3 and Probability of Default Rating at Ba3-PD. At the same time,
Moody's assigned a Ba3 rating to the company's proposed new $450
million first lien term loan due 2028. The outlook is stable. The
Ba3 rating on the company's existing first lien term loan due 2024
is unchanged, and will be withdrawn concurrent with the anticipated
repayment of this debt obligation.
Net proceeds from the proposed $450 million first lien term loan
will be used to refinanced approximately $294 million of existing
debt, including a $100 million seller note issued in conjunction
with the March 2019 acquisition of Instant Brands, and to fund a
$245 million dividend distribution to shareholders. Moody's
estimates pro forma for the proposed refinancing transaction
Instant Brands' debt/EBITDA leverage at 3.9x for the fiscal year
ending December 31, 2020.
The ratings affirmation reflects Moody's expectations that Instant
Brands' debt/EBITDA leverage will decline to around 3.0x by fiscal
year end 2021, mainly driven by earnings growth. Moody's expects
the company's revenue will grow in the mid-single digits along with
EBITDA margin expansion, as the company laps a challenging first
half of 2020, and margins benefit from management's recent pricing
and inventory management initiatives.
The Ba3 assigned to the proposed $450 million first lien term loan,
same as the Ba3 CFR, reflects that this facility represents the
preponderance of the pro forma capital structure.
Assignments:
Issuer: Instant Brands Holdings Inc.
Senior Secured 1st Lien Term Loan Bank Credit Facility, Assigned
Ba3 (LGD4)
Affirmations:
Issuer: Instant Brands Holdings Inc.
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Outlooks:
Issuer: Instant Brands Holdings Inc.
Outlook, is Stable
RATINGS RATIONALE
Instant Brands' Ba3 credit profile reflects the company's
well-recognized portfolio of housewares and small kitchen appliance
brands, global footprint, and good diversification of its
distribution channels. During the coronavirus outbreak the company
has experienced heightened demand for its products because of
ongoing stay at home and social distancing measures. Moody's
expects continued good consumer demand for kitchen electronics and
housewares at least through the first half of 2021 that will
support solid revenue and earnings growth, and positive free cash
flow in the $55-$60 million range. As a result, Moody's projects
Instant Brands' debt/EBITDA leverage will decline to around 3.0x in
fiscal year 2021. The company's good liquidity is supported by
Moody's expectations of solid free cash flow on an annual basis,
access to a $250 million ABL revolving facility due 2025, and lack
of near term maturity until the revolver expires.
Instant Brands' credit profile also reflects the company's
relatively modest scale with annual revenue of around $1.0 billion,
its moderately high debt/EBITDA leverage at around 3.9x pro forma
for the refinancing transaction, and its elevated operational risks
due to legacy Corelle business high fixed costs. The legacy Corelle
Brands' business operates in the cyclical and mature housewares
category, and it's highly reliant on a single, specialized
manufacturing facility for its namesake brand. An extended supply
chain disruption from situations such as the coronavirus would
adversely affect the company's revenue and EBITDA. The legacy
Instant Brands business operates in the highly competitive small
kitchen appliance market, which requires continued product
innovation and differentiation, and exposes the company to changes
in consumer tastes. Governance factors relate to the company's
ownership by a private equity sponsor, which increases the risk of
shareholder friendly financial policies, which is partially
mitigated by the company's history of debt repayment using excess
free cash flows resulting in moderate financial leverage relative
to that typical of private equity owned companies.
The stable outlook reflects Moody's expectations for continued good
consumer demand for the company's products will support solid
revenue and earnings growth, resulting in good free cash flow
generation and debt/EBITDA declining to around 3.0x by fiscal year
end 2021.
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
Instant Brands from the current weak US economic activity and a
gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous, and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around Moody's forecasts is unusually high. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety. The consumer durables industry is one of the sectors most
meaningfully affected by the coronavirus because of exposure to
discretionary spending.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if the company increases its revenue
scale, demonstrates consistent organic revenue growth and operating
margin expansion, while debt/EBITDA is sustained below 2.5x, and
EBITA/interest expense above 4.5x. A ratings upgrade will also
require the company to maintain at least good liquidity, and
Moody's expectations of balanced financial policies that support
credit metrics at those levels.
Ratings could be downgraded if the company's operating performance
deteriorates with consistent revenue declines or profit margin
deterioration, or if debt/EBITDA is sustained above 3.5x, of if
liquidity weakens following the company's failing to generate free
cash flows as anticipated or the ABL revolver is drawn more than
expected. Ratings could also be downgraded if financial policies
become more aggressive, including undertaking a large debt-financed
acquisition of dividend distribution that materially increases
financial leverage.
The proposed first lien credit agreement contains provisions for
incremental debt capacity up to the greater of $152.0 million and
100% of consolidated pro forma trailing four quarter consolidated
EBITDA, plus unused amounts under the general debt basket, plus
additional amounts subject to a pro forma first lien net leverage
requirement not to exceed first lien net leverage at close (if pari
passu secured). The incremental can also be used to finance a
permitted acquisition or investment, with a requirement not to
increase first lien net leverage on a pro forma basis. Amounts up
to the greater of $76 million and 50% of consolidated EBITDA may be
incurred with an earlier maturity date than the initial term loans.
The credit agreement permits the transfer of assets to unrestricted
subsidiaries, up to the carve-out capacities, subject to "blocker"
provisions preventing unrestricted subsidiaries from owning or
holding exclusive rights in intellectual property that is material
to the business of the company and its restricted subsidiaries,
taken as a whole. Non-wholly-owned subsidiaries are not required to
provide guarantees; dividends or transfers resulting in partial
ownership of subsidiary guarantors could jeopardize guarantees
subject to protective provisions which only permit guarantee
releases if the company has made an investment in such subsidiary
in the amount of its outstanding investment at such time. The
proposed terms and the final terms of the credit agreement can be
materially different.
Headquartered in Downer's Grove, IL, Instant Brands Holdings Inc.
manufactures, designs and markets dinnerware, bakeware, kitchen
tools, range-top cookware, storage and cutlery products. In March
2019, the company acquired Instant Brands, manufacturer of the
Instant Pot line of products. The company's most notable brands
include Corelle, Pyrex, Corningware, Snapware, Visions, Chicago
Cutlery, and Instant. The company markets its products primarily in
the US, Canada, and Asia-Pacific region and sells into several
channels including mass merchants, department stores, specialty
retailers and the Internet, among others. Instant Brands was
acquired by Cornell Capital in May 2017. Annual revenue is around
$1.0 billion.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
INTEGRATED GROUP: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Integrated Group LLC
137 West Commercial Ave
Moonachie, NJ 07074
Business Description: Integrated Group LLC manufactures office
furniture (including fixtures).
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 21-12484
Debtor's Counsel: David Edelberg, Esq.
SCARINCI HOLLENBECK
110 Valley Brook Avenue
Lyndhurst, NJ 07071-0790
Tel: 201-896-4100
E-mail: dedelberg@sh-law.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael Boyle, managing member.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/EF53VOY/Integrated_Group_LLC__njbke-21-12484__0001.0.pdf?mcid=tGE4TAMA
IRM EXPRESS: Case Summary & 7 Unsecured Creditors
-------------------------------------------------
Debtor: IRM Express, LLC
1140 East Main Street
Delta, OH 43515
Business Description: IRM Express, LLC is a licensed and bonded
shipping and freight companyand operates
from Delta, Ohio. Its business operations
are primarily operating as a third-party
logistics service which allows companies to
outsource all things associated with
logistics including warehousing,
transportation and pick-pack.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Northern District of Ohio
Case No.: 21-30506
Judge: Hon. John P. Gustafson
Debtor's Counsel: Steven L. Diller, Esq.
DILLER AND RICE, LLC
124 East Main Street
Van Wert, OH 45891
Tel: 419-238-5025
Tel: 419-724-9047
Fax: 419-238-4705
E-mail: Steven@drlawllc.com
Kim@drlawllc.com
Eric@drlawllc.com
Total Assets: $235,145
Total Liabilities: $5,583,537
The petition was signed by William Toedter, the managing member.
A copy of the petition containing, among other items, a list of the
Debtor's seven unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/O7MXUAA/IRM_Express_LLC__ohnbke-21-30506__0001.0.pdf?mcid=tGE4TAMA
J&J VENTURES: S&P Assigns 'B' ICR on High Degree of Competition
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
Effingham, Ill.-based video gaming terminal (VGT) operator J&J
Ventures Gaming LLC (J&J).
S&P said, "We also assigned our 'B' issue-level and '3' recovery
ratings to J&J's proposed senior secured credit facility, which
reflects our expectation of meaningful (50%-70%; rounded estimate:
65%) recovery for lenders in the event of a payment default.
"The stable outlook reflects our expectation that, despite the
uncertainty of COVID-19, J&J will be able to significantly increase
EBITDA through organic growth and acquisitions and reduce leverage
below 5x by the end of 2021 while maintaining EBITDA coverage of
interest around 3x.
"The 'B' issuer credit rating primarily reflects the high degree of
competition in the Illinois video-gaming terminal (VGT) market,
limited geographic diversity, below-average margins, lack of a
comprehensive player rewards program given regulatory restrictions
around marketing, and our expectation for leverage in the 4x-5x
range through 2022. We also view the company's majority ownership
by financial sponsor Oaktree Capital Management as a financial risk
given our belief that financial sponsor owners frequently engage in
debt-financed acquisitions or shareholder returns over time.
Somewhat offsetting these risks is the company's leading market
share based on net terminal income (NTI), long-term contracts with
high renewal rates, limited customer concentration, and our view
that J&J's revenue is less volatile than traditional casino gaming
given the low price point and convenience nature of the product."
J&J is an established player in the Illinois VGT market, but faces
significant competition from other distributed gaming operators.
Illinois has high gaming supply, resulting in significant
competition from other VGT operators including Accel Entertainment
(not rated), Gold Rush Gaming (not rated), and Prairie State
Gaming, a subsidiary of Penn National Gaming Inc. S&P said,
"However, pro forma for the acquisition of Awesome Hand Gaming
(A&H) and the pending acquisition of a top-ten terminal operator in
Illinois (subject to approval by the Illinois Gaming Board [IGB]),
we expect J&J's market share will be about 30%, compared to 26% for
the next closest competitor (Accel Entertainment). Outside of the
two largest participants, J&J and Accel, the VGT market is highly
fragmented. As a result, we believe the increased scale from the
acquisitions will give J&J a competitive advantage in terms of its
ability to provide its customers with superior service and
favorable contract terms, which will be difficult for smaller
competitors to replicate. J&J already has a strong track record of
not only renewing its existing contracts but also winning contracts
and taking share from its competitors, and we believe these
acquisitions will further entrench the company's market-leading
position."
S&P said, "Going forward, we expect J&J's leading scale, market
position, and service reputation to enable the company to gain
market share. Additionally, we think the company will continue to
experience modest tailwinds from the passage of Illinois' gaming
expansion bill (SB 690) in 2019, which allows VGT operators to
increase the number of machines per location to six from five and
increase the maximum bet to $4 from $2. We believe these favorable
changes sufficiently offset the increase in the state and local tax
rate on VGTs to 34% from 30% that was also enacted in 2019 and
should result in NTI and EBITDA growth that allows J&J to reduce
leverage below 5x by the end of 2021.
"We view J&J's business more favorably than casino gaming given the
less volatile and relatively predictable nature of its revenues, a
higher frequency of play given the convenience nature of its
locations, and long-term contracts. We view J&J's model as more
akin to the lottery business than casino gaming as both VGT and
lottery operators benefit from less volatile revenue given the low
price points of their products and customers' easy access to
locations with VGT terminals or that sell lottery products compared
to having to drive to a casino to gamble. J&J primarily serves
lower-stakes gaming customers, who may be overlooked by casinos as
being less profitable. Although VGTs and casinos are two distinct
product offerings with differences in their customer bases, we view
J&J's hyper-local gaming model more favorably given that it is not
reliant on destination travel or group business, which have been
hurt by the pandemic. Although J&J is concentrated in a single
state, it is not dependent on a single location or customer because
its machines are located in thousands of locally convenient
establishments. We view its diversity of locations and proximity to
customers as advantageous given that regional casino operators are
reliant on drive-to traffic from further distances than J&J is." In
fact, the average J&J customer lives within 15 minutes of a partner
location, which is convenient and results in increased frequency of
play, stickier customers, and highly recurring revenues.
J&J's operating performance is largely stable despite relatively
low EBITDA margins. J&J's EBITDA margins are typically in the
low-20% range, compared to the low-30% range for Nevada-based VGT
operator Golden Entertainment Inc. J&J's below-average EBITDA
margin reflects the state-mandated revenue split in Illinois (34%
to state and local taxes, 0.9% to Scientific Games, 32.6% to the
establishment in which the VGTS are located, and 32.6% to the
terminal operator). While Golden's overall profitability is better
than J&J due to its casino gaming business, the mid-teens margin on
Golden's distributed gaming business compares less favorably to
J&J. This is because J&J is not burdened by high fixed rent
payments for the gaming space like Golden, but rather operates
under a revenue share model. Nevertheless, J&J's below-average
profitability is offset by relatively low levels of required
capital spending to maintain and grow the business. J&J only bears
responsibility for maintaining and replacing the gaming machines
and not the upkeep of the establishment in which the machines are
located. This enables J&J to generate moderate free operating cash
flow (FOCF) of around $50 million-$60 million on a run-rate basis.
S&P said, "Furthermore, although VGTs recently surpassed casinos in
terms of statewide gaming revenue, we believe J&J's business still
has solid growth potential because there are some municipalities
that have not yet opted into the VGT model and may choose to do so
to support small business recovery, as the small business would
benefit from the VGT revenue share. Additionally, the increased
maximum bet and ability to add an additional terminal at locations
should drive higher revenue growth. Furthermore, West Virginia,
whose VGT market is more limited in scope, generates a higher NTI
per adult, which suggests the VGT market in Illinois has room to
grow. We also view J&J's business as being less cyclical given that
customers tend to engage in local, convenient, low-cost forms of
entertainment during recessions, which is supported by J&J's
recovery to pre-COVID levels of NTI within two weeks of reopening
in July 2020. Consequently, we think the company should be
relatively insulated from any further pandemic-related fallout
given the demonstrated resiliency of its business model, unless
there were additional government-mandated shutdowns."
J&J's is vulnerable to operating volatility given its revenue and
EBITDA concentration in Illinois, but this is somewhat mitigated by
its leading market position and its diversity of locations and
customers. Given that the company's operations are concentrated in
Illinois, J&J lacks material geographic diversity, which heightens
its vulnerability to adverse regional events, weather risk,
regional economic weakness, or changes in the competitive landscape
and could result in significant EBITDA volatility and liquidity
stress. S&P said, "Furthermore, we believe that longer-term, J&J is
vulnerable to adverse changes in the regulatory environment in
Illinois, particularly changes in the tax rate or further expansion
of gaming activities in the state, which could erode J&J's
competitive position and cash flow. Nevertheless, given SB690,
which raised taxes on VGT operators in 2019, we believe further
increases in taxes are unlikely and would be politically unpopular,
at least over the near term. Under current VGT regulations, NTI
after paying state and local taxes is split evenly between the
establishment and the terminal operator so any increase in taxes
would hurt the local establishment, many of which may be struggling
as a result of the pandemic."
S&P said, "The stable outlook reflects our expectation that,
despite the uncertainty of COVID-19, J&J will be able to grow
EBITDA significantly because of organic growth and the integration
of recently completed and pending acquisitions and improve leverage
below 5x by the end of 2021 while maintaining EBITDA coverage of
interest around 3x.
"We could lower the ratings if J&J sustains leverage above 6x. This
could occur if rising cases of COVID-19 result in further capacity
restrictions, another shutdown in operations, or generally weaker
demand, or if the company undertook leveraging transactions to
pursue acquisitions or return capital to its shareholders.
"We could consider raising the rating if J&J is able to increase
NTI and EBITDA or voluntarily repay debt to reduce leverage below
4.5x on a sustained basis. We would also need to believe that any
acquisitions or shareholder distributions would be done in a manner
that kept leverage below 4.5x."
J.H. BRYANT: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: J.H. Bryant Jr., Inc.
17217 South Broadway Street
Gardena, CA 90248-3117
Business Description: J.H. Bryant Jr., Inc. --
http://www.jhbryant.com-- is a family-owned
and operated multi-solution contractor
established in 1951 to provide contracting
services.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Central District of California
Case No.: 21-12463
Judge: Hon. Ernest M. Robles
Debtor's Counsel: Zev Shechtman, Esq.
DANNING, GILL, ISRAEL & KRASNOFF, LLP
1901 Avenue of the Stars, Suite 450
Los Angeles, CA 90067-6006
Tel: (310) 277-0077
E-mail: zs@danninggill.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by John Henry Bryant III, president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/FLC7EPQ/JH_Bryant_Jr_Inc__cacbke-21-12463__0003.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/SOKTKOI/JH_Bryant_Jr_Inc__cacbke-21-12463__0001.0.pdf?mcid=tGE4TAMA
KINGS SUPERMARKET: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Kings Supermarket Inc.
DBA Bravo Supermarket
7562 West Irlo Bronson Memorial Hwy
Kissimmee, FL 34747
Business Description: Kings Supermarket Inc is a privately held
company in the grocery stores business.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 21-01319
Debtor's Counsel: Jeffrey S. Ainsworth, Esq.
BRANSONLAW, PLLC
1501 E. Concord Street
Orlando, FL 32803
Tel: 407-894-6834
Fax: 407 894 8559
E-mail: jeff@bransonlaw.com
Total Assets: $198,320
Total Liabilities: $5,073,112
The petition was signed by Amjad Maali, 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/HY24KLA/Kings_Supermarket_Inc__flmbke-21-01319__0001.0.pdf?mcid=tGE4TAMA
LA DHILLON: April 22 Disclosure Statement Hearing Set
-----------------------------------------------------
On March 11, 2021, La Dhillon Investments, LLC, filed with the U.S.
Bankruptcy Court for the Western District of Louisiana a Disclosure
Statement describing Plan of Reorganization. On March 18, 2021,
Judge John S. Hodge ordered that:
* April 22, 2021 at 10:00 AM at the United States Courthouse,
Third Floor Courtroom, located at 201 Jackson Street, Monroe,
Louisiana, 71201 is the hearing to consider the approval of the
disclosure statement.
* April 15, 2020 is fixed as the last day for filing and
serving written objections to the disclosure statement.
A full-text copy of the order dated March 18, 2021, is available at
https://bit.ly/3lRBmRH from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Bradley L. Drell, Esq.
Heather M. Mathews, Esq.
GOLD WEEMS BRUSER SUES & RUNDELL
P. O. Box 6118
Alexandria, LA 71307-6118
Tel: (318) 445-6471
Fax: (318) 445-6476
E-mail: bdrell@goldweems.com
About La Dhillon Investments
La Dhillon Investments, LLC, based in Ruston, LA, filed a Chapter
11 petition (Bankr. W.D. La. Case No. 20-30840) on Sept. 14, 2020.
In the petition signed by Devinder Singh, owner, the Debtor was
estimated to have $0 to $50,000 in assets and $1 million to $10
million in liabilities. The Hon. John S. Hodge presides over the
case. Gold Weems Bruser Sues & Rundell, serves as bankruptcy
counsel to the Debtor.
LATAM AIRLINES: Appointment of Equity Committee Sought
------------------------------------------------------
A shareholder of LATAM Airlines Group, S.A. asked the U.S.
Bankruptcy Court for the Southern District of New York to issue an
order directing the appointment of an official committee of equity
security holders in the company's Chapter 11 case.
In court papers, Kevin Barnes, the beneficial owner of
approximately 208,000 common shares of LATAM, argued the company is
"far from hopelessly insolvent" and that common shareholders are
"plausibly in the money."
Mr. Barnes cited the company's current equity market
capitalization, which exceeds $1 billion based on the March 18
closing price of $1.79 per share.
"LATAM's common shares transact in significant daily volume both in
Chile and the United States while being held and traded by a
variety of informed and sophisticated equity market participants,"
Mr. Barnes said.
The shareholder also cited dramatic improvement in equity
capitalization of LATAM's peers since its Chapter 11 filing,
dramatic improvement in financial markets willingness to provide
financing to LATAM's peers, and equity research analysts from major
Wall Street investment banks upgrading their rating on the common
stock and raising price targets on the company.
Mr. Barnes said there are three other shareholders of LATAM who
have expressed willingness to serve on the equity committee should
one be appointed.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados,
is the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
LD HOLDINGS: S&P Affirms 'B+' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issuer credit rating on LD
Holdings Group LLC (LD) and raised its debt rating on LD's existing
$500 million senior unsecured notes due 2025 to 'B+' from 'B'. The
outlook remains stable. At the same time, S&P assigned its 'B+'
rating to LD's new $500 million senior unsecured notes due 2028.
S&P's recovery rating on unsecured notes is '4' indicating its
expectation of an average recovery (40%) in a simulated default
scenario.
The rating affirmation follows LD's announcement that it intends to
raise $500 million of senior unsecured notes due 2028. It intends
to use net proceeds for general corporate purposes, paydown certain
operating indebtness, and to fund a special dividend. At year-end
2020, LD's leverage, measured as gross debt to adjusted EBITDA, was
0.5x and debt to tangible equity was 0.5x compared with 5.6x and
6.1x, respectively, in 2019. S&P said, "Pro forma for the issuance,
we expect debt to EBITDA to be near 0.7x and debt to tangible
equity of 0.9x. We expect LD will have another strong year in 2021,
even though we expect origination volume to decline and gain on
sale margins to compress industry-wide. We also expect management
will prudently manage its financial leverage so that debt to
tangible equity remains below 1.0x on a sustained basis."
S&P said, "We are raising the rating on LD's unsecured debt rating
to 'B+' from 'B' on MSR growth and termination of secured credit
facility. As of Dec. 31, 2020, MSRs at fair value grew to about
$1.13 billion from $447.5 million in 2019. The growth was driven by
origination boom and a higher retention rate. As of the same date,
LD's servicing unpaid principal balance grew to about $103 billion
from $36 billion in 2019. The fourth-quarter 2020 balance made up
$25.8 billion, or 39%, of the total $66.6 billion increase
throughout the year. We have a positive view of the company's
effective hedge of its interest rate exposure on its MSR assets,
which mitigates mark-to-market valuation adjustments." MSRs are a
Level 3 asset whose economic value and life can change
substantially based on interest rates and prepayment speed
assumptions.
In February 2021, LD completed its IPO. Following the offering, CEO
Anthony Hseish will retain 61% voting power, entities affiliated
with Parthenon will have 38.6% voting power, and the holders of
Class A common stock will own the difference. The board of
directors comprises five members with Mr. Hsiesh as chairman; two
members are from Parthenon and there are two independent members.
Overtime, the company expects the board to have seven directors,
three of which will be independent.
S&P said, "The stable outlook reflects our expectation that, over
the next 12 months, LD will operate debt to tangible equity below
1.0x and debt to EBITDA below 4.0x. Our outlook also considers LD's
existing market position and adequate liquidity to meet potential
forbearance requests.
"We could lower the ratings over the next 12 months if we expect
debt to tangible equity to rise above 1.0x or debt to EBITDA above
4.0x on a sustained basis. We believe this would most likely be
caused by shareholder distributions, debt-funded initiatives, or
unexpected losses.
"An upgrade is unlikely in the next 12 months. Over the longer
term, we could raise the ratings if LD is able to materially
decrease its earnings volatility such that debt to EBITDA is
sustained well below 3.0x and debt to tangible equity remains well
below 1.0x."
LINEAR MOLD: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Linear Mold & Engineering, LLC
DBA Linear AMS
12163 Globe Street
Livonia, MI 48150
Business Description: Linear Mold & Engineering, LLC is a full-
service plastics mold and tooling and
production service provider.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Eastern District of Michigan
Case No.: 21-42617
Debtor's Counsel: Lynn M. Brimer, Esq.
Pamela Ritter, Esq.
STROBL SHARP PLLC
300 East Long Lake Road, Suite 200
Bloomfield Hills, MI 48304-2376
Tel: (248) 540-2300
Fax: (248) 645-2690
E-mail: lbrimer@stroblpc.com
pritter@stroblpc.com
Total Assets: $1,565,224
Total Liabilities: $3,149,145
The petition was signed by John Tenbusch, chief executive officer.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at:
https://www.pacermonitor.com/view/QQ6KKYY/Linear_Mold__Engineering_LLC__miebke-21-42617__0003.0.pdf?mcid=tGE4TAMA
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/QILAJMY/Linear_Mold__Engineering_LLC__miebke-21-42617__0001.0.pdf?mcid=tGE4TAMA
LIONS GATE: S&P Affirms 'B' Issuer Credit Rating, Outlook Negative
------------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating and its
'B+' issue-level rating on Lions Gate Entertainment Corp.'s secured
debt.
S&P said, "At the same time, we assigned our 'CCC+' issue-level
rating on the company's proposed unsecured debt. The recovery
rating is '6', indicating our expectation of negligible (0%-10%;
rounded estimate: 0%) recovery in the event of a default.
"Our negative outlook reflects the risk that Lions Gate's
accelerated spending may not generate sufficient subscriber growth
in its Starz network, leading to lower-than-expected revenues,
weakened market positioning among content providers, and prolonged
free operating cash flow deficits.
"Our 'B' rating and negative outlook reflect the growth investments
we expect Lions Gate to make in its motion picture, television, and
media networks segments and the risk that these investments may not
achieve expected levels of revenue and subscriber growth, causing
substantial cash flow deficits in fiscal 2022 and beyond.
"We expect Lions Gate to accelerate its investment in content,
leading to organic free cash flow deficits over the next 12 months.
Over the past three quarters Lions Gate generated over $150 million
in reported cash flow from operations due to lower-than-expected
cash investments in motion picture and television content, which
stemmed from studio shutdowns during the COVID-19 pandemic. The
company also benefited from higher-than-expected sales from its
content library and increased demand for its Starz network. While
these dynamics have been positive for cash flow year to date, we
expect the company to accelerate its cash investments in its motion
pictures and television content over the next 12 months, resuming
studio production and bolstering its Starz original programming. As
a result, we expect the company's cash costs to outpace its content
amortization expense and create substantially negative working
capital swings in excess of $300 million during fiscal 2022.
"In our view, these cash outflows represent investments for growth
in the company's content platforms and could result in increased
revenues and demand for its Starz network. However, we also believe
these negative cash flow characteristics represent substantial risk
to the business as investments are made today in the hopes of
achieving a return on that investment. Specifically, this content
is aimed at increasing motion picture revenue at the box office, TV
series sales to third parties, and boosting Starz original
programing to accelerate subscriber growth. Should these future
movies and TV series underperform, revenue growth could suffer and
subscriber growth at Starz could stall. In our view, the credit
risk to these investments is partially mitigated by a positive
secular trend of over-the-top (OTT) subscriber growth and the
company's ample liquidity sources, including its undrawn $1.5
billion revolver."
Secular pressures in the film and TV industry remain challenging,
limiting substantial revenue and earnings growth beyond the
pandemic. While the pandemic was negative for studio revenue
derived from theatrical exhibitions, the related stay-at-home
orders have had a positive impact on studios with sizable content
libraries like Lions Gate. These studios have been able to sell
their ready-made television and motion picture content into a
market where demand is elevated due to increased at-home viewing,
resulting in temporary higher-margin content sales.
S&P said, "However, as these temporary social impacts from the
pandemic subside and studio production resumes in full force, we
believe the competitive landscape for premium film and TV content
will continue to be challenging. In our view, this competition will
be most visible in the company's premium linear and OTT network,
Starz, because other traditional networks, studios, and OTT
providers will continue to vie for market share and viewership.
Over the past year the number of major OTT providers has grown
substantially, and the variety of offerings has expanded to include
not only general entertainment streaming services, but niche
services focused on specific genres or consumer demographics.
Consequently, we believe these OTT platforms have caused
substantial fragmentation of and increased competition for viewers
and their consumption of media. We highlight that many of these
offerings are from diversified media conglomerates who have
considerable capital sources and are better able to fund
substantial investments in content for the sake of gaining market
share through subscriber growth. As a result, we believe Lions
Gate, like other smaller studios, must continue to spend
aggressively on content production and marketing in order to keep
pace in this dynamic market and differentiate Starz as a premium
linear and OTT viewing platform. As a result, we believe increased
production, marketing, and distribution costs will pressure Lions
Gate's EBITDA margins and hurt its cash flows over the next fiscal
year. It may also limit Lions Gate's long-term financial
flexibility if it can't achieve the consolidated revenue growth and
OTT Starz subscriber growth it's aiming for, causing the company to
continue its aggressive cash investments in content and worsen its
credit measures.
"Our negative outlook reflects the risk that Lions Gate's expected
accelerated content spending may not generate sufficient subscriber
growth in its Starz network, leading to lower-than-expected
revenues, weakened market positioning among linear and OTT content
providers, and prolonged free operating cash flow deficits beyond
fiscal 2022.
"We could lower the rating if revenue growth slows, OTT subscriber
growth at Starz stalls, and the company appears likely to maintain
substantial free cash flow deficits past fiscal year 2022. This
could occur if Lions Gate suffers from decreased demand for its
film and television series, poor returns on investment for its
content and marketing spending at Starz, unforeseen excess
operating costs, and imprudent cash management.
"We could revise the outlook back to stable if the company can grow
revenue and increase Starz subscribers while improving cash flow
trends through prudent content investing leading to sustained
positive free operating cash flow."
LS MOTORCARS: Case Summary & 9 Unsecured Creditors
--------------------------------------------------
Debtor: LS Motorcars, LLC
DBA Lonestar Motorcars
309 West Avenue B
Garland, TX 75040
Business Description: LS Motorcars, LLC's business consists of the
ownership and operation of automobile
sales lot.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 21-40441
Debtor's Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS, P.C.
12770 Coit Road
Suite 1100
Dallas, Texas 75251
Tel: (972) 991-5591
Fax: (972) 991-5788
E-mail: eric@ealpc.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Robert Morales, manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's nine unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/NZWNBIA/LS_Motorcars_LLC__txebke-21-40441__0001.0.pdf?mcid=tGE4TAMA
MACOM TECHNOLOGY: S&P Alters Outlook to Positive, Affirms 'B' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook to positive from stable and
affirmed its 'B' issuer credit rating on U.S.-based analog
semiconductor manufacturer MACOM Technology Solutions Holdings Inc.
S&P also placed the ratings on the existing secured credit
facilities on CreditWatch with positive implications.
S&P said, "The positive outlook reflects our expectation that MACOM
will maintain discipline around costs and product investments, with
EBITDA margins improving to the high-20% area. We expect revenues
to expand at least 10%, supported by increased demand in the
industrial and defense segment and product launches. In addition to
the announced debt reduction, we expect this to result in leverage
of just under 4x and FOCF to debt of about 20% in fiscal 2021."
MACOM Technology Solutions Holdings Inc. plans to reduce debt by
$100 million using cash on the balance sheet, and issue $400
million of convertible notes to partially prepay its term loan.
S&P said, "The announced debt reduction will contribute to faster
deleveraging in fiscal 2021 than we previously expected. The
outlook revision follows the announced $100 million debt reduction
and an upward revision in our EBITDA forecasts after strong
operating performance in the first fiscal quarter. We now expect
leverage to reduce to just under 4x by the end of the fiscal year
from about 4.2x at the time of the debt paydown, compared to our
previous expectation of about 5x. We also expect greater FOCF
generation of $145 million-$150 million, partly driven by about $10
million in annual cash interest savings under the new capital
structure. We thus expect FOCF to debt in the 20% area compared to
about 15% previously. This excludes a further cash saving on
mandatory term loan principal payments of about $7 million annually
due to the loan prepayment.
"Our adjusted debt, FOCF, and EBITDA figures include standard
adjustments for operating leases and share-based compensation. We
do not net accessible cash from our debt figures.
"We positively revised our base-case forecasts for fiscal 2021
based on steady operating performance. We expect MACOM to continue
to maintain quarterly revenues of about $150 million over fiscal
2021 with high contributions from the industrial and defense
segment from demand related to U.S. defense programs. This offsets
a near-term pause in 5G infrastructure spending in China and the
exclusion of Huawei-related revenues (up to about $20 million in
fiscal 2020). After the digestion of excess customer inventory, we
also expect data center revenues to pick up in the second half of
the fiscal year. In general, this should result in year-over-year
growth in the low-double-digit percent area for the full fiscal
year, an improvement over our previous forecast of 7%-9%. With
operating leverage gains and continued cost discipline, we also
expect EBITDA margins in the high-20% area in fiscal 2021 rather
than the mid-20% area.
"We expect MACOM to maintain sufficient liquidity. Despite
available cash being used to partially prepay the term loan, we
still expect sufficient liquidity from the company's FOCF
generation and pro forma cash and cash equivalents balance of about
$250 million as of Jan. 1, 2021. This should be sufficient over the
next 12 months even if MACOM does not renew its revolving credit
facility (RCF) maturing in November 2021.
"The positive outlook reflects our expectation that increased
revenue contributions from the industrial and defense and data
center segments will exceed near-term weakness in telecoms,
increasing revenues at least 10%. We also expect MACOM to maintain
discipline around costs and product investments, improving EBITDA
margins to the high-20% area. In addition to the announced debt
reduction, this should lower leverage to just under 4x in fiscal
2021 and FOCF to debt of about 20%."
S&P could raise its rating if:
-- MACOM maintains consistent revenue growth in at least the mid-
to high-single-digit percent area from continued successful product
launches and a supportive demand environment;
-- EBITDA margins improve to well above 25% or the company
continues to reduce debt such that leverage falls and stays below
4x; and
-- It maintains FOCF to debt above 10%.
S&P would revise the outlook back to stable if:
-- Prolonged weakness in the telecoms or data center markets,
perhaps from delayed 5G-related spending, leads to less than
mid-single-digit percent revenue growth or EBITDA margins below the
mid-20% area, so S&P expects leverage to remain above 4x or FOCF to
debt below 10% for a sustained period; or
-- MACOM adopts a more aggressive financial policy including large
debt-funded acquisitions or share repurchases.
MATRIX INTERNATIONAL: Gets Cash Collateral Access
-------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, has authorized Matrix International Textile,
Inc. to use cash collateral on an interim basis.
The Debtor is authorized to use cash collateral in which First
Credit Bank, the California Employment Development Department, the
U.S. Small Business Administration, and Orient Gate Enterprises,
Ltd. claim to have a security interest and lien, to pay for
ordinary and necessary operating and administrative expenses, in
conformity with a budget, with a 10% variance for any line item,
except for the "Secured Judgment Lien Creditor Settlement" payment
and any other monthly expenses that do not fluctuate.
The Debtor is also authorized to use cash collateral to pay
prepetition priority payroll.
The FCB, the EDD, the SBA and/or Orient Gate have an additional and
replacement lien valid, binding, enforceable, non-avoidable, and
automatically perfected, as of March 10, 2021, against the Debtor's
postpetition assets which, but for the commencement of the
bankruptcy case, would constitute prepetition collateral to the
extent that FCB, the EDD, the SBA and/or Orient Gate have a valid
and enforceable security interest and/or lien as of the Petition
Date and, solely to the extent of any diminution in the value, from
and after the Petition Date, resulting from any postpetition use of
cash collateral, or the use, sale, or lease of the prepetition
collateral.
A final hearing to consider the Debtor's continued use of cash
collateral is scheduled for April 20, 2021 at 11:30 a.m.
A copy of the Court order is available at https://bit.ly/3tTD9Zk
from PacerMonitor.com.
About Matrix International Textile, Inc.
Matrix International Textile, Inc. sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No.
21-11893) on March 10, 2021. In the petition signed by Kourosh
Neman, president, the Debtor disclosed up to $10 million in assets
and up to $50 million in liabilities.
Judge Deborah J. Saltzman oversees the case.
Raymond H. Aver, Esq. at the Law Offices of Raymond H. Aver A
Professional Corporation is the Debtor's counsel.
MBM SAND: Plan Confirmation Hearing Continued to April 27
---------------------------------------------------------
Debtor MBM Sand Company, LLC, filed with the U.S. Bankruptcy Court
for the Southern District of Texas, Houston Division, an emergency
motion to continue the hearing to consider confirmation of its
Plan. On March 23, 2021, Judge Eduardo V. Rodriguez ordered that:
* The hearing for confirmation of Debtor's Amended Combined
Disclosure Statement and Plan of Reorganization, as may be
modified, is continued to April 27, 2021, at 1:30 p.m.
* The Debtor may modify the proposed plan in regards to the
deadline for any sale and for commencing the auction process and
obtaining the approval of the modification from creditors.
* Any deadline for receiving ballots is four business days
prior to the continued confirmation hearing.
A full-text copy of the order dated March 23, 2021, is available at
https://bit.ly/3cshPnN from PacerMonitor.com at no charge.
Counsel for the Debtor:
Pendergraft & Simon, LLP
Leonard H. Simon
William P. Haddock
Texas Bar No. 00793875
S.D. Tex. Adm. No. 19637
2777 Allen Parkway, Suite 800
Houston, TX 77019
Tel. (713) 528-8555
Fax. (713) 868-1267
About MBM Sand Company
MBM Sand Company, LLC, which is primarily engaged sand mining
business, sought Chapter 11 protection (Bankr. S.D. Tex. Case No.
20-32883) on June 1, 2020. At the time of the filing, the Debtor
disclosed assets of $1 million to $10 million and estimated
liabilities of the same range. Judge Eduardo V. Rodriguez oversees
the case. The Debtor has tapped Pendergraft & Simon LLP, led by
Leonard Simon, Esq., as its legal counsel.
