/raid1/www/Hosts/bankrupt/TCR_Public/210421.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, April 21, 2021, Vol. 25, No. 110
Headlines
1 BIG RED: Wins Cash Collateral Access Thru May 6
127 WESTCHESTER: Seeks to Hire Ortiz & Ortiz as Legal Counsel
17 JOHN STREET: Lender Selling 15-Storey Building
203 W 107 STREET: Unsecured Creditors to Split $670,000 in Plan
4F ITALIA: Seeks Approval to Hire Van Horn Law Group as Counsel
730 OAKLAND: Seeks to Hire Buck & Associates as Real Estate Broker
ADVANCED POWER: Unsecured Creditors Will Recover 1.22% Under Plan
AFFINITY GAMING: New $70MM Note Add-on No Impact on Moody's B3 CFR
AGD SYSTEMS: Court Extends Plan Exclusivity Thru June 18
AJC ATP: Bid to Use Bank's Cash Collateral Denied
ALBANY MOLECULAR: S&P Ups ICR to 'B' on Improved Performance
ALPHA AGRICULTURAL: Seeks Access to Cash Collateral
AMBERSON NATURAL: Unsecured Creditors Will Recover 5.6% in Plan
ANDINA GOLD: Widens Net Loss to $11.8 Million in 2020
APRO LLC: Moody's Assigns B2 Rating to Upsized Term Loan B
APRO LLC: S&P Rates $105MM Incremental Sr. Secured Term Loan 'B'
ASP LS: Moody's Assigns First Time B3 Corporate Family Rating
ATLANTICA SUSTAINABLE: S&P Raises ICR to 'BB+' on Increased Scale
ATLAS CC: S&P Assigns Preliminary 'B-' ICR, Outlook Stable
AUTO RECYCLERS: Seeks to Tap Woods Rogers as Bankruptcy Counsel
AUTOMOTORES GILDEMEISTER: Unsecureds Unimpaired in Prepack Plan
BARINGS CLO 2019-I: S&P Affirms BB- (sf) Rating on Class E-R Notes
BASIC ENERGY: S&P Lowers ICR to 'D' on Missed Interest Payment
BEACON ROOFING: Moody's Hikes CFR to Ba3 & Rates Unsecured Notes B2
BEE COUNTY: Seeks to Hire D. William & Co. as Accountant
BEE COUNTY: Seeks to Hire Mullin Hoard & Brown as Legal Counsel
BENSON PROPERTY: U.S. Trustee Unable to Appoint Committee
BLACK DIRT: Seeks to Tap Paul Roop as Bankruptcy Counsel
BLACKSTONE CQP: S&P Alters Outlook to Positive, Affirms 'B' ICR
BLUE RIBBON: Moody's Hikes CFR to B2 & Rates New Secured Loans B2
BLUE RIBBON: S&P Withdraws ICR 'B-' Rating on Refinance
BMSL MANAGEMENT: Says Plan Disclosures Do Not Satisfy Sec. 1125(b)
BORINQUEN NATURAL: Seeks to Tap MRO Attorneys at Law as Counsel
BORINQUEN NATURAL: Taps Albert Tamarez-Vasquez as Accountant
BOY SCOUTS OF AMERICA: Files Two-Path Bankruptcy-Exit Plan
BOY SCOUTS OF AMERICA: Seeks August 18 Plan Exclusivity Extension
CARBONLITE HOLDINGS: Niagara Bottling Resigns as Committee Member
CENTENNIAL RESOURCE: Moody's Hikes CFR to B2 on Improved Cash Flow
CENTRAL GARDEN: Moody's Rates $400MM Unsecured Notes 'B1'
CENTRAL GARDEN: S&P Rates $400MM Senior Unsecured Notes 'BB'
CHARTER COMMUNICATIONS: Moody's Rates New Sr. Unsecured Notes 'B1'
CHG HEALTHCARE: Moody's Alters Outlook on B2 CFR to Stable
CLICK BIO: Gets Continued Access to Cash Collateral
COLLECTED GROUP: U.S. Trustee Appoints Creditors' Committee
CONN'S INC: S&P Upgrades ICR to 'B' on Recent Debt Reduction
CONNECTIONS COMMUNITY: Case Summary & 30 Top Unsecured Creditors
CONNECTIONS COMMUNITY: Hits Chapter 11; Businesses Up for Sale
CORNERSTONE CHEMICAL: S&P Lowers ICR to 'CCC+', Outlook Negative
CPV MARYLAND: Moody's Rates New $475MM Sr. Credit Facilities 'Ba3'
DUNTOV MOTOR: Seeks to Hire Rosen Systems as Appraiser
ELI & ALI: Wins Cash Collateral Access Thru April 29
ENCINO ACQUISITION: Moody's Lowers CFR to B2 on Cash Flow Outspend