MED EQUITY: Case Summary & Unsecured Creditor
---------------------------------------------
Debtor: Med Equity, LLC
871 Linda Flora Drive
Los Angeles, CA 90049
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Central District of California
Case No.: 21-12447
Judge: Hon. Ernest M. Robles
Debtor's Counsel: Alan W. Forsley, Esq.
FREDMAN LIEBERMAN PEARL LLP
1875 Century Park East, Ste 2230
Los Angeles, CA 90067
Tel: (310) 284-7350
E-mail: alan.forsley@flpllp.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Joshua R. Pukini, managing member.
The Debtor listed Luna Construction Management LLC as its sole
unsecured creditor holding a claim of $988,787.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/62OYAEI/Med_Equity_LLC__cacbke-21-12447__0001.0.pdf?mcid=tGE4TAMA
MED PARENTCO: S&P Alters Outlook to Stable, Affirms 'B-' ICR
------------------------------------------------------------
S&P Global Ratings revised its outlook on Optical retailer MED
ParentCo L.P. (operating as MyEyeDr.) to stable from negative. At
the same time, S&P affirmed all its ratings, including its 'B-'
issuer credit rating on the company.
S&P said, "The stable outlook reflects our view that threats posed
by the pandemic to MyEyeDr.'s sales and liquidity have mostly
subsided. We expect MyEyeDr.'s credit metrics will gradually
recover over the next 12 months due to profit growth from its
accretive acquisitions and same-store sales increases.
"We expect MyEyeDr.'s performance recovery to continue into 2021
after being disrupted by the COVID-19 pandemic. The company was
able to return to positive same store sales for most months in the
second half of 2020, reflecting a strong demand for the company's
customer value proposition, including its ability to allow doctors
to improve the quality of patient care, serve existing patients at
any office using its technology platform, and accept all insurance.
In particular, the total exam count has gradually recovered to
pre-COVID-19 levels on a same store basis during the last quarter
of 2020, and we expect the company's top-line growth and same-store
contribution to continue in 2021 as its operations as a
nondiscretionary medical necessities provider are relatively
insulated from a recession. In addition, while we previously
anticipated material EBITDA margins declines in 2020, the company
reported higher earnings than expected as it offset some sales
deleveraging through improved expense efficiencies, including
labor.
"Although further lockdowns continue to be a key risk, we believe
MyEyeDr. will have sufficient liquidity in 2021. In 2020, the
company preserved liquidity by furloughing its staff, delaying
acquisitions, and extending payment terms. In our view, the company
has adequate liquidity through its undrawn revolver and cash on
hand and from its delayed draw term loan to cover cash flow
deficits incurred by the up-front costs required for acquisitions.
In addition, we project MyEyeDr. to have sufficient covenant
headroom after it received a waiver for its springing financial
covenant through the fourth quarter of 2021.
"After the pandemic, we expect the company will maintain elevated
leverage. We expect the company's pro forma debt to EBITDA to
remain in the high-single digits over the forecast period due to
the severe EBITDA loss in 2020. Our leverage calculation includes
the $120 million of preferred equity units held by existing
investors as akin to debt. While leverage should decline modestly
in the next 12 months, we anticipate the company will releverage
occasionally due to its debt-funded acquisition strategy. We think
management has done a good job integrating acquired operations, but
we recognize potential execution risks could lead to some
volatility in its operating performance as the timing of expected
cost savings from acquired units remains uncertain. Given the
acquisitive nature of the business, the large pipeline of
acquisitions and anticipated very high leverage, we continue to
apply a negative comparable ratings adjustment.
"The stable outlook reflects our view that MyEyeDr.'s credit
metrics will gradually recover over the next 12 months due to
profit growth from acquisitions and same-store sales increases
while keeping liquidity adequate."
S&P could lower the rating on MyEyeDr. if:
-- Operational performance meaningfully weakened compared with our
expectations and leverage remained high, leading us to believe
MyEyeDr.'s capital structure were unsustainable;
-- This could occur if the company generated consistently negative
cash flow absent acquisitions or if contributions from new
acquisitions, organic revenue, and customer retention rates
materially weakened due to office integration setbacks or increased
competitive pressures; or
-- S&P anticipated the company's liquidity would deteriorate such
that it would not be able to maintain sufficient headroom under its
financial covenant or liquidity sources declined meaningfully.
S&P could raise the rating on MyEyeDr.'s if:
-- The company shifted to a less aggressive financial policy,
leading S&P to believe it would sustain leverage below 7.5x on a
sustained basis; and
-- Free cash flow to debt were sustained above 5%.
MEDALLION MIDLAND: Fitch Hikes LongTerm IDR to 'B+', Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has upgraded Medallion Midland Acquisition, LLC's
Long-Term Issuer Default Rating (IDR) to 'B+' from 'B' and senior
secured term loan B rating to 'BB-'/'RR3' from 'B+'/'RR3'. Fitch
has also upgraded Medallion Gathering & Processing, LLC's IDR to
'B+' from 'B' (collectively with parent Medallion Midland
Acquisition, LLC, MEDMID). The Rating Outlooks have been revised to
Stable from Negative.
The Negative Outlook was set twelve months ago when Fitch foresaw
industry volume declines. The ensuing two quarters of volumes were
better than expected (though volumes did fall). Notwithstanding a
good EBITDA performance through mid-year, Fitch expected to see a
somewhat longer track record. By 4Q20, volumes showed
stabilization, and a review of many of the company's 27 long-term
customers resulted in Fitch forecasting 2021 volumes rising
meaningfully over 2020.
The upgrade partly reflects the expected rise in 2021 volumes. It
also reflects the flexibility of MEDMID's system. 2Q20's record
EBITDA quarter demonstrates these features, as the company was able
to deploy its network for storage services to take advantage of an
extreme contango.
A forecast for rising volumes and a solid 2020 fiscal performance
support the IDR upgrade to 'B+' from 'B.' Of concern are the
potential for a prolonged period of low oil prices, and the effect
this would have on volumes. In addition, a low oil price scenario
would result in prices below the Fitch stress case price deck
(e.g., 2022 WTI $32 per barrel).
KEY RATING DRIVERS
Leverage: MEDMID is one of several Permian gathering borrowers that
have steadily de-levered since formation. However, the pace of
de-leveraging prior to 2020 did not met Fitch's forecasts.
Currently, MEDMID steady de-leveraging record now exceeds Fitch's
leverage expectations. Twelve months prior, Fitch forecast 2020
leverage (total debt with equity content over adjusted EBITDA) at
6.6x, and actual leverage for 2020 was 5.8x (Fitch calculation). In
2021, Fitch forecasts leverage to significantly drop again to 5.3x.
Fitch notes that MEDMID, now forecast to post free cash flow (if a
dividend is not initiated), stipulated in its term loan B agreement
to provide excess cash flow sweeps, whereby, at certain leverage
levels, distributions to owners go in tandem with loan prepayments
(compared to scheduled repayments of 1% of face). MEDMID's
financial policy is to bring leverage down to approximately (in
Fitch's math) 4.0x.
2020 Forecast Exceedance: Twelve months ago, the forecast for the
2020 West Texas Intermediate (WTI) price (three months actual, nine
months forecast) was $38 per barrel, about where it ended up.
Realization of this forecast exhibited significant volatility. The
short-term contango in mid-April was one of the most pronounced
ever. MEDMID was able to benefit from this volatility by using its
storage assets for gathering, and send-out on export pipes (some of
which provide a batched service) instead. Accordingly, 2Q20 was
MEDMID's best quarter, while it was the second best volume
quarter.
The price path that emerged from the Covid/OPEC+ leadership
dynamics of 2020 is unlikely to be replicated at the next price
bust. Fitch believes a long-duration trough would be more harmful
to MEDMID. The Fitch price deck manifests Fitch's criterion to rate
through the cycle, yet Fitch's through- the-cycle approach does not
preclude the primacy of liquidity. If another price bust where to
more severely test MEDMID and peers, having adequate liquidity will
become even more important.
Diverse Customers, Steady Large Customers: MEDMID has 27 customers
that, as expect for that high a number, exhibit considerable
diversity in pace and phasing of growth. MEDMID's most important
customer, according to Fitch, crucially did not shut in any
production in 2020. The second most important customer did shut in
production, yet is expected in 2021 to be among the fastest-growing
large companies in the Permian basin. This is partly why 2020
volumes in the six counties in which MEDMID operates showed an
aggregate production drop over the quarters of the year
approximately three percentage points greater than MEDMID's.
Competitive Risks: MEDMID is located in and around a significant
amount of existing gathering infrastructure (including the flexible
service of trucks), which could provide a significant amount of
competition. The Gathering sub-sector has low barriers to entry,
relative to most other midstream sub-sectors. Offsetting the
competitive risks is an increase in acres dedicated by producer
counterparties to MEDMID operations. MEDMID's dedicated acreage has
increased by about two-thirds since October 2017. One of the
barriers to entry in the gathering sector are acreage dedications.
MEDMID has worked pro-actively to extend the term of its
foundational gathering service contracts. At inception of the term
loan B, MEDMID had a material amount of contracted acreage that
would have had expired dedications by now. Through diligent
partnering with customers, across MEDMID's entire contract
portfolio, no material acreage dedication is set to expire before
the end of 2025.
Supportive Sponsor: The ratings recognize that Medallion benefit
from a supportive sponsor in Global Infrastructure Partners (GIP),
which has, after MEDMID's creation by GIP, invested a significant
amount of equity into MEDMID Fitch anticipates GIP will continue to
support accretive growth projects.
Medallion has an ESG Relevance Score of '4' for Group Structure and
Financial Transparency as private-equity backed midstream entities
typically have less structural and financial disclosure
transparency than publicly traded issuers. This has a negative
impact on the credit profile, and is relevant to the rating in
conjunction with other factors
DERIVATION SUMMARY
MEDMID's closest peer is Oryx Midstream Holdings LLC (Oryx;
B/Positive). Oryx is a crude gathering and intra-basin
transportation service provider. MEDMID is a Midland sub-basin
company, and Oryx is a Delaware sub-basin company. The difference
in regions is not at this time a differentiating credit factor.
Oryx's producers have higher credit quality, with approximately 50%
of 2020 volumes from investment grade counterparties. Credit
quality is also not a differentiating credit factor, because
neither company has meaningful minimum volume commitments.
The difference in rating is due to leverage. Fitch expects Oryx's
leverage in 2021 to be in the 5.6x-5.9x range. itch forecasts
MEDMID's leverage to be 5.3x. The 2020 contrast is stronger, with
Oryx expected (at the release of final financial reporting) to have
posted around a 6.5x leverage, whereas MEDMID posted 5.8x.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Fitch price deck, e.g., 2022 West Texas Intermediate
US$50/Bbl.
-- A rise in delivery by Medallion's customers under dedication
contracts (2021 versus 2020).
-- 2021 capital expenditures and other growth investments in line
with 2020.
-- All-in interest rates consistent with past history, as driven
by a past long-term hedge.
-- For the Recovery Rating, Fitch's estimates found that the
company's going-concern (GC) value was greater than the
liquidation value. The GC multiple used was a 6x EBITDA
multiple, which is in the range of most multiples seen in
recent reorganizations in the energy sector. There have been a
limited number of bankruptcies within the midstream sector.
Two recent gathering and processing bankruptcies of companies
indicate an EBITDA multiple between 5.0x and 7.0x, by Fitch's
best estimates.
-- In its recent bankruptcy case study report, "Energy, Power and
Commodities Bankruptcies Enterprise Value and Creditor
Recoveries," published in April 2019, the median enterprise
valuation exit multiplies for 35 energy cases for which this
was available was 6.1x, with a wide range. Fitch assumed a
mid-cycle going concern EBITDA of approximately $101 million,
the same EBITDA as in the previous recovery rating exercise
(March 2020). Fitch calculated administrative claims to be 10%
(to arrive at $101 million), and fully drew down the revolving
credit facility ($50 million), which are the standard
assumptions.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Leverage (total debt with equity credit to operating EBITDA)
expected to be below 5.0x on a sustained basis;
-- Forecast of meaningfully rising EBITDA after consideration, as
part of the long-term forecast, of a small number of
expirations of contracts of various sorts;
-- A long-term plan to achieve a run-rate of $300 million per
annum EBITDA.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Actual or forecast leverage (total debt with equity credit to
operating EBITDA) at or above 6.0x;
-- FFO fixed-charge coverage sustained below 2.5x, or other
conditions that raise a concern for liquidity;
-- A significant increase in capital expenditures, compared to
budget (or, at inception of budget, compared to the run-rate),
that Fitch believes carries risk of failing to translate into
prompt adequate EBITDA growth. An investment in a new service
or frontier area that increased business risk would be two
examples;
-- The initiation of a distribution policy that Fitch forecasts
will have the effect of increasing leverage from current
expectations.
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 MEDMID's liquidity to remain
adequate. MEDMID's liquidity as of Dec. 31, 2020 consisted of $20
million availability under its $50 million super senior secured
revolving credit facility, which is effectively senior to its term
loan, and $6.4 million of cash. The credit facility matures in
October 2022. Fitch expects management will extend the maturity of
the facility sufficiently in advance of its expiration such that
liquidity remains adequate.
The term loan requires 1% per annum amortizations. Term loan
lenders enjoy the protection of a six-month debt service reserve
account (DSRA) feature. The instrument that fulfils the requirement
of a DSCA is a letter of credit (LOC). The LOC is written in favor
of the collateral agent. The obligation to repay the letter of
credit resides at an entity above Medallion in its ownership
chain.
The term loan requires MEDMID to maintain a debt service coverage
ratio (DSCR; as defined in the agreement) of above 1.1x. The DSCR
was well above this threshold throughout 2020. The revolving credit
facility contains restrictions on debt to capital, leverage, and
interest coverage ratios. As of Dec. 31, 2020, MEDMID was in
compliance with its financial covenant and Fitch expects it to
remain so throughout the forecast period.
SUMMARY OF FINANCIAL ADJUSTMENTS
Regarding unconsolidated affiliates, Fitch calculates midstream
energy companies' EBITDA by use of cash distributions from those
affiliates, rather than by use of equity in earnings. Non-cash
mark-to-market expenses of various types are added back to the base
profit figure to arrive at adjusted EBITDA.
ESG CONSIDERATIONS
Medallion has an ESG Relevance Score of '4' for Group Structure and
Financial Transparency as private-equity backed midstream entities
typically have less structural and financial disclosure
transparency than publicly traded issuers. This has 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'. 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.
MEHR GROUP: Case Summary & 2 Unsecured Creditors
------------------------------------------------
Debtor: Mehr Group of Companies Holding Inc.
DBA Optima Salon Suites
OptimaSalons.com
Optima Beauty Supply Suites
26021 Horseshoe Circle
Laguna Hills, CA 92653
Business Description: Mehr Group of Companies Holding Inc. owns
and operates beauty shops.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Central District of California
Case No.: 21-10779
Judge: Hon. Erithe A. Smith
Debtor's Counsel: Andy C. Warshaw, Esq.
FINANCIAL RELIEF LAW CENTER, APC
1200 Main St., Suite G
Irvine, CA 92614
Tel: 714-442-3319
Fax: 714-361-5380
E-mail: awarshaw@bwlawcenter.com
Total Assets: $1,692,000
Total Liabilities: $345,000
The petition was signed by Javad Mehrvijeh, CEO.
A copy of the petition containing, among other items, a list of the
Debtor's two unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/NKRONOY/Mehr_Group_of_Companies_Holding__cacbke-21-10779__0001.0.pdf?mcid=tGE4TAMA
MICROVISION INC: Yalon Farhi to Step Down as Board Member
---------------------------------------------------------
MicroVision, Inc. announced that Yalon Farhi will not stand for
re-election to its board of directors and will step down when his
current term expires at the Company's 2021 annual meeting of
shareholders.
Yalon Farhi joined the Board in September 2016 and is stepping down
to pursue personal business interests. Farhi, a Colonel in the
Israeli Defense Forces (reserves), has served as a motivational
lecturer and educator at Bnei-David Institutions, a pre-army and
post-army educational program in Israel and has served on the board
of directors of DarioHealth Corp., a provider of digital health
services and dynaCERT, Inc. a Canadian company that provides carbon
reduction technology for internal combustion engines.
"Yalon Farhi has been a valuable member of the board since he
joined in 2016," said Brian Turner, chairman and independent
director at MicroVision. "We have benefitted from Yalon's
expertise in international business and appreciate his insight and
contributions to the board and the Company. I have enjoyed working
with him and wish him well on his future pursuits."
"I am grateful to have been able to serve on the MicroVision board
and contribute to the evolution of the Company," said Yalon Farhi.
"I will miss working with my fellow board members and management
but believe the time is right to not stand for re-election and
retire from the Board when my term ends to enable me to focus on
personal business opportunities. I remain excited about the
Company's future."
About MicroVision
MicroVision -- http://www.microvision.com-- is a pioneering
company in MEMS based laser beam scanning technology that
integrates MEMS, lasers, optics, hardware, algorithms and machine
learning software into its proprietary technology to address
existing and emerging markets. The Company's integrated approach
uses its proprietary technology to provide solutions for automotive
lidar sensors, augmented reality micro-display engines, interactive
display modules and consumer lidar modules.
MicroVision reported a net loss of $13.63 million for the year
ended Dec. 31, 2020, compared to a net loss of $26.48 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$21.01 million in total assets, $11.99 million in total
liabilities, and $9.01 million in total shareholders' equity.
MIKEN OIL: Case Summary & 13 Unsecured Creditors
------------------------------------------------
Debtor: Miken Oil, Inc.
596 Gargill Road
Kilgore, TX 75662
Business Description: Miken Oil, Inc. operates as an oil
services company.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 21-60115
Debtor's Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS
12770 Coit Road
Suite 1100
Dallas, TX 75251
Tel: 972-991-5591
Fax: 972-991-5788
E-mail: eric@ealpc.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Mike Tate, president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 13 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/JN4MH5Q/Miken_Oil_Inc__txebke-21-60115__0001.0.pdf?mcid=tGE4TAMA
NATIONAL RIFLE: Bonds Ellis Updates on Judge Journey, 3 Others
--------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Bonds Ellis Eppich Schafer Jones LLP submitted an
amended verified statement to disclose an updated list of creditors
that it is representing in the Chapter 11 cases of National Rifle
Association of America and Sea Girt LLC.
As of March 24, 2021, the creditors and their disclosable economic
interests are:
Judge Journey
* Nature of Claim: Unsecured Claim; Membership Interest; and
Contingent D&O Liability
* Total Estimated Liability: General Unsecured Claim of $4,193.63
per Debtors' Amended Schedule E/F;
Unknown
Rocky Marshall
* Nature of Claim: Membership Interest; and Contingent D&O
Liability
* Total Estimated Liability: Unknown
Esther Schneider
* Nature of Claim: Membership Interest
* Total Estimated Liability: Unknown
Buz Mills
* Nature of Claim: Membership Interest; and Contingent D&O
Liability
* Total Estimated Liability: Unknown
Each of the parties listed in the foregoing chart has consented to
this multiple representation by Counsel in the above-captioned
matter.
Counsel reserves the right to amend this Verified Statement in
accordance with the requirements set forth in Bankruptcy Rule
2019.
Counsel for The Honorable Phillip Journey, et al. can be reached
at:
M. Jermaine Watson, Esq.
Joshua N. Eppich, Esq.
H. Brandon Jones, Esq.
Clay M. Taylor, Esq.
J. Robertson Clarke, Esq.
BONDS ELLIS EPPICH SCHAFER JONES LLP
420 Throckmorton Street, Suite 1000
Fort Worth, TX 76102
Telephone: (817) 405-6900
Facsimile: (817) 405-6902
E-mail: jermaine.watson@bondsellis.com
joshua@bondsellis.com
brandon@bondsellis.com
clay.taylor@bondsellis.com
robbie.clarke@bondsellis.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2PyYoR7
About the National Rifle Association
Founded in 1871 in New York State, the National Rifle Association
of America is a gun rights advocacy group. The NRA claims to be the
longest-standing civil rights organization and has more than five
million members.
Seeking to move its domicile and principal place of business to
Texas amid lawsuits in New York, National Rifle Association of
America sought Chapter 11 protection (Bankr. N.D. Tex. Case No.
21-30085) on Jan. 15, 2021. Affiliate Sea Girt LLC simultaneously
sought Chapter 11 protection (Case No. 21-30080).
The NRA was estimated to have assets and liabilities of $100
million to $500 million as of the bankruptcy filing.
Judge Harlin Dewayne Hale oversees the cases.
The Debtors tapped Neligan LLP and Garman Turner Gordon LLP as
their bankruptcy counsel, and Brewer, Attorneys & Counselors as
their special counsel.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors on Feb. 4, 2021. The committee is represented
by Norton Rose Fulbright US, LLP.
NEW FORTRESS: Fitch Assigns First-Time 'BB-' LongTerm IDR
---------------------------------------------------------
Fitch Ratings has assigned a first-time Long-Term Issuer Default
Rating of 'BB-' to New Fortress Energy Inc. (NFE), and a
'BB-'/'RR4' rating to NFE's existing senior secured debt and
proposed $1.5 billion senior secured notes. Fitch has reviewed the
preliminary notes documentation and financing plan. The assigned
ratings assume there will be no material variation from the
provided documentation and plan.
The Rating Outlook is Stable.
The rating considers that the soon-to-be-completed acquisition will
increase NFE's scope and scale while diversifying the
counterparties under long-term contracts. Management's aggressive
growth strategy has significant execution risk, with construction,
regulatory and jurisdictional issues. The new assets increase the
cash flow under long-term contracts. However, the pace of the
development and completion of the projects dictates the improvement
in business risk and cash flow stability.
KEY RATING DRIVERS
Improving Counterparty Exposure: NFE's ratings are limited by the
credit quality of the main off-takers under long-term contract. NFE
generates cashflow from selling Liquefied Natural Gas (LNG) to
customers in the power and industrial sectors. Additional cash flow
comes from power sales from NFE owned power plants, and the LNG
supplied to the plant. Fitch estimates that by 2022, around 55% of
NFE cash flow will originate from 45 customers with operations in
Brazil (18%; BB-/Negative), Jamaica (21%; B+/Stable), Nicaragua
(5%; B-/Negative) and Puerto Rico (5%).
Although Fitch does not rate the off-takers, the agency estimates
that its credit quality would either be linked to the sovereign,
for government related entities, or limited by the operating
environment in which they operate. Partially mitigating this risk
is Fitch's expectation that the balance of the cash flow will
originate from 20 customers operating in investment-grade countries
such as Mexico (BBB-/Stable) and the United States (AAA/Negative).
Growth Faces Execution Risk: NFE is aggressively moving to
diversify its business. Fitch believes the constrained energy
infrastructure in developing regions offers an opportunity for
NFE's growth prospects. However, NFE may face regulatory and
political issues as it enters developing markets. Additionally,
alternative energy sources such as renewables will remain an
emerging threat under the expectation of improved technology.
The pace of project diversification and deleveraging are two key
factors in lowering NFE's business risk. According to Fitch's
calculations, 2020 EBITDA was $11 million, significantly lower than
expected due to an above market LNG supply contract and lower
volumes in the tourism-based areas of Jamaica and Puerto Rico,
affected by the global pandemic, highlighting the business risk.
Fitch's ratings concerns include construction risk of the $500
million floating liquified natural gas (FLNG) facility. The
construction is with experienced contractors and largely
fixed-price under a fast track schedule with a modular design. The
process, in Fitch's opinion, lacks mitigants for delays in
completion and construction cost overruns typically found with a
complex construction project.
Increasing Geographic Diversification: Fitch believes that NFE will
benefit from its geographic diversification in the Brazilian and
North American Markets. In these markets, there is growing power
demand and an interest in cleaner gas-fired power generation. With
the Hygo acquisition, NFE establishes a platform for accelerated
development in Brazil.
The LNG plants under construction in Mexico and Nicaragua add
further diversification, building on the management strategy to
construct LNG terminals and establish long-term contracts with
local utilities while supplying LNG to power the thermal plants.
During the next four years, NFE's applicable Country Ceiling could
be that of Brazil at 'BB', at the lowest.
Offtake Volume and Commodity Price Exposure: Fitch believes the
contract structure provides some cash flow stability. The
take-or-pay component will increase to over 60% of NFE's LNG sales
volume under Fitch's rating case, up from about 40% before the
acquisition. The balance of cash flow is exposed to volumetric
risk, and subject to industrial and commercial customer needs
driven by tourism and regional economic demand.
NFE has commodity price exposure to LNG and natural gas (Henry Hub)
prices, as its contracts are predominately indexed to Henry Hub
plus a contractual spread. Unfavorable price movements in Henry Hub
or future contractual spread with NFE's customers will be
detrimental to NFE's cashflow. Offsetting some of the natural gas
price exposure is its LNG supply contracts, which are indexed to
Henry Hub. The successful completion of the FLNG facility,
providing NFE its own source of LNG, may mitigate some commodity
price exposure.
Supply Chain and Logistics Risk: NFE's business profile is exposed
to supply chain risk for the procurement of LNG and the logistics
of delivering the products to its customers. NFE is dependent upon
third-party LNG suppliers and third-party tankers to fulfil its
contracts obligation until NFE completes construction of its FLNG
facility.
With the Golar acquisition, NFE will own vessels to provide
services to its customers. In the near term, until Golar's existing
contracts mature and management migrates the vessels for company
use, operating margins could also be adversely affected by shifts
in tanker market dynamics and an unfavorable increase in charter
rates.
Path to Deleverage: Fitch expects NFE's leverage (total debt with
equity credit to operating EBITDA) to be below 6x by 2022,
supported by cash flow from LNG and power sales and the completion
of power plants in Mexico and Nicaragua.
Deleveraging through 2024 under the Fitch base case is dependent on
the integration of new projects, including the Hygo and GMLP
assets, new sales and power contracts supplied from existing
terminals and plants, and successful completion of the Brazilian
terminals and related infrastructure. Additionally, NFE's path of
deleveraging is also tied to LNG sales growth to NFE's
counterparties, purchasing volumes in excess of the minimum
take-or-pay requirements.
DERIVATION SUMMARY
NFE's rating reflects an aggressive growth strategy and execution
risk, counterparty risk, business risk associated with supply chain
and logistics, and commodities price exposure. Incorporated in the
rating is the deleveraging expected under the Fitch rating case as
the business ramps up, adding new projects and diversifying the
portfolio. The ratings are supported by the long-term contract
profile underpinned by take-or-pay and minimum volume commitment
components, which provide some cashflow stability.
NFE's operational and geographic focus is unique relative to
Fitch's midstream universe, but has a similar global focus as LNG
provider, Cheniere Energy Partners LP (Cheniere Energy;
BB/Positive). NFE constructs and operates liquefaction,
regasification and power infrastructure in Miami, Jamaica, Puerto
Rico, Mexico and Nicaragua, with an expansion into Brazil following
the close of the Hygo and Golar acquisition.
NFE's cash flow is mainly supported by long-term take-or-pay
contracts with utilities and power generators in its operating
regions through the sale of LNG and Power. NFE's contract tenor
compare favorably with Cheniere Energy, averaging about 15 years,
but has a lower portion of fixed take-or-pay revenues, less
geographic diversity and smaller scale than Cheniere Energy,
factors which drive the difference in ratings.
Cheniere Energy is a master limited partnership with an LNG
import-export facility and a Federal Energy Regulatory Commission
regulated interstate natural gas pipeline operating subsidiary,
Creole Trail Pipeline LP. Cheniere's consolidated operations are
supported by long-term, take-or-pay style contracts for import,
export and pipeline capacity, and has a highly leveraged operating
subsidiary, Sabine Pass Liquification, LLC (BBB-/Positive).
Fitch notes Sabine Pass' contracts are of much more substantial
duration than any of its midstream peers, in addition to its
primarily fee-based revenue. Sabine Pass' current contracts have
between 17 to 20 years remaining. The contract profile is with
investment-grade counterparties, in contrast to NFE with over 60%
of its counterparties based in non-investment countries.
Additionally, Cheniere Energy's contracts are supported by a
pass-through of fixed and variable costs of LNG to contractually
obligated off-takers unlike NFE, which is exposed to changes in
commodity price and offtake volumes.
The majority of NFE's subsidiaries do not have project level debt,
while Cheniere's operating subsidiary, Sabine Pass is highly
levered, and in a combined and severe downside case of payment
default by a large customer and weak merchant price forecast
realizations, cash could be trapped.
Consolidated leverage for NFE, as measured by total debt with
equity credit to operating EBITDA, under the Fitch rating case
improves to below 6.0x by 2022, supported by cash flow from LNG and
power sales with the completion power plants in Mexico and
Nicaragua. Consolidated leverage for Cheniere Partners is similar
with total debt with operating credit to operating EBITDA of 6.4x
in 2020, and under the Fitch rating case will approach 6.0x by
2023. However, Fitch believes Cheniere has a demonstrated track
record in management and completion of complex construction
projects and has less construction risk in competing Train 6 by the
second half 2022 (over 75% complete in December 2020) compared with
NFE's pipeline of terminals, power plants and FLNG projects.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Fitch base case price deck, e.g. Henry Hub natural gas prices
in 2021 at $2.75/mcf and $2.45/mcf thereafter;
-- Growth capital spending is funded with retained cash and debt;
-- Dividends in line with public guidance;
-- Execution of committed growth projects and an additional
growth project annually during the outer years of the
forecast;
-- Simplified capital structure with the project-level debt paid
down and on a consolidated basis, it migrates to the parent
level.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Geographic diversification that improves cashflow quality;
-- Leverage (total debt with equity credit to operating EBITDA)
below 5.0x on a sustained basis;
-- Improved credit quality of counterparties;
-- Long-term fixed price contracts for liquefaction services and
transportation services cost that help mitigate risks
associated with variable cost.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Leverage (total debt with equity credit to operating EBITDA)
above 6.5x on a sustained basis;
-- Heightening supply chain risk, including sustained inability
to re-contract tanker contracts or procure LNG products to
fulfil contract obligations;
-- Deterioration in counterparty credit quality;
-- Aggressive cash distribution inconsistent with the company's
long-term financing needs;
-- Long-term fundamentals over depressed international gas prices
putting additional pressure the company's cash flow
generation.
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, NEF had approximately $601
million of unrestricted cash. The company has approximately $28
million of restricted cash on its balance sheet. There are no
near-term maturities for parent level debt, as the $1.25 billion
senior secured notes outstanding mature in 2025.
The transaction will fund the $1.5 billion acquisition of Golar LNG
Partners LP, part of three acquisitions totaling $5.1 billion,
which includes Hygo Energy Transition Ltd., and 288 MW of PPAs to
be supplied from management's planned development of the terminal
and pipeline at the port of Suape. In addition to the operating 13
vessels, 1 terminal and the power plant, the acquisition includes
several assets under short- to medium-term development in Brazil
and the development of a FLNG. For the funding of the Golar
acquisition, NFE has obtained debt financing commitments consisting
of a $1.5 billion senior secured bridge facility and a $200 million
senior secured revolving facility. However, once the $1.5 billion
senior secured notes close, the bridge facility will remain
undrawn.
ESG CONSIDERATIONS
NFE has an ESG relevance score of '4' for Exposure to Environmental
Impacts due to potential operational challenges related to extreme
weather events in its operating regions. This is generally viewed
as having 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'. 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.
NEW FORTRESS: Moody's Rates Sr. Secured Notes 'B1', Outlook Stable
------------------------------------------------------------------
Moody's Investors Service affirmed the B1 corporate family rating,
B1-PD probability of default rating and B1 rating on senior secured
notes of New Fortress Energy Inc.'s (NFE) and rated its new senior
secured notes B1. The SGL-3 Speculative Grade Liquidity rating is
unchanged. The outlook on all ratings is stable.
In January 2021, NFE announced that it reached agreements to
acquire Hygo Energy Transition Ltd. and Golar LNG Partners LP that
will add three Brazilian terminals and power plants to its asset
portfolio, as well as an additional fleet of floating storage
vessels, LNG carriers and a 50% interest in a floating liquefied
natural gas vessel. NFE will use a combination of cash and equity
to fund these acquisitions. It also plans to use proceeds from the
new senior secured notes to refinance all existing debt of the
acquired companies. The closing of the transactions is subject to
applicable regulatory approvals and customary closing conditions.
NFE expects to close the transactions in the first half of 2021.
Assignments:
Issuer: New Fortress Energy Inc.
Senior Unsecured Notes, Assigned B1 (LGD3)
Affirmations:
Issuer: New Fortress Energy Inc.
Probability of Default Rating, Affirmed B1-PD
Corporate Family Rating, Affirmed B1
Senior Secured Notes, Affirmed B1 (LGD3)
Outlook Actions:
Issuer: New Fortress Energy Inc.
Outlook, Remains Stable
RATINGS RATIONALE
NFE's senior secured notes, including the new notes, are rated B1,
at the same level as the CFR. NFE plans to use the proceeds from
the new notes to refinance all existing debt at the acquired
companies following the completion of the acquisitions. As part of
the refinancing, NFE plans to put in place a $200 million senior
secured revolver facility ranking at par with its senior secured
notes.
NFE is a high growth business. The B1 CFR is underpinned by robust
growth in assets and earnings in 2020, backed by long term
contracts and proprietary downstream infrastructure appended to
power generation facilities in Jamaica and Puerto Rico. NFE plans
to launch significant new facilities in Mexico and Nicaragua in the
second quarter 2021 and will rapidly grow its earnings in 2021. The
announced acquisitions would also add some EBITDA in 2021, while
acquired growth projects in Brazil would provide NFE with
opportunities to maintain rapid earnings growth beyond 2021.
Moody's notes elevated integration and execution risks, given
increasing complexity of operations and the rapid rate of the
company's development. NFE continues to build a solid track record
of effective management of the expanding operations, while
executing on its new projects.
NFE's CFR also reflects Moody's views on the credit quality of its
customers. By adding new projects through investment and the
acquisitions, NFE is on the path to reduce its counterparty risk
with a few key utility customers and build a diversified earnings
base over the medium term. The rating assumes a relatively low
volatility in earnings, underpinned by a high level of contracted
revenues, including some take-or-pay and minimum volume
commitments, expected volume growth, as well as above market
contracted prices that support strong cash margins.
The B1 CFR reflects Moody's expectation that the company will
maintain a conservative balance of debt and equity funding while
executing on numerous growth opportunities, as demonstrated by the
use of equity to co-fund the announced acquisitions. NFE's
financial policy targets reasonable financial leverage of
debt/EBITDA of 3x.
Following the closing of the announced acquisitions, NFE will
assume debt of the acquired companies. Even as NFE will also add
earnings, the acquisitions will initially slow down the pace of the
deleveraging in 2021. On current assumptions, Moody's expects that
NFE's leverage will decline to below 3x in 2022.
NFE maintains adequate liquidity, reflected in its SGL-3 rating.
With all operating facilities generating substantial operating cash
margin, NFE's principal financing needs in 2021-22 will be driven
by its growth capital requirements. The rating assumes that NFE
will maintain a sizable cash balance in 2021, following the
acquisitions, and will continue to proactively raise additional
financing to support growth investment requirements. The adequate
liquidity position is supported by a new 2026 $200 million revolver
facility, and by substantial alternate liquidity sources, including
growing infrastructure power assets, as well as the demonstrated
ability to raise equity to support growth.
The stable outlook reflects Moody's expectation that NFE will
continue to execute on its growth projects in 2021 and will
complete and successfully integrate the announced acquisitions,
adding to its scale, as well as diversification of its EBITDA and
asset base. The stable outlook also anticipates that the company
will continue to manage its funding requirements proactively and
will maintain the deleveraging trend in 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The B1 CFR could be upgraded if the company successfully executes
on its growth plans in 2021, including a timely launch of its
operations in Mexico and Nicaragua, and will successfully close and
integrate the acquisitions. Also, the company will need to
demonstrate its ability to effectively manage expanding operations
and maintain the deleveraging trend, operating within the stated
financial policy with targeted debt/EBITDA below 3x.
The ratings may be downgraded if the deleveraging trend is reversed
as a result of a decline in operations or regulatory interference
with debt/EBITDA not trending below 5x or if liquidity position
weakens.
New Fortress Energy Inc. is a US-listed, high growth energy
infrastructure company with downstream LNG operations in Jamaica,
Puerto Rico, Mexico, Nicaragua and in the US.
The principal methodology used in these ratings was Midstream
Energy published in December 2018.
NEW FORTRESS: S&P Affirms 'B+' Ratings on Expected Growth
---------------------------------------------------------
S&P Global Ratings affirmed its 'B+' ratings on New Fortress Energy
Inc. (NFE). The outlook is stable.
S&P said, "Our stable outlook reflects our expectation that the
material growth in scale and geographic diversification will be
accompanied by deleverage starting in 2022. We expect adjusted
leverage above 7x in fiscal year 2021, improving to below 5x after
2022."
New Fortress recently announced acquisitions for $5.1 billion
enterprise value that will expand its scale and geographic
diversification. 2021 will be the first full year with a positive
EBITDA generation, and S&P Global Ratings needs to see that
expected cash flow growth materialize to improve its business score
assessment of NFE.
The company will raise $1.5 billion in debt to finance these
acquisitions, together with about $1.6 billion in equity.
Additionally, some of the debt sitting at acquired companies will
remain on the balance sheet.
S&P said, "We now expect New Fortress' leverage to decline below 5x
by 2022, a delay from our previous expectation of develeraging by
2021. New Fortress continues its aggressive growth strategy
financed with debt and equity. While we view as positive that the
company is financing also with equity and that its business is
growing, its debt on the balance sheet continues to grow as well."
The company is financing these transactions with $1.6 billion in
equity and $1.5 billion in new debt. Additionally, some debt at
acquired companies will remain as part of the consolidated group,
such as a $389 million debt that was part of Golar LNG Partners
L.P. (GMLP) and sale and leaseback agreements from GMLP that total
about $430 million, which we also include under our adjusted debt
metrics.
The company ended 2020 with about $1.3 billion in adjusted debt
(including lease liabilities) and EBITDA turned positive in the
second half of the year after the ramp-up of some assets. S&P now
expects that after these transactions, adjusted debt will be about
$4 billion by year-end 2021.
S&P said, "Our previous 'B+' rating and stable outlook considered
that New Fortress would achieve adjusted leverage below 4x by 2021,
as we expected full-year EBITDA generation of about $400 million
and no additional debt. Now, the deleverage story is being delayed,
but we believe that the material growth in scale and addition of
contracted cash flows helps to maintain its current 'B+' rating.
"With the recent acquisitions of Hygo Energy Transition (that
includes Brazil's largest thermal power plant and liquefied natural
gas, or LNG, terminals), Golar LNG Partners (contracted cash flows
from 13 vessels), and 288 megawatts of power purchase agreements in
Brazil, we expect EBITDA should grow from about $500 million-$600
million in fiscal 2021 (annualized EBITDA from the second half of
the year should be higher) to about $1 billion by 2022. In those
markets in which the company has exposure to spot prices (LNG
acquisition, no take-or-pay volume commitments, or exposure to
electricity prices), we are making some haircuts to the company's
EBITDA projections. The company has also made a final investment
decision on a "fast LNG" project to provide low-cost supply of LNG
for its growing customer base. This project will provide 1.4
million tons per annum capacity on a modular liquefaction facility
and is likely to start generating EBITDA by year-end 2022."
This EBITDA growth is because some of the assets acquired are still
in the development phase, and because some of the existing assets
(such as the power plants in Mexico and Nicaragua) will come online
by mid-2021. The company has some exposure to LNG prices (as not
100% of its needs are contracted) and exposure to power prices in
some markets (such as its power plant in Mexico that will have
exposure to electricity prices, apart from contracted LNG volumes
with CFE, the state-owned integrated power company).
S&P said, "Because of this, we now expect adjusted leverage to be
above 7x in fiscal year 2021 (could be below 5x once all
developments are operational and we annualize year end EBITDA),
delaying the deleverage story to 2022, in which we expect adjusted
leverage below 5x.
"Our view of New Fortress' business risk profile could improve once
the company establishes significant EBITDA growth and a record of
stable cash flow generation. Given the company operates in emerging
markets with noninvestment-grade counterparties, and that 2021
would be the first full year with positive EBITDA generation, our
business risk profile on NFE remains weak.
"While there is upside to the business risk assessment, which would
help to counterbalance the elevated leverage, it is our view that
the company needs to show a record of strong cash flow generation
and material contracted business to improve our assessment."
Additionally, the volatility or predictability of new projects and
cash flows will also dictate our decision to improve the business
score assessment.
S&P said, "Our stable outlook reflects our expectation that the
material growth in scale and geographic diversification will be
accompanied by deleverage starting in 2022. We expect adjusted
leverage above 7x in fiscal year 2021, improving to below 5x after
2022.
"We could lower the rating if we envision that additional debt to
finance expansions could result in adjusted leverage still above 5x
by 2022, and that EBITDA generation close to $1 billion does not
materialize by that year, which could improve our view of the
company's business profile offsetting the increase in leverage. A
downgrade could also occur if we see that assets under development
are materially delayed, or if the company finance new projects with
additional debt that are not contracted or add volatility to the
overall business.
"We could raise the rating if we believe NFE's financial profile
will stabilize by achieving consistent adjusted leverage below 5x
by 2022, and if the company generates a strong cash flow base that
would make us improve the business risk profile."
NORDAM GROUP: S&P Downgrades ICR to 'B-', Outlook Stable
--------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on The NORDAM
Group LLC to 'B-' from 'B'. At the same time, S&P lowered its
rating on the company's $250 million term loan B to 'B-' from 'B'
and revised the recovery rating to '4' from '3'.
The stable outlook reflects S&P's expectation that leverage will
increase significantly in 2022, but will improve thereafter as
earnings increase while cash flow remains close to break-even.
NORDAM's commercial aviation business was significantly impaired by
the COVID-19 pandemic. Through maintenance, repair, and overhaul
(MRO) work as well as its position as an original equipment
manufacturer (OEM), nearly half of NORDAM's revenues stem from
commercial aviation, which is among the hardest-hit industries from
the pandemic. The company's business jet segment, which makes up a
slightly smaller portion of the business, wasn't as negatively
impacted, but still experienced a reduction in revenues. S&P
expects the market to improve gradually over the next few years,
with MRO likely growing faster than OEM as maintenance work is
likely to pick up as air travel recovers, offset by a lag in new
aircraft production. However, the recovery will likely be slow and
we don't expect NORDAM's revenues to reach pre-pandemic levels
during our forecast period, which runs through 2023.
The company's EBITDA margins might be slow to recover. NORDAM cut
costs during the height of the pandemic, reducing headcount,
eliminating travel, and closing a small facility. However, these
initiatives were not sufficient to offset the substantial decrease
in volume, resulting in the company's negative EBITDA in 2020 if
not for CARES Act funds; though without the funding NORDAM likely
would have made additional cost reductions. S&P expects NORDAM to
start investing in the business again in 2021 in an attempt to
capture additional business as the market rebounds. As costs
increase in the near term while revenues take time to grow, EBITDA
margins are likely to remain weak. The company received additional
CARES Act funds in 2021 and S&P expects EBITDA, without that
benefit in 2022, to likely decline despite gradually improving
operations, before increasing in 2023.
NORDAM is unlikely to face problems with liquidity in the near
term. S&P said, "We expect free cash flow to be slightly negative
in 2020, positive in 2021, and close to break-even in 2022.
Although we expect modest cash flows over the next few years, the
company does not have any near-term maturities and we don't expect
access to the company's ABL revolver to be limited by covenants."
S&P said, "The stable outlook on NORDAM reflects our expectation
that debt to EBITDA will be artificially low in 2021 at around
5.5x-5.9x due to CARES Act funds, but will rise to well over 7x in
2022 before beginning to improve in 2023, while free cash flow
remains near break-even.
"We could lower our ratings on NORDAM if debt to EBITDA rises to a
point that we believe the capital structure is unsustainable, or
free cash flow is materially negative and we don't expect it to
improve, constraining liquidity." This could occur if:
-- The commercial aerospace market rebound is much slower than it
expects and NORDAM is unable to gain new business;
-- Cost-reduction efforts are not successful; or
-- The company experiences business delays or cost overruns,
resulting in significant cash outflows.
Although unlikely in the next 12 months, S&P could raise its
ratings on NORDAM if the company's EBITDA improves such that it
expects debt to EBITDA to remain below 5x and free cash flow is
solidly positive. This could occur if:
-- The commercial aviation market rebounds faster than S&P
expects;
-- EBITDA margins rise comfortably above 10% absent any external
funding; and
-- NORDAM is successful in managing costs as it invests to prepare
for the market rebound.
NORDSTROM INC: S&P Alters Outlook to Stable, Affirms 'BB+' ICR
--------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating to
Seattle-based retailer Nordstrom Inc.'s proposed senior unsecured
note offerings. The recovery rating is '3', indicating its
expectations for meaningful (50%-70%; 65% rounded estimate)
recovery in the event of default. S&P will withdraw its ratings on
the secured notes after they are repaid.
S&P said, "Concurrently, we revised our recovery rating on
Nordstrom's existing senior unsecured debt to '3' from '4'. The
'BB+' issue-level rating is unchanged.
"We affirmed all of our ratings, including the 'BB+' issuer credit
rating, and revised the outlook to stable from negative reflecting
our belief Nordstrom will demonstrate sequential recovery in
operating performance this year, generating more than $1 billion in
operating cash flow.
"The stable outlook reflects our expectation for improving
operating results and debt retirement later in the year to lead to
S&P Global Ratings-adjusted leverage improving to below 3x at
fiscal year end 2021.
"The stable outlook reflects our expectation for a sequential
recovery in operating performance and gross debt reduction this
year, resulting in S&P Global Ratings-adjusted leverage improving
to below 3x by fiscal year end 2021. Sales trends at Nordstrom
have sequentially improved since stores reopened last year and we
expect results to recover at an accelerating pace as restrictions
ease, consumer confidence builds, and the economy reopens. Further,
we believe the company's strategic initiatives to expand its
merchandise, broaden its customer reach, and enhance its digital
capabilities can serve as additional levers to recoup sales lost
during the pandemic. Net sales declined approximately 32% in 2020,
trailing peers in both the full-line and off-price segments, and
the challenging forces of the pandemic contributed to a net
operating loss of more than $1 billion. However, in response to
COVID-19-related pressures, the company implemented material cost
reductions, including approximately $300 million of annualized
permanent overhead savings. We believe this lower fixed-cost base
will support earnings generation at lower sales volumes. For 2021,
we estimate Nordstrom will generate adjusted EBITDA that approaches
80% of 2019 levels, achieved by strengthening sales volumes as the
recovery from COVID-19 progresses. We expect improving operating
cash flow generation, coupled with a sizable cash tax refund, will
position the company to repay its $500 million bond maturing in
October, facilitating its ability to reduce adjusted leverage to
below 3x this year.
"We believe Nordstrom will benefit from a recovery in apparel
spending as consumers refresh their wardrobes throughout the year
and easing restrictions support a return to in-person shopping. The
company's Market Strategy, which enables inventory visibility
across its digital and physical footprint, has shortened fulfilment
times, increased product availability, and increased customer
engagement. We expect the company will drive sales growth as these
capabilities are added to new markets this year. We also expect
Nordstrom will continue to leverage its leading omnichannel
capabilities to defend its market share. The company grew digital
sales approximately 16% year-over-year in fiscal 2020, representing
55% of total sales, up from 33% at fiscal year-end 2019.
"Still, our longer-term view is that changing consumer preferences
will be difficult to navigate. Declining mall traffic, shifting
category preferences, and online price transparency are persistent
risks that will continue to challenge Nordstrom's full-price
business. Nordstrom is expanding its product assortment by evolving
its business model to rely less on its traditional wholesale
channel and expanding the use of revenue sharing, drop shipping,
and concessions. We believe there are benefits to this approach,
including greater merchandise selection, less inventory risk, and
reduced working capital needs, but the company will need to
navigate execution issues and drive higher volumes to offset what
we believe to be lower margin models."
Strengthening Nordstrom Rack's value proposition will be key to
achieving management's long-term sales growth targets. Nordstrom
Rack, the company's off-price business, has traditionally focused
on serving fashion forward, brand-oriented customers. This customer
segment is narrowing as growth trends illustrate consumers are
embracing either deep discounts or luxury products, with the
middle-tier being squeezed. Sales at Nordstrom Rack declined 35%
last year, continuing a multi-year trend of underperforming
off-price peers. In response, the company is repositioning its
stores to target different customer segments based on market
demographics. To date, the company has reconfigured the merchandise
and layout of approximately 30% of its stores. S&P believes, if
executed successfully, this could enable Nordstrom Rack to compete
more effectively for price-oriented customers and expand its
addressable market. Still, the repositioning pushes the company
deeper into the discount space, which is highly competitive and
crowded with many sharp operators.
The company accelerated its digital strategies within Nordstrom
Rack last year, adding in-store fulfilment, ship to store, and
cross-banner returns. While we expect brick-and-mortar sales to
contribute the majority of off-price industry revenue due to the
difficulty of replicating the in-store treasure hunt experience,
Nordstrom Rack's omnichannel capabilities give it an edge to be a
digital leader in this segment. This still requires the company to
have the right product assortment at the right price to resonate
with customers and win back share that it has ceded in recent
years. Further, the contribution margin of the Rack's digital
business is inferior to in-store sales and the company will need to
drive scale and efficiencies to improve profitability.
Recovering business performance and anticipated debt reduction
later this year will strengthen credit metrics. Nordstrom launched
a refinancing transaction that seeks to redeem the 8.75% $600
million secured notes the company issued last year. The transaction
will unencumber the properties pledged to the secured notes, extend
Nordstrom's maturity profile, and reduce annual cash interest
expense. The two-part offering, consisting of a $250 million
three-year note and longer duration $425 million 10-year note, is
slightly leveraging as the make-whole premium of the secured notes
is rolled in to the new issuance. S&P said, "However, we forecast
improving cash generation during the year and expect Nordstrom will
repay its $500 million unsecured notes maturing later this year
with cash received from the company's 2020 income tax refund. We
believe the company's liability management efforts, in conjunction
with adjusted EBITDA recovering to between 75%-80% of 2019 levels
and year-end cash balances of roughly $1 billion will result in
adjusted leverage improving to below 3x by fiscal year-end. Based
on our updated forecast, which projects adjusted leverage remaining
below 3x, we are revising our financial risk profile assessment to
intermediate from significant. We view the 'BB+' rating as
accurately reflecting Nordstrom's stand-alone credit risk profile
and therefore are revising the comparable ratings analysis modifier
to neutral from positive."
S&P said, "The stable outlook reflects our expectation that
improving operating performance and debt reduction later this year
will result in adjusted leverage improving to below 3x by fiscal
year-end. We expect additional recovery in operating results in
2022 but at levels that remain well below pre-pandemic thresholds.
"We could lower the rating if we believe Nordstrom's competitive
position is deteriorating or we expect adjusted leverage to remain
above 3x."
This could occur if:
-- The projected recovery in operating performance is less robust
than S&P anticipates, possibly due to execution issues, resulting
in the company underperforming S&P's base-case forecast.
-- Full-price and off-price sales and margin performance trail
peers, indicating Nordstrom's relative competitive position is
deteriorating.
-- The company embraces a more aggressive financial policy.
-- S&P could upgrade Nordstrom if it views its competitive
standing more favorably and it strengthens and maintains credit
metrics that are consistent with an investment-grade rating.
This could occur if:
-- The company's operating initiatives gain traction, leading to
consistent market share gains and an accelerated timeline to
returning to 2019 profitability levels; and
-- Demonstrated commitment to sustaining leverage in the mid-2x
area and free operating cash flow (FOCF) to debt around 20%.
NOVABAY PHARMACEUTICALS: Posts $11 Million Net Loss in 2020
-----------------------------------------------------------
Novabay Pharmaceuticals, Inc. filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing a net
loss attributable to common stockholders of $11.04 million on $9.93
million of net total sales for the year ended Dec. 31, 2020,
compared to a net loss attributable to common stockholders of
$10.48 million on $6.60 million of net total sales for the year
ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $15.24 million in total
assets, $2.92 million in total liabilities, and $12.32 million in
total stockholders' equity.
Novabay said, "We have historically incurred net losses, and we may
never achieve or maintain sustained profitability. In addition, at
this time, we expect to incur substantial marketing and sales
expenses as we continue efforts to increase sales of our Avenova
and CelleRx products, and our results of operations may fluctuate
significantly."
"We will need to generate significant revenues to achieve and
maintain profitability. Even with current Avenova sales, if we
cannot successfully market and sell our Avenova or CelleRx
products, we may not be able to generate sufficient revenues to
achieve or maintain profitability. Our failure to achieve and
subsequently maintain profitability could have a material adverse
impact on the market price of our common stock."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1389545/000143774921007158/nby20201231_10k.htm
About Novabay
Headquartered in Emeryville, California, NovaBay Pharmaceuticals,
Inc. -- http://www.novabay.com-- is a biopharmaceutical company
focusing on commercializing and developing its non-antibiotic
anti-infective products to address the unmet therapeutic needs of
the global, topical anti-infective market with its two distinct
product categories: the NEUTROX family of products and the
AGANOCIDE compounds. The Neutrox family of products includes
AVENOVA for the eye care market, CELLERX for the aesthetic
dermatology market, and NEUTROPHASE for wound care market.
OAKSHIRE MUSHROOM: Gets Cash Collateral Access Thru April 24
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Pennsylvania
has entered a Tenth Bridge Order extending the terms of the Third
Final Order authorizing Oakshire Mushroom Farm, Inc. and Oakshire
Mushroom Sales, LLC to use cash collateral on an interim basis
through April 24, 2021.
The Debtors said they are unable continue the operation of their
business or utilize Cash Collateral pending the "Effective Date" of
their Second Amended Joint Chapter 11 Plan dated March 17, 2021.
The Debtors are authorized to use the Cash Collateral to pay the
expenses incurred by the Debtors in the ordinary course of their
business and in connection with the chapter 11 cases on an extended
basis during the Tenth Bridge Period in compliance with and subject
to the terms of the Third Final Cash Collateral Order and the
Budget, as well as to pay any previously approved, but unpaid,
ordinary course expenses in accordance with the terms of this
Court's prior Cash Collateral Orders and approved budgets.
A further telephonic hearing, if needed, on the matter is scheduled
for April 21 at 11 a.m.
A copy of the order and the Debtor's budget through the week of
April 24 is available at https://bit.ly/3tZhcIa from
PacerMonitor.com.
About Oakshire Mushroom Farm, Inc.
Oakshire -- http://www.oakshire.com/-- has been a grower of
specialty mushrooms since 1985. Its offices are located in Kennett
Square, Pa.
Oakshire Mushroom Farm, Inc., and its affiliate Oakshire Mushroom
Sales, LLC, sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Pa. Lead Case No. 18-18446) on Dec. 28, 2018. At
the time of filing, each Debtor estimated assets of less than $1
million and liabilities of $1 million to $10 million.
The Debtors tapped Smith Kane Holman, LLC, as legal counsel.
Judge Jean K. FitzSimon, who oversees the cases, entered a
Memorandum Order dated March 17, 2021, confirming the Debtors'
Chapter 11 Plan.
OER SERVICES: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: OER Services, LLC
1650 W Carmen Drive
Elk Grove Village, IL 60007
Business Description: OER Services, LLC is a small business
certified operator whose business caters to
the rental, leasing, and sale of
construction equipment in connection with
municipal, state and local government
agencies' construction projects.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 21-03981
Judge: Hon. Janet S. Baer
Debtor's Counsel: Steve Jakubowski, Esq.
Parker E. Lawton, Esq.
ROBBINS, SALOMON & PATT, LTD.
180 N. LaSalle St., Ste. 3300
Chicago, IL 60601
Tel: (312) 456-0191
E-mail: sjakubowski@rsplaw.com
plawton@rsplaw.com
Debtor's
Chief
Restructuring
Officer: Gregory A. Paulus
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Ali R. Zaiml, 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/YYEDOMQ/OER_Services_LLC__ilnbke-21-03981__0001.0.pdf?mcid=tGE4TAMA
OLMA-XXI INC: Unsecured Creditors Will Recover 15% Under Plan
-------------------------------------------------------------
Olma-XXI, Inc., submitted a Second Revised Amended Disclosure
Statement.
The assets of the Debtor are the security deposit with the
landlord, Saul Realty LLC., in the amount of $30,000; grocery
products with an estimated value of $30,000; office furniture and
office equipment with an estimated value of $1,000; automobile
Chevrolet E3500, 2008 with an estimated value of $ 1,500; Forklift
with an estimated value $3,000; machinery, fixtures and equipment
with an estimated value of $7,000; accounts receivable with an
estimated value of $80,000, as per the current accountant's
valuation. The current monetary value of the business was
determined by adding the value of the security deposit held by the
Debtor's landlord ($30,000), the estimated value of groceries and
other resale food items in the possession of the Debtor at the time
of the filing of the instant plan(S30,000), the approximate current
value of furniture and office equipment ($ 1,000), the Kelly Blue
Book value of the Chevrolet E3500, 2008 (1,500), a forklift with an
estimated value of $3,000, machinery, fixtures and equipment with
an estimated value of $7,000, accounts receivable with an estimated
value of $80,000, and the balance of the Debtor in Possession
Account, in the amount of $32,451, as of November 30th, 2020. Thus,
the total business value arrived at having adding up the values of
the foregoing business assets is $194,951.
The Plan treats unsecured claims as follows:
* Class 3 - Unsecured, non-priority claim of Lina Eliacheva
totaling $100,000. This claim will be paid at 15% dividend
($15,000) in 60 monthly installment payments in the amount of $250,
commencing 12 months after the effective date of the plan. Class 3
is impaired.
* Class 3 - Unsecured, non-priority claim of Olga Lina Eliacheva
totaling $60,000. This claim will be paid at 15% dividend ($9,000)
in 60 monthly installment payments in the amount of $150,
commencing 12 months after the effective date of the plan. Class 3
is impaired.
* Class 4 - Unsecured, non-priority claim of American Express
National Bank totaling $38,480.64. This claim will be paid at 15%
dividend ($5,772.10) in 60 monthly installment payments in the
amount of $96.20, commencing 12 months after the effective date of
the plan. Class 4 is impaired.
* Class 4 - Unsecured, non-priority claim of Gleb Lipkin
totaling $91,000. This claim will be paid at 15% dividend ($13,650)
in 60 monthly installment payments in the amount of $227.50,
commencing 12 months after the effective date of the plan. Class 4
is impaired.
* Class 4 - Unsecured, non-priority claim of Nataliya
Cherneykina totaling $150,000. This claim will be paid at 15%
dividend ($22,500) in 60 monthly installment payments in the amount
of $375, commencing 12 months after the effective date of the plan.
Class 4 is impaired.
* Class 4 - Unsecured, non-priority claim of Printing for "U"
totaling $100,000. This claim will be paid at 15% dividend
($15,000) in 60 monthly installment payments in the amount of $250,
commencing 12 months after the effective date of the plan. Class 4
is impaired.
* Class 4 - Unsecured, non-priority claim of Arkadi Katselnik
totaling $500,000. The claim, to the extend and in the final
allowed amount, will be paid at 15% dividend ($75,000) in 60
monthly installment payments in the amount of $1,250, commencing 12
months after the effective date of the plan. Class 4 is impaired.
The Plan will be financed from continuing, reorganized business
operations of the debtor, from the timely collections of
outstanding receivables, from funds accumulated in the debtor in
possession account, as well as the contribution of Valeriy
Eliachov, from personal funds, in the total amount equivalent to
the business value as of the time of the plan filing, in monthly
payments, commencing on the Effective date of the Plan.
Attorney for the Debtor:
ALLA KACHAN, ESQ.
3099 Coney Island Ave, 3rd Floor
Brooklyn, NY 11235
Tel: (718) 513-3145
Fax: (347) 342-315
E-mail: alla@kachanlaw.com
A copy of the Disclosure Statement is available at
https://bit.ly/2OWqNRv from PacerMonitor.com.
About Olma XXI Inc.
Located in Brooklyn, New York, Olma-XXI, Inc., distributes ethnic
and specialty foods. Olma-XXI, Inc., is a major producer of fine
caviar, meat, fish, and other quality foods.
Olma-XXI filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No.
19-44731) on Aug. 1, 2019. In the petition signed by Valeri
Eliachov, president, the Debtor disclosed $246,471 in assets and
$1,965,500 in liabilities. The Hon. Nancy Hershey Lord oversees
the case. Alla Kachan, Esq., at the Law Offices of Alla Kachan,
P.C., serves as bankruptcy counsel to the Debtor.
OMEGA SPORTS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Omega Sports, Inc.
950 Revolution Mill, Suite 1
Greensboro, NC 27405
Business Description: Omega Sports, Inc. --
https://www.omegasports.com -- manufactures
and sells sporting goods, including apparel,
footwear, and gear & accessories.
Chapter 11 Petition Date: March 25, 2021
Court: United States Bankruptcy Court
Western District of North Carolina
Case No.: 21-30160
Judge: Hon. Laura T. Beyer
Debtor's Counsel: Andrew T. Houston, Esq.
MOON WRIGHT & HOUSTON, PLLC
121 West Trade Street
Suite 1950
Charlotte, NC 28202
Tel: 704-944-6560
Fax: 704-944-0380
E-mail: ahouston@mwhattorneys.com
Debtor's
Financial
Advisor: THE FINLEY GROUP
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Ronald Craig Carlock, Jr., owner/CEO.
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/KQ4YRQY/Omega_Sports_Inc__ncwbke-21-30160__0001.0.pdf?mcid=tGE4TAMA
OPTIMUMBANK HOLDINGS: Incurs $782K Net Loss in 2020
---------------------------------------------------
Optimum Bank Holdings, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$782,000 on $6.71 million of total interest income for the year
ended Dec. 31, 2020, compared to a net loss of $1.10 million on
$5.17 million of total interest income for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $235.11 million in total
assets, $217.28 million in total liabilities, and $17.83 million in
total stockholders' equity.
The Bank's primary sources of cash during the year ended Dec. 31,
2020, were payments of principal and interest on loans made by the
Bank to third parties, payments of principal and interest on debt
securities held by the Bank and deposits made by third parties at
the Bank. Cash was used primarily to fund loans and repay Federal
Home Loan Bank of Atlanta advances. The Bank adjusts rates on its
deposits to attract or retain deposits as needed. The Bank
primarily obtains deposits from its market area.
The Bank may borrow funds from other financial institutions. The
Bank is a member of the FHLB, which allows it to borrow funds under
a pre-arranged line of credit. As of Dec. 31, 2020, the Bank had
$23 million in borrowings outstanding from the FHLB of Atlanta to
facilitate lending and manage its asset and liability structure,
and remaining credit availability with the FHLB of $29.1 million.
At Dec. 31, 2020, the Company also had lines of credit amounting to
$9.5 million with four correspondent banks to purchase federal
funds. The Company also has a line of credit with the Federal
Reserve Bank under which the Company may draw up to $223,000. The
line is secured by $230,000 in securities.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1288855/000149315221006774/form10-k.htm
About OptimumBank
OptimumBank Holdings, Inc. is a Florida corporation formed in 2004
as a bank holding company for OptimumBank. The Company's only
business is the ownership and operation of the Bank. The Bank is a
Florida state chartered bank established in 2000, with deposits
insured by the Federal Deposit Insurance Corporation. The Bank
offers a variety of community banking services to individual and
corporate customers through its three banking offices located in
Broward County, Florida.
ORGANON & CO: S&P Assigns 'BB Long-Term Issuer Rating
-----------------------------------------------------
S&P Global Ratings assigned a 'BB' long-term issuer-level rating to
global pharmaceutical company Organon & Co. with a stable outlook.
S&P also assigned its 'BB' issue-level and '3' recovery ratings to
Organon's proposed senior secured debt.
S&P's stable outlook reflects its expectation for significant
growth in Nexplanon and stabilization in the established brands
segment, resulting in adjusted debt to EBITDA generally remaining
in the 3x-4x range including expected business development.
Organon & Co. plans to separate from Merck & Co. Inc. in mid-2021,
establishing a stand-alone portfolio of women's health, biosimilar,
and established brand products.
In advance of the separation, Organon is proposing a $2 billion
dollar-denominated senior secured term loan B, a $1 billion
euro-denominated senior secured term loan B, and a $2 billion term
loan A, and the company intends to offer $3 billion of senior
secured notes and $1.5 billion of senior unsecured notes.
Organon's key challenges over the next several years will be to
grow sales of Nexplanon, its women's health franchise, and
biosimilars; manage its mature branded generics portfolio; and
build a new product pipeline through business development.
Organon's business is highly cash generative in the near term,
given expected growth in its women's health business from renewed
promotion efforts post-spinoff, and from premium branded pricing in
its established brands portfolio. S&P thinks the established brands
segment will provide years of solid cash flows, as growing emerging
markets frequently regard branded products as safer and more
effective than alternatives.
However, the majority of Organon's products are off patent, and S&P
expects sales to eventually decline over time as lower-cost
generics penetrate these markets. The company's women's health and
biosimilar segments provide a focused platform to build a
development pipeline of future products to offset the projected
eventual decline. However, S&P thinks the primary credit risk is
that its branded generics portfolio, marketed primarily in
less-mature pharmaceutical markets, declines faster than expected,
increasing the impetus for larger acquisitions as a source of
growth.
Organon's branded product diversification is a key strength.
Organon's product portfolio of patented and off-patent drugs is
diverse and contains several well-known brands, which should offer
significant protection from competition. Its largest product is the
contraceptive Nexplanon, which is patent protected through 2027 and
is expected to represent a growing proportion of the overall
business, but still only represents about 15% of revenue in 2021.
The top-three products represent about 30% of revenue, which S&P
views as strong. Organon has 64 brands overall, distributed in
several major therapeutic categories, and this breadth and brand
recognition dampens the impact of competition to a single product
in a single market.
Organon's solid global scale and geographic diversification limits
the risk of competition in individual markets. With many of its
key established brands products off patent and subject to generic
competition, Organon's geographic diversification and strong brand
recognition in many of its markets limits the impact from
competition to the overall business.
S&P said, "Although about 40% of Organon's revenue comes from two
markets, the United States (about 25% of revenue) and China (about
12% of revenue), we think these markets are likely sources of
growth in the next two to three years. In the U.S., Organon has
relatively durable revenue prospects from patent-protected
Nexplanon, the growing adoption of biosimilars, and no near-term
loss of exclusivity. In China, we think the growth in the overall
retail pharmaceutical market and Organon's investment in marketing
its brands should result in a growing portfolio, although the
government could take even more aggressive drug price control
measures that could affect individual products." The growth in the
U.S. and China will likely more than offset revenue declines in the
third-largest market, Japan, where brands remain important, but
generic penetration is increasing due to healthcare cost
pressures.
No other individual country represents more than 5% of total
revenues. Organon competes in a diverse set of drug markets
including Europe, North America, Australia, and Brazil, in which
Organon benefits from its strong brand recognition, such as from
Zetia, Singulair, and Zocor, despite the availability of generics.
Each country in these markets has a unique healthcare system, and
therefore we do not expect drastic, concurrent competitive changes.
Instead, we think established brands revenue will gradually decline
in the low-single-digit percents annually from fragmented pricing
pressure and generic competition, providing Organon time to grow
its women's health products and biosimilars to partly offset
revenue declines in established brands.
The sustainability of Organon's business relies on acquiring and
developing new products, and its current pipeline is relatively
limited. S&P said, "We expect its established products to
gradually decline and top product Nexplanon to lose exclusivity in
2027; therefore, the company must build a pipeline of multiple
products to sustain future growth. We expect off-patent
pharmaceutical products to come under increasing pricing pressure
that will eventually result in revenue declines. At the same time,
the company has an unproven record of successfully acquiring
attractive assets and launching new products. We expect the company
to both acquire products outright and partner to advance its
pipeline, which is inherently risky because of hurdles in clinical
development and marketing."
S&P said, "We believe Organon's cost structure is largely fixed,
especially in its initial period of investment after launch. The
thesis for the creation of Organon is that increased focus and
renewed marketing will result in growth (or slower declines in some
products). However, if revenue growth lags expectations, the
company will likely still need to aggressively invest in expanding
its marketing infrastructure as well as its product pipeline to
balance expectations of equity holders with creditors. We think the
company has some flexibility if constraints from COVID-19 extend
longer than expected, but additional unexpected business weakness
would likely significantly pressure margins." In the first two to
three years of existence, Organon will have a greater amount of
one-time cash expenses, compounding the financial constraints if
the business underperforms.
S&P said, "Despite expected adjusted debt to EBITDA of about 4x in
2021, we expect Organon to deleverage to about 3.7x in 2022 from
EBITDA growth and generally maintain leverage in the mid-3x-4x
range. We believe 2021 will be a trough year as declines in
certain established brands including Zetia are not fully offset by
growth in women's health and biosimilars. In 2022, we think the
business will stabilize and grow in the low-single-digit percents
while slightly expanding EBITDA margins as the company leverages
its expanded marketing efforts and benefits from greater Nexplanon
sales, which is likely a higher-margin product. We expect the
company to generally maintain adjusted debt to EBITDA in the 3x-4x
range, using primarily excess cash flow (estimated about $900
million after dividends and debt amortization in 2022) to fund
business development.
"Our stable outlook reflects our expectation for adjusted debt to
EBITDA to remain in the 3x-4x range over the next 12 months, based
on stabilization of established brands and growth of Nexplanon and
biosimilars supporting a modest level of EBITDA growth and about
$700 million-$900 million of annual discretionary cash flow (after
dividends and excluding transaction-related expenses). We expect
Organon to use discretionary cash flow to fund business development
rather than voluntarily repay debt.
"We could consider a lower rating if we expect debt to EBITDA to
remain in the 4x-5x range over the next 12-18 months. This scenario
could occur from continued revenue declines in established products
and slower-than-expected growth in Nexplanon. Alternatively, we
could consider a lower rating if Organon makes an acquisition of
more than $1.25 billion, assuming the business is generally
performing as expected.
"A higher rating on Organon over the next year is unlikely given
the expected cash uses from the completion of the spinoff. We could
consider a higher rating if adjusted debt to EBITDA decreases to
the 2x-3x range and the company publicly commits to maintaining
leverage below 3x."
PACIFIC DRILLING: To Merge With Noble After Bankruptcy
------------------------------------------------------
Noble Corporation and Pacific Drilling Company LLC announced March
25, 2021, that they have entered into a definitive merger agreement
under which Noble will acquire Pacific Drilling in an all-stock
transaction. The definitive merger agreement was unanimously
approved by each company's Board of Directors. The transaction has
also been approved by a majority of Pacific Drilling's equity
holders, and no shareholder vote is required for Noble to close the
transaction. As part of the transaction, Pacific Drilling's equity
holders will receive 16.6 million shares of Noble, or approximately
24.9% of the outstanding shares of Noble at closing. Noble expects
to realize annual pre-tax cost synergies of at least $30 million,
and additionally, will move to dispose of the Pacific Bora and
Pacific Mistral expeditiously. The transaction is subject to
customary closing conditions and is expected to be completed in
April 2021.
Noble's President and Chief Executive Officer, Robert Eifler, said,
"The acquisition of Pacific Drilling will enhance our position in
the ultra-deepwater market through the addition of its
technologically-advanced ultra-deepwater drillships, which are
highly complementary to Noble's existing fleet. By bringing these
modern drillships into the Noble fleet, we will be able to better
serve the needs of our customers globally and to participate in a
wider range of drillship tender activity. The combination brings
together two companies who share a common culture prioritizing
safety and operational excellence. Additionally, the acquisition
expands and further solidifies our relationship with certain key
customers, facilitates re-entry into both the West African and
Mexican regions, and strengthens our presence in the US Gulf of
Mexico."
Mr. Eifler continued, "This acquisition is a positive strategic
step for Noble, and we will work expeditiously to close the
transaction and integrate the two companies. We remain committed to
generating shareholder value through safety and operational
excellence, capital discipline and customer satisfaction. As the
offshore drilling landscape evolves, we look forward to maintaining
our leadership role as we continue to grow in concert with the
needs of our customers."
Bernie Wolford, Pacific Drilling's Chief Executive Officer, stated,
"Bringing together the Pacific Drilling and Noble fleets creates a
stronger and more stable combined company with the scale to provide
solutions for our clients on a global basis. This combination will
advance the ongoing recovery in the industry and will allow Pacific
Drilling equity holders to fully participate in that recovery. I
would like to personally thank the entire Pacific Drilling team for
their unwavering commitment to delivering safe, efficient and
reliable services to our customers, and we look forward to working
with Noble to successfully integrate the two companies."
Significant Value Creation Potential for Noble Shareholders and
Pacific Drilling Equity Holders:
* Pacific Drilling's high specification UDW drillships are
complementary to Noble's high specification fleet: The combined
fleet will be one of the youngest and most technologically advanced
fleets in the industry. The complementary nature of both drillship
fleets will permit sharing of expertise, capital spares and
equipment across the rigs. For example, both companies utilize the
same original equipment manufacturers for engines, thrusters, well
control and drilling equipment.
* Shared culture and commitment to operational excellence: Noble
and Pacific Drilling both operate with a commitment to
best-in-class safety performance and environmental stewardship. A
key component of both companies' value proposition also includes
delivering the most efficient and reliable drilling performance to
the customer.
* Expansion of Noble's customer relationships and geographic
footprint: The acquisition facilitates Noble's reentry into the
growing West Africa and Mexico regions, and broadens its customer
relationships. Given Noble's fully contracted drillship fleet,
these additional assets will also allow participation in key
drillship tendering activity.
* Meaningful cost synergies: Noble expects to realize annual
pre-tax cost synergies of at least $30 million, with the full
amount of cost synergies being realized by the end of 2021.
* Strengthens balance sheet: Pacific Drilling will be acquired
on a debt free basis and with approximately $30 million of
anticipated cash and cash equivalents, after adjusting for certain
anticipated transaction related expenses. Noble remains committed
to maintaining a conservative balance sheet.
Noble - Customer Focused, Global Provider of High-Specification
RigsPro forma for the acquisition, Noble will own and operate a
high specification fleet of 24 rigs, with 11 drillships, 1
semisubmersible, and 12 jackups. Additionally, Noble will have pro
forma backlog of approximately $1.7 billion, split across a diverse
set of customers and regions of operation. Noble remains focused on
serving the needs of its customers and delivering best-in-class
operational excellence that is consistent across all geographies.
No changes to Noble's Board of Directors or executive management
team are anticipated as a result of the acquisition. Noble will
continue to have its principal executive offices in Sugar Land,
Texas.
Advisors
Ducera Partners LLC and DNB Markets, a part of DNB Bank ASA, are
acting as financial advisors, and Kirkland & Ellis LLP is acting as
legal advisor to Noble.
Houlihan Lokey Capital, Inc. is acting as financial advisor and
Akin Gump Strauss Hauer & Feld LLP is acting as legal advisor to
Pacific Drilling.