ENTEGRIS INC: Moody's Gives Ba2 Rating on New Sr. Unsecured Notes
ENTEGRIS INC: S&P Rates $400MM Senior Unsecured Notes 'BB'
ESTHER CORONA: May Continue Using Cash Collateral
EVERI PAYMENTS: Moody's Affirms B2 CFR & Alters Outlook to Stable
FARR BUILDERS: Court OKs Deal on Cash Collateral Access
FORD CITY CONDOMINIUM: Case Summary & 12 Unsecured Creditors
FRESH ACQUISITIONS: Case Summary & 20 Top Unsecured Creditors
FRESH ACQUISITIONS: Starts VitaNova-Backed Chapter 11 Case
FRESH ACQUISITIONS: Tahoe Joe's and Furr's Brands on the Block
FRONTIER COMMUNICATIONS: Shearman Updates on Debtholders Group
FRONTIER COMMUNICATIONS: To Emerge from Chapter 11 Under New Team
GENESIS ENERGY: Moody's Alters Outlook on Ba3 CFR to Negative
GRIDDY ENERGY: State of Texas Objects to PR Firm in Chapter 11 Case
GTT COMMUNICATIONS: Has Some Recovery for Shareholders in Ch. 11
HECLA MINING: Moody's Raises CFR to B2 on Strong Performance
HERMITAGE OFFSHORE: Wins May 8 Plan Exclusivity Extension
HERTZ CORPORATION: Morris, Glenn Represent Shareholders
HIDALGO COUNTY EMS: Court Okays Pharr's Plan to Buy Assets
HOLLINGSWORTH FARMS: Unsecureds' Payout Depends on Outcome of Sale
INSULET CORP: Moody's Assigns B2 CFR & Rates Secured Loan Ba3
INTEGRO PARENT: Moody's Withdraws Caa1 Corporate Family Rating
INVISTA EQUITIES: S&P Places 'BB+' ICR on CreditWatch Positive
IPC CORP: S&P Lowers ICR to 'CCC-' as Bullet Maturity Gets Closer
JOSIAH'S TRUCKING: Trustee Hires John Mosley as Accountant
JPW INDUSTRIES: S&P Alters Outlook to Stable, Affirms 'B' ICR
K & W CAFETERIAS: Plan Exclusivity Extended Until July 1
LCM INVESTMENTS: Moody's Assigns First Time Ba3 Corp Family Rating
MAGENTA BUYER: Moody's Assigns First Time B3 Corp Family Rating
MAGENTA BUYER: S&P Assigns 'B' Issuer Credit Rating, Outlook Neg.
MALLINCKRODT PLC: Willkie, Morris Represent Attestor Claimants
MARVEL INVESTMENTS: Seeks to Hire Freeman Law as Legal Counsel
MEZZ57TH LLC: Court OKs Continued Cash Access
MIAMI-DADE COUNTY IDA: Moody's Lowers 2015A Revenue Bonds to B2
MIDCAP FINANCIAL: Moody's Assigns First Time Ba3 Long-Term CFR
MKJC AUTO: Court Extends Plan Exclusivity Until July 5
MOSS CREEK: S&P Upgrades ICR to 'B-' on Improved Credit Ratios
NATIONAL RIFLE: Can Argue LaPierre Paid Back Extra Benefits
NEELKANTH HOTELS: May Use Cash Collateral Thru June 30
NEWSTREAM HOTEL: Seeks Cash Collateral Access
NINE POINT ENERGY: Bids Due June 11; Auction Set for June 15
PPD INC: Moody's Puts Ba3 CFR Under Review for Upgrade
ROMANS HOUSE: Seeks to Obtain Up to $1.11M of DIP Loans
RUMBLEON INC: Lowers Net Loss to $25 Million in 2020
SEADRILL LTD: Replaces Forbearance Agreement
SEADRILL PARTNERS: Lenders, Committee Okay Cash Access thru May 7
SIGNIFY HEALTH: SGL-1 Liquidity Rating No Impact on Moody's B2 CFR
SMG INDUSTRIES: Delays Filing of 2020 Annual Report
SOBR SAFE: Incurs $30 Million Net Loss in 2020
SOFT FINISH: Has Deal on Cash Collateral Access
SOLOMON EDUCATION: Seeks Cash Collateral Access
SPECTRUM GLOBAL: Incurs $17.7 Million Net Loss in 2020
SPHERATURE INVESTMENTS: Wins Cash Collateral Access Thru May 3
STAFFING 360: Widens Net Loss to $15.6 Million in 2020
SUNDANCE ENERGY: Court Okays Ch. 11 Debt Swap With Term Lenders
TECOSTAR HOLDINGS: S&P Affirms 'B' ICR, Outlook Negative
TENNESSEE CLEAN: Seeks to Hire Richard Banks as Legal Counsel