About Noble Corporation
Noble Corp. is a leading offshore drilling contractor for the oil
and gas industry. The Company owns and operates one of the most
modern, versatile and technically advanced fleets in the offshore
drilling industry. Noble performs, through its subsidiaries,
contract drilling services with a fleet of 19 offshore drilling
units, consisting of 7 drillships and semisubmersibles and 12
jackups, focused largely on ultra-deepwater and high-specification
jackup drilling opportunities in both established and emerging
regions worldwide. Noble is a public limited company registered in
England and Wales with company number 08354954 and registered
office at 3rd Floor, 1 Ashley Road, Altrincham, Cheshire, WA14 2DT.
On the Web: http://www.noblecorp.com/
On July 31, 2020, Noble Corporation and its affiliates filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Tex. Lead Case No. 20-33826). Richard B. Barker,
chief financial officer, signed the petitions. The Debtors
disclosed total assets of $7,261,099,000 and total liabilities of
$4,664,567,000 as of March 31, 2020.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Skadden, Arps, Slate, Meagher & Flom LLP and
Porter Hedges LLP as legal counsel; Smyser Kaplan & Veselka,
L.L.P., McAughan Deaver PLLC, and Baker Botts L.L.P. as special
counsel; AlixPartners, LLP as financial advisor; and Evercore Group
LLC as investment banker. Epiq Corporate Restructuring, LLC is the
claims and noticing agent.
In November 2020, Noble Corporation plc changed its name to Noble
Holding Corporation plc to allow the ultimate parent company that
emerges from the Chapter 11 reorganization to use the name "Noble
Corporation plc."
About Pacific Drilling
Pacific Drilling (NYSE: PACD) provides deepwater drilling services.
Pacific Drilling's fleet of seven drillships represents one of the
youngest and most technologically advanced fleets in the world. On
the Web: http://www.pacificdrilling.com/
On Nov. 12, 2017, Pacific Drilling S.A. along with affiliates each
filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
17-13193). In that case, Pacific tapped Togut, Segal & Segal LLP
as counsel; Evercore Partners International LLP as investment
banker; and AlixPartners, LLP, as restructuring advisor.
Pacific Drilling S.A. and its affiliates returned to Chapter 11
bankruptcy (Bankr. S.D. Tex. Lead Case No. 20-35212) on Oct. 30,
2020, to seek approval of a bankruptcy-exit plan that will cut debt
by $1.1 billion.
As of June 30, 2020, Pacific Drilling had $2,166,943,000 in assets
and $1,142,431,000 in liabilities.
In the present case, Greenhill & Co. is acting as financial advisor
to the Debtors, Latham & Watkins LLP and Jones Walker LLP are
serving as legal counsel, and AlixPartners is acting as
restructuring advisor to Pacific Drilling in connection with the
restructuring. Prime Clerk LLC is the claims agent.
Houlihan Lokey is acting as financial advisor and Akin Gump Strauss
Hauer & Feld LLP is acting as legal advisor to the noteholders. hat
emerges from the Chapter 11 reorganization to use the name "Noble
Corporation plc."
PAUL F. ROST: Updates Administrative Tax Claims Pay Details
-----------------------------------------------------------
Paul F. Rost Electric, Inc. d/b/a Rost Electric, Inc. submitted a
Third Amended Plan and a corresponding Disclosure Statement on
March 23, 2021.
The Third Amended Plan discusses the changes to Administrative Tax
Claims in which 2020 & 2021 Real Estate taxes paid in full on or
before Effective Date for the City of McKeesport and County of
Allegheny.
The Third Amended Plan does not alter the proposed treatment for
creditors and the equity holder:
* Class 4 Unsecured Tax Claimants will receive a 10% dividend
on behalf of their allowed, unsecured claims. Distributions will
be made pro-rata among the three claimants, beginning on the last
business day of the third month following Effective Date and
continuing thereafter on or before the last business day of each
following three-month period, until the 24th and final payment is
made 71 months after the initial payment. No interest shall be paid
on unsecured claims. Class 4 is impaired under the Plan.
* As to Class 5 Disputed Unsecured Claims, the Debtor is
unaware of any prepetition disputed unsecured claims. In the event
that any disputed, unsecured claims are brought to the Debtor's
attention prior to Plan confirmation, an objection will be filed to
each such claim. Any disputed, unsecured claim deemed to be
allowed by the Court shall be paid a 10 percent dividend of such
allowed claim, on the same terms of payment as set forth in class
4.
* Class 6 Equity Security Claimants will not receive any
distribution under the Plan, but shall retain their interest in the
reorganized Debtor, in consideration of value provided by the
Equity Security Holder to the Debtor to effectuate the Plan. Class
6 is impaired under the Plan.
A full-text copy of the Third Amended Plan dated March 23, 2021, is
available at https://bit.ly/3ss1dC9 from PacerMonitor.com at no
charge.
About Paul F. Rost Electric
Paul F. Rost Electric, Inc., sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Pa. Case No. 20-20344) on Jan. 30,
2020. At the time of the filing, the Debtor had estimated assets
of less than $50,000 and liabilities of between $500,001 and $1
million. Judge Jeffery A. Deller oversees the case. Dennis J.
Spyra & Associates is the Debtor's legal counsel.
PB 6 LLC: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------
The U.S. Trustee for Region 16 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of PB 6, LLC.
About PB 6 LLC
PB 6, LLC, a privately held company in Newbury Park, Calif., sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D.
Calif. Case No. 21-10293) on Feb. 23, 2021. At the time of the
filing, the Debtor disclosed assets of between $1 million and $10
million and liabilities of the same range. Judge Maureen Tighe
oversees the case. Jeffrey S. Shinbrot, APLC is the Debtor's
counsel.
PBS BRAND: April 28 Plan Confirmation Hearing Set
-------------------------------------------------
PBS Brand Co., LLC, et al., filed with the U.S. Bankruptcy Court
for the District of Delaware a motion for an order approving on an
Interim Basis the Adequacy of Disclosures in the Combined Plan and
Disclosure Statement.
On March 18, 2021, Judge John T. Dorsey granted the motion and
ordered that:
* The Plan is approved on an interim basis as containing
adequate information under Bankruptcy Code Section 1125 for
solicitation purposes.
* April 19, 2021 at 4:00 p.m. is fixed as the last day to
submit all Ballots in order to be counted as votes to accept or
reject the Plan.
* April 21, 2020 at 4:00 p.m. is fixed as the last day to file
objections to final approval and confirmation of the Plan.
* April 26, 2021 at noon is fixed as the last day to file a
brief in support and submit any evidence in support of confirmation
of the Plan, as well as respond to any objections or responses
filed in opposition to the Plan.
* April 28, 2020 at 10:00 a.m. is the Confirmation Hearing for
final approval of the Plan and confirmation of the Plan.
A copy of the order is available at https://bit.ly/31m1fji from
Omniagentsolutions, the claims agent.
Counsel to the Debtors:
Jeffrey R. Waxman
Eric J. Monzo
Brya M. Keilson
Sarah M. Ennis
Morris James LLP
500 Delaware Avenue, Suite 1500
Wilmington, DE 19801
Telephone: (302) 651-7700
E-mail: jwaxman@morrisjames.com
E-mail: emonzo@morrisjames.com
E-mail: bkeilson@morrisjames.com
E-mail: sennis@morrisjames.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.
PETIQ INC: S&P Assigns 'B-' Issuer Credit Rating, Outlook Positive
------------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
U.S.-based pet medication and wellness company PetIQ Inc. and its
'B-' issue-level rating and '3' recovery rating to its proposed
$300 million term loan. The '3' recovery rating indicates its
expectation for meaningful recovery (50%-70%; rounded estimate:
65%) for secured creditors in the event of a payment default.
The positive outlook reflects the potential that S&P will raise its
rating on the company over the next 12 months if it is able to
improve its leverage to 6.5x while generating free cash flow of
about $20 million.
S&P said, "PetIQ Inc. intends to raise a new $300 million
first-lien term loan to refinance $260 million of existing debt and
fund its near-term working capital needs. The company will also
establish a new $125 million senior secured asset-based lending
(ABL) revolving credit facility to replace its existing facility.
"Our rating reflects PetIQ's narrow focus in the pet health and
wellness industry, which benefits from favorable industry
fundamentals but is intensely competitive. The company sells
proprietary and third-party over-the-counter (OTC) products,
prescription medications, and health and wellness products for pets
through traditional brick-and-mortar and e-commerce retailers. It
also operates veterinary clinics at various mass and pet specialty
retailers. Both the company's products and services segments are
positioned to benefit from the surge in pet ownership during the
COVID-19 pandemic (over 11 million households estimated to have
added pets since the beginning of the pandemic) and the elevated
level of consumer discretionary spending on pets, which are now
increasingly viewed as central members of their households. We
expect the heightened consumer focus on pet health and wellness,
combined with the significant increase in pet ownership, will
support a solid sustained expansion in this category over the next
few years. However, we view switching costs for pet wellness
products and services as relatively low and note that the company's
products compete against those of large multinational companies,
such as Bayer AG, Mars Inc., Nestle SA, and the J.M. Smucker Co.,
which have much greater resources and financial wherewithal.
"The company's very high leverage and historically weak free cash
flow weigh on our rating, though our positive outlook reflects the
potential for a substantial improvement in its credit metrics over
the next year. We estimate PetIQ's leverage will be in the mid-7x
area as of the close of the transaction but forecast it will
improve to the 6x area over the next year as the company generates
solid product sales growth and the services business recovers from
the effects of the COVID-19 pandemic. Many of PetIQ's wellness
centers were closed for extended periods during 2020 because of
COVID-19 lockdowns, which led to a 40% decline in the revenue from
its services segment and rendered the business unprofitable. We
expect the company's performance to improve significantly in 2021
as it laps the easy comps from last year. Still, we believe PetIQ's
cash flow generation over the next couple of years will be very
limited due to its aggressive growth strategy, which calls for
significant expenditures to expand its veterinary clinic footprint.
Specifically, the company plans to expand to about 1,000 veterinary
wellness centers by 2024, which compares to just 126 as of the end
of 2020, and opening new wellness centers requires material upfront
investment. In addition, it generally takes about 18 months for new
centers to become profitable. Therefore, we expect PetIQ to
generate modest cash flow and sustain leverage of more than 5x for
at least the next couple of years despite its long-term (company
defined) leverage target of 2x-3x. Furthermore, given the company's
limited history of managing such a rapid expansion, any operational
missteps could lead to sustained pressure on its profitability.
PetIQ has also been acquisitive over the last couple years and
additional mergers and acquisitions (M&A) would further weaken its
credit metrics, though we do not incorporate any such transactions
into our base-case forecast."
The company is managing a very aggressive growth strategy in the
highly competitive veterinary services industry and any missteps
could lead to material profit misses. Traditional veterinarian
offices continue to dominate the majority of the $31 billion
veterinary services market and the company has to compete against
these offices for customers and veterinary talent. PetIQ's clinics
provide noninvasive wellness services, thus their average ticket
prices per visit tend to be lower than for visits to traditional
veterinarian offices. S&P said, "In our view, the company's
inability to provide comprehensive pet care at its clinics is a
weakness of its business model. That said, we believe PetIQ's price
transparency and the affordability of its basic services are value
propositions that will attract cost-conscious consumers away from
traditional veterinarian offices." At the same time, the company
faces competition from similar veterinary services chains,
including a group owned by Mars Inc., which has much greater scale
and financial wherewithal than PetIQ.
In managing its wellness center expansion strategy, the company
selects locations carefully based on a number of criteria,
including the strength of the veterinary labor market and various
population demographics. One way the company has managed its
expansion is by first operating mobile clinics at retail partner
sites, which it can visit a couple of times per month to better
assess the viability of a permanent wellness center. The company
operates mobile clinics at over 3,400 retail partner locations
nationwide and expects that about 60% of its planned wellness
center openings will involve mobile clinic conversions. S&P said,
"We believe PetIQ will continue to manage its expansion strategy
prudently, though its ability to recruit and retain talent could be
challenged if its top competitors begin to pursue similarly
aggressive growth strategies and compete in its key geographic
markets. In addition, despite its careful selection of retail
partners, the company could still be subject to the closure of
brick-and-mortar retail locations that are out of its control,
which would require it to write-off its upfront expenditure and
absorb any initial operating losses. PetIQ has partnered with a
diverse group of mass and pet specialty retailers, which we believe
will likely mitigate the effects of any single retailer's decision
to close stores. Nevertheless, we view this as an ongoing risk,
particularly given the continued shift in consumer spending toward
the e-commerce channel."
PetIQ has high customer and supplier concentrations and its
profitability could weaken significantly if any of its key business
relationships deteriorate. S&P said, "The company has
substantially expanded its sales to its largest customer,
Chewy.com, over the last few years and we believe Chewy now
accounts for about one-third of PetIQ's sales and over 10% of its
profitability. Given the ongoing shift in consumer spending toward
e-commerce purchases, we believe this concentration will remain
high for the foreseeable future. Similarly, PetIQ distributes
prescription (Rx) products on behalf of a pharmaceutical supplier
that we believe accounts for about 20%-25% of its product segment
profitability. There is a moderate risk that the company could be
disintermediated from the supply chain if its partners believe the
economics of working directly together is more favorable.
Notwithstanding this risk, we believe both the supplier and
customer concentrations will moderate over the next couple of years
as it expands its veterinary services presence and makes further
inroads into selling higher-margin manufactured products, some of
which it acquired in the last couple of years."
S&P said, "While we expect improved business conditions relative to
the initial period of COVID-19 related lockdowns in 2020, the
pandemic still poses a risk to our forecast. The company reopened
all of its wellness centers by the end of 2020 following prolonged
lockdowns in some regions. On average, PetIQ is now close to
servicing the same number of pets per clinic as it was prior to the
pandemic, which supports our view that the performance of its
services segment will be much stronger in 2021. At the same time,
the company's wellness centers and mobile clinics are still
struggling with high rates of COVID-19 related absenteeism
(12%-16%). Our forecast assumes its absentee rates will gradually
improve over the course of the year as the coronavirus vaccines
become more widely distributed. If absentee rates remain high, or
(less likely) secondary lockdowns are implemented due to additional
virus mutations, the company's profit may decline further, which
would prevent it from deleveraging. However, despite these
potential challenges to its services business, we expect its
products business to continue to benefit from the ongoing consumer
shift toward e-commerce purchasing. This includes our expectation
that PetIQ will continue to make inroads in selling its
higher-margin manufactured products.
"The positive outlook on PetIQ reflects the potential that we will
raise our rating if it reduces its leverage below 6.5x over the
next year.
"We could raise our rating on PetIQ if it continues to generate
solid sales and profit growth from its products segment, it
prudently manages its rapid wellness center expansion strategy, and
the performance of its existing wellness centers recovers to
pre-COVID levels such that its credit metrics improve steadily,
including leverage of less than 6.5x and annual free cash flow
generation of about $20 million."
S&P could revise its outlook on PetIQ to stable if it sustains
leverage of more than 6.5x over the next 12 months. This could
occur if the company experiences operational missteps in managing
its rapid expansion plans (including with its talent recruitment
and retention), it loses relationships with key customers or
suppliers, or its wellness center closures remain significant due
to sustained high employee absence rates or additional
government-imposed lockdown measures.
PHILADELPHIA PARKING: Fitch Cuts $44MM Parking Bonds to 'BB+'
-------------------------------------------------------------
Fitch Ratings has downgraded the rating on the Philadelphia Parking
Authority's (PPA, or the authority) approximately $44 million in
outstanding airport parking revenue bonds to 'BB+' from 'BBB', and
maintains the Rating Watch Negative (RWN).
RATING RATIONALE
The downgrade is driven by uncertainty regarding PPA's ability to
pay subordinated debt obligations in a full and timely manner and
its reliance to date on discretionary creditor payment deferrals.
Additionally, the downgrade is substantiated by the severe
deterioration in airport parking volumes and revenues caused by
challenges imposed by the coronavirus pandemic. Fitch believes the
continuation of the current environment raises the risk profile
with the possibility of default on subordinate debt obligations in
addition to elevated stresses to coverage and liquidity metrics.
The Rating Watch Negative reflects concerns about PPA's ability to
pay its subordinate note bullet payment, which was previously
deferred 12 months by the lender to March 31, and is expected to be
deferred an additional three months. In addition, the Rating Watch
Negative echoes PPA's diminishing liquidity position, uncertain
recovery speed from the coronavirus pandemic and ability to
stabilize net revenues given the substantial reductions in parking
revenues.
The above rating actions do not consider a plan underway by the
City of Philadelphia, through its airport enterprise, to purchase
PPA's airport parking facilities and repay and legally defease the
outstanding debt. The timing of such actions remains uncertain but,
should they occur, would place the facility revenues and costs
under PHL's management.
KEY RATING DRIVERS
Ineffective Management Strategy—Ownership and Sponsors: Weaker
Fitch views management strategy as a weakness as exhibited by the
inability thus far to execute a buy-out between PPA and PHL and to
find a long-term solution to the authority's bond anticipation
notes (BAN), originally issued in 2015. The confluence of these
issues during the pandemic has led to the authority's reliance on
its BAN creditor, PNC Bank, to continually extend repayment to
avoid a default on its subordinate obligations, which are not rated
by Fitch.
Flat Parking Demand with Volatility—Revenue Risk (Volume):
Midrange
PPA benefits from its competitive position as the sole provider of
on-airport parking at the airport, supporting PHL's sizable origin
and destination (O&D) enplanement base of nearly 8 million in
fiscal 2020. Recently, parking transactions have deteriorated given
substantial decreases in enplanements at PHL in connection to the
conditions created by the coronavirus pandemic.
Narrow Revenue Stream—Revenue Risk (Price): Midrange
The authority's narrow parking revenue stream is partially
mitigated by its moderate flexibility to raise parking rates,
evidenced by four increases since fiscal 2001, with the most recent
increases occurring in 2016 and 2017. While current rates are
considered economical, competition exists from off-airport parking
providers. Prior to the coronavirus pandemic, transportation
network companies (TNCs) experienced strong growth at PHL. Although
the coronavirus pandemic has muted this impact, Fitch believes that
future TNC growth remains a credible threat that could constrain
the authority's ability to implement future adjustments.
Debt-Funded Capital Plan—Infrastructure Development & Renewal:
Midrange
The authority's proposed six-year (2019-2024), $75.5 million
capital improvement plan (CIP) will be primarily funded through
additional long-term debt. Projects include new lighting, signage
and canopy upgrades, as well as structural repair and maintenance.
In light of the conditions created by the coronavirus, the
authority is focused on keeping the facilities in a state of good
repair and deferring nonessential work under its capital plan.
Conservative Debt Structure—Debt Structure: Stronger
The bonds benefit from a conservative debt structure, characterized
by senior, fixed-rate and fully amortizing debt with a declining
debt service profile. The security package is considered strong,
with a 12-month cash funded debt service reserve fund (DSRF), and a
1.5x rate covenant and additional bonds test (ABT). Fitch expects
the authority's additional bonds to amortize over a 20-year
period.
Financial Profile
Key financial metrics have historically been sound, but will be
pressured as the pandemic-led volume decline and the potential
recovery takes course over the next several years. While debt
service coverage was a solid 3.2x in fiscal 2020, PPA will be
dependent in the near term on enplanement recovery at PHL, its
primary source of customers, to maintain a comparable coverage
profile. While PPA has made all of its debt service payments for
fiscal 2021 (ended March 31), PPA's liquidity position remains a
concern with limited funds to cover future debt service payments in
the event that operating cash flows are insufficient to make
payments on time and in full.
Other than Management Strategy, 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.
PPA has an ESG Relevance Score of 4 [-] for Management Strategy due
to the inability thus far to execute a buy-out between PPA and PHL
and to find a long-term solution to the authority's bond
anticipation notes (BAN), originally issued in 2015. The confluence
of these issues during the pandemic has led to the authority's
reliance on its BAN creditor, PNC Bank, to continually extend
repayment to avoid a default on its subordinate obligations, which
are not rated by Fitch.
PEER GROUP
Rated peers include Baltimore Washington Airport Parking
('A'/Negative) and Miami Parking ('A'/Stable). Similar to
Philadelphia, Baltimore is an airport parking facility with a
somewhat narrow revenue stream. Baltimore's higher rating is
supported by higher coverage over 3x, no future borrowing plans and
very low reliance on rate increases. Miami also has strong coverage
at over 3x, slightly higher leverage over 2x and benefits from a
more diversified revenue stream of garage and on-street facilities,
which better protects the system from demand volatility.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- While a higher rating is not likely in the near term, a return
to a Stable Outlook could be possible, and the ratings
affirmed, if Fitch sees sustained recovery in volume and
revenues due to the easing of the pandemic resulting in normal
air traffic patterns or the adoption of strategies that
convincingly stabilizes the authority's finances.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A continued period of material volume declines relative to
historical performance that presents further challenges to
stabilize PPA's cash flow available for debt service or
liquidity levels.
-- Failure to extend or pay off the subordinate notes held by PNC
could lead to negative rating action.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT UPDATE
In addition to the revenue bonds, PPA has approximately $18.2
million of outstanding airport parking garage revenue bond
anticipation notes (BANs) with PNC Bank. The BANs are structured
with a bullet maturity and are secured by a subordinate lien on net
airport parking garage revenues as well as a DSRF consisting of
three months of interest expense, which is held at PNC Bank.
Additionally, the BANs are not cross-defaulted with PPA's revenue
bonds.
The BANs have a maturity date of April 1, 2021 and PPA's management
believes the authority lacks sufficient cash to meet this
obligation as a result of the financial burden caused by the
coronavirus. As of March 18, the authority intends to enter into a
three-month extension by the end of the month.
Although Fitch views this positively, it is unclear if PPA will be
able to meet its obligation at the end of the three-month
extension, suggesting the notes still pose a credit risk in the
near term. Additionally, it is uncertain if PNC Bank will extend
the notes again if PPA is not in a position to fulfil its
obligation upon the new maturity date. This $18.2 million
subordinate bullet payment coupled with a $13.8 million senior debt
service payment due September 2021, creates an uncertain situation
surrounding PPA's ability to pay its subordinate debt obligations
in the current economic environment. It was previously anticipated
that the notes would be paid off with a $65 million new bond
issuance, or the city of Philadelphia airport enterprise would
defease the debt by purchasing the parking facilities. Although
negotiations between PHL and PPA are ongoing, they have not come to
an agreement regarding this transaction, and it is unclear when or
whether the transaction may occur.
PPA experienced unprecedented financial and operational challenges
stemming from the outbreak of the coronavirus. As of December 2020,
PPA suffered a year over year (YoY) decline in revenue of
approximately 80% and YoY decline in operating profit of 98%.
Additionally, YTD parking volumes as of January 2021 declined 50%
from the same period in FY 2020. While fiscal 2021 YTD transaction
volumes are substantially depressed compared to the year prior,
transactions have been steadily increasing month-over-month from
coronavirus troughs, with January 2021 transactions down 13.7% from
the year prior. In spite of these challenges, PPA paid all of its
FY 2021 senior debt service obligations on time and in full and did
not utilize its DSRF.
Although month-over-month parking transactions are improving, Fitch
believes making future debt payments will be subject to improved
parking volumes in the near term. In the absence of such
improvements, Fitch believes it is possible the authority will need
to utilize its DSRF to either make or assist substantially in
making its future debt payments in the near term. As of February
2021, PPA held approximately $23.7 million in liquidity consisting
of $18.5 million in fully funded DSRFs and $5.2 million of
unrestricted cash. PPA has not received any CARES Act funding, nor
do they anticipate receiving any in the future. Although the
authority carries business interruption insurance, their insurance
provider does not cover the coronavirus outbreak as a force majeure
event and will not be providing any funds.
The authority is cutting operating expenses to the furthest extent
possible in an effort to preserve cash and minimize any cash
disbursement during this stressed period. Management projects cost
savings of approximately 22% relative to FY 2020 as a result of its
cost cutting initiatives and variable costs that fall in line with
volumes. The authority believes that a DSCR of 1.5x in FY 2021 is
still attainable, which meets PPA's rate covenant requirement;
however, Fitch believes that achieving a 1.5x DSCR in FY 2021
remains subject to a number of favorable developments, notably
improved transactions and revenues in the near term.
The authority's previous capital plan has been postponed while PPA
prioritizes essential work to keep the facilities in a state of
good repair due to disruptions caused by the coronavirus. In
addition, PPA confirmed there are no planned new debt issuances in
the near future.
The authority faces distinct competitive threats looking ahead.
While the authority is the exclusive provider of parking at the
airport facility, there are numerous parking competitors located
off-site, which are accessible via shuttle, as well as transit
options offered by the Southeastern Pennsylvania Transportation
Authority (SEPTA). However, Fitch notes the authority's economy lot
parking is priced competitively with off-airport alternatives, and
offers an added measure of convenience. In the wake of COVID-19,
competition from TNCs has softened considerably, though their
post-pandemic competitive position remains unclear.
FINANCIAL ANALYSIS
The coronavirus rating case serves as both the base and rating
case. Fitch's rating case assumes parking transactions fall at more
severe levels than enplanements at PHL due to challenges imposed by
the coronavirus outbreak and competition from other parking and
transportation options near PHL airport.
Under Fitch's rating case, the fiscal 2021 revenue assumption
includes a 68% decline from FY 2020 levels. Thereafter, revenues
increase gradually and return to pre-coronavirus levels (FY 2019)
by FY 2025. Operating expenses in FY 2021 reflect PPA's estimate of
$16.6 million and gradually increase as parking volumes recover.
PPA's five-year DSCR averages 3.2x, but drops to near 1.0x in FY
2021, given the sharp decrease in parking volumes. Leverage
gradually declines through fiscal 2025 to less than 1x.
Fitch's more conservative coronavirus downside scenario preserves
many of the rating case assumptions but adopts a more tepid growth
trajectory to full recovery. Fiscal 2021 revenue and cost
assumptions mirror the rating case, and are followed by a slower
recovery to pre-coronavirus levels in fiscal 2025. Under these
assumptions, PPA's five-year DSCR averages 2.8x, but falls to
roughly 1.3x in FY 2022, and leverage follows a similar trajectory
as the rating case.
PPA confirmed its unrestricted cash position is approximately $5.2
million as of February 2021. Inclusive of DSRF balances, the
authority retains enough liquidity to make their debt payments
through the remainder of FY 2022. Fitch believes that making future
debt payments on time and in full will be subject to improved
parking volumes. In the absence of improved parking volumes, Fitch
believes it is likely that the authority will need to utilize its
liquidity to either make or assist in making its future debt
payments in the near term.
ESG CONSIDERATIONS
Philadelphia Parking Authority (PA) [Airport Parking]: Management
Strategy: '4'
Other than Management Strategy, 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.
PHIO PHARMACEUTICALS: Incurs $8.8 Million Net Loss in 2020
----------------------------------------------------------
Phio Pharmaceuticals Corp. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$8.79 million on zero revenue for the year ended Dec. 31, 2020,
compared to a net loss of $8.91 million on $21,000 of revenues for
the year ended Dec. 31, 2019. The decrease in net loss was
primarily attributable to the decrease in general and
administrative expenses.
As of Dec. 31, 2020, the Company had $15.74 million in total
assets, $2.72 million in total liabilities, and $13.02 million in
total stockholders' equity.
At Dec. 31, 2020, the Company had cash of $14.2 million as compared
with $6.9 million at Dec. 31, 2019. Subsequent to the end of the
fourth quarter of 2020, the Company raised an additional $21.7
million in gross proceeds through a registered direct offering and
a private placement offering. The Company expects its current cash
will be sufficient to fund currently planned operations to the
second quarter of 2023.
Research and development expenses were approximately $4.4 million
for the year ended Dec. 31, 2020, compared to approximately $4.3
million for the year ended Dec. 31, 2019. The increase is
primarily due to an increase in the use of sponsored research
organizations to support the development of the Company's pipeline
programs as compared to the prior year period.
General and administrative expenses were approximately $4.4 million
for the year ended Dec. 31, 2020, compared to approximately $4.7
million for the year ended Dec. 31, 2019. The decrease is
primarily due to decreases in legal-related expenses and recruiting
fees to support employee hiring activities as compared to the prior
year period.
Phio said, "We expend substantial funds to develop our
technologies, and additional substantial funds will be required for
further research and development, including preclinical testing and
clinical trials of any product candidates, and to manufacture and
market any products that are approved for commercial sale. Because
the successful development of our products is uncertain, we are
unable to precisely estimate the actual funds we will require to
develop and potentially commercialize them. In addition, we may
not be able to generate enough revenue, even if we are able to
commercialize any of our product candidates, to become profitable.
"If we are unable to achieve or sustain profitability or to secure
additional financing, we may not be able to meet our obligations as
they come due, raising substantial doubts as to our ability to
continue as a going concern. Any such inability to continue as a
going concern may result in our common stockholders losing their
entire investment. There is no guarantee that we will become
profitable or secure additional financing. Our financial
statements do not include any adjustments to, or classification of,
recorded asset amounts and classification of liabilities that might
be necessary if we were unable to continue as a going concern.
Changes in our operating plans, our existing and anticipated
working capital needs, the acceleration or modification of our
expansion plans, increased expenses, potential acquisitions or
other events will all affect our 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/1533040/000168316821001062/phio_10k-123120.htm
About Phio
Marlborough, Massachusetts-based Phio Pharmaceuticals Corp. --
http://www.phiopharma.com-- is a biotechnology company developing
the next generation of immuno-oncology therapeutics based on its
self-delivering RNAi therapeutic platform. The Company's efforts
are focused on silencing tumor-induced suppression of the immune
system through its proprietary INTASYL platform with utility in
immune cells and/or the tumor micro-environment. The Company's
goal is to develop powerful INTASYL therapeutic compounds that can
weaponize immune effector cells to overcome tumor immune escape,
thereby providing patients a powerful new treatment option that
goes beyond current treatment modalities.
PINNACLE DEMOLITION: Gets Cash Collateral Access
------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York has
authorized Pinnacle Demolition and Environmental Services Corp. to
use cash collateral on an interim basis in accordance with the
budget.
Prior to the Petition Date, the Debtor obtained from Commercial
Credit Group Inc. a commercial equipment loan, which is evidenced
by a Negotiable Promissory Note and Security Agreement executed by
the Debtor and payable to CCG dated December 21, 2017 in the face
amount of $229,918.75 and the Amendment to Negotiable Promissory
Note and Security Agreement / Lease / Conditional Sale Contract
executed by the Debtor and CCG dated January 10, 2019.
Pursuant to the Note, the Debtor granted to CCG security interests
and lien in and upon a 2012 Link Belt 350X# Excavator with Geith
Hydraulic coupler, Hydraulic Thumb and Standard Bucket bearing s/n
EKDK2-5959, as well as all of the Debtor's accounts, accounts
receivable, chattel paper, equipment, contract rights, documents,
fixtures, general intangibles, goods, instruments, inventory,
securities, deposit accounts, investment property, and all other
property of the Debtor, which in part, constitute "cash
collateral."
CCG properly perfected its pre-petition security interests in the
Cash Collateral and Excavator Collateral by filing UCC-1 Financing
Statements with the New York Department of State.
As of the Petition Date, the Debtor owed CCG the amount of
$124,320.11 on the Note, plus subsequently accruing interest, and
other charges, including legal expenses recoverable under the Loan
Documents.
Prior to the Petition Date, the Excavator Collateral was
repossessed by CCG and in a storage facility. The Debtor believes
the Excavator Collateral is not necessary for the Debtor's
reorganization efforts and agrees to release its right, title and
interest in the Excavator Collateral. The Debtor further consents
to the relief from the automatic stay with respect to the Excavator
Collateral to enable CCG to sell it.
On June 15, 2020 the Debtor, as borrower, and the U.S. Small
Business Administration as lender, entered into a Loan
Authorization and Agreement to obtain a $150,000 loan through the
SBA's Economic Injury Disaster Loan program. As of the Petition
Date, the Debtor owes approximately $150,000 to the SBA.
The Debtor was also indebted to the Internal Revenue Service in the
amount of $35,381.13 arising from unpaid taxes.
The IRS asserts a security interest and lien in the amount of
$34,912.53 on all of the Debtor's assets arising from the IRS
Indebtedness.
The Debtor is authorized to use the Cash Collateral to pay
post-petition expenses incurred in the ordinary course of its
business activities.
In exchange for the Debtor's use of Cash Collateral, and as
adequate protection, CCG is granted a senior post petition lien and
security interest and the SBA and the IRS are granted a junior
post-petition liens and security interests in all assets of the
Debtor, wherever located, effective nunc pro tunc as of the
Petition Date.
The liens are deemed for all purposes to have been properly
perfected, without filing, as of the Petition Date.
As additional adequate protection for the Debtor's use of Cash
Collateral, CCG is granted a superpriority administrative claim, to
the extent of any post-Petition Date diminution in value of its
Collateral arising from the Debtor's use of the Cash Collateral or
the automatic stay and the SBA and IRS are granted a superpriority
administrative claim, to the extent of any post-Petition Date
diminution in value of its Collateral arising from the Debtor's use
of the Cash Collateral or the automatic stay. The CCG Superpriority
Administrative Claim are senior in all respects to the SBA
Superpriority Administrative Claim and IRS Superiority
Administrative Claim.
These constitute Events of Default:
-- The failure by the Debtor to perform, in any respect, any
of the terms, provisions, conditions, covenants, or obligations
under this Fourth Interim Order, the CCG Loan Documents or the SBA
Loan Agreement;
-- The entry of any order by the Court granting relief from or
modifying the automatic stay of Bankruptcy Code section 362(a);
-- Dismissal of the chapter 11 case or conversion of the
chapter 11 case to a chapter 7 case, or appointment of a chapter 11
trustee or examiner with expanded powers or other responsible
person;
-- Except as may be authorized by Final Court Order, the
Debtor granting, creating, incurring or suffering to exist any
post-petition liens, security interests or super-priority claims
which are senior to or pari passu with those granted pursuant to
the Fourth Interim Order.
The Postpetition Liens and the Superpriority Claims are subordinate
solely to all fees required to be paid to the Clerk of the
Bankruptcy Court and to the Office of the United States Trustee
pursuant to 28 U.S.C. section 1930(a) and Section 3717 of Title 31
of the United States Code, and an additional amount (in addition to
amounts set forth in the prior Interim Order) of $15,000 for the
Subchapter V Trustee. The Carve Out will be payable solely from the
Debtor's Cash Collateral and not the proceeds of the Debtor's
Excavator Collateral. Nothing will obligate CCG, the SBA or the IRS
to pay the Carve Out amounts.
A copy of the order is available for free at https://bit.ly/3rqjsH1
from PacerMonitor.com.
About Pinnacle Demolition
and Environmental Services Corp.
Pinnacle Demolition and Environmental Services Corp. filed its a
voluntary petition under Chapter 11 (Bankr. E.D.N.Y. Case No.
20-43057) on Aug. 24, 2020. At the time of filing, the Debtor
estimated $100,001 to $500,000 in assets and $1,000,001 to
$10,000,000 in liabilities.
Judge Elizabeth S. Stong oversees the case.
Joseph A. Fazio, Esq., serves as the Debtor's legal counsel.
PROFESSIONAL FINANCIAL: Unsecureds to Get 35% to 50% in Joint Plan
------------------------------------------------------------------
Professional Financial Investors, Inc. ("PFI") and its affiliated
debtors and Official Committee of Unsecured Creditors submitted a
Disclosure Statement for the Joint Chapter 11 Plan and supported by
the Ad Hoc LLC Members Committee and the Ad Hoc DOT Noteholders
Committee.
The Plan Proponents, together with the Ad Hoc Committees, have
worked diligently to maximize recoveries for the Debtors' Investors
and other creditors following the revelation of the massive Ponzi
scheme and the resulting bankruptcy filings. Since even before the
commencement of the Chapter 11 Cases, the investor body has played
a critical role by organizing themselves to ensure that Investors'
interests are well-represented, and, through both the appointment
of the Unsecured Creditors' Committee and the formation of the Ad
Hoc Committees, Investors of all types are ensured an active and
representative role in the bankruptcy process.
The Debtors and the Committees, through months of open cooperation,
information gathering and negotiation for the benefit of all
Investors, reached a global resolution, embodied in the proposed
Plan, aimed at: mitigating the damage inflicted by Ken Casey's (and
others') having operated the Debtors as a Ponzi scheme; and
developing a level playing field that attempts to treat all
aggrieved Investors equally and fairly.
Significantly, the proposed Plan is a single pot plan, meaning that
under the Plan, generally, all of the assets and liabilities of all
Debtors and non-debtor affiliates will be pooled and consolidated
for distribution purposes. This is legally referred to under the
Plan as substantive consolidation. As a result of such substantive
consolidation, among other things:
* Creditors of any Debtor entity are treated as if they have a
claim against the entire PFI enterprise, rather than a particular
Debtor.
* Any and all purported equity interests of an Investor in any
Debtor shall be automatically cancelled and extinguished as of the
Effective Date, and deemed and treated as Investor Claims of the
Investor pursuant to the Plan, regardless of the pre-petition
designations used by the Debtors and/or Investors.
* No certain type of Investors will receive a premium or other
benefit based on the type of investment they held. Rather, each
Investor's Claim will be calculated in the same manner, and each
Investor will receive a proportional recovery from the PFI Trust
based on such Investor's allowed claim amount, after netting and
any clawbacks are taken into account as described in the Plan.
To effectuate distributions to Investors and other creditors, the
Plan provides for the creation of the PFI Trust, which will own the
Estates' assets and will sell or otherwise dispose of those assets
to generate cash, and will distribute that cash to creditors
(including to Investors). The PFI Trust also will own litigation
claims against third parties and may generate cash through
prosecution or settlement of those claims. Cash will be distributed
by the PFI Trust to Investors and other creditors over time (as the
PFI Trust collects on the PFI Trust Assets and the OpCo upstreams
operating profits from and/or sale proceeds from the disposition of
the Real Properties).
The Plan contemplates a restructuring of the Debtors and the Estate
Assets into the PFI Trust and the OpCo operating company structure,
and the orderly monetization and other disposition of Estate Assets
through such structure. The Debtors' assets largely consist of
direct or indirect interests in the Real Properties, Cash, and the
PFI Trust Actions under the Plan.
Class 6 consists of all Other Unsecured Claims with projected
recovery of 35%-50%. Class 6 is Impaired under the Plan. In full
satisfaction, settlement, and release of and in exchange for such
Claims, the Holders of Allowed Class 6 Claims will receive on or as
soon as reasonably practicable after the Effective Date, one (1)
Class A PFI Trust Interest for each dollar of Allowed Other
Unsecured Claims held by the applicable Holder.
Class 8 consists of all Equity Interests in the Debtors. Class 8 is
Impaired under the Plan. Holders of Equity Interests shall not be
entitled to, and shall not receive or retain any property or
interest in property under the Plan on account of such Equity
Interests. Class 8 is deemed to have rejected the Plan and,
therefore, Holders of Equity Interests are not entitled to vote on
the Plan.
A full-text copy of the Disclosure Statement dated March 21, 2021,
is available at https://bit.ly/31rM9sg from Donlin, Recano &
Company, Inc., the claims agent.
Counsel to the Debtors:
Ori Katz, Esq.
J. Barrett Marum, Esq.
Matt Klinger, Esq.
Gianna Segretti, Esq.
Sheppard, Mullin, Richter & Hampton LLP
Four Embarcadero Center, 17th Floor
San Francisco, CA 94111-4109
Telephone: (415) 434-9100
Facsimile: (415) 434-3947
Email: okatz@sheppardmullin.com
bmarum@sheppardmullin.com
mklinger@sheppardmullin.com
gsegretti@sheppardmullin.com
Counsel to the Official Committee of Unsecureds:
Debra I. Grassgreen (CA Bar No. 169978)
John D. Fiero (CA Bar No. 136557)
Cia H. Mackle (admitted pro hac vice)
PACHULSKI STANG ZIEHL & JONES LLP
150 California Street, 15th Floor
San Francisco, CA 94111
Telephone: (415) 263-7000
Facsimile: (415) 263-7010
E-mail: dgrassgreen@pszjlaw.com
jfiero@pszjlaw.com
cmackle@pszjlaw.com
About Professional Financial Investors
Professional Financial Investors, Inc. and Professional Investors
Security Fund, Inc. are engaged in activities related to real
estate. PFI directly owns 28 real property locations in fee simple
and has an interest as a tenant in common at another real property
location, primarily consisting of apartment buildings and office
parks, located in Marin and Sonoma Counties, California, with an
aggregate value of approximately $108 million, according to an
early July 2020 valuation.
On July 16, 2020, a group of creditors filed an involuntary Chapter
11 petition (Bankr. N.D. Cal. Case No. 20-30579) against
Professional Investors Security Fund. On July 26, 2020,
Professional Financial Investors sought Chapter 11 protection
(Bankr. N.D. Cal. Case No. 20-30604). On Nov. 20, 2020,
Professional Financial Investors filed involuntary Chapter 11
petitions against Professional Investors Security Fund I, A
California Limited Partnership and 28 other affiliates. The cases
are jointly administered under Case No. 20-30604.
At the time of the filing, Professional Financial Investors
disclosed assets of between $100 million and $500 million and
liabilities of the same range.
Hannah L. Blumenstiel oversees the cases.
The Debtors tapped Sheppard, Mullin, Richter & Hampton, LLP, as
their legal counsel; Trodella & Lapping LLP as conflicts counsel;
Ragghianti Freitas LLP, Weinstein & Numbers LLP, Wilson Elser
Moskowitz Edelman & Dicker LLP, Nardell Chitsaz & Associates, and
Kimball Tirey & St. John, LLP as special counsel; and Donlin,
Recano & Company, Inc. as claims, noticing, and solicitation agent
and administrative advisor.
Michael Hogan of Armanino LLP was appointed as the Debtors' chief
restructuring officer. FTI Consulting, Inc. is the financial
advisor.
On Aug. 19, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. The committee is represented by
Pachulski Stang Ziehl & Jones.
RAM DISTRIBUTION: Unsec. Creditors to Recover 1% in Plan
--------------------------------------------------------
Ram Distribution Group LLC, d/b/a Tal Depot, filed a First Amended
Disclosure Statement in connection with its Chapter 11 Plan.
The Debtor has filed a Plan seeking to provide a basis for
resolving outstanding claims against the Debtor through four
general mechanisms: use of proceeds from (1) the revenue generated
by the Debtor from its business operations during the course of the
accumulated during the Debtor's Chapter 11 Case (2) from the
Debtor’s MonthlyNet Income over a five-year period, (3) the
recoveries, if any, from the Preference Actions referenced below on
page 12, and (4) the proceeds, if any, from the Special Counsel
Litigation as defined in the Plan.
Within 30 days of the Effective Date of the Plan, the Debtor will
be paying out approximately $289,394 in claims. As per the
Debtor's February 2021 monthly operating report, the Debtor had
approximately $74,024 in cash on hand in its DIP Account. Further,
the Debtor's counsel is currently holding $238,051 as funds
recovered from Avoidance Actions. The Debtor's counsel also has an
additional $25,000 being held in its escrow account pending court
approval of the Debtor's settlement with U.S. Underwriter Insurance
for a grand total of $263,051 being held by counsel. The Debtor's
principal will also be contributing $10,000 of new capital from
personal funds. From all of these sources together the Debtor will
have sufficient funds to pay out all of the claims that the Plan
provides to be paid within 30 days of the Effective Date.
Class 4 consists of all Allowed General Unsecured Claims of
Creditors in amounts less than $3,500. This class consists of 10
creditors. Each creditor will receive 1% of their claim for a
total of $1,831. Each claim will be paid in one lump sum within
thirty days of the Effective Date. Class 4 is impaired and the
holders of claims in Class 4 are entitled to vote to accept or
reject the Plan.
Class 5 consists of General Unsecured Claims, including the Claims
of the MCA Companies provided the Debtor prevails on its motions to
value the MCA Claims. The Debtor will make monthly payments in
the amount of $1,175 per month to be shared on a Pro Rata basis by
Claimants holding Allowed Unsecured Claims commencing at the
beginning of month 17 following the Effective Date, as shown on the
SevenYear Projections which at this juncture is projected to be
approximately 1%. Specifically, the Debtor's Plan payments to Class
5 Unsecured Creditors are calculated in order to provide the Debtor
with sufficient operating capital to continue its business
operations. The payments to Unsecured Creditors are set to begin
in Month 17 after the Effective Date. Per the Debtor's Seven-Year
Projections, the Debtor projects its first post-confirmation
monthly payment to Unsecured Creditors to occur in month seventeen
following the Effective Date.
A copy of the Amended Disclosure Statement dated March 19, 2021, is
available at https://bit.ly/3rxsvWu
About Ram Distribution Group
Tal Depot owns and operates an e-commerce website
https://taldepot.com/ that sells snacks, drinks, groceries,
wellness, and home goods products.
Ram Distribution Group, LLC, d/b/a Tal Depot, filed for Chapter 11
bankruptcy protection (Bankr. E.D.N.Y. Case No. 19-72701) on April
12, 2019. In the petition signed by CEO Jeremy J. Reichmann, the
Debtor was estimated to have $100,000 to $500,000 in assets and
$10 million to $50 million in and liabilities.
Btzalel Hirschhorn, Esq., at Shiryak, Bowman, Anderson, Gill &
Kadochnikov LLP is the Debtor's counsel. Analytic Financial Group,
LLC, d/b/a Corporate Matters, serves as financial advisors to the
Debtor.
RELMADA THERAPEUTICS: Widens Net Loss to $59.4 Million in 2020
--------------------------------------------------------------
Relmada Therapeutics, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$59.45 million for the year ended Dec. 31, 2020, compared to a net
loss of $15 million for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $118.18 million in total
assets, $12.60 million in total liabilities, and $105.58 million in
total stockholders' equity.
Research and development expenses for the year ended Dec. 31, 2020,
totaled $36.0 million, up from $7.9 million in the year ended Dec.
31, 2019. The increase was primarily due to increased costs
associated with preparations for and conducting multiple Phase 2
and Phase 3 studies for REL-1017.
General and administrative expenses for the year ended Dec. 31,
2020, totaled $24.9 million, up from $7.2 million in the year ended
Dec. 31, 2019. The increase was primarily driven by an increase in
salaries and stock-based compensation.
As of Dec. 31, 2020, the Company had approximately $117.1 in cash,
cash equivalents, and short-term investments, compared to $116.4
million at Dec. 31, 2019.
"We have achieved significant progress in advancing our lead
product candidate, REL-1017, which has the potential to be the
first U.S. Food and Drug Administration (FDA)-approved
anti-depressant for adjunctive treatment of major depressive
disorder (MDD)," said Dr. Sergio Traversa, Relmada's chief
executive officer. "In our successfully completed Phase 2 study,
REL-1017 demonstrated statistically significant, rapid and
sustained anti-depressant effects with a favorable safety and
tolerability profile. Based on these compelling data and our
interactions with the FDA and scientific advisors, late in 2020, we
were thrilled to initiate our Phase 3 program for REL-1017. Our
first of two Phase 3 trials, RELIANCE I, is enrolling as planned,
and we expect to begin the second study, RELIANCE II, imminently."
"Looking ahead, we anticipate multiple key data readouts over the
next several quarters, including data from our oxycodone human
abuse potential study in the second quarter of this year, followed
by data from our IV ketamine human abuse potential study by
year-end 2021. Further out, we look to top-line data from both
RELIANCE I and RELIANCE II in the first half of 2022," continued
Dr. Traversa. "Importantly, we have a strong balance sheet driving
our robust development efforts, with a cash runway that is
anticipated to support us through multiple potentially
value-creating catalysts."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1553643/000121390021017556/f10k2020_relmadatherapeutic.htm
About Relmada Therapeutics, Inc.
Relmada Therapeutics is a late-stage pharmaceutical company
addressing diseases of the central nervous system (CNS), with a
focus on major depressive disorder (MDD).
RENAISSANCE RESTORATION: Voluntary Chapter 11 Case Summary
----------------------------------------------------------
Debtor: Renaissance Restorations, Inc.
P.O. Box 1268
Birmingham, MI 48012
Business Description: Renaissance Restorations Inc. provides
residential building construction services.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Eastern District of Michigan
Case No.: 21-42600
Debtor's Counsel: Michael E. Baum, Esq.
SCHAFER AND WEINER, PLLC
40950 Woodward Ave., Ste. 100
Bloomfield Hills, MI 48304
Tel: (248) 540-3340
E-mail: mbaum@schaferandweiner.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Jamie D. Craig, owner/president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/CPVHVSI/Renaissance_Restorations_Inc__miebke-21-42600__0001.0.pdf?mcid=tGE4TAMA
ROCK CREEK: Unsecureds Owed $713K to Get 100% in 48 Months
----------------------------------------------------------
Rock Creek Baptist Church of the District of Columbia filed a
Fourth Amended Plan of Reorganization.
On the Effective Date, the Debtor shall close upon the sale of the
Ritchie Marlboro Property to RCBCRM pursuant to the terms of the
Sale Agreement. The proceeds from such sale shall be used to fund
payments under the Plan. Pursuant to Section 1146 of the Bankruptcy
Code, the transfer and sale of the Ritchie Marlboro Property to
RCBCRM shall not be taxed under any law imposing a transfer, stamp
or other similar tax.
"Sale Agreement" shall mean that Agreement of Sale dated as of July
6, 2020 between the Debtor and RCBCRM, LLC with respect to the real
property owned by the Debtor and located at 2505 Ritchie Marlboro
Road, Upper Marlboro, Maryland, 20772, being currently designated
on Tax Map 83, Grid B2 as Parcel 0016 ("Ritchie Marlboro
Property"), as same may be amended from time to time.
The Plan treats Class 2 (Allowed Secured Claim of Ministry Partners
Investment Company, LLC) as follows:
* Ministry Partners will have an Allowed secured claim in the
amount of $4,650,000, inclusive of its filed Claim No. 18 and all
amounts allowable under Section 506(b). Post-confirmation interest
will accrue on only the $3,702,535 principal balance of the
Ministry Partners Class 2 Claim at the rate of 5% per annum.
Ministry Partners' claim will be paid pursuant to the terms below,
with a maturity date on the fifth anniversary of the Effective
Date.
* Ministry Partners will receive payments of $22,500 a month,
comprised of $17,500 in interest and $5,000 in principal, beginning
on the Effective Date until paid in full. Although the interest
payments are expected to be made by RCBCRM and the principal
payments by the Debtors (with RCBCRM making such principal payments
if not paid by the Debtor), both these payments will remain solely
the Debtor's obligation even after RCBCRM is no longer required to
pay them under the terms of the Sale Agreement and the Operating
Agreement.
* Unless Ministry Partners is already satisfied in full, RCBCRM
will pay the Debtor's plan distributions to Ministry Partners of
not less than $670,000 on the fourth anniversary of the Effective
Date and $1,000,000 on the fifth anniversary of the Effective Date,
which will not otherwise change the maturity date of the Debtor's
obligation to pay the balance of Ministry Partner's claim in full
on the fifth anniversary of the Effective Date.
* In the event that Ministry Partners receives a minimum
curtailment payment, RCBCRM distribution, or other payment from or
on behalf of the Debtor in excess of $1,500,000 exclusive of the
monthly payments in Section 5.02 (1)(a) above, then such monthly
payments shall be recalculated going forward based upon the
then-remaining balance of Ministry Partners claim as amortized
through the twenty-fifth anniversary of the Effective Date at an
interest rate of 5% per annum; provided, however, that such
recalculation shall occur no more often than once in any
twelve-month period.
Class 10 (Allowed General Unsecured Claims) consists of the Allowed
General Unsecured Claims in the amount of $713,000. Pursuant to an
order of the Court, the unsecured claim of Vogel has been allowed
in the amount of $375,000 plus interest.
Holders of Class 10 Claims will receive distributions totaling 100
percent of their Allowed Claims in cash, with interest at the rate
of 5 percent per annum, as follows: beginning on the date that is
six months from the Effective Date and continuing on the
anniversary of each such date for a period of five years, holders
of Class 10 General Unsecured Creditors shall receive their
pro-rata share of an aggregate sum of not less than $50,000 each
year. All Class 10 General Unsecured Claims are expected to be
paid in full no later than the date that is 48 months from the
Effective Date but, in any event, no later than the date that is 60
months from the Effective Date.
Attorneys for the Debtor:
Janet M. Nesse
MCNAMEE, HOSEA, JERNIGAN, KIM GREENAN & LYNCH, P.A.
6411 Ivy Lane, Suite 200
Greenbelt, Maryland 20770
Telephone: (301) 441-2420
Facsimile: (301) 982-9450
jnesse@mhlawyers.com
A copy of the Fourth Amended Plan of Reorganization is available at
https://bit.ly/31ay0jk from PacerMonitor.com.
About Rock Creek Baptist Church
Rock Creek Baptist Church of the District of Columbia, based in
Upper Marlboro, MD, filed a Chapter 11 petition (Bankr. D. Md. Case
No. 19-16565) on May 14, 2019. In the petition signed by Jeffrey
L. Mitchell, Sr., pastor, the Debtor was estimated to have up to
$50,000 in assets and $1 million to $10 million in liabilities.
The Hon. Lori S. Simpson oversees the case. The Debtor hired The
Weiss Law Group, LLC, and McNamee Hosea Jernigan Kim Greenan &
Lynch, P.A., as bankruptcy counsel.
ROCKIES EXPRESS: S&P Alters Outlook to Stable, Affirms 'BB+' ICR
----------------------------------------------------------------
S&P Global Ratings revised the rating outlook on Rockies Express
Pipeline LLC (REX) to stable from negative and affirmed the 'BB+'
issuer credit rating.
S&P said, "We also affirmed the 'BB+' issue-level ratings on the
senior unsecured debt, which reflects recovery expectations of
'3'.
"The stable outlook captures our view that S&P Global Ratings
adjusted leverage will remain between 4x and 4.5x over the next
several years even as open capacity is re-contracted at declining
rates.
"We expect adjusted EBITDA to remain relatively flat over the next
few years, leading to S&P Global Ratings adjusted leverage of about
4x-4.5x. We expect EBITDA to decline slightly this year given the
loss of its Ultra contract, the recent Gulfport settlement, and
other general demand and pricing pressures. Our base case forecast
is underpinned by our view that utilization in the western zones
will remain somewhat volatile and open capacity will earn a rate of
about 15 cents per dekatherms per day (dth/d). As a result of the
pressured pricing, EBITDA growth will be muted, leading to S&P
Global Ratings adjusted leverage that remains between 4x and 4.5x
through 2023. The company's stability is driven by stable contracts
and very high utilization in Zone 3 (Appalachian region) that allow
the company to maintain a baseline level of EBITDA and operating
cash flows. We expect the company to focus its efforts on signing
new contracts on open capacity, especially in the western region.
From a cash flow perspective, we think the company benefits from
its stable fixed-cost structure. We expect capital expenditures
(capex) to average about $30 million annually and dividends to
remain in the $400 million to $425 million area annually."
Counterparties experienced material credit pressures in 2020, but
they have recovered to some extent and outlooks have been revised
to stable. REX's business strength is tied to counterparties that
have long term contracts to transport gas out of the Appalachian
region. The price volatility in 2020 put significant pressure on
their credit quality and pressured ratings. S&P said, "However, as
the commodity price environment stabilized in the second half of
2020, we upgraded several of these gas producers and returned
several outlooks to stable. We raised our ratings on EQT Corp., for
instance, to 'BB', with a stable outlook from 'BB-', with a
negative outlook in the second-half of 2020. Antero Midstream
Partners L.P. (B/Stable/--) and Ascent Resource Utica Holdings LLC
also saw positive momentum, while Gulfport is expected to emerge
from bankruptcy. Although the average counterparty rating is still
several notches lower than REX's rating, we think the customer
diversification insulates them from dependency on any single
counterparty."
S&P said, "We believe REX's contract profile is incrementally more
stable considering the recent settlement with Gulfport. We expect
the lost volumes to be recontracted at prices that are basically in
line with other similar contracts. While the lost volumes and cash
flows will be detrimental for credit metrics in the short term, the
lost volumes and lower rate won't materially affect the forecast.
While the company also lost committed volumes from Ultra Petroleum
Corp., it was able to sign several new contracts as well, which
offset some of the cash flow stress. The company's average weighted
remaining contract length is about nine years, supported by
long-term contracts in Zone 3. The next material contract to expire
is with Ovintiv Corp. in May 2024, although several less
significant contracts in Zones 1 and 2 will expire over the next
few years as well.
The stable outlook reflects our view that REX will be able to
"maintain S&P Global Ratings adjusted debt to EBITDA below 4.5x
over the next few years while navigating contract expirations and
pressured pricing on renewals. Underlying the stable outlook is our
expectation that the overall creditworthiness of REX's
counterparties will not materially decline and utilization and
demand for its services will remain close to historical levels."
S&P could lower the ratings if:
-- Counterparty creditworthiness were to worsen from current
levels and S&P forecasted S&P Global adjusted debt to EBITDA to
remain above 4.5x. This could materialize if natural gas market
fundamentals were to come under stress and REX's utilization and
the contract profile became challenged in its view.
-- Counterparty stress were to remain at current levels, but S&P
Global adjusted debt to EBITDA began to approach 5x. This could
materialize if demand for REX's services declines or if the company
is unable to sign new contracts at adequate prices.
S&P could consider a positive rating action if leverage remains
below 4.5x and either:
-- The credit quality of shippers improves, which could be the
result if upstream gas market fundamentals were to strengthen
materially.
-- The company is able to sign new long-term volume-protected
contracts with higher-rated counterparties such that S&P thinks
general counterparty stress and recontracting risk is sufficiently
mitigated.
ROOSEVELT UNIVERSITY: Fitch Affirms 'B' Issuer Default Rating
-------------------------------------------------------------
Fitch Ratings has affirmed the 'B' Issuer Default Rating (IDR) and
'B' series 2007 rating on $35.4 million outstanding Illinois
Finance Authority revenue bonds, issued on behalf of Roosevelt
University (Roosevelt or RU).
The Rating Outlook is Negative.
SECURITY
The $35.4 million series 2007 bonds are an unsecured general
obligation of RU. The 2007 bonds do not have a debt service
reserve. . Fitch does not rate RU's outstanding 2018, 2019 or 2020
bonds, about $199 million combined, which have a stronger security
pledge than the unsecured 2007 bonds, including mortgage liens on
all university-owned property and various liquidity covenants.
ANALYTICAL CONCLUSION
Affirmation of the 'B' rating on RU's series 2007 bonds and IDR
reflects continued negative operating performance in fiscal 2020
and cash-flow margins insufficient to meet annual debt service,
requiring use of reserves. While benefiting from an asset
acquisition with Robert Morris University Illinois (RMUI) effective
March 2020, as well as federal stimulus funds in fiscals 2020 and
2021, significant financial uncertainty remains. The new December
2020 and March 2021 stimulus funding cycles could total about $11
million for institutional purposes at RU, which will partially
support fiscal 2021 and 2022 operations. Enrollment grew 15% in
fall 2020, but at levels lower than expected after the RMUI asset
acquisition. Enrollment uncertainties from the coronavirus pandemic
are exacerbated by a highly competitive market for students in
Illinois and projected declines in the numbers of high school
students. RU has a high student revenue dependence (about 84% in
fiscal 2020).
RU has very high debt leverage, an ongoing structural deficit, and
cash-flow margins that in 2020 were again insufficient to meet
either MADS or current debt service coverage. The effectiveness of
management's current expense reduction efforts, targeted at $10
million in fiscal 2021 alone, will impact future operating results
and possibly the character of the institution. RU's leverage ratio
(available funds-to-debt, about 43% in fiscal 2020) is adequate for
the rating, but quite vulnerable to endowment market fluctuations
and continued deficit operations in a stress scenario. Favorably,
available funds (AF) of $101 million at both FYE Aug. 31, 2020 and
2019 provide some cushion for RU to implement financial and
enrollment initiatives. RU has no new debt capacity at the current
rating.
The Negative Outlook reflects uncertainty related to RU's ability
to grow enrollment, reduce expenses, and achieve cash-flow margins
sufficient to meet debt service once federal stimulus funds are
expended. The university's Aug. 31, 2020 financial statements
reflect six months of combined RU and RMUI operations; fiscal 2021
statements will have a full combined operating year.
Revenue Defensibility: 'bb'
Enrollment Pressure in Competitive Market.
The 'bb' Revenue Defensibility assessment is supported by
increasing fall 2020 enrollment, although fall 2021 enrollment
remain uncertain due to the competitive market. RU enrollment grew
15% in fall 2020, largely due to the RMUI asset acquisition,
although growth was less than was expected. RU has significant
competition for students in Illinois, a highly student-fee driven
revenue profile, and elevated student price sensitivity. High
school demographics for Illinois are projected to decline
significantly over the next decade, heightening competition,
pricing and enrollment pressures. The asset acquisition with RMUI
was completed in March 2020.
RU operations remain highly dependent on net student revenues,
about 84% in fiscal 2020. The integration of RMUI and RU added
about 1,300 students in spring 2020 on top of RU's roughly 2,300
students. RU's tuition dependency is not expected to change.
Operating Risk: 'bb'
Slim Cash flow Margins and Structurally Unbalanced Budget
RU's Operating Risk assessment would normally be a 'bbb' attribute
for a fiscal 2020 cash flow margin of 9.4%, no new debt plans, and
generally manageable capital needs. However, RU's ongoing
structural budget imbalance is an asymmetric rating factor that
constrains the operating risk assessment at 'bb'. Coronavirus
stresses have added additional execution risk to RU's financial
recovery plans.
Management projects fiscal 2021 operations to strengthen due to
higher fall 2020 enrollment, two additional rounds of stimulus
funds and significant expense reduction actions. Fiscal 2021
operations will have a full year of combined RU and RMUI
operations. Stimulus funds available for institutional needs and
expected to be recognized in fiscals 2021 or 2022 could exceed $10
million. Management is also actively reducing fiscal 2021
expenses.
Since fiscal 2017, RU's cash flow margin has not been sufficient to
meet either current or MADS coverage due to high debt leverage,
requiring the use of reserves. This was the case in fiscal 2020,
with a cash-flow margin of $9.9 million or 9.4% that benefited from
six months of merged RMUI operations, and about $3 million of
stimulus funds (half of which is dedicated to student aid). Current
debt service coverage in fiscal 2020 was only 0.7x, and MADS
coverage was 0.6x. The timing of operating risks are exacerbated as
RU's annual debt service increases in fiscal 2024 from
interest-only at $13.9 million to $16 million.
Financial Profile: 'bb'
High Debt Leverage
The 'bb' Financial Profile assessment reflects high debt leverage
and vulnerability through a stress scenario due to potential
enrollment volatility, ability to make and sustain significant
expense cuts, grow operating margins sufficient to meet MADS in
fiscal 2024, and potential market pressures on balance sheet
ratios. Since fiscal 2017, including 2020, RU's cash-flow margins
were insufficient to meet either current or MADS coverage; this is
an asymmetric rating factor limiting the Financial Profile
assessment.
RU's outstanding debt at FYE 2020 is $238 million, including bonds,
some capital leases, and Fitch-adjusted operating leases. The debt
service structure is highly back-ended. Available funds (AF),
defined by Fitch as unrestricted cash and investments, totaled $101
million at Aug. 31, 2020, about the same as fiscal 2019. AF at FYE
2020 was 85% of operating expenses and a narrower 42% of
Fitch-adjusted debt. These balance sheet metrics are adequate for
the rating, but in a stress scenario are quite vulnerable to
endowment market fluctuations and continued operating losses.
However, RU's balance sheet does provide some financial cushion as
the university implements financial and strategic plans and absorbs
its asset acquisition of RMUI.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to a positive
rating action/upgrade:
-- Improved and sustained cash flow margins closer to 20% with
MADS coverage consistently exceeding 1.1x. Fitch would also
expect RU's leverage ratios to remain stable or improve.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- Failure to show consistent progress in improving cash flow
margins and achieving debt service coverage without reliance
on non-recurring revenues;
-- New debt issuance, absent significant gifts or improvement in
cash flow margins and demonstrated achievement of MADS
coverage from recurring revenues.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT PROFILE
Founded in 1945, Roosevelt's main campus is located in Chicago's
"loop" business district, and includes the historic auditorium
building, a 32-floor Wabash Street "vertical campus" building, and
the Goodman Center. The university also owns and operates a 27-acre
suburban campus in Schaumburg, IL, a northwest Chicago suburb. RU
has additional academic locations in Waukegan, Peoria and at Harper
Community College. Roosevelt students primarily come from the
Chicago metro area and are a mix of traditional undergraduates and
graduate students. Many students commute to the Chicago or
Schaumburg campuses, or attend on-line. RU has benefited from
several large nonrecurring revenue inflows in recent years, which
has helped support its balance sheet. In 2017, RU received a $25
million bequest dedicated for scholarships; in fiscal 2019, RU sold
its ownership in the Gage building for about $15 million; and in
fiscal 2017 RU sold its ownership interest in the University Center
housing for $19.9 million.
Enrollment in fall 2020 was 4,680 (4,037 FTE), up 15% from fall
2019 largely due to the asset acquisition of RMUI. This increase
was noteworthy, but not as large as expected. In fall 2019,
Roosevelt enrolled 3,427 FTE students, down 28% in the six years
since fall 2014. At the time of the acquisition, RMUI had 1,300
students. In fall 2020, about 69% of FTE enrollment was
undergraduate students and 31% was graduate students, including the
PharmD program.
Integration with RMUI
On March 9, 2020, the Higher Learning Commission approved RU and
RMUI's joint application to formally integrate. Both institutions'
academic programs retain full accreditation. About 1,300 RMUI
students moved to Roosevelt at the time of the integration. Many
RMUI students were located at the leased Chicago site, which was
next to Roosevelt's Chicago facilities. Programs with overlap (such
as business and core curriculum subjects) were merged into
Roosevelt's existing academic divisions; programs unique to RMUI,
such as some health science programs, will continue independently.
Roosevelt did not acquire any RMUI debt or property.
Coronavirus Impact
The ongoing coronavirus pandemic creates an uncertain environment
for the U.S. public finance higher education sector. Fitch's
forward-looking scenario analysis is informed by management
expectations and by Fitch's macroeconomic views, and evolves as
needed during this dynamic time. For RU, the baseline stress
scenario matches operating experience for fall 2020. Sporadic
closures remain possible going forward. During its spring and
summer 2020 semesters, RU transitioned classes to remote learning
but kept housing, dining and academic facilities open; as such it
made relatively few room and board refunds.
For fall 2020, RU continued offering a mix of in-person, online and
hybrid academic offerings, and structured its facilities and
related operations to do so safely. Housing operations reduced
density to accommodate social distancing, and RU waived its
freshman/sophomore residency requirement. For RU, the stress
scenario encompasses risks and uncertainties related to enrollment
growth and implementation of a plan to reduce significant expenses
in fiscal 2021.
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.
ROYAL CARIBBEAN: S&P Rates New $1.25BB Senior Unsecured Notes 'B'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '4'
recovery rating to Royal Caribbean Cruises Ltd.'s proposed $1.25
billion senior unsecured notes due 2028. The '4' recovery rating
indicates its expectation for average (30%-50%; rounded estimate:
30%) recovery for noteholders in the event of a payment default.
The company intends to use the proceeds from these notes primarily
to repay debt and will apply any remaining proceeds for general
corporate purposes. Specifically, S&P expects Royal to repay the
300 million outstanding under its commercial paper (CP) program
(unrated) and portions of its existing debt that mature in 2022,
including portions of its $1.6 billion revolver and $1 billion term
loan. Royal has launched amendments to its $1.6 billion revolver
due 2022 and $1 billion term loan due 2022 to extend their
maturities (the revolver to 2024 and the term loan to 2023). For
the revolving and term loan lenders that consent to the amendments,
Royal will reduce their respective commitments and outstanding
balances by 20%.
S&P said, "Our 'B' issuer credit rating and negative outlook on
Royal are unchanged. Notwithstanding our forecast that the
company's credit measures and operating cash flow generation will
be unsustainable through 2021, we believe its credit measures could
improve to more sustainable levels in 2022. Furthermore, we believe
Royal has sufficient liquidity to weather the continued suspension
and eventual slow resumption of sailing this year.
"Nevertheless, we believe there is still substantial uncertainty
around the ultimate path of the company's recovery given the
potential for further suspensions in its operations. In addition,
it is not clear how consumers and health authorities, like the U.S.
Centers for Disease Control and Prevention (CDC), would respond to
further flare-ups or additional waves of the virus either before or
after achieving widespread vaccination. Therefore, Royal may be
unable to ramp its EBITDA generation to a level that would support
material deleveraging and generate sufficient cash flow to partly
address the large calls on its cash in 2022, which include sizeable
amortization payments and debt maturities, maintenance capital
spending across its fleet of ships, and our expectation for two
large ship deliveries. Royal has committed financing for about 80%
of the cost of these ships.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P assigned its 'B' issue-level rating and '4' recovery rating
to Royal's proposed $1.25 billion senior unsecured notes. The '4'
recovery rating indicates its expectation for average (30%-50%;
rounded estimate: 30%) recovery for noteholders in the event of a
payment default.
-- S&P's 'BB-' issue-level rating and '1' recovery rating on
Royal's $3.32 billion senior secured notes remain unchanged. The
'1' recovery rating indicates its expectation for very high
(90%-100%; rounded estimate: 95%) recovery for noteholders in the
event of a payment default.
-- S&P said, "Our 'B+' issue-level rating and '2' recovery rating
on Royal's guaranteed unsecured notes and revolving credit
facilities remain unchanged. The '2' recovery rating indicates our
expectation for substantial (70%-90%; rounded estimate: 85%)
recovery for lenders in the event of a payment default. While our
estimated recovery on the guaranteed unsecured notes would indicate
a recovery rating of '1' (90%-100%), we cap our recovery ratings on
the debt issued by companies we rate in the 'B' category at '2'."
The cap addresses that these creditors' recovery prospects are at
greater risk of being impaired by the issuance of additional
priority or pari passu debt prior to default.
-- S&P said, "Our 'B' issue-level rating and '4' recovery rating
on Royal's existing unsecured and nonguaranteed debt remain
unchanged. The '4' recovery rating indicates our expectation for
average (30%-50%; rounded estimate: 30%) recovery for noteholders
in the event of a payment default." However, the recovery prospects
for Royal's unsecured and nonguaranteed debt may be impaired if it
incurs additional unsecured and non-guaranteed debt.
-- S&P uses an enterprise valuation (EV) approach to value Royal
because it believes the company would most likely be restructured
as a going concern.
Certain of Royal's subsidiaries pledge specific collateral and
provide guarantees of various priorities to different parts of the
capital structure. In our analysis, the recovery prospects for
Royal's debt instruments that benefit from guarantees reflect the
value we attribute to the applicable guarantor subsidiaries along
with the priority of the guarantee(s) supporting the instrument.
The recovery prospects for debt instruments that lack subsidiary
guarantees reflect their pro rata share of the value we attribute
to the parent on a stand-alone basis and the residual value, if
any, from guarantor subsidiaries after accounting for any debt they
guarantee. The value from these subsidiaries is available to cover
specific claims on a first-, second-, or third-priority basis.
Specifically:
--Royal's secured notes are secured by certain collateral,
including 28 of Royal's ships, up to an amount permitted by the
company's existing debt agreements. The secured notes also benefit
from a guarantee from certain of Royal's subsidiaries, including
Celebrity Cruises Holdings Inc. and Celebrity Cruises Inc. Under
S&P's analysis, the pledged collateral covers about half the
estimated secured claims at default and it believes the remaining
secured notes claims at default would be covered by unsecured
guarantees.
--Royal's guaranteed unsecured notes and committed (but currently
undrawn) $700 million 364-day term loan are guaranteed by Royal's
RCI Holdings LLC subsidiary, which holds seven vessel-owning
special-purpose vehicles (SPVs). Under S&P's analysis, the
guarantees from RCI Holdings LLC fully cover the estimated
guaranteed unsecured notes and term loan balance (which it assumes
is drawn) at default.
--Royal's unsecured revolvers, $1 billion term loan, and certain
other specified pieces of debt in the capital structure benefit
from a first-priority guarantee from the company's RCL Holdings
LLC, Torcatt Enterprises S.A., RCL Holdings Cooeratief UA, RCL
Cruises Ltd, and RCL Investments Ltd. subsidiaries and a
second-priority guarantee from RCI Holdings LLC. Under S&P's
analysis, these guarantees fully cover the estimated revolvers (pro
forma for the expected reduction of commitments under the current
$1.6 billion revolver), $1 billion term loan (pro forma for the
expected reduction in outstanding balance), and other specified
claims at default.
--Royal's export credit agreement (ECA) debt, relating to various
ship-specific financings, benefits from a first-priority guarantee
from Celebrity Cruise Lines Inc. (which is the parent of secured
notes guarantors Celebrity Cruise Holdings Inc. and Celebrity
Cruises Inc.), a second-priority guarantee from RCL Holdings LLC,
Torcatt Enterprises S.A., RCL Holdings Cooeratief UA, RCL Cruises
Ltd, and RCL Investments Ltd., and a third-priority guarantee from
RCI Holdings LLC. Under our analysis, these guarantees do not fully
cover our estimate of outstanding ECA debt at default, which
includes incremental ECA borrowings based on our assumption for
ship deliveries over the next few years. S&P assumes that any
deficiency not covered by guarantees would rank pari passu with all
of Royal's unsecured and unguaranteed debt.
--Royal's unsecured and unguaranteed debt benefit from unpledged
value at the parent as well as any residual value from subsidiaries
after accounting for collateral pledges and guarantees provided to
other pieces of debt in the capital structure. Under S&P's
analysis, this value covers only a portion of the estimated
unsecured, unguaranteed, and pari passu deficiency claims at
default.
Simulated default assumptions
-- S&P's simulated default scenario contemplates a default
occurring by 2024 due to a significant decline in cash flow from
permanently impaired demand for cruises following the negative
publicity and travel advisories during the COVID-19 pandemic, a
prolonged economic downturn, and/or increased competitive
pressures.
-- S&P said, "We estimate a gross enterprise value at emergence of
about $15.6 billion by applying a 7x multiple to our estimate of
EBITDA at emergence. We use a multiple that is at the high end of
our range for leisure companies to reflect Royal's good position as
the second-largest global cruise operator, which is a small but
underpenetrated part of the overall travel and vacation industry,
and its high-quality brands."
-- S&P attributes its estimate of gross enterprise value at
emergence to various parts of the capital structure based on its
understanding of the contribution, by asset value, of the parent
and its various subsidiaries that provide security and/or
guarantees.
-- S&P assumes that of its estimated gross enterprise value at
emergence:
--Approximately 50% is available to cover the secured notes;
--About 30% is available to cover the guaranteed unsecured
notes and committed $700 million term loan facility;
--10% is available to cover the guaranteed revolvers and
certain other specified pieces of unsecured debt; and
--10% is available to cover all remaining unsecured and
unguaranteed debt and pari passu claims that aren't fully covered
by the applicable guarantees.