TJC SPARTECH: Moody's Assigns B2 CFR on Improved Credit Metrics
TRIBUNE CO: SC Justices Won't Review Chapter 11 Clawback Case
TRIPLE J PARKING: Has Access to SBA Cash Collateral
U.S. GLOVE: Seeks Cash Collateral Access
US RENAL CARE: S&P Assigns 'B-' Rating to New $150MM Term Loan
US RENAL: Upsized Secured Term Loan No Impact on Moody's B3 CFR
USA COMPRESSION: S&P Affirms 'B+' ICR, Outlook Negative
VILLAS OF WINDMILL: Trustee Wins Cash Collateral Access
VIP PHARMACY: Lender Seeks to Prohibit Cash Collateral Use
ZAYAT STABLES: Trustee Says Lack of File Access Allows Manipulation
[*] Oil Bankruptcies in U.S. Rose the Highest in First Quarter
*********
1 BIG RED: Wins Cash Collateral Access Thru May 6
-------------------------------------------------
The U.S. Bankruptcy Court for the District of Kansas has authorized
1 Big Red, LLC to use cash collateral and inventory on an interim
basis in accordance with the budget and provide adequate
protection, through May 6, 2021.
The Debtor requires the use of cash collateral to pay insurance
premiums. The Debtor is indebted to these entities for mortgages
on the specified properties:
Property
--------
Anchor Loans 2994 W. 118th Terr., Leawood, KS
Cherokee
Investments 3901-3923 Linwood Blvd, Kansas City, MO
Lima One Capital 4812 W. 69th Terr., Prairie Village, KS
Peerstreet 7410 Sni A Bar Road, Kansas City, MO
Peerstreet 411 W. 46th Terr, Unit 104, Kansas City, MO
Taylor Strategic 3901 – 3923 Linwood Blvd., Kansas City, MO
Taylor Strategic also holds a second mortgage on 3901 – 3923
Linwood Blvd, Kansas City, MO.
As adequate protection, each of the Creditors is granted
replacement security interests in, and liens on, all post-Petition
Date acquired property of the Debtor and the Debtor's bankruptcy
estate that is the same type of property that the Creditor holds a
pre-petition interest, lien or security interest to the extent of
the validity and priority of such interests, liens, or security
interests, if any. The amount of each of the Replacement Liens
shall be up to the amount of any diminution of each of the
Creditors' respective collateral positions from the Petition Date.
The priority of the Replacement Liens will be in the same priority
as each of the Creditors pre-petition interests, liens and security
interests in similar property.
To the extent that the Replacement Liens prove inadequate to
protect the Creditors from a demonstrated diminution in value of
collateral positions from the Petition Date, each of the Creditors
is granted an administrative expense claim under Bankruptcy Code
section 503(b) with priority in payment under Code section 507(b).
The Debtor is also directed to continue to maintain adequate and
sufficient insurance on all its property and assets, timely file
all post-petition tax returns and will make timely deposits of all
post-petition taxes.
A hearing on the matter is scheduled for May 6 at 1 p.m.
A copy of the order is available at https://bit.ly/2Qe0Mh1 from
PacerMonitor.com.
About 1 Big Red, LLC
1 Big Red, LLC, principally located at 440 E. 63rd St., Kansas
City, MO 64110, is engaged activities related to real estate.
1 Big Red, LLC sought Chapter 11 protection (Bankr. D. Kan. Case
No. 21-20044) on Jan. 15, 2021. The case is assigned to Judge
Robert D. Berger.