-- In S&P's analysis, any guaranteed debt claims that aren't fully
covered by the applicable guarantees rank pari passu with all of
Royal's unsecured and unguaranteed debt.
-- S&P includes in its unsecured claims additional tranches of
loans recently entered into by Royal and various export credit
agencies, as well as new ship debt that S&P expects it to incur
prior to the year of default.
-- S&P assumes Royal's $700 million 364-day term loan facility is
fully drawn at default.
-- S&P assumes Royal's revolvers are 85% drawn at default.
Simplified waterfall
-- Emergence EBITDA: $2.2 billion
-- EBITDA multiple: 7x
-- Gross enterprise value: $15.6 billion
-- Net enterprise value after administrative expenses (5%): $14.8
billion
-- Total value attributed to entities securing and guaranteeing
the secured notes: $7.3 billion
-- Estimated secured debt at default: $3.5 billion
--Recovery expectations: 90%-100% (rounded estimate: 95%)
-- Residual value: $3.8 billion
--Residual value (attributed to Celebrity Cruises Holdings Inc.
and Celebrity Cruises Inc.) available for ECA debt that has a
first-priority guarantee from Celebrity Cruise Lines Inc.: $1.4
billion
--Residual value (attributed to entities other than Celebrity
Cruises) available for unsecured and unguaranteed debt at parent
Royal Caribbean Cruises Ltd.: $2.4 billion
-- Total value attributed to entities guaranteeing the guaranteed
unsecured notes and $700 million credit facility: $4.6 billion
Estimated guaranteed unsecured notes and $700 million term loan
balance at default: $1.8 billion
--Recovery expectations: Capped at 70%-90% (rounded estimate:
85%)
-- Residual value available for second-priority guaranteed debt
(revolvers [pro forma for expected reduced commitments], $1 billion
term loan [pro forma for the expected reduced balance outstanding],
and certain other pieces of debt): $2.8 billion
-- Total value attributed to entities providing a first-priority
guarantee to Royal's revolvers, $1 billion term loan, and certain
other specified pieces of guaranteed debt, as well as value from
second-priority guarantees: $4.3 billion
-- Estimated revolver, term loan, and other certain guaranteed
balances at default: $3.7 billion
--Recovery expectations: Capped at 70%-90% (rounded estimate:
85%)
-- Residual value available for second-priority guaranteed debt
(ECA debt): $0.6 billion
-- Total value available to ECA debt from first- and
second-priority guarantees: $2 billion
-- Estimated ECA debt at default: $10 billion
-- ECA deficiency claims that are pari passu to Royal's unsecured
and unguaranteed debt: $7.9 billion
-- Total value attributed to the parent and remaining enterprise
value from subsidiaries that provide guarantees and collateral:
$3.8 billion
-- Estimated unsecured, unguaranteed, and pari passu deficiency
claims at default: $12.4 billion
--Recovery expectations: 30%-50% (rounded estimate: 30%)
Note: All debt amounts include six months of prepetition interest.
RUBIE'S COSTUME: Amended Liquidating Plan Confirmed by Judge
------------------------------------------------------------
Judge Alan S. Trust has entered findings of fact, conclusions of
law and order confirming the Second Amended Joint Plan of
Liquidation of Debtors RCCI Wind Down Company, Inc. f/k/a Rubie's
Costume Company, FN Wind Down Company, Inc., Buy SE Wind Down
Company, MW Wind Down Company, LLC, and DC Wind Down Company LLC.
The Debtors have proposed the Plan and all other agreements,
documents, and instruments necessary to effectuate the Plan in good
faith and not by any means forbidden by law, thereby satisfying
section 1129(a)(3) of the Bankruptcy Code. The Debtors' good faith
is evident from the facts and record of these Chapter 11 Cases.
The Debtors, the Liquidating Debtors, the Plan Administrator,
Responsible Officer and/or any Litigation Trustee are authorized
and empowered to execute, deliver, and/or file such documents, and
make such payments, as are necessary to consummate the Plan. All
actions contemplated by the Plan are authorized and approved in all
respects.
Pursuant to Section 5.1 of Plan, on and after the Effective Date,
all assets and all liabilities of the Debtors shall be deemed
merged into RCCI and each Claim filed in the Chapter 11 Case of any
Debtor shall be deemed filed against the consolidated Debtors and a
single obligation of the consolidated Debtors on and after the
Effective Date.
Attorneys for the Debtors:
MEYER, SUOZZI, ENGLISH & KLEIN, P.C.
Edward J. LoBello
Jordan D. Weiss
990 Stewart Avenue, Suite 300
Garden City, New York 11530
(516) 741-6565
-and-
TOGUT, SEGAL & SEGAL LLP
Frank A. Oswald
Brian F. Moore
One Penn Plaza, Suite 3335
New York, New York 10119
Tel: (212) 594-5000
About Rubie's Costume Company
Rubie's Costume Company Inc. is a distributor, manufacturer, and
designer of costume and party-related accessories that serve over
2,000 retail accounts. It also maintains licensing partnerships
with top studios like Nickelodeon, Warner Bros, Lucasfilm, Marvel,
and Disney for products inspired by WWE, Ghostbusters, Stranger
Things, DC Comics, JoJo Siwa, Harry Potter, and Star Wars.
Rubie's Costume Company and its affiliates sought Chapter 11
protection (Bankr. E.D.N.Y. Lead Case No. 20-71970) on April 30,
2020. Rubie's Costume was estimated to have $100 million to $500
million in assets and $50 million to $100 million in liabilities as
of the filing.
Judge Alan S. Trust oversees the cases.
The Debtors tapped Meyer, Suozzi, English & Klein, P.C. and Togut,
Segal & Segal LLP as bankruptcy counsel; BDO USA, LLP as
restructuring advisor; and SSG Capital Advisors LLC as investment
banker. Kurtzman Carson Consultants is the claims agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 18, 2020. The committee is represented by Arent
Fox, LLP.
* * *
On Sept. 24, 2020, Debtors won court approval to sell substantially
all assets as a going concern to Rubie’s II, LLC. Rubie’s
Costume Company, et al., were renamed to RCCI Wind Down Company,
Inc., et al., following the closing of the sale.
Debtors have tapped Meyer, Suozzi, English & Klein, P.C. and Togut,
Segal & Segal LLP as bankruptcy counsel; BDO USA, LLP as
restructuring advisor; and SSG Capital Advisors LLC as investment
banker. Kurtzman Carson Consultants is the claims agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on May 18, 2020. The committee is represented by Arent
Fox, LLP.
S & A RETAIL: Case Summary & 10 Unsecured Creditors
---------------------------------------------------
Lead Debtor: S & A Retail, Inc.
f/d/b/a Geox Retail, Inc.
f/d/b/a Geox Retail East, Inc.
334 S Buckhout St.
Irvington, NY 10533
Business Description: The Debtors sell Geox branded footwear and
apparel through wholesale and ecommerce
distribution channels and at two retail
locations in New York and Florida.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Southern District of New York
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
S & A Retail, Inc. (Lead Case) 21-22174
FDBA Geox Retail, Inc.
FDBA Geox Retail East, Inc.
334 S Buckhout St.
Irvington, NY 10533
S & A Distribution, Inc. 21-22175
FDBA Geox USA, Inc.
FDBA Shoes & Apparel Distribution
334 S Buckhout St.
Irvington, NY 10533
Judge: Hon. Robert D. Drain
Debtors'
General
Bankruptcy
Counsel: Joseph T. Moldovan, Esq.
David J. Kozlowski, Esq.
MORRISON COHEN LLP
909 Third Avenue
New York, NY 10022
Tel: 212-735-8600
Fax: 212-735-8708
Email: jmoldovan@morrisoncohen.com
dkozlowski@morrisoncohen.com
Debtors'
Financial
Advisor: RYNIKER CONSULTANTS, LLC
Debtors'
Claims &
Noticing
Agent: OMNI AGENT SOLUTIONS DBA OMNI
https://cases.omniagentsolutions.com/documents?clientid=CsgAAncz%2b6YYYULoayPwR2X0z88YUC09mszsQrs7FpcL6IKM6lMApHqxNboj6JF7X81cRWkj8W0%3d&tagid=1268
S & A Retail's
Estimated Assets: $100,000 to $500,000
S & A Retail's
Estimated Liabilities: $1 million to $10 million
S & A Distribution's
Estimated Assets: $1 million to $10 million
S & A Distribution's
Estimated Liabilities: $10 million to $50 million
The petitions were signed by Bridgette Nally, secretary.
Copies of the petitions containing, among other items, a
consolidated a consolidated list of the Debtors' 10 unsecured
creditors are available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/MRWDZEA/S__A_Retail_Inc__nysbke-21-22174__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/MYLZHEQ/S__A_Distribution_Inc__nysbke-21-22175__0001.0.pdf?mcid=tGE4TAMA
S & H HARDWARE: Unsecureds Will Recover 11.1% in Amended Plan
-------------------------------------------------------------
S&H Hardware & Supply Co, Inc., submitted an Amended Chapter 11
Plan and a Disclosure Statement.
The Debtor will liquidate its assets and make disbursements to
creditors in accordance with their respective statutory priority.
The Plan contemplates the following distributions to Holders of
Allowed Claims:
* Allowed Non-Tax Priority Claims and Allowed Secured Claims are
Unimpaired and will be fully paid on or as soon as reasonably
practicable following the Effective Date.
* General Unsecured Claims will receive a total of approximately
11.12% of the Allowed amount of such Claims, Pro Rata, in Cash on
or as soon as reasonably practicable following the Effective Date.
* Insider Loan Claims will receive no distributions under the
Plan.
Attorneys for the Debtor:
Maureen P. Steady, Esquire
KURTZMAN | STEADY, LLC
401 S. 2nd Street, Suite 200
Philadelphia, PA 19147
Telephone: (215) 883-1600
Email: steady@kurtzmansteady.com
A copy of the Amended Disclosure Statement is available at
https://bit.ly/3vXEJLq from PacerMonitor.com.
About S & H Hardware & Supply
S & H Hardware & Supply Co., Inc., which engages in the retail of
hardware, home furnishings and related goods, filed a Chapter 11
bankruptcy petition (Bankr. E.D. Pa. Case No. 20-11514) on March
10, 2020, disclosing under $1 million in both assets and
liabilities. Judge Eric L. Frank oversees the case. The Debtor is
represented by Maureen P. Steady, Esq., at Kurtzman Steady, LLC,
and Heier Weisbrot & Bernstein, LLC, as an accountant.
No official committee of unsecured creditors has been appointed in
the case.
SALEM MEDIA: S&P Upgrades ICR to 'CCC+' on Improved Liquidity
-------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Salem Media
Group Inc. to 'CCC+' from 'CCC'. S&P also raised its issue-level
rating on its senior secured debt to 'CCC+' from 'CCC'.
S&P said, "The stable outlook reflects our expectation that Salem's
gross leverage will remain about 8x through 2021. It also reflects
our expectation of sufficient cash to meet operating and
fixed-charge obligations over the next 12 months.
"We believe Salem will have sufficient sources of liquidity to
cover its cash uses over the next year. Salem had cash balances of
$6.3 million as of Dec. 31, 2020, and we expect cash on the balance
sheet to increase further through the company's first quarter due
to proceeds from government loans. In January 2021, Salem applied
for $11.2 million in PPP loans. It has already received proceeds of
$8.4 million, with the remainder expected in the coming weeks.
Historically, the company operated with minimal cash on its balance
sheet and relied heavily on its $30 million asset-based lending
(ABL) revolving credit facility (unrated) for liquidity. The
company had approximately $19.2 million in availability as of Dec.
31, 2020 ($24.2 million borrowing base, limited by eligible
accounts receivables, and $5 million of borrowings). We now expect
liquidity (cash and ABL availability) and expected operating cash
flow in 2021 will be sufficient to cover financial and operating
obligations over the next 12 months. These include about $15
million in expected interest payments, $10 million-$12 million in
capital expenditures (capex), and $200 million-$230 million in
operating expenses.
"We do not expect the 1x minimum fixed-charge ratio covenant to
spring in 2021, but headroom remains tight. The covenant on the ABL
facility applies if availability is less than $4.5 million. We do
not expect it to spring in our base-case scenario given current
cash on the balance sheet and PPP cash injections. However, in the
event it does, we expect headroom to remain tight at less than
10%.
"We expect credit metrics to remain weak over the next 12 months,
with S&P Global Ratings-adjusted leverage of about 8x in 2021. We
expect Salem to generate between $30 million and $40 million of S&P
Global Ratings-adjusted EBITDA in 2021, compared to $37.6 million
in 2020. The U.S. broadcast radio sector is recovering from the
recession brought on by the coronavirus pandemic more slowly than
we expected. Salem's block programming (30% of 2020 revenue) was
down 9% in 2020. Although, we expect low-single-digit percent
growth from new contracts, overall segment revenue in 2021 will be
less than that of 2019 because the company is holding block pricing
flat."
Broadcast radio advertising (23% of 2020 revenue) is highly
correlated to expectations for consumer spending. S&P said, "We
expect industrywide spending on broadcast radio advertising to
increase 8.7% in 2020 and 9.6% in 2021. We expect radio advertising
won't recover to about 90% of full-year 2019 spending until 2022.
While radio advertising has sequentially improved since April 2020,
many local advertisers have still not yet returned to radio
advertising. Although radio advertising normally has short lead
times, we believe the recession further shortened advertiser
commitments, giving us little visibility into the recovery.
Additionally, the company will not benefit from the $6.6 million in
political revenue it generated in 2020, given it is tends to be
significantly less in years following congressional and
presidential elections."
S&P said, "Salem's capital structure is unsustainable long term. If
leverage remains elevated well above 5x, we believe it could be
difficult to refinance its $216.3 million (outstanding) senior
secured notes before they mature in 2024. We do not expect EBITDA
generation to be substantial enough for Salem to significantly
deleverage over the next two years. While not included in our
base-case forecast, it could reduce leverage through noncore asset
sales or paying off debt using its cash balance. If the PPP loans
are forgiven, Salem will have additional cash to pay off debt.
"The stable outlook reflects our expectation that Salem's gross
leverage will remain elevated at about 8x through 2021. It also
reflects our expectation it will generate sufficient cash to meet
operating and fixed-charge obligations over the next 12 months."
S&P could lower its rating on Salem if it envisions a default in
the next 12 months. This would likely occur because of:
-- A stalled recovery, leading to a cash flow burn and a sharp
decline in profitability;
-- An expected covenant breach; or
-- An expected restructuring of its debt obligations.
Although unlikely, S&P could raise its rating on Salem over the
next 12 months if:
-- Revenue growth stabilizes, and S&P expects the company to
reduce leverage to 5x or below before it must refinance its senior
secured notes due in 2024; or
-- It executes significant deleveraging asset sales to achieve the
same result.
SC SJ HOLDINGS: Unsec. Creditors Get Share of GUC Cash Pot
----------------------------------------------------------
SC SJ Holdings LLC, et al., submitted a Plan and a corresponding
Disclosure Statement.
Debtor SC SJ is the owner of a luxury convention hotel (the
"Hotel") located at 170 South Market Street, San Jose, California,
in the heart of Silicon Valley near many tech-industry corporate
offices. The 20-story, two-tower Hotel has 805 rooms and suites,
65,000 square feet of state-of-the-art meeting and event space,
three restaurants with bars, a café bakery, a fitness center, and
a rooftop pool and gazebo. The Hotel features grand ballrooms for
large conferences and conventions, as well as intimate spaces for
smaller gatherings. The Hotel historically hosted many conferences
and conventions, particularly in the technology industry.
In connection with a March 2020 refinancing of the Prepetition
Secured Loan, which was derailed by the pandemic, the Hotel was
appraised by LW Hospitality Advisors: (a) on an "as is" basis at
$261 million, (b) with a "prospective market value upon completion
of renovation" on March 1, 2021 at $285.5 million, and (c) with a
"prospective market value upon stabilization" on March 1, 2023 at
$304 million.
The Plan treats claims as follows:
* Class 3(A): SC SJ Prepetition Secured Loan Claim. The
Prepetition Secured Lender will release its right to receive
Default Interest and shall receive, on account of the SC SJ
Prepetition Secured Loan Claims payment in Cash of any unpaid
interest on the Prepetition Secured Loan accrued prior to the
Effective Date at the non-default rate and any unpaid reasonable
costs and expenses owed and payment in full over time of the
Post-Effective Date. Class 3(A) is impaired.
* Class 3(B): FMT Prepetition Secured Claims. The Prepetition
Secured Lender shall receive other than cash collateral, shall be
delivered in kind to Reorganized SC SJ and repayment of the debt
secured by the Prepetition FMT Collateral shall be made over time
by Reorganized SC SJ pursuant to the Post-Effective Date Secured
Loan Documents. Class 3(B) is impaired.
* Class 4A: SC SJ General Unsecured Claims. The class is
unimpaired.
* Class 4B: FMT General Unsecured Claims. Each Holder of an
Allowed FMT General Unsecured Claim will receive its Pro Rata share
of the FMT GUC Cash Pot. If Class 4B accepts the Plan, the
Prepetition Secured Lender will voluntarily waive its right to
receive a Pro Rata share of the FMT GUC Cash Pot on account of the
FMT Deficiency Claim, provided that if Class 4B does not accept the
Plan, then the GUC Cash Pot will be distributed Pro Rata on account
of all Class 4B Allowed Claims, including the FMT Deficiency Claim.
Class 4B is impaired.
* Class 5: Inter-Debtor Claims, Class 6B: FMT Subordinated
Claims and Class 7B: FMT Equity Interest. These classes shall be
discharged. All claims are impaired.
The Disclosure Statement still has blanks as to the estimated total
allowed amount and the estimated percentage recovery for Class 4B:
FMT General Unsecured Claims.
Proposed Counsel to the Debtors:
Patrick Potter
Dania Slim
Jonathan Doolittle
Rahman Connelly
PILLSBURY WINTHROP SHAW PITTMAN LLP
1200 Seventeenth Street, NW
Washington, DC 20036
Telephone: (202) 663-8928
Facsimile: (202) 663-8007
Justin Alberto (No. 5126)
Patrick J. Reilley (No. 4451)
COLE SCHOTZ P.C.
500 Delaware Avenue, Suite 1410
Wilmington, Delaware 19801
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
A copy of the Disclosure Statement is available at
https://bit.ly/3lNuuoE from PacerMonitor.com.
About SC SJ Holdings and FMT SJ
San Ramon-based Eagle Canyon Management's SC SJ Holdings LLC owns
The Fairmont San Jose, an 805-room luxury hotel located at 170
South Market St., San Jose, Calif. The hotel is near many of the
largest Fortune 1000 corporations and is a popular location for
conferences and conventions, particularly in the technology
industry.
On March 5, 2021, SC SJ Holdings' affiliate, FMT SJ LLC, filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Case No. 21-10521). On March 10, 2021, SC SJ
Holdings sought Chapter 11 protection (Bankr. D. Del. Case No.
21-10549). The cases are jointly administered under Case No.
21-10549.
At the time of the filing, SC SJ Holdings disclosed assets of
between $100 million and $500 million and liabilities of the same
range. FMT SJ disclosed that it had estimated assets of between
$500,000 and $1 million and liabilities of between $100 million and
$500 million.
The Debtors tapped Pillsbury Winthrop Shaw Pittman, LLP, as their
bankruptcy counsel, Cole Schotz P.C. as local counsel, and Verity
LLC as financial advisor. Stretto is the claims agent and
administrative advisor.
SEADRILL PARTNERS: Amends MSA; Unsecureds to Recover Up to 0.9%
---------------------------------------------------------------
Seadrill Partners LLC, et al., submitted an Amended Disclosure
Statement relating to the Joint Chapter 11 Plan of Reorganization
on March 18, 2021.
The Amended Disclosure Statement discusses how the Strategic
Process resulted in the execution of a master services agreement
with Energy Drilling Management Pte. Ltd. with respect to the
Debtors' tender rigs and the execution of the Vantage Drilling MSA
with Vantage Drilling International. However, following the
execution of such agreements the Debtors continued to receive
proposals with respect to the operation of their floater vessels,
which the Debtors have assessed in comparison to the Vantage
Drilling MSA.
The Debtors determined in their reasonable business judgment that
the commercial proposition served by using a combination of Vantage
Drilling International, Diamond Offshore Drilling Inc., and Odfjell
Drilling Ltd., each as managers of certain of the Debtors' floater
vessels, was superior to the original Vantage Drilling management
structure. On March 16, 2021, the Debtors filed their Supplement to
Debtors' Emergency Motion for an Order Authorizing the Debtors to
Enter into a New Framework Agreement with Vantage Drilling
Management for the Debtors’ Fleet Vessels.
The Supplement to MSA Motion is set to be heard on March 18, 2021.
If the Supplement to the MSA Motion is approved, the Debtors will
enter into management agreements with Diamond and Odfjell, and an
amended version of the Vantage Drilling MSA. Collectively, the
Energy Drilling MSA, the Vantage Drilling MSA, the Odfjell MSA, and
the Diamond MSA represent the management and operation of the
Debtors' entire fleet, aside from two fleet vessels which are
currently managed by Seadrill Limited and will transfer to
management under Vantage Drilling upon the expiration of the
applicable customer contracts.
Class 4 consists of TLB Secured Claims with $2,637.0 million
approximate amount of claims and 12.3% projected recovery. Each
Holder of an Allowed Class 4 Claim shall receive its Pro Rata share
of 68.2% of the New Common Stock (subject to dilution by any New
Common Stock that may be issued pursuant to the Employee Incentive
Plan, if any), unless such Holder elects to receive the Cash Out
Amount per $1,000 of Allowed Class 4 Claims in Cash, subject to the
Cash Cap.
Class 5 consists of General Unsecured Claims with $82.2 - $2,405.2
million approximate amount of claims and 0.9% - 0% projected
recovery. As of the Effective Date, each Holder of an Allowed
General Unsecured Claim against the Debtors shall receive its Pro
Rata share of $750,000. $209,776,103 of intercompany claims will
not participate in cash recovery but will be included as Class 5
General Unsecured Claims for voting purposes.
If both Class 4 and Class 5 vote to accept the Plan, the TLB
Deficiency Claims, which represent up to 96% of all General
Unsecured Claims, shall not be entitled to any distribution under
the Plan and shall be deemed canceled, released, and extinguished,
but the total consideration distributed to Holders of Claims in
Class 5 shall remain $750,000, thereby increasing the ratable
allocation of such consideration to such Holders.
Co-Counsel to 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
Email: mcavenaugh@jw.com
mstull@jw.com
ggraham@jw.com
Brian E. Schartz, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
609 Main Street
Houston, Texas 77002
Telephone: (713) 836-3600
Facsimile: (713) 836-3601
Email: brian.schartz@kirkland.com
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
Proposed 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
- and -
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 by deep-water drilling contractor Seadrill Ltd.
(OTCMKTS:SDRLF) to own, operate and acquire offshore drilling rigs.
It 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 and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-35740) on Dec. 1, 2020. Mohsin
Y. Meghji, managing partner at M3 Partners, acting as the Company's
Chief Restructuring Officer, 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.
Kirkland & Ellis LLP and Kirkland & Ellis International LLP, and
Jackson Walker LLP are the Debtors' bankruptcy counsel. The
Debtors also tapped Sheppard Mullin Richter & Hampton, LLP to serve
as conflicts counsel and KPMG LLP to provide tax provision and
consulting services.
SEADRILL PARTNERS: April 30 Plan Confirmation Hearing Set
---------------------------------------------------------
Seadrill Partners LLC, et al., submitted a Second Amended
Disclosure Statement relating to the Joint Chapter 11 Plan of
Reorganization on March 23, 2021.
The Bankruptcy Court has scheduled the Confirmation Hearing for
April 30, 2021, at 9:00 a.m. The Voting Deadline is April 23, 2021,
at 11:59 p.m. Objections to Confirmation must be filed and served
on the Debtors, and certain other parties, by no later than April
23, 2021, at 4:00 p.m.
The Second Amended Disclosure Statement cites minor alterations to
Other Secured Claims in Class 1. Each Holder of an Allowed Other
Secured Claim shall receive as determined by the Debtors or the
Reorganized Debtors, as applicable, with the consent of the
Required Consenting Lenders: payment in full in Cash of its Allowed
Other Secured Claim; the collateral securing its Allowed Other
Secured Claim; Reinstatement of its Allowed Other Secured Claim; or
such other treatment as is necessary to satisfy section 1129 of the
Bankruptcy Code.
The Debtors have not yet finalized their determination of the
Restructuring Transactions that will be utilized to distribute New
Common Stock. This discussions addresses consequences in two
scenarios: the Restructuring Transactions are effectuated by, among
other things, causing Seadrill Partners LLC to issue New Common
Stock to Seadrill Operating LP, and then causing Seadrill Operating
LP to distribute such New Common Stock to Holders of Allowed Claims
who are entitled to receive New Common Stock in exchange for their
Claims pursuant to the Plan in a transaction that is respected as a
taxable transaction for U.S. federal income tax purposes (a "1001
Transaction ") and (2) a scenario where, either, the steps taken to
effectuate a 1001 Transaction are recharacterized, or Holders of
Claims are treated as contributing their Claims directly to
Seadrill Partners LLC for New Common Stock (a "351/367 Transaction
").
The Second Amended Disclosure Statement does not alter the proposed
treatment for creditors:
* Class 4 consists of TLB Secured Claims with $2,637.0 million
approximate amount of claims and 12.3% projected recovery. Each
Holder of an Allowed Class 4 Claim shall receive its Pro Rata share
of 68.2% of the New Common Stock (subject to dilution by any New
Common Stock that may be issued pursuant to the Employee Incentive
Plan, if any), unless such Holder elects to receive the Cash Out
Amount per $1,000 of Allowed Class 4 Claims in Cash, subject to the
Cash Cap.
* Class 5 consists of General Unsecured Claims with $82.2 -
$2,405.2 million approximate amount of claims and 0.9% - 0%
projected recovery. As of the Effective Date, each Holder of an
Allowed General Unsecured Claim against the Debtors shall receive
its Pro Rata share of $750,000. $209,776,103 of intercompany claims
will not participate in cash recovery but will be included as Class
5 General Unsecured Claims for voting purposes.
* If both Class 4 and Class 5 vote to accept the Plan, the TLB
Deficiency Claims, which represent up to 96% of all General
Unsecured Claims, shall not be entitled to any distribution under
the Plan and shall be deemed canceled, released, and extinguished,
but the total consideration distributed to Holders of Claims in
Class 5 shall remain $750,000, thereby increasing the ratable
allocation of such consideration to such Holders.
Co-Counsel to 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
Email: mcavenaugh@jw.com
mstull@jw.com
ggraham@jw.com
Brian E. Schartz, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
609 Main Street
Houston, Texas 77002
Telephone: (713) 836-3600
Facsimile: (713) 836-3601
Email: brian.schartz@kirkland.com
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
Proposed 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
- and -
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 by deep-water drilling contractor Seadrill Ltd.
(OTCMKTS:SDRLF) to own, operate and acquire offshore drilling rigs.
It 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 and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-35740) on Dec. 1, 2020. Mohsin
Y. Meghji, managing partner at M3 Partners, acting as the Company's
Chief Restructuring Officer, 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.
Kirkland & Ellis LLP and Kirkland & Ellis International LLP, and
Jackson Walker LLP are the Debtors' bankruptcy counsel. The
Debtors also tapped Sheppard Mullin Richter & Hampton, LLP to serve
as conflicts counsel and KPMG LLP to provide tax provision and
consulting services.
SENIOR PRO SERVICES: May 7 Plan & Disclosure Hearing Set
--------------------------------------------------------
On Feb. 12, 2021, debtor Senior Pro Services, LLC filed with the
U.S. Bankruptcy Court for the Northern District of California,
Oakland Division, a First Amended Combined Plan and Disclosure
Statement.
On March 23, 2021, Judge Charles Novack tentatively approved the
Disclosure Statement and ordered that:
* April 23, 2021, is fixed as the last day for filing written
acceptances or rejections of the First Amended Plan.
* April 23, 2021, is fixed as the last day for filing and
serving written objections to the First Amended Plan.
* May 7, 2021, at 11:00 a.m. is the date and time fixed for
the hearing on final approval of the disclosure statement (if a
written objection has been timely filed) and for the hearing on
confirmation of the First Amended Plan.
* May 3, 2021, is fixed as the last day to file all ballots
and a ballot tabulation.
A full-text copy of the order dated March 23, 2021, is available at
https://bit.ly/3w7NClJ from PacerMonitor.com at no charge.
The Debtor is represented by:
James A. Shepherd, Esq.
LAW OFFICES OF JAMES SHEPHERD
3000 Citrus Circle, Suite 204
Walnut Creek, CA 94598
Tel: (925) 954-7554
Fax: (925) 281-2341
Email: jim@jsheplaw.com
About Senior Pro Services
Senior Pro Services LLP is a home health care service provider in
San Leandro, California. It sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-40408) on Feb.
22, 2020. The case is assigned to Judge Charles Novack. The
Debtor estimated $1 million to $10 million in assets and $100,000
to $500,000 in liabilities. The petition was signed by Fessha
Taye, the Debtor's manager and chief executive officer. James A.
Shepherd, Esq. at the Law Offices of James Shepherd is the Debtor's
counsel.
SHILO INN: Gets Cash Collateral Access Thru May 31
--------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
has authorized Shilo Inn, Ocean Shores, LLC and Shilo Inn, Nampa
Suites, LLC to use cash collateral on an interim basis in
accordance with the budget through May 31, 2021.
RSS WFCM2016NXSSWA SIOSN, LLC's predecessor in interest extended
pre-petition credit facilities to Ocean Shores and Nampa Suites,
respectively evidenced, in part, by several loan documents
including the note in the original principal amount of $9,886,941
dated November 2, 2015 executed by the Borrower in favor of NATIXIS
REAL ESTATE CAPITAL LLC, the Original Lender.
The Secured Creditor succeeded by assignment to all of the
interests of the Original Lender in the Loan Documents; and as a
result, the Secured Creditor is the current holder of the Note and
the Loan Documents.
The Debtors are in the process of reviewing and analyzing their
respective obligations under the Loan Documents and the validity,
extent and priority of Secured Creditor's interests in and to the
Debtor's assets.
The Debtors are authorized to use cash collateral to pay for the
operating expenses and costs of administration incurred by the
Debtor in accordance with the budget, with a 10% variance.
A Termination Event constitute any of these events:
a) May 31, 2021;
b) The Debtors will fail to deposit on a daily basis all cash
receipts and collections from whatever source in its post-petition
debtor-in-possession account(s);
c) Any order will be entered, other than with the consent of the
Secured Creditor, reversing, amending, supplementing, staying,
vacating, or otherwise modifying the Order in any material respect
or terminating the use of Cash Collateral by the Debtors pursuant
to the Order;
d) An application will be filed by the Debtors for the approval of
any Superpriority Claim or any lien in the Chapter 11 Case which is
pari passu with or senior to the Adequate Protection Obligations or
Adequate Protection Liens, or there will be granted any such pari
passu or senior Superpriority Claim or lien in each case, except
any such Superpriority Claim or lien arising thereunder;
e) Any order will be entered granting relief from the automatic
stay applicable under section 362 of the Bankruptcy Code to the
holder or holders of any security interest, lien or right of setoff
other than a security interest, lien or right of setoff of the
Secured Creditor, to permit foreclosure (or the granting of a deed
in lieu of foreclosure or the like), possession, set-off or any
similar remedy with respect to any Collateral or any assets of the
Debtors necessary to the conduct of its businesses;
f) Except as permitted by any order of the Court and included in
the Budget, the Debtors will make any payment in respect of a
prepetition claim;
g) (i) Ocean Shores' or Nampa Suites' chapter 11 case will be
dismissed or converted to a case under chapter 7 of the Bankruptcy
Code; or (ii) a trustee under chapter 11 of the Bankruptcy Code, a
responsible officer, or an examiner with enlarged powers relating
to the operation of the business (powers beyond those set forth in
section 1106(a)(3) and (4) of the Bankruptcy Code) under section
1106(b) of the Bankruptcy Code shall be appointed or elected in a
Chapter 11 Case;
h) Except as would not reasonably be expected, individually or in
the aggregate, to have a material adverse effect, the Debtors fail
to keep and maintain all property in good working order and
condition, ordinary wear and tear excepted;
i) The Debtors fail to maintain, with financially sound and
reputable insurance companies insurance in such amounts and against
such risks as are customarily maintained by companies of
established repute engaged in the same or similar businesses
operating in the same or similar locations and all insurance
required to be maintained pursuant to the Loan Documents, or fails
to furnish to the Secured Creditor, upon reasonable request,
information in reasonable detail as to the insurance so
maintained;
j) The Debtors fail to comply with all laws, rules, regulations,
and orders of any Governmental Authority applicable to it, its
operations or its property, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected
to result in a material adverse effect, provided, that the Debtors
will be entitled to contest in good faith any laws, rules,
regulations and order of any Governmental Authority so long as,
prior to contesting such matters, the Debtors notifies and obtains
written consent of the Secured Creditor, which consent will not be
unreasonably withheld; or
k) The Debtors fail to comply with any of the terms or conditions
of the Order; provided, however, that the Secured Creditor may
waive, in writing, any Termination Event.
The Secured Creditor is entitled to adequate protection of its
interest in the Prepetition Collateral securing the Prepetition
Obligations, including Cash Collateral, for and equal in amount to
the amount of Cash Collateral used from and after the Petition
Date.
Although the Debtors contend that the Secured Creditor is
adequately protected by, among other things, substantial equity
cushion, the Secured Creditor disputes the contention and argues
the Debtor cannot offer adequate protection for its use of Cash
Collateral. The Secured Creditor has, however, consented to the
Debtors' use of Cash Collateral, subject to and expressly
conditioned upon the granting of protections as provided for in the
Order.
The Debtors grant, in favor of the Secured Creditor and as security
for all indebtedness that is owed by the Debtors to the Secured
Creditor, under the Loan Documents, but only to the extent of the
Adequate Protection Obligations, a first priority post-petition
security interest and lien in, to and against all of the Debtors
assets, to the same priority, validity and extent that the Secured
Creditor held a properly perfected pre-petition security interest
in such assets, which are or have been acquired, generated or
received by the Debtors subsequent to the Petition Date.
The liens and security interests granted are deemed perfected
without the necessity for filing or execution of documents which
might otherwise be required under non-bankruptcy law for the
perfection of said security interests.
A further interim hearing on the Debtors' continued use of Cash
Collateral is scheduled for May 26 at 10 a.m. Objections are due
May 19.
A copy of the Order and the Debtors' pro forma operating statement
for the period from April 1 2021 to May 31, 2021, prepared on cash
flow basis is available at https://bit.ly/3w48BG3 from
PacerMonitor.com.
Shilo Inn Ocean Shores, LLC projects $397,373 in gross revenues and
$204,326 in total general and administrative expenses and other
cash outflows during the two-month period. Shilo Inn Nampa Suites,
LLC projects $228,291 in gross revenues and $103,294 in total
general and administrative expenses and other cash outflows during
the two-month period.
About Shilo Inn
Hospitality companies Shilo Inn, Ocean Shores, LLC and Shilo Inn,
Nampa Suites, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Wash. Lead Case No. 20-42348) on Oct.
15, 2020.
At the time of filing, Shilo Inn, Ocean Shores disclosed up to $50
million in both assets and liabilities of the same range. Shilo
Inn, Nampa Suites disclosed $1 million to $10 million in both
assets and liabilities.
Judge Brian D. Lynch oversees the cases.
The Debtors tapped Levene, Neale, Bender, Yoo & Brill L.L.P. as
their bankruptcy counsel and Stoel Rives LLP as their local
counsel.
SM ENERGY: S&P Upgrades ICR to 'B-', Alters Outlook to Stable
-------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on SM Energy Co.
to 'B-' from 'CCC+' and revised the outlook to stable from
negative. At the same time, S&P raised its rating on the company's
unsecured notes to 'B' from 'B-' (recovery rating: '2') and on its
second-lien notes to 'B+' from 'B' (recovery rating: '1').
The stable outlook reflects S&P's expectation that SM Energy will
be able to meet its upcoming debt maturity schedule through a
combination of free cash flow and drawing on its credit facility.
S&P Global Ratings recently raised its crude oil price assumption
to $55 per barrel (bbl) for the remainder of 2021 and 2022, up from
$45/bbl, which will support improved cash flow metrics for oil and
gas exploration and production (E&P) company SM Energy Co. S&P also
believes the risk of SM Energy executing another distressed
exchange is remote, given the improvement in capital markets and
the company's bond prices.
Improved free cash flow, credit ratios, as well as capital market
conditions should allow SM Energy to repay or refinance its
upcoming maturities on favorable terms. S&P said, "Based on our
revised oil price assumptions, we now expect SM Energy to realize
higher prices for its oil production. Therefore, after temporarily
weakening in 2021 due to below-market hedges put in place last
year, we now expect funds from operations (FFO) to debt will rise
to the mid- to high-30% range in 2022 while debt to EBITDA
decreases to the low-2x area. At the same time, after projected
neutral free cash flow in 2021, we expect SM Energy to generate
meaningful free cash flow beginning in 2022. In addition, the
company should have full availability on its revolver now that we
expect leverage to head below 2.5x, which will provide another
source of funds for debt repayment. If leverage should remain above
2.5x (contrary to our expectations), the company continues to have
an approximately $200 million basket $380 million in second-lien
capacity, which it could tap if needed to address near-term debt
maturities."
S&P said, "We believe the likelihood for further below-par debt
repurchases or exchanges is remote. Given the increase in the
price of SM Energy's bonds to close to par, along with improvement
in the company's liquidity position, we believe the likelihood of
an additional distressed exchange is low."
Free cash flow is dependent on the execution of its production
targets, including the success of its Austin Chalk program. SM
Energy relies on the execution of both its Midland Basin (Permian)
and Austin Chalk assets to generate positive free cash flow in
2021. While the company's most recent Austin Chalk well results
have been promising, with initial production rates in line with
some of the company's core Midland acreage, the Austin Chalk has a
long history of inconsistent results from other operators. SM
Energy reiterated its commitment to debt paydown and spending
within free cash flows. Management expects to generate sufficient
cash under current strip prices to redeem its maturities through
2024, thus lowering its overall debt load. Additionally, the
company committed to a less-than 75% reinvestment rate in 2022 and
commitment to reducing its leverage profile to below 2x by year-end
2022.
S&P said, "The stable outlook reflects our view that SM Energy will
use free cash flow to address its upcoming maturities and lower its
overall debt load. Additionally, it reflects our expectations for
debt to EBITDA to temporarily weaken in 2021 before strengthening
in 2022 to the low-2x area and FFO to debt to the mid- to high-30%
range as the company works through its delineation of the Austin
Chalk and executes on its Midland Basin acreage.
"We could raise our rating on SM Energy should the company's credit
metrics strengthen such that debt to EBITDA approaches 2x while FFO
to debt rises to the mid-30% area on a sustained basis and the
company generates positive free cash flow. This would most likely
occur if the company delivers on its capital spending and
production targets and uses free cash flow to reduce debt.
"We could lower the rating if SM Energy's cash flow profile
meaningfully weakens, or it loses access to the capital markets,
such that it is unable to address its near-term debt maturities.
This could occur should commodity prices meaningfully decline below
our current expectations and the company does not rein in spending,
or if production comes in well below our estimates."
SOUTHLAND ROYALTY: May 12 Plan Confirmation Hearing Set
-------------------------------------------------------
Southland Royalty Company LLC filed with the U.S. Bankruptcy Court
for the District of Delaware a motion seeking entry of an order
approving the Disclosure Statement.
On March 23, 2021, Judge Karen B. Owens granted the motion and
ordered that:
* The Disclosure Statement is approved as containing adequate
information.
* April 26, 2021 at 4:00 p.m. is fixed as the last day for all
Holders of Claims or Interests entitled to vote on the Plan to
return their Ballots to be counted as votes.
* April 26, 2021 at 4:00 p.m. is fixed as the last day to file
objections to the Plan.
* May 10, 2021, prior to noon is fixed as the last day to file
responses to objections to the Plan.
* May 5, 2021, at 4:00 p.m. is fixed as the last day to file
the report tabulating the voting on the Plan.
* May 12, 2021, at 10:00 a.m. is the hearing to consider
Confirmation of the Plan.
Counsel to the Debtor:
M. Blake Cleary
Sean M. Beach
Elizabeth S. Justison
S. Alexander Faris
Rodney Square
1000 North King Street
Wilmington, DE 19801
Phone: (302) 571-6600
Fax: (302) 571-1253
E-mail: mbcleary@ycst.com
sbeach@ycst.com
afaris@ycst.com
ejustison@ycst.com
- and -
C. Luckey McDowell
Ian E. Roberts
2828 N. Harwood Street, Suite 1800
Dallas, TX 75201
Phone: (214) 271-5777
E-mail: luckey.mcdowell@shearman.com
ian.roberts@shearman.com
- and -
Sara Coelho
Jonathan M. Dunworth
599 Lexington Avenue
New York, NY 10022
Phone: (212) 848-4000
Email: sara.coelho@shearman.com
jonathan.dunworth@shearman.com
About Southland Royalty
Southland Royalty Company LLC -- http://www.southlandroyaltyco.com/
-- is a privately held independent exploration and production
company engaged in the acquisition and development of hydrocarbons.
Headquartered in Fort Worth, Southland Royalty Company conducts its
business across four states, with the majority of operations in
Wyoming and New Mexico. Southland Royalty Company was formed
principally to produce and extract hydrocarbons in the Wamsutter
field of the Green River Basin and in the San Juan Basin.
Southland Royalty Company sought Chapter 11 protection (Bankr. D.
Del. Case No. 20-10158) on Jan. 27, 2020. In the petition signed
by CRO Frank A. Pometti, the Debtor was estimated to have $100
million to $500 million in assets and $500 million to $1 billion in
liabilities.
The Debtor tapped Shearman & Sterling LLP as bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as Delaware counsel; AP
Services, LLC as interim management services provider; PJT Partners
Inc. as investment banker; and Epiq Corporate Restructuring, LLC as
claims and noticing agent.
SOUTHLAND ROYALTY: Royalty Plaintiffs Request Reserve in Plan
-------------------------------------------------------------
Southland Royalty Company LLC submitted a Further Revised
Disclosure Statement.
The Further Revised Disclosure Statement retains most of the terms
of the prior iteration of the document except provides that the
plaintiffs in the Royalty Claimant Litigation have requested that
the Debtor create a reserve under the Plan to address the alleged
underpaid royalties. The Debtor disputes all claims alleged in the
Royalty Claimant Litigation and maintains that, to the extent there
are any valid claims asserted in the New Mexico Litigation or the
Royalty Claimant Litigation, they are General Unsecured Claims. In
its ruling on the Class Claim Motion issued on January 19, 2021,
the Court noted that it would be prepared to address the issue of
whether the claims of the Royalty Claimant Litigation plaintiffs
are general unsecured claims or whether such claimants have rights
to property that is not property of the estate if briefed and
presented to the Court. Notwithstanding the Court's ruling, the
plaintiffs assert that the Court deferred ruling on that issue.
Counsel to the Debtor:
M. Blake Cleary
Sean M. Beach
Elizabeth S. Justison
S. Alexander Faris
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, DE 19801
Phone: (302) 571-6600
Fax: (302) 571-1253
Email: mbcleary@ycst.com
sbeach@ycst.com
afaris@ycst.com
ejustison@ycst.com
- and -
SHEARMAN & STERLING LLP
C. Luckey McDowell
Ian E. Roberts
2828 N. Harwood Street, Suite 1800
Dallas, TX 75201
Phone: (214) 271-5777
Email: luckey.mcdowell@shearman.com
ian.roberts@shearman.com
- and -
Sara Coelho
Jonathan M. Dunworth
599 Lexington Avenue
New York, NY 10022
Phone: (212) 848-4000
E-mail: sara.coelho@shearman.com
jonathan.dunworth@shearman.com
A copy of the Disclosure Statement is available at
https://bit.ly/39amOHD from PacerMonitor.com.
About Southland Royalty
Southland Royalty Company LLC -- http://www.southlandroyaltyco.com/
-- is a privately held independent exploration and production
company engaged in the acquisition and development of hydrocarbons.
Headquartered in Fort Worth, Southland Royalty Company conducts
its business across four states, with the majority of operations in
Wyoming and New Mexico. Southland Royalty Company was formed
principally to produce and extract hydrocarbons in the Wamsutter
field of the Green River Basin and in the San Juan Basin.
Southland Royalty Company sought Chapter 11 protection (Bankr. D.
Del. Case No. 20-10158) on Jan. 27, 2020. In the petition signed
by CRO Frank A. Pometti, the Debtor was estimated to have $100
million to $500 million in assets and $500 million to $1 billion in
liabilities.
The Debtor tapped Shearman & Sterling LLP as bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as Delaware counsel; AP
Services, LLC as interim management services provider; PJT Partners
Inc. as investment banker; and Epiq Corporate Restructuring, LLC as
claims and noticing agent.
SPLASH NEWS: Bankrupted by Legal Battle With Meghan Markle
----------------------------------------------------------
Eriq Gardner of the Hollywood Reporter reports that Splash News &
Picture Agency, a prominent paparazzi shop, has filed for Chapter
11 bankruptcy. A global pandemic that had stars staying indoors is
partly to blame, but also notable is Splash's legal adventures over
the years both as a plaintiff suing celebrities for posting
copyrighted images of themselves as well as its status as a
defendant in a privacy action brought by Meghan Markle. Having
difficulty navigating the financial situation, Splash reports
having defaulted on a loan now worth nearly $1 million and is
seeking the protection of a Nevada bankruptcy court.
"Splash's financial problems stem from three sources," states
Splash president Emma Curzon in a declaration submitted as part of
the bankruptcy. "As a consequence of the global pandemic the
availability of celebrity images has declined and budgets within
media companies have been cut to reflect wider macro-economic
challenges. This situation has been exacerbated by two ongoing
litigation cases and the costs of defending these cases."
One of the two cases is Splash's battle with Markle over photos
taking during a "private family outing" in a park in Canada. While
the BBC and other press outlets reported a settlement in December
— a Splash spokesperson said at the time that going forward, "it
will not take unauthorized photographs of the family of the Duke
and Duchess of Sussex" — the case may not be fully resolved.
"The case involves free speech related issues under United Kingdom
law and, unfortunately, has proven to be too unbearably expensive
for Splash to continue its defense," said Curzon. "Furthermore, if
the plaintiffs were to prevail in that case it would likely result
in a large attorney fee award against Splash. Notwithstanding the
merits of the case the company has sought to settle this matter but
has been unable to agree [on] a financial settlement within its
resources."
As for the other case in which Splash finds itself a defendant,
it's with the company's former account manager Esmeralda Servin,
who says she was repeatedly subjected to sexist remarks at the
company. Servin also says she was terminated after raising other
concerns ranging from illegal bidding to the lack of transparency
over its commission structure. Curzon tells the bankruptcy court
that its insurance coverage might not cover the liability and that
its defense fees were also proving financially burdensome.
As Splash fought for free speech with Markle, it pursued many
celebrities in court. In fact, the agency was one of the pioneers
in actions against famous individuals for posting images of
themselves. One NFL star even claimed extortion. Others who have
been on the defending side of a copyright case versus Splash
include Jennifer Lopez, Jessica Simpson, Liam Hemsworth and Nicki
Minaj.
According to bankruptcy papers, copyright infringements brought in
a little more than $118,000 in 2020 but just $21,000 last 2020.
That was nowhere close to covering expenses, especially in light of
the pandemic and the Markle and Servin suits. "Attorney bills have
drained, and continue to drain, cash from the business," says
Curzon.
Splash reports Deasil Limited as a secured creditor with a blanket
lien on substantially all of its assets. With approximately
$972,000 owed to Deasil, the paparazzi agency has now filed for
Chapter 11.
About Splash News
Splash News & Picture Agency, LLC is a privately held company in
the image licensing & stock photography business. The Debtor is a
wholly-owned subsidiary of Splash News and Picture Agency Holdings,
Inc.
The Company filed a Chapter 11 petition (Bankr. D. Nev. Case No.
21-11377) on March 23, 2021. The petition was signed by Emma
Curzon, president. It listed total assets of $706,911 as of Feb.
28, 2021, and total liabilities of $2,803,140 as of Feb. 28, 2021.
The case is handled by Honorable Judge August B. Landis.
Husch Blackwell LLP, led by Michael D. Fielding, in Kansas City,
serves as counsel to the Debtor.
STEPS IN HOME: Expects Live Oak's PPP Claim to Be Forgiven
----------------------------------------------------------
Steps in Home Care, Inc., filed a Second Amended Plan of
Reorganization and a corresponding Disclosure Statement for its
small business case on March 19, 2021.
The Second Amended Disclosure Statement retains most of the terms
of the prior version of the Disclosure Statement except provides
that the class 2 claim is comprised of the claim of Live Oak
Banking Company received by the Debtor under the U.S. Small
Business Administration ("SBA") Paycheck Protection Program ("PPP
Loan") in the amount of $694,900. It is anticipated that this claim
will be forgiven, and that the creditor will be paid by the SBA.
Attorneys for the Debtor:
LAWRENCE F. MORRISON
BRIAN J. HUFNAGEL
MORRISON TENENBAUM PLLC
87 Walker Street, Floor 2
New York, New York 10013
Telephone: (212) 620-0938
Facsimile: (646) 390-5095
A copy of the Disclosure Statement is available at
https://bit.ly/3sgX7Nm from PacerMonitor.com.
About Steps in Home Care
Steps in Home Care Inc. is a home health care provider located at 3
Barker Avenue, 2nd Floor, White Plains, New York 10601. It was
founded in 2011 and it has offices in Garden City, New York and
Stamford, Connecticut. The company was owned by Jennifer Baukol
and sister Lisa Wade. It offers home companions, skilled nursing,
basic assistance and concierge services, like driving patients to
their appointments and managing their insurance claims.
On May 1, 2020, Steps in Home Care sought Chapter 11 protection
(Bankr. S.D.N.Y. Case No. 20-22615) on May 1, 2020. The Debtor was
estimated to have less than $50,000 in assets and liabilities.
Morrison Tenenbaum, PLLC, is the Debtor's counsel.
STEWART SUPERMARKET: Case Summary & 7 Unsecured Creditors
---------------------------------------------------------
Debtor: Stewart Supermarket, LLC
DBA Stewart Market
2021 Stewart Ave
Las Vegas, NV 89101
Business Description: Stewart Supermarket, LLC owns and operates
grocery stores.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
District of Nevada
Case No.: 21-11508
Judge: Hon. August B. Landis
Debtor's Counsel: Robert E. Atkinson, Esq.
ATKINSON LAW ASSOCIATES LTD.
376 E Warm Springs Rd Suite 130
Las Vegas, NV 89119
Tel: (702) 614-0600
E-mail: bknotices@nv-lawfirm.com
Total Assets: $115,944
Total Liabilities: $2,367,682
The petition was signed by Maher Al-Sayegh, manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/FVZ6YCY/STEWART_SUPERMARKET_LLC__nvbke-21-11508__0001.0.pdf?mcid=tGE4TAMA
STONEMOR INC: Lowers Net Loss to $8.4 Million in 2020
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StoneMor Inc. filed with the Securities and Exchange Commission its
Annual Report on Form 10-K disclosing a net loss of $8.36 million
on $279.54 million of total revenues for the year ended Dec. 31,
2020, compared to a net loss of $151.94 million on $257.24 million
of total revenues for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $1.63 billion in total assets,
$1.72 billion in total liabilities, and a total owners' equity of
($92.41 million).
StoneMor said, "Our primary sources of liquidity are cash generated
from operations and proceeds from asset sales. Our primary cash
requirements, in addition to normal operating expenses, are for
capital expenditures, net contributions to the merchandise and
perpetual care trust funds and debt service. Amounts contributed
to the merchandise trust funds will be withdrawn at the time of the
delivery of the product or service sold to which the contribution
related, which will reduce the amount of additional borrowings or
asset sales needed."
"While we rely heavily on our available cash and cash flows from
operating activities to execute our operational strategy and meet
our financial commitments and other short-term financial needs, we
cannot be certain that sufficient capital will be generated through
operations or be available to us to the extent required and on
acceptable terms. We have experienced negative financial trends,
including net losses and use of cash in operating activities,
which, when considered in the aggregate, raise substantial doubt
about our 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/1753886/000156459021015568/ston-10k_20201231.htm
About StoneMor Inc.
StoneMor Inc. (http://www.stonemor.com),headquartered in Bensalem,
Pennsylvania, is an owner and operator of cemeteries and funeral
homes in the United States, with 313 cemeteries and 80 funeral
homes in 26 states and Puerto Rico. StoneMor's cemetery products
and services, which are sold on both a pre-need (before death) and
at-need (at death) basis, include: burial lots, lawn and mausoleum
crypts, burial vaults, caskets, memorials, and all services which
provide for the installation of this merchandise.
STONEMOR INC: Signs Deal to Acquire 4 Cemeteries for $5.4 Million
-----------------------------------------------------------------
StoneMor Inc. has signed a definitive agreement to acquire four
cemeteries located within its East Coast geographic footprint for a
total purchase price of $5,395,000, subject to customary working
capital adjustments.
Joe Redling, StoneMor's president and chief executive officer said,
"We are very excited to announce that we have entered into an asset
purchase agreement to acquire four cemeteries within our East Coast
geographic footprint. While this is a small first step, it
represents a very important shift in our strategy from focusing on
divesting assets to acquiring new locations that align with our
existing portfolio."
The transaction is expected to close by July 2021, subject to
customary due diligence and regulatory approval.
About StoneMor Inc.
StoneMor Inc. (http://www.stonemor.com),headquartered in Bensalem,
Pennsylvania, is an owner and operator of cemeteries and funeral
homes in the United States, with 313 cemeteries and 80 funeral
homes in 26 states and Puerto Rico. StoneMor's cemetery products
and services, which are sold on both a pre-need (before death) and
at-need (at death) basis, include: burial lots, lawn and mausoleum
crypts, burial vaults, caskets, memorials, and all services which
provide for the installation of this merchandise.
StoneMor reported a net loss of $8.36 million for the year ended
Dec. 31, 2020, compared to a net loss of $151.94 million for the
year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$1.63 billion in total assets, $1.72 billion in total liabilities,
and atotal owners' deficit of $92.41 million.
TECH DATA: Fitch Puts 'BB+' Issuer Default Rating on Watch Positive
-------------------------------------------------------------------
Fitch Ratings has placed the 'BB+' Issuer Default Rating (IDR) of
Tech Data Corporation (Tech Data) on Rating Watch Positive. Fitch
has also placed the company's 'BBB-'/'RR1' rated senior secured
term loan and senior secured last-out term loan facilities on
Rating Watch Positive.
These actions follow the announcement that Tech Data had entered
into definitive agreement to be acquired by SYNNEX Corporation
(SYNNEX) in a deal valued at approximately $7.2 billion The
transaction is expected to close in calendar 2H21, subject to the
satisfaction of customary closing conditions, including approval by
SYNNEX stockholders and regulatory approvals. Fitch expects to
resolve the rating watch upon closing of the merger.
KEY RATING DRIVERS
Evolving Financial Policies: Fitch expects the combination with
SYNNEX to result in reduced leverage alongside the introduction of
a conservative explicit financial policy. Fitch estimates opening
leverage of 2.7x at the transaction's close, while, together with
the merger announcement, SYNNEX announced a target for leverage to
decline to 2x within 12 months. In contrast, under the ownership of
private equity sponsor, Apollo Global Management, Tech Data
maintained leverage above 4.0x and did not commit to any formal
financial policy. The leverage target established by SYNNEX
compares favorably to the 2.6x median and the range of 2.0x - 3.0x
typically maintained by 'BBB-' rated IT Distributor Peers, Ingram
Micro, Arrow Electronics and Avnet.
Resilient Through the Pandemic: Tech Data has withstood the
macro-economic headwinds caused by the pandemic due to the
company's counter-cyclical FCF profile, highly variable cost
structure and strong liquidity position. In response to the
coronavirus pandemic, the company continued to operate with nearly
all of its global workforce on work-from-home arrangements and
substantially all logistics centers open and functioning. During
the Q3 YTD period ended Oct. 31, 2020, Tech Data experienced a
constant currency revenue decline of 4.7% while EBITDA margins
expanded nearly 10 bps relative to the prior year period, due to
mix benefits from elevated demand for PCs related to remote
workforce enablement and management's ongoing product portfolio
trimming efforts, partially offset by a decrease in sales to data
center markets.
Market Leadership and Scale: Tech Data is a leading IT distributor
that enables suppliers to expand access to fractured sources of
demand and optimize logistics while providing customers access to a
product portfolio consisting of over 150,000 hardware and software
offerings. The company maintains a number one market share in EMEA
and is number two in North America, while the combination with
SYNNEX will result in a number one share in North America as well.
Fitch believes Tech Data is likely to sustain its leadership
position due to its critical role in generating sales for suppliers
with over $150 million of orders shipped daily, broad product
portfolio, global distribution footprint and increased access to
emerging customer segments.
Significant FCF Scale: Fitch expects Tech Data to generate
consistent mid-cycle FCF margins of approximately 1% - 1.5%,
leading to FCF scale approaching $500 million per annum over the
forecast horizon. FCF is supported by minimal capital intensity
that Fitch expects to remain below .5%, in line with historical
levels. Fitch believes the high absolute scale of FCF is
representative of a strong credit profile.
Countercyclical FCF: Tech Data has been able to offset the impact
of past cyclical downturns by rapidly shrinking working capital,
particularly inventory, resulting in a counter-cyclical FCF
profile. During 2009 (FY10), the company experienced a revenue
decline of (8.2%). However, FCF margins expanded 130 bps from the
previous year to 2.3%, leading to over 100% growth in FCF to nearly
$515 million. Fitch expects the slowing demand environment that
began in 2019, followed by the additional pressures from the
coronavirus, will result in similarly improved FCF, which Fitch
forecasts will total nearly $500 million in aggregate through FY21.
Fitch believes the ability to sustain debt servicing capacity with
improved FCF through a downturn contributes positively to a stable
credit profile.
Variable Cost Structure: Tech Data's EBITDA margins have ranged
from 1.5% to 2.2% during the most recent four-year period, in line
with closest peer Ingram Micro but at the low end of Fitch's IT
Distributor coverage where Fitch calculates a median of 4.2%.
Despite the narrow profitability profile, Tech Data has
demonstrated a highly variable cost structure with approximately
two-thirds of SG&A costs made up of headcount. During the 2009
(FY10) downturn, the company reduced SG&A spend by 8%, nearly in
line with the decline in revenue, leading to EBITDA margin
expansion of 30 bps and 16.2% growth in total EBITDA, despite the
adverse economic conditions. Fitch believes the variable cost
structure enables Tech Data to sustain leverage metrics through a
cycle.
Constrained Pricing Power: The relative strength of suppliers
constrains pricing power and limits margin expansion opportunities
for Tech Data. Suppliers may opt to switch distributors or to
transact directly with customers, reflecting the lower value-added
nature of the distribution business. Pricing power is also limited
by the relative bargaining power of suppliers with the company's
top three suppliers responsible for 36% of product dollar volume in
FY20. While margin expansion opportunities are limited compared to
the broader Technology sector, Fitch believes breadth of product
selection, global distribution capabilities and access to fractured
client segments uphold Tech Data's essential role.
DERIVATION SUMMARY
Tech Data is one of the world's largest IT distribution and
solutions companies, serving a critical role in the IT ecosystem by
enabling the world's leading technology vendors to access fractured
sources of demand. Tech Data serves one of the largest bases of
resellers throughout the Americas, Europe and Asia-Pacific.
Products are purchased directly from vendors in high volumes and
are marketed to an active reseller base of over 125,000 value added
resellers (VARs), direct marketers, retailers, corporate resellers
and MSPs. The company maintains a leading market share in Europe
and a number two position in the Americas region, behind Ingram
Micro.
Tech Data is most directly comparable to direct competitor, Ingram
Micro, as well as Avnet, Arrow and Anixter given partial product
overlap and similar operating profiles for large distribution
businesses, all rated 'BBB-'. Fitch forecasts that the company's
EBITDA margins will remain largely in line with FY19 - FY20,
ranging 2.2%-2.4% over the forecast horizon, which is 50 bps above
Ingram Micro but below the 4.2% peer median. In addition, FCF
margins averaging 1% compare favorably to the long-term break-even
FCF of peers.
On a stand-alone basis, Fitch forecasts FY21 leverage of 4.5x well
above the peer average of 2.6x and typical range of 2.0x - 3.0x,
due to off-balance sheet accounts receivable (A/R) factoring
facilities that Fitch consolidates into its debt quantum. Fitch
believes Tech Data has little opportunity for deleveraging absent
voluntary debt prepayments, due to a limited EBITDA growth profile
that results from the relative strength of suppliers that
constrains pricing power and limits margin expansion opportunities.
The company has not committed to a formal financial policy under
current ownership by private equity firm Apollo Global Management.
In contrast, alongside the merger announcement, SYNNEX put forth an
explicit financial policy targeting leverage of 2x within 12 months
after the close of the transaction.
The ability to tolerate higher leverage levels is supported by
strong financial flexibility, represented by the company's
counter-cyclical FCF profile. Tech Data has been able to offset the
impact of past cyclical downturns by rapidly shrinking working
capital, particularly inventory, resulting in a counter-cyclical
FCF profile. During 2009 (FY10), the company experienced a revenue
decline of (8.2%). However, FCF margins expanded 130 bps from the
previous year to 2.3%, leading to over 100% growth in FCF to nearly
$515 million. Fitch believes the ability to sustain debt servicing
capacity with improved FCF through a downturn contributes
positively to a stable credit profile.
The ratings watch positive reflect Fitch's expectation for a more
conservative credit profile under the ownership of SYNNEX. Fitch
expects to resolve the RWP upon closing of the merger with final
financing terms in place. No country-ceiling, parent/subsidiary or
operating environment aspects impact the rating.
KEY ASSUMPTIONS
Fitch's key assumptions within the agency's rating case for the
issuer include:
-- Revenue: decline of 7.5% in FY21 due to slowing macro
environment resulting from coronavirus impact, declines in
data center spend and deceleration of elevated demand from
enterprise work-at-home initiatives; growth of 10% in FY22 as
business activity resumes, followed by organic growth 1.8% -
1.9% per annum thereafter;
-- Margins: EBITDA margin of 2.2% - 2.4% over the forecast
horizon due robust cost reduction programs, offset by narrow
fulfilment margins, low mix of value-added services, and the
company's constrained pricing power;
-- Working Capital: Fitch calculated net working capital ranging
7% - 7.5% of revenue;
-- Capex: capital intensity .25%, above historical average of
.15%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Total Debt with Equity Credit/Operating EBITDA sustained below
3.0x;
-- Total Gross Debt/ FCF sustained below 6.5x;
-- Net Debt/ (CFO-Capex) sustained below 3.5x;
-- FCF margins averaging greater than 2% through a cycle;
-- Introduction of a formal financial policy with explicit
leverage targets.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Total Debt with Equity Credit/Operating EBITDA sustained above
3.5x;
-- Total Gross Debt/ FCF sustained above 7.5x;
-- Net Debt/ (CFO-Capex) sustained above 4.0x;
-- FCF margins averaging close to break-even through a cycle.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity and Financial Flexibility: Tech Data's liquidity
is ample for the rating category. As of Oct. 31, 2020, liquidity is
comprised $850 million of cash and $2.8 billion of availability
under the undrawn ABL revolving credit facility. Tech Data
typically possesses over $8 billion in aggregate A/R and inventory,
suggesting that the borrowing base provides for significant
overcollateralization and full availability on the ABL facility.
Liquidity is further supported by FCF that Fitch forecasts will
approach $500 million per annum over the forecast horizon. Pro
forma for the acquisition by SYNNEX, Fitch expects combined
liquidity of $4.5 billion, comprised of $1 billion of cash on hand
and $3.5 billion of availability under an undrawn Revolving Credit
Facility.
Fitch believes the company's counter-cyclical working capital
profile that results in improved FCF during a downturn provides
additional liquidity support during adverse macro environments. The
company may also access additional sources of liquidity, not
counted in Fitch's calculation of liquidity, including uncommitted
A/R factoring facilities. The company's diversified sources of
liquidity provide significant operating flexibility with no need to
access capital markets in the next 24 months.
ESG CONSIDERATIONS
Tech Data has an ESG Relevance Score of '4' for Governance
Structure due to the ownership by private equity sponsor Apollo
Global Management, which is assumed to be heavily biased in favor
of shareholder returns and has a negative impact on the credit
profile, and is relevant to the rating[s] 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 minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
TECH DATA: S&P Places 'BB' Issuer Credit Rating on Watch Positive
-----------------------------------------------------------------
S&P Global Ratings placed all of its ratings on Tech Data Corp.,
including its 'BB' issuer credit rating, on CreditWatch with
positive implications.
S&P said, "The CreditWatch placement follows Tech Data Corp.'s
announcement that it will merge with SYNNEX to form the largest
broadline distributor globally. Specifically, the positive
CreditWatch reflects our view that the transaction will likely lead
to the creation of a combined company with stronger credit quality
than that of Tech Data on a stand-alone basis. We expect the
transaction to close in the second half of calendar year 2021
subject to the satisfaction of customary closing conditions,
including shareholder and regulatory approvals.
"We view the combination with SYNNEX favorably. If the transaction
clears all of the customary regulatory and shareholder approvals
without any changes, we believe it would likely provide Tech Data
with an immediate improvement in its scale and geographic
diversity. The combined company would have annual revenue of about
$57 billion; however, the full realization of its competitive gains
and operational synergies will likely take time. The realization of
these benefits would also be predicated on the successful
integration of the two companies, which could lead to challenges
given the size of the transaction. It is also uncertain how the two
businesses' key supplier partners will react to the news of the
merger. Given these risks, it is unlikely that our existing view of
Tech Data's competitive position and our satisfactory assessment of
its business risk profile will improve in the near term."
The proposed transaction will likely result in a combined company
with a less leveraged capital structure. The combined entity
announced that it expects to raise about $4 billion to fund the
combination. Based on its calculated pro forma adjusted EBITDA of
approximately $1.5 billion, the company's debt to adjusted EBITDA
will likely be about 2.7x as of the close of the transaction. Based
on our estimates, this would equate to S&P Global Ratings-adjusted
leverage of less than 3x, which is lower than Tech Data's current
leverage levels on a stand-alone basis. That said, S&P does not
rate currently SYNNEX and it is uncertain what role Tech Data will
play in raising these funds.
The reduction in Apollo's influence could be credit positive. Per
the terms of the transaction, SYNNEX's shareholders will retain a
55% ownership stake in the combined entity while the remaining 45%
will be held by Apollo Funds. The company's board also announced
that intends to create an 11 member board of directors, of which
Apollo will have the right to appoint four seats (though two of
these are required to be independent). S&P needs to determine the
level of influence Apollo will have given this ownership stake and
board representation; however, the addition of minority voting
rights and board representation will likely positively affect its
assessment of the company's financial policy.
S&P said, "We expect to resolve the CreditWatch either when the
transaction is complete or we gain a greater understanding of where
Tech Data sits in the merged organization structure given that we
do not currently rate SYNNEX. Based on publicly available
information, we could raise our rating on Tech Data by up to two
notches if we determine if it no longer controlled by its financial
sponsor and expect its leverage to remain below 3x."
TELEMACHUS LLC: Has Until April 27 to File Plan & Disclosures
-------------------------------------------------------------
Judge Jack Schmetterer of the U.S. Bankruptcy Court for the
Northern District of Illinois has entered an order within which the
deadline for debtor Telemachus, LLC, to file the Chapter 11 Plan
and Disclosure Statement is extended to April 27, 2021.
A full-text copy of the order dated March 23, 2021, is available at
https://bit.ly/3w62Bwr from PacerMonitor.com at no charge.
The Debtor is represented by:
Ben Schneider, Esq.
Matthew Stone, Esq.
Schneider & Stone
8424 Skokie Blvd., Suite 200
Skokie, IL 60077
Phone: 847-933-0300
Email: ben@windycitylawgroup.com
About Telemachus LLC
Telemachus, LLC is a single asset real estate debtor (as defined in
11 U.S.C. Section 101(51B)). It is the owner of fee simple title
to a property located at 769 W. Jackson Blvd., Chicago, Illi.,
having an appraised value of $3 million.
Telemachus filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-21374) on Dec.
11 2020. The petition was signed by Marc Washor, managing member
of Baklava, LLC (owner of Debtor). At the time of filing, the
Debtor disclosed $3,226,189 in assets and $2,228,372 in
liabilities. Judge Jack B. Schmetterer oversees the case.
Schneider & Stone represents the Debtor as counsel.
TERRA-GEN FINANCE: S&P Affirms 'CCC+' ICR on Refinancing Risk
-------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' issuer credit rating on
Terra-Gen Finance Co. LLC and its 'B-' issue-level rating on its
term loan B. S&P's '2' recovery rating on the term loan B remains
unchanged, indicating its expectation for substantial (70%-90%;
rounded estimate: 80%) recovery in the event of a payment default.
The positive outlook reflects the probability that the sponsors
could provide capital to bridge the term loan maturity if
necessary.
Terra-Gen's sponsor, ECP, has entered into an agreement to sell its
50% stake to a new ECP-managed vehicle, Continuation Fund. This
follows from a change in ownership December 2020, where ECP sold
40% of its interest in the company to First Sentier Investors
(FSI), a global asset manager based in Australia that manages
direct infrastructure investments. In February 2021, FSI entered
into an agreement to acquire an additional 10% of Terra-Gen, which
upon closing, will increase its stake in the company to 50%. Both
FSI's 10% upsize in equity and the Continuation Fund's acquisition
of Terra-Gen are expected to close on or around March 31, 2021. S&P
said, "Notably, ECP has a track record of supporting Terra-Gen, and
we expect it to continue to do so. We believe the change in
ownership structure incentivizes both ECP and FSI to provide some
measure of support and capital for Terra-Gen in the future,
including to bridge the upcoming maturity."
The lack of a binding capital commitment exclusively for the
December 2021 term loan B maturity constrains our rating. S&P said,
"In our opinion, the company's liquidity is still insufficient to
repay the outstanding amount on its term loan and any borrowings on
the revolving credit facility. However, we believe that with the
change in ownership structure the company could have access to
incremental capital to bridge the refinancing risk."
The positive outlook reflects S&P's belief that it could raise the
rating depending when Terra-Gen successfully refinances its
December 2021 term loan and if it maintains generally consistent
operating performance.
S&P could lower its rating on Terra-Gen if:
-- It fails to refinance its December 2021 term loan.
-- Its liquidity becomes further constrained or if unfavorable
economic conditions lead us to conclude the company will likely
default over the following quarters. These scenarios include a
near-term liquidity crisis or the likely implementation of a
distressed exchange offer or debt redemption over the next several
quarters.
S&P could raise the rating if the company successfully refinances
its term loan B and revolver in the near term.
TIGER OAK: Case Trustee Seeks to Use Cash Collateral Thru May 31
----------------------------------------------------------------
Edwin H. Caldie, as chapter 11 trustee for Tiger Oak Media,
Incorporated, asks the U.S. Bankruptcy Court for the District of
Minnesota for an expedited hearing and approval of the Stipulation
for Use of Cash Collateral, entered into between the Trustee and
Choice Financial Group.
A hearing on the matter has been set for 10:30 a.m. on April 7,
2021. The hearing may be held telephonic or other means as directed
by the Court in light of the COVID-19 pandemic.
The Trustee requests authorization to use cash collateral through
May 31, 2021, pursuant to the budget appended to the Fourth
Stipulation.
As of the bankruptcy filing date, the Debtor owed Choice pursuant
to two Promissory Notes, Loan No. 16623 in the principal amount of
$535,910.80, dated May 22, 2019 and, Loan No. 16624 in the
principal amount of $850,000, dated May 21, 2019. The Debtor also
executed a Commercial Guaranty dated November 29, 2017, in which
the Debtor guarantied payment and performance of all obligations
owed by Lazzari + Santori Partners, LLC to Choice.
The Loans are subject to, among other things, various loan and
security documents, including without limitation a Commercial
Security Agreement dated May 21, 2019 where the Debtor granted
Choice a first-priority security interest in the assets of Debtor,
including Accounts and Other Rights, Inventory, Equipment,
Instruments and Chattel Paper, General Intangibles, Documents,
Investment Property, and Deposit Accounts as more fully set forth
in the Security Agreements.
Choice perfected its first-priority security interest in the Debtor
Assets by filing two UCC financing statements: filing no.
20115369235 on August 29, 2011, and filing no. 20115368814 on
August 29, 2011. The UCC financing statements have been continued
through a series of modifications and continuations the last one of
which was filed on February 29, 2016.
Before the Filing Date, the Debtor had been making monthly payments
to Choice in the amount of $29,600.34 on Loan No. 16623 and
$3,800.00 on Loan No. 16624.
As of the Filing Date, the Debtor owed Choice the principal amount
of $1,173,250.50, plus interest, attorneys' fees, costs, and
expenses on account of the Loans and $984,639.12 on account of the
Guaranty.
Choice agrees and consents to the Trustee's continued use of
Choice's cash collateral for the period of April 1, 2021 through
the earlier of the date the Court enters an Order on the
Stipulation or April 10, 2021.
During the term of the Fourth Stipulation, the Trustee will not
make payments to Choice and Choice will not divert any funds from
any accounts held by the Debtor without further order of the Court.
The Trustee will:
a. file all reports required by the United States Trustee.
b. maintain adequate insurance on all Debtor Assets.
c. maintain complete and accurate books and accounts, and
shall provide to Choice reasonable access to its books, records,
and accounts.
d. provide Choice copies of all reports as they are provided
to the U.S. Trustee's office.
e. if required, cooperate with Choice's appraisal of the
Debtor Assets, including without limitation providing the appraiser
access to the property and all of Debtor's books and records.
Choice will provide a copy of the appraisal to Debtor as soon as it
is made available to Choice.
f. provide Choice with the right to inspect the Debtor Assets
at reasonable times.
These events constitute Events of Default:
A. Failure of Trustee to timely: (i) comply with any
obligation contained in the Stipulation; (ii) properly maintain and
repair the Debtor Assets, but only to the extent the Debtor Assets
are property of the estate; or (iii) maintain insurance on the
Debtor Assets, but only to the extent the Debtor Assets are
property of the estate;
B. Entry of an order altering or vacating the order approving
the Fourth Stipulation, or lifting the automatic stay as to any
other creditor, or providing for conversion or dismissal of the
case, unless Choice will consent to the order;
C. Failure to make any payments required under the terms of
the Fourth Stipulation; and
D. In the event there is an event of default as set forth
above, Choice will give written notice of the default to the
Trustee, the Trustee's attorney, and the Committee, by U.S. mail
and e-mail, allowing the Debtor 10 days from the date of the
Default Notice to cure or contest such claimed defaults.