In the petition signed by Sean Tarpenning, CEO, the Debtor listed
total assets at $2.5 million and $3,094,099 in estimated
liabilities.
Judge Robert D. Berger oversees the case.
The Debtor tapped Colin Gotham, Esq., at Evans & Mullinix, P.A. as
counsel.
127 WESTCHESTER: Seeks to Hire Ortiz & Ortiz as Legal Counsel
-------------------------------------------------------------
127 Westchester SQ Restaurant LLC seeks approval from the U.S.
Bankruptcy Court for the Southern District of New York to employ
Ortiz & Ortiz, LLP as its legal counsel.
Ortiz & Ortiz will render these legal services:
(a) protect and preserve the estate assets during the pendency
of the Debtor's Chapter 11 case;
(b) prepare documents and pleadings; and
(c) perform all other bankruptcy-related services.
The hourly rates of Ortiz & Ortiz's counsel and staff are as
follows:
Partners $450
Associates/Of Counsel $375
Paralegals $75
The Debtor paid Ortiz & Ortiz a retainer in the amount of $15,000.
Norma Ortiz, Esq., an attorney at Ortiz & Ortiz, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Norma Ortiz, Esq.
Ortiz & Ortiz, LLP
35-10 Broadway, Ste. 202
Astoria, NY 11106
Telephone: (718) 522-1117
Facsimile: (718) 596-1302
Email: email@ortizandortiz.com
About 127 Westchester SQ Restaurant
127 Westchester SQ Restaurant LLC filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y.
Case No. 21-10503) on March 17, 2021, listing under $1 million in
both assets and liabilities. Javiel Rodriguez, president, signed
the petition. Judge Shelley C. Chapman oversees the case. Ortiz &
Ortiz, LLP serves as the Debtor's legal counsel.
17 JOHN STREET: Lender Selling 15-Storey Building
-------------------------------------------------
Eastdil Secured, on behalf of 17 John III Strategic Venture LLC
("secured party"), will offer for sale the interest as permitted
pursuant to the terms of a certain junior mezzanine pledge and
security agreement dated June 17, 2018, by 17 John Street Mezz LLC
("junior mezzanine borrower"), in favor of the secured party.
Secured Party is offering for sale 100% of the limited liability
membership interests in 17 John Street Holdings LLC, owned by the
junior mezzanine borrower, which represents 100% of the limited
liability membership interests in the pledged entity, which is the
sole owner of 100% of the limited liability company membership
interests in 17 John Street Property Owner LLC, which in turns owns
the property located at 17 John Street, New York, New York. The
sale is being made in connection with the foreclosure on a pledge
of the interests to secured party by junior mezzanine borrower
under the secured agreement, pursuant to which junior mezzanine
borrower granted to secured party a first priority lien on the
interests as collateral for the loan from secured party to junior
mezzanine borrower. The junior mezzanine loan was made pursuant to
a certain junior mezzanine loan agreement dated June 7, 2018, by
and between secured party and junior mezzanine borrower, as amended
by that certain Omnibus First Amendment to the loan documents dated
as of April 22, 2020.
The sale will take place as follows, subject to the COVID-19
pandemic and applicable law, including any applicable executive
orders of the Governor of the State of New York:
In person:
May 12, 2021
12:00 p.m. (New York Time)
Goodwin Procter LLP
The New York Times Building
620 Eighth Avenue
New York, New York 10018
Attn: Christopher B. Price, Esq.
Tel: (212) 813-8951
and
Via simultaneous video conference:
https://bit.ly/17JohnStreetUCC
Attn: Christopher B. Price, Esq.
Tel: (212) 813-8951
The public sale will be conducted by William Mannion of Mannion
Auctions LLC.
Further information concerning the interest and the requirements
for obtaining information and bidding on the interests can be found
in the terms of sale (including by access through:
https://www.17JohnStreetUCCForeclosure.com.
Eastdil Secured can be reached at:
Eastdil Secured
Tel: +1 (212) 315-7200
Email: ES17JohnStreet@eastdilsecured.com
17 John Street Property Owner LLC operates a building located in 17
John Street, New York. The building was built in 1920, has 15
floors and a total of 81 units.
203 W 107 STREET: Unsecured Creditors to Split $670,000 in Plan
---------------------------------------------------------------
203 W 107 Street LLC, et al., filed a Fourth Amended Joint
Disclosure Statement.
Votes accepting or rejecting