A copy of the motion and the Debtor's weekly cash flow projection
through June 5 is available for free at https://bit.ly/3rok67P from
PacerMonitor.com. The Debtor projects $697,050 in total cash
receipts and $810,942 in total cash paid out during the period.
About Tiger Oak Media
Tiger Oak Media, Incorporated, is a regional and national publisher
of books, magazines, media and events that appeal to targeted
audiences.
Tiger Oak Media sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Minn. Case No. 19-43029) on Oct. 7,
2019. In the petition signed by its CEO Craig Bednar, the Debtor
was estimated to have assets of less than $50,000 and liabilities
of less than $10 million.
The Hon. Michael E. Ridgway is the case judge.
The Debtor tapped Steven Nosek, Esq. and Yvonne Doose, Esq., as
bankruptcy attorneys; Lurie, LLP as accountant; and Integrated
Consulting Services, LLC as financial consultant.
The U.S. Trustee for Region 12 appointed creditors to serve on the
official committee of unsecured creditors on Oct. 22, 2019. The
committee tapped Bassford Remele, P.A., as its legal counsel, and
Platinum Management, LLC as its financial advisor.
Edwin H. Caldie, as Chapter 11 Trustee, is represented by:
Andrew J. Glasnovich, Esq.
STINSON LLP
50 South Sixth Street, Suite 2600
Minneapolis, MN 55402
Phone: (612) 335-1500
Email: drew.glasnovitch@stinson.com
Choice Financial Group, as Lender, is represented by:
Christopher Camardello, Esq.
MANTY & ASSOCIATES, P.A.
150 South Fifth Street Ste. 3125
Minneapolis, MN 55402
Phone: (612) 465-0349
Email: chris@mantylaw.com
TK SKOKIE: Has Until July 20 to File Plan & Disclosure Statement
----------------------------------------------------------------
Judge LaShonda Hunt of the U.S. Bankruptcy Court for the Northern
District of Illinois has entered an order within which debtor TK
Skokie, LLC, must file its Plan and Disclosure Statement is
extended to July 20, 2021.
A copy of the order dated March 18, 2021, is available at
https://bit.ly/3w15z5C from PacerMonitor.com at no charge.
Attorney for the Debtor:
Timothy C. Culbertson
ARDC No. 6229083
P.O. Box 56020
Harwood Heights, Illinois 60656
Tel: (847) 913-5945
E-mail: tcculb@gmail.com
TK Skokie, LLC, sought Chapter 11 protection (Bankr. N.D. Ill. Case
No. 19-33898) on Nov. 29, 2019, listing assets and liabilities of
less than $1 million. Timothy C. Culbertson, Esq., at the LAW
OFFICES OF TIMOTHY C. CULBERTSON, is the Debtor's counsel.
TPT GLOBAL: Signs Contract to Provide COVID-19 Testing
------------------------------------------------------
TPT Global Tech Inc. and its strategic partner Thomas Scientific
executed a contract with the State of Nevada to provide COVID-19
testing. The contract includes mobile testing sites,
facility-based specimen collection, and community-based testing
sites for State agencies and other governmental entities in Nevada
on an as needed basis. Specifics related to usage are being
discussed. These contracts shall be permissive for State agencies
located in geographic regions serviced by the contract. The
contracts could potentially include university and community
college systems, the court system, the Legislative Counsel Bureau
as well as State political subdivisions (i.e., cities, counties,
school districts, etc.). Tribal nations may take advantage of the
contracts as well, however, they are not required to do so.
At the direction of a customer, and in accordance with a Service
Agreement, the contractor will: (1) stand up and operate mobile
testing sites; (2) stand up and operate mobile facility teams to
conduct on-site specimen collection at facilities identified by the
customer such as long-term care centers and manufacturing plants;
and/or (3) assume responsibility for operation of an existing
community-based testing center. The location and duration of the
mobile testing sites and community-based testing sites will be at
the customer's direction in accordance with a Service Agreement and
will vary within the term of the service agreement depending on
need.
"We are proud of the joint effort made with Thomas Scientific to
secure these contracts and the potential they hold for both
companies. This is but another demonstration of the value and
acceptance of our already being deployed end-to-end technologies
that address Covid-19 immediate needs and for future use," said TPT
Global Tech CEO Stephen J. Thomas, III.
About TPT Global Tech
TPT Global Tech Inc. (OTC:TPTW) based in San Diego, California, is
a Technology/Telecommunications Media Content Hub for Domestic and
International syndication and also provides technology solutions to
businesses domestically and worldwide. TPT Global offers Software
as a Service (SaaS), Technology Platform as a Service (PAAS),
Cloud-based Unified Communication as a Service (UCaaS) and
carrier-grade performance and support for businesses over its
private IP MPLS fiber and wireless network in the United States.
TPT's cloud-based UCaaS services allow businesses of any size to
enjoy all the latest voice, data, media and collaboration features
in today's global technology markets. TPT's also operates as a
Master Distributor for Nationwide Mobile Virtual Network Operators
(MVNO) and Independent Sales Organization (ISO) as a Master
Distributor for Pre-Paid Cellphone services, Mobile phones
Cellphone Accessories and Global Roaming Cellphones.
TPT Global reported a net loss of $14.03 million for the year ended
Dec. 31, 2019, compared to a net loss of $5.38 million for the year
ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $15.96
million in total assets, $36.86 million in total liabilities, $4.79
million in total mezzanine equity, and a total stockholders'
deficit of $25.69 million.
Sadler, Gibb & Associates, LLC, in Salt Lake City, UT, the
Company's auditor since 2016, issued a "going concern"
qualification in its report dated April 14, 2020 citing that the
Company has suffered recurring losses from operations and has a net
capital deficiency which raise substantial doubt about its ability
to continue as a going concern.
TRANSOCEAN LTD: Argues With Creditors Again on Default Case
-----------------------------------------------------------
Allison McNeely of Bloomberg News reports that Transocean and its
creditors are back in court, three months after a judge ruled for
the offshore services company, saying it didn't default on a debt
deal.
Creditors led by Whitebox Advisors claimed that Transocean
defaulted by issuing notes out of new subsidiaries for a debt
exchange that extended some of its bond maturities. They appealed
after Judge George B. Daniels in December 2020 sided with the
company.
The case in the U.S. Court of Appeals for the Second Circuit argues
that Daniels used a legal standard that wasn't applicable.
About Transocean
Transocean is an international provider of offshore contract
drilling services for oil and gas wells. The company specializes
in technically demanding sectors of the offshore drilling business
with a particular focus on ultra-deepwater and harsh environment
drilling services. The company's mobile offshore drilling fleet is
considered one of the most versatile fleets in the world.
* * *
As reported by the TCR on Dec. 1, 2020, S&P Global Ratings raised
its issuer credit on Switzerland-based offshore drilling contractor
Transocean Ltd. to 'CCC-' from 'SD' (selective default). The
upgrade follows the company's repurchase of at least $347.6 million
of the principal amount on various of its secured and unsecured
debt issues (with maturities ranging from 2020 to 2025) for about
$213 million in cash.
TRILOGY INTERNATIONAL: New Zealand Unit to Explore Public Listing
-----------------------------------------------------------------
Trilogy International Partners Inc., together with its other
shareholders, is exploring a partial public listing of its New
Zealand subsidiary, Two Degrees Mobile Limited, on the main board
of the New Zealand Stock Exchange (NZX) and Australian Securities
Exchange (ASX) in the second half of 2021 or early 2022. Any such
listing would be subject to market conditions.
"Equity markets are strong globally, telecom valuations are
attractive, and the New Zealand dollar is at a multi-year high.
This compelling macro backdrop, combined with the resilience, scale
and growth of the 2degrees business, suggests now is an opportune
time for the shareholders of 2degrees to explore a partial listing
of the business," said Brad Horwitz, president and CEO of Trilogy
and Chair of the 2degrees Board. "An equity event in New Zealand
would raise primary capital to accelerate growth initiatives at
2degrees as well as enable Trilogy to reduce the debt it incurred
while building the 2degrees business."
For the year ended Dec. 31, 2020, 2degrees demonstrated strong
service revenue and Segment Adjusted EBITDA growth, despite
Covid-19 impacts, including closed international borders.
According to an independent research report, 2degrees is the only
wireless operator in New Zealand to increase mobile market share
over the same period, which it also achieved in fixed broadband.
"2degrees continues to perform well with Segment Adjusted EBITDA
surpassing $110 million for the year ended December 31, 2020," said
Mr. Horwitz. "Our New Zealand team delivered record service
revenue and Segment Adjusted EBITDA levels during a year of
challenging circumstances created by the pandemic. We continue to
be enthusiastic about the future growth opportunities in the New
Zealand market and we expect to retain a significant interest in
the business following any public listing."
About Trilogy International
TIP Inc. is the parent of Trilogy International Partners LLC, an
international wireless and fixed broadband telecommunications
operator formed by wireless industry veterans John Stanton, Theresa
Gillespie and Brad Horwitz. Trilogy LLC's founders have
successfully bought, built, launched and operated communications
businesses in 15 international markets and the United States.
Trilogy reported a net loss attributable to the Company of $47.78
million for the year ended Dec. 31, 2020, compared to net income
attributable to the Company of $2.88 million for the year ended
Dec. 31, 2019. As of Dec. 31, 2020, the Company had $989.03
million in total assets, $1.02 billion in total liabilities, and a
total shareholders' deficit of $33.89 million.
* * *
As reported by the TCR on Oct. 27, 2020, Fitch Ratings affirmed the
Issuer Default Ratings (IDR) of Trilogy International Partners, LLC
and Trilogy International Partners Inc. at 'CCC+'. The ratings
affirmation reflects the increase in near-term liquidity resulting
from a transaction with existing bondholders and shareholders that
raised $50 million of new notes.
TRILOGY INTERNATIONAL: Swings to $47.8 Million Net Loss in 2020
---------------------------------------------------------------
Trilogy International Partners Inc. filed with the Securities and
Exchange Commission its Annual Report on Form 20-F disclosing a net
loss attributable to the Company of $47.78 million on $610.30
million of total revenues for the year ended Dec. 31, 2020,
compared to net income attributable to the Company of $2.88 million
on $693.93 million of total revenues for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $989.03 million in total
assets, $1.02 billion in total liabilities, and a total
shareholders' deficit of $38.89 million.
"Our business in New Zealand ended the year showing continued
strength," said Brad Horwitz, president and CEO. "Our mobile B2B
customer base grew 21% year-over-year, complementing continued
solid performance by our legacy consumer products. We achieved
record service revenues in the fourth quarter and double-digit
growth in organic Segment Adjusted EBITDA for the year despite
continued pandemic-related border closures. Our financial results
for the quarter and the year reflect the resilience of our
operation and ability to execute in challenging conditions."
"Given the strength and growth trajectories of 2degrees, we are
exploring a partial public listing on the main board of the New
Zealand Stock Exchange and on the Australian Securities Exchange.
Equity markets are strong globally, telecom valuations are
attractive, and the New Zealand dollar is at a multi-year high. An
equity event in New Zealand would raise primary capital to
accelerate growth initiatives at 2degrees as well as enable Trilogy
to reduce the debt it incurred while building the 2degrees
business."
"Our results in Bolivia improved with the modest recovery in our
operating conditions during the fourth quarter. Our postpaid
mobile and fixed LTE customer bases, as well as corresponding ARPU,
increased on a sequential basis and we continue our focus on
operating efficiency."
A full-text copy of the Form 20-F is available for free at:
https://www.sec.gov/Archives/edgar/data/1689382/000106299321002971/form20f.htm
About Trilogy International Partners Inc.
TIP Inc. is the parent of Trilogy International Partners LLC, an
international wireless and fixed broadband telecommunications
operator formed by wireless industry veterans John Stanton, Theresa
Gillespie and Brad Horwitz. Trilogy LLC’s founders have
successfully bought, built, launched and operated communications
businesses in 15 international markets and the United States.
* * *
As reported by the TCR on Oct. 27, 2020, Fitch Ratings affirmed the
Issuer Default Ratings (IDR) of Trilogy International Partners, LLC
and Trilogy International Partners Inc. at 'CCC+'. The ratings
affirmation reflects the increase in near-term liquidity resulting
from a transaction with existing bondholders and shareholders that
raised $50 million of new notes.
TWT LLC: Case Summary & 3 Unsecured Creditors
---------------------------------------------
Debtor: TWT, LLC
124 Purple Ln.
Zillah, WA 98953
Business Description: TWT, LLC is a Single Asset Real Estate
debtor (as defined in 11 U.S.C. Section
101(51B)).
Chapter 11 Petition Date: March 25, 2021
Court: United States Bankruptcy Court
Eastern District of Washington
Case No.: 21-00400
Judge: Hon. Whitman L. Holt
Debtor's Counsel: Timothy M. Coleman, Esq.
OLSENDAINES
PO Box 12829
Salem, OR 97309
Tel: (503) 362-9393
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Vasiliy Teslo, managing member.
A copy of the petition containing, among other items, a list of the
Debtor's three unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/MVCXYBQ/TWT_LLC__waebke-21-00400__0001.0.pdf?mcid=tGE4TAMA
ULD LOGISTICS: Case Summary & 8 Unsecured Creditors
---------------------------------------------------
Debtor: ULD Logistics, LLC
1140 East Main Street
Delta, OH 43515
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Northern District of Ohio
Case No.: 21-30509
Judge: Hon. John P. Gustafson
Debtor's Counsel: Steven L. Diller, Esq.
DILLER AND RICE, LLC
124 East Main Street
Van Wert, OH 45891
Tel: 419-238-5025
Fax: 419-238-4705
E-mail: Steven@drlawllc.com
Kim@drlawllc.com
Eric@drlawllc.com
Total Assets: $1,491,071
Total Liabilities: $5,660,360
The petition was signed by Peggy Toedter, managing member.
A copy of the petition containing, among other items, a list of the
Debtor's eight unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/Y33YKTI/ULD_Logistics_LLC__ohnbke-21-30509__0001.0.pdf?mcid=tGE4TAMA
WASHINGTON STATE CONVENTION: S&P Cuts 2018 Rating to 'BB+'
----------------------------------------------------------
S&P Global Ratings lowered its long-term and underlying ratings on
Washington State Convention Center (WSCC) Public Facilities
District's previously issued series 2010B, 2018 senior lien
lodging-tax bonds to 'BBB-' from 'BBB+', and lowered its long-term
and underlying ratings to 'BB+' from 'BBB' on WSCC's series 2018
subordinate lodging-tax bonds. The outlook is stable.
"The downgrades reflect our view of what we think will be a modest
recovery in travel activity in 2021 after pledged revenues plunged
in 2020 as a result of health and safety social risks that were a
direct effect of the COVID-19 pandemic," said S&P Global Ratings
credit analyst Chris Morgan. Preliminary 2020 data show annual debt
service coverage at both the senior and subordinate liens falling
below 1x, even when considering the portion of pledged revenues
that sunsets prior to the final years of debt service. S&P thinks
management's projections for growth in the second half of 2021
associated with a nascent leisure travel recovery are credible,
consistent with our view that widespread immunization against
COVID-19 looks to be achievable by the third quarter, but that
higher-cost destinations will lag in lodging demand growth relative
to more affordable, drive-to markets. Furthermore, there could be
long-term behavioral changes toward business travel that could also
lead to a drag on pledged revenue.
Three revenue streams secure the bonds:
-- "Regular" lodging tax revenue collected within the district
(which is coterminous with King County) consisting of a 7.0% tax
within Seattle and a 2.8% tax outside of Seattle, but within King
County on lodging premises with 60 or more rooms;
-- Half of "extended" lodging tax revenue that the district
started to receive in 2019 at the same rates as regular taxes, and
derived from stays at premises with fewer than 60 rooms, including,
for the area outside Seattle, nontraditional lodging such as homes
rented through AirBnB; and
-- "Additional" lodging tax revenue collected through July 1,
2029, in the form of a credit, if needed for debt service,
representing 2% of the applicable sales tax on stays within Seattle
at all types of lodging premises.
S&P's analytical approach factors in both the strength and
stability of the pledged revenue, as well as the general credit
quality of the district. In its view, the rating can, but is not
currently constrained by the district's general creditworthiness.
The rating further reflects S&P's view of the district's:
-- Very strong taxing area;
-- High pledged revenue volatility;
-- Very weak maximum annual debt service coverage; and
-- Substantial operating reserves.
"We could lower our rating at either lien position if pledged
revenues do not start to grow in 2021 or we expect the district
will face a lengthy trough in pledged revenue performance that
would keep annual coverage below 1x through 2022," Mr. Morgan
added.
S&P said, "We could raise the rating at the senior position or both
positions if effective vaccine deployment and evidence of a pickup
in lodging activity lead us to anticipate that pledged revenues are
on a sustainable upward trajectory, particularly if 2021 pledged
revenues including "additional" lodging taxes significantly exceed
1x annual debt service.
S&P said, "Despite a more coordinated approach to vaccine supply
and distribution, we believe the COVID-19 pandemic and the health
and safety social risks arising from it could affect leisure and
business travel for a longer duration and exacerbate the industry's
challenges brought on by social-distancing and activity
restrictions implemented at the pandemic's onset. We view the
health and safety social factor as an ESG-related risk and we view
it as the primary reason for the plummeting demand for hotels and
conventions, which has resulted in widespread cancellation of
district events and a substantial weakening in the district's
pledged revenue coverage. We also view environmental risk as above
average for the district, with the likelihood of a major seismic
event during the life of the obligations potentially negatively
affecting regional economic performance that influences demand for
lodging activity or lowering revenues in the event of facility
damage that causes a portion of the hotels within its taxing area
to close. We view governance risks as mostly in line with those of
the sector."
WATERVILLE-MONCLOVA: Case Summary & 3 Unsecured Creditors
---------------------------------------------------------
Debtor: Waterville-Monclova Properties, LLC
1140 East Main Street
Delta, OH 43515
Business Description: Formed in 2006, Waterville-Monclova
Properties' business operations consist of
holding and renting certain real property.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Northern District of Ohio
Case No.: 21-30508
Judge: Hon. Mary Ann Whipple
Debtor's Counsel: Steven L. Diller, Esq.
DILLER AND RICE, LLC
124 Main Street
Van Wert, OH 45891
Tel: 419-238-5025
Fax: 419-238-4705
E-mail: Steven@drlawllc.com
Kim@drlawllc.com
Eric@drlawllc.com
Total Assets: $1,201,810
Total Liabilities: $5,496,430
The petition was signed by Peggy Toedter, the managing member.
A copy of the petition containing, among other items, a list of the
Debtor's three unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/DFGW2WQ/Waterville-Monclova_Properties__ohnbke-21-30508__0001.0.pdf?mcid=tGE4TAMA
WESTMORELAND COAL: Set $19 Million Black Lung Claims in Chapter 11
------------------------------------------------------------------
Law360 reports that Westmoreland Coal Co. and the U.S. Department
of Labor have agreed to a $19 million black lung benefits claim to
be included in the coal company's already confirmed Chapter 11
plan, seeking approval Wednesday, March 24, 2021, from a Texas
federal judge.
The Colorado coal company and its affiliated debtors got
confirmation by the court in early 2019 for their liquidation plan,
around the same time the federal government filed its black lung
claim, the parties said in their settlement. Such claims, to
provide compensation to coal miners affected by the disease known
as black lung from inhaling coal dust.
About Westmoreland Coal
Based in Englewood, Colorado, Westmoreland Coal Company
(otcmkts:WLBA) -- http://www.westmoreland.com/-- is an independent
coal company based in the United States. The Company produces and
sells thermal coal primarily to investment grade utility customers
under long-term, cost-protected contracts. Its focus is primarily
on mine locations which allow it to employ dragline surface mining
methods and take advantage of close customer proximity through
mine-mouth power plants and strategically located rail
transportation. At Dec. 31, 2017, the Company's U.S. coal
operations were located in Montana, Wyoming, North Dakota, Texas,
New Mexico and Ohio, and its Canadian coal operations were located
in Alberta and Saskatchewan. The Company sold 49.7 million tons of
coal in 2017.
As of June 30, 2018, the Company had $1.45 billion in total assets,
$2.14 billion in total liabilities and a total deficit of $686.2
million.
Westmoreland Coal Company and 36 affiliates filed voluntary Chapter
11 petitions (Bankr. S.D. Tex. Case No. 18-35672) on Oct. 9, 2018.
The Debtors tapped Jackson Walker LLP and Kirkland & Ellis LLP and
Kirkland & Ellis International LLP as their legal counsel;
Centerview Partners LLC as financial advisor; Alvarez & Marsal
North America, LLC as restructuring advisor; PricewaterhouseCoopers
LLP as consultant; and Donlin, Recano & Company, Inc. as notice and
claims agent.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on Oct. 19, 2018. The Committee tapped Morrison
& Foerster LLP and Cole Schotz P.C. as its legal counsel.
Judge David Jones of the Bankruptcy Court for the Southern District
of Texas on March 2, 2019, confirmed the Amended Joint Chapter 11
Plan. Pursuant to the Confirmation Order, debtor Westmoreland
Mining LLC was renamed to Old Westmoreland Mining LLC effective as
of March 8, 2019.
WIRTA HOTELS: Plan Exclusivity Period Extended Thru April 15
------------------------------------------------------------
At the behest of Wirta Hotels 3, LLC, Judge Marc Barreca of the
U.S. Bankruptcy Court for the Western District of Washington,
Seattle extended the period in which the Debtors may file and
solicit acceptances of the Chapter 11 plan to April 15, 2021.
The Debtors' Motion is granted on an interim basis as set forth
herein:
(i) A hearing to consider the relief requested in the Motion on a
final basis is set for April 15, 2021, at 9:30 A.M. (prevailing
Pacific Time). The Debtors shall serve a copy of this Order, a
notice of hearing for the Final Hearing, and the Motion on the same
parties that received notice of the hearing held on March 17, 2021;
and
(ii) All objections to the Motion are hereby continued to the Final
Hearing, and all parties may submit objections or responses (or
further objections or responses) to the Motion by no later than
April 8, 2021.
On February 22, 2021, the Debtors and Wilmington Trust, N.A., as
Trustee, on behalf of the Registered Holders of Citigroup
Commercial Mortgage Trust 2017-C4, Commercial Mortgage Pass-Through
Certificates, Series 2017-C4 engaged in mediation over issues
relating to the Debtors' Plan. The mediation occurred via Zoom with
The Honorable Mary Jo Heston serving as mediator.
Despite the good faith efforts by the parties, the mediation
concluded on the afternoon of February 22 without the parties
reaching an agreement on a consensual plan of reorganization.
Nevertheless, the parties connected again on February 24, 2021, and
on February 26, 2021, the Debtors made a settlement proposal to
Wilmington that the Debtors believe addresses the major concerns
Wilmington has with respect to the Debtors' Plan.
The Debtors anticipated a response from Wilmington by March 5,
2021, but to date have not received any counterproposal or
substantive response.
On March 10, 2021, the Debtors received a ballot from Wilmington in
which Wilmington voted to reject the Debtors' Plan. This is the
only "no vote" the Debtors received, but it is now clear that the
Debtors will not be able to confirm a plan that is accepted by each
class of claims that is impaired under it within 180 days of the
Petition Date, as set forth in 11 U.S.C. section 1121(c)(3).
On March 24, 2021, the Court scheduled to hold a "non-evidentiary
hearing" on the Debtors' Plan. The Debtors anticipate that certain
issues relating to the Debtors' Plan may be resolved at that
hearing but, in light of the objection filed by Wilmington to the
plan, the Debtors anticipate that discovery will be necessary and
that, at the hearing on March 24, the Court will set related
deadlines and an evidentiary confirmation hearing to consider the
remaining issues in the Debtors' Plan.
The Debtors continue to negotiate with Wilmington and believe the
universe of issues that separates the two sides will continue to
narrow if good-faith negotiations continue. In addition to
Wilmington, the primary party in interest in these chapter 11 cases
has been Holiday Hospitality Franchising, LLC ("HHF"), and the
franchisor which, among other things, licenses the Holiday Inn
brand name to the Debtors. The Debtors have proactively and
constructively engaged with HHF during these chapter 11 cases, and
believe that the Debtors' Plan provides for the Debtors and HHF to
remain in business together for many years. The Debtors also worked
to secure support for the Debtors' Plan for the major unsecured
creditor, in this case, AFS Properties.
The Debtors are paying their bills as they become due. Now with the
extension, the Debtors will have sufficient time to prepare and
file a plan of reorganization and diligently pursued a consensual
plan, since the Debtors need more time to negotiate that plan with
Wilmington while simultaneously preparing for a contested
confirmation hearing.
A copy of the Debtors' Motion to extend is available at
https://bit.ly/31ldgVS from PacerMonitor.com.
A copy of the Court's Extension Order is available at
https://bit.ly/3tSQAIV from PacerMonitor.com.
About Wirta Hotels
Wirta Hotels 3, LLC and Wirta 3, LLC own and operate the Holiday
Inn Express & Suites in Sequim, Washington. They own the real
property (1141 East Washington Street) upon which the hotel is
situated. Bret Wirta and Patricia Wirta, husband, and wife, own
100% of Wirta.
On September 18, 2020, Wirta Hotels and Wirta 3 filed Chapter 11
petitions (Bankr. W.D. Wash. Lead Case No. 20-12398). At the time
of filing, Wirta Hotels disclosed $2,365,830 in assets and
$2,805,775 in total liabilities while Wirta 3 disclosed $13,214,141
in assets and $7,017,530 in liabilities.
Judge Marc Barreca oversees the cases. Foster Garvey, PC is the
Debtor's legal counsel.
WOC PACIFIC: Case Summary & 7 Unsecured Creditors
-------------------------------------------------
Debtor: WOC Pacific Garage Company LLC
670 Dekalb Avenue
Brooklyn, NY 11217
Business Description: WOC Pacific Garage Company LLC operates a
parking garage located at 670 Pacific
Street, Brooklyn, New York.
Chapter 11 Petition Date: March 26, 2021
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 21-40778
Debtor's Counsel: Lawrence F. Morrison, Esq.
MORRISON TENENBAUM, PLLC
87 Walker Street, Second Floor
New York, NY 10013
Tel: 212-620-0938
Fax: 646-390-5095
E-mail: info@m-t-law.com
Total Assets: $37,227
Total Liabilities: $1,040,856
The petition was signed by Perry Finkelman, the managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's eight unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/4APGKNA/WOC_Pacific_Garage_Company_LLC__nyebke-21-40778__0001.0.pdf?mcid=tGE4TAMA
WW INTERNATIONAL: S&P Rates New First-Lien Credit Facility 'BB-'
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating and '2'
recovery rating to WW International Inc.'s proposed senior secured
first-lien credit facility including a revolver and term loan, and
senior secured notes. The '2' recovery rating indicates its
expectation of substantial (70%-90%; rounded estimate: 70%)
recovery in the event of a payment default. S&P expects the company
to use the proceeds from the transaction to refinance its existing
senior secured term loan B with approximately $1.2 billion
outstanding and $300 million senior unsecured notes.
The proposed credit facility and senior secured notes will be
issued by WW International and secured on a first-lien basis on
substantially all assets and capital stock of the borrowers and
guarantors. The proposed credit facility and the senior secured
notes will be pari passu. Pro forma for the transaction, the
company's gross debt remains largely unchanged at $1.5 billion. S&P
will withdraw its current ratings on its existing credit facility
and unsecured notes due 2025 when they are paid off. All ratings
are based on preliminary terms and are subject to review upon
receipt of final documentation.
S&P said, "Our 'BB+' ratings and negative outlook on WW
International reflect our expectations that operations will remain
challenged at least through the end of the first quarter ending
March 31, 2021, as the fallout from the pandemic continues to hurt
its studio businesses. Due to the timing of its successful new
program launch in the first quarter of 2020 from both its studio
and digital subscribers, the company will bear the weight of the
fast-declining studio subscriber base the most this quarter. We
project the company's adjusted leverage could peak close to 5x by
the end of this quarter before improving to the low- to mid-4x area
by the end of the year. The negative outlook reflects the potential
that we could lower our ratings on the company if we believe it
will sustain leverage of more than 5x in 2021."
WYNTHROP PARTNERS: Rutt Family Says Disclosures Insufficient
------------------------------------------------------------
Rutt Family Sonshine Limited Partnership ("RFSLP") objects to the
First Amended Small Business Chapter 11 Plan and Disclosure
Statement of Debtor Wynthrop Partners, L.P.
Rutt Family claims that the Disclosure Statement contains no
discussion of the purportedly-secured claim (Claim #1) of the
Internal Revenue Service for $74,201.44 other than a statement that
it will be paid at closing on the sale of the Debtor's real
property. The Disclosure Statement thus contains insufficient
information regarding the claim of the IRS to be approved.
Rutt Family points out that the Disclosure Statement offers no
information supporting the valuations that the Debtor has asserted
for the real and personal property it wishes to sell, beyond
reciting the assessments for real estate tax purposes of the three
parcels of real property at issue.
Rutt Family asserts that the Debtor's Schedule B, at Part 11, Line
77, lists income from a real property lease of $900.00 per year
(the "Farm Lease"). However, the Farm Lease is not mentioned in the
disclosure statement.
Rutt Family further asserts that the Disclosure Statement (and the
Sale Motion) fail to sufficiently explain that the winning sale
bidder will not be expected to close on its purchase until final
subdivision approval has been obtained.
Rutt Family states that there is no need for a Section 363 sale,
except for the Debtor's desire to limit the amount of money that
would be available to pay RFSLP in the event that the stalking
horse was the only sale bidder.
Rutt Family says that the Debtor could simply settle its objection
to RFSLP's claim, and mortgage the real property to finance the
settlement, thereby avoiding most or all of the expenses associated
with holding a Bankruptcy Court sale and achieving confirmation of
a Chapter 11 Plan since RFSLP is substantially the only creditor in
the case.
A full-text copy of the Rutt Family's objection dated March 23,
2021, is available at https://bit.ly/31pQ3SA from PacerMonitor.com
at no charge.
Counsel for Rutt Family Sonshine:
KAPLIN STEWART MELOFF REITER & STEIN, P.C.
William J. Levant, Esquire
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.
YOUNGEVITY INTERNATIONAL: Extends Maturity of $1M Notes to 2022
---------------------------------------------------------------
Between March 18, 2021 and March 22, 2021, Youngevity
International, Inc. entered into note amendments with the holders
of an aggregate of $1,000,000 in principal amount of the 6% secured
convertible notes issued by the company on Feb. 15, 2019 and March
13, 2019.
The amendments extend the maturity date of the 6% notes held by the
investors by one year, to Feb. 15, 2022 and March 15, 2022, as
applicable, and increase the interest rate to 12%. As an
inducement to enter into the amendments, Youngevity International
issued to the investors an aggregate of 150,000 shares of its
restricted common stock, par value $0.001 per share.
About Youngevity
Chula Vista, California-based Youngevity International, Inc. --
https://ygyi.com -- is a multi-channel lifestyle company offering a
hybrid of the direct selling business model that also offers
e-commerce and the power of social selling. Assembling a virtual
main street of products and services under one corporate entity,
the Company offers products from the six top selling retail
categories: health/nutrition, home/family, food/beverage (including
coffee), spa/beauty, apparel/jewelry, as well as innovative
services.
Youngevity reported a net loss attributable to common stockholders
of $23.50 million for 2018 following a net loss attributable to
common stockholders of $12.69 million for 2017. As of Sept. 30,
2019, the Company had $141.18 million in total assets, $85.01
million in total liabilities, and $56.17 million in total
stockholders' equity.
Mayer Hoffman McCann P.C., in San Diego, California, the Company's
auditor since 2011, issued a "going concern" qualification in its
report dated April 15, 2019, on the consolidated financial
statements for the year ended Dec. 31, 2018, citing that the
Company has recurring losses and is dependent on additional
financing to fund operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
[^] BOND PRICING: For the Week from March 22 to 26, 2021
--------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
BPZ Resources Inc BPZR 6.500 3.017 3/1/2049
Basic Energy Services Inc BASX 10.750 19.250 10/15/2023
Basic Energy Services Inc BASX 10.750 20.546 10/15/2023
Briggs & Stratton Corp BGG 6.875 8.500 12/15/2020
Buffalo Thunder
Development Authority BUFLO 11.000 50.001 12/9/2022
Capitol Investment
Merger Sub 2 LLC NSCOHL 10.000 107.834 8/1/2024
Capitol Investment
Merger Sub 2 LLC NSCOHL 10.000 107.853 8/1/2024
Chinos Holdings Inc CNOHLD 7.000 0.332 N/A
Chinos Holdings Inc CNOHLD 7.000 0.332 N/A
Citigroup Inc C 3.362 99.465 4/1/2021
Coca-Cola Co/The KO 2.500 104.031 4/1/2023
Continental Airlines
2005-ERJ1 Pass
Through Trust UAL 9.798 99.586 4/1/2021
Dean Foods Co DF 6.500 2.000 3/15/2023
Dean Foods Co DF 6.500 1.925 3/15/2023
Diamond Offshore Drilling DOFSQ 7.875 24.750 8/15/2025
Diamond Offshore Drilling DOFSQ 3.450 15.000 11/1/2023
ENSCO International Inc VAL 7.200 10.088 11/15/2027
EnLink Midstream Partners LP ENLK 6.000 62.250 N/A
Energy Conversion Devices ENER 3.000 7.875 6/15/2013
Energy Future Competitive
Holdings Co LLC TXU 0.999 0.072 1/30/2037
Evernorth Health Inc CI 3.900 102.589 2/15/2022
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 35.125 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 35.787 7/15/2023
Federal Farm Credit
Banks Funding Corp FFCB 0.140 99.869 12/9/2021
Federal Farm Credit
Banks Funding Corp FFCB 0.170 99.873 2/24/2022
Fidelity National
Information Services Inc FIS 3.000 110.490 8/15/2026
Fleetwood Enterprises Inc FLTW 14.000 3.557 12/15/2011
Frontier Communications FTR 8.750 65.000 4/15/2022
Frontier Communications FTR 6.250 63.000 9/15/2021
Frontier Communications FTR 9.250 64.750 7/1/2021
GNC Holdings Inc GNC 1.500 1.250 8/15/2020
GTT Communications Inc GTT 7.875 13.645 12/31/2024
GTT Communications Inc GTT 7.875 27.750 12/31/2024
Global Eagle Entertainment GEENQ 2.750 1.114 2/15/2035
Goodman Networks Inc GOODNT 8.000 21.875 5/11/2022
Hi-Crush Inc HCR 9.500 0.680 8/1/2026
Hi-Crush Inc HCR 9.500 0.680 8/1/2026
High Ridge Brands Co HIRIDG 8.875 1.135 3/15/2025
High Ridge Brands Co HIRIDG 8.875 1.135 3/15/2025
HighPoint Operating Corp HPR 7.000 55.063 10/15/2022
Hubbell Inc HUBB 3.625 105.326 11/15/2022
J Crew Brand LLC /
J Crew Brand Corp JCREWB 13.000 54.858 9/15/2021
Keurig Dr Pepper Inc KDP 2.700 103.251 11/15/2022
Liberty Media Corp LMCA 2.250 46.131 9/30/2046
MAI Holdings Inc MAIHLD 9.500 15.895 6/1/2023
MAI Holdings Inc MAIHLD 9.500 15.895 6/1/2023
MAI Holdings Inc MAIHLD 9.500 15.895 6/1/2023
MF Global Holdings Ltd MF 6.750 15.625 8/8/2016
MF Global Holdings Ltd MF 9.000 15.625 6/20/2038
MTS Systems Corp MTSC 5.750 109.156 8/15/2027
Mashantucket Western
Pequot Tribe MASHTU 7.350 15.750 7/1/2026
Mondelez International Inc MDLZ 4.000 109.037 2/1/2024
Morgan Stanley MS 3.362 99.760 4/1/2021
Murphy Oil Corp MUR 4.000 102.234 6/1/2022
NOV Inc NOV 2.600 101.597 12/1/2022
Navajo Transitional Energy NVJOTE 9.000 65.500 10/24/2024
Nine Energy Service Inc NINE 8.750 48.701 11/1/2023
Nine Energy Service Inc NINE 8.750 49.439 11/1/2023
Nine Energy Service Inc NINE 8.750 49.634 11/1/2023
OMX Timber Finance
Investments II LLC OMX 5.540 1.472 1/29/2020
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 90.000 6/1/2021
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 90.000 6/1/2021
Pride International LLC VAL 6.875 7.250 8/15/2020
Pride International LLC VAL 7.875 10.858 8/15/2040
Renco Metals Inc RENCO 11.500 24.875 7/1/2003
Revlon Consumer Products REV 6.250 34.962 8/1/2024
Rolta LLC RLTAIN 10.750 1.726 5/16/2018
Sears Holdings Corp SHLD 8.000 1.410 12/15/2019
Sears Holdings Corp SHLD 6.625 2.122 10/15/2018
Sears Holdings Corp SHLD 6.625 2.171 10/15/2018
Sears Roebuck Acceptance SHLD 7.500 0.691 10/15/2027
Sears Roebuck Acceptance SHLD 6.750 0.847 1/15/2028
Sears Roebuck Acceptance SHLD 6.500 0.792 12/1/2028
Sears Roebuck Acceptance SHLD 7.000 0.663 6/1/2032
Sempra Texas Holdings Corp TXU 5.550 13.500 11/15/2014
Summit Midstream Partners LP SMLP 9.500 62.000 N/A
TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019
Transworld Systems Inc TSIACQ 9.500 30.000 8/15/2021
ViacomCBS Inc VIAC 3.250 105.412 3/15/2023
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 52.250 8/15/2021
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 50.041 8/15/2021
Western Union Co/The WU 3.600 102.518 3/15/2022
*********
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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
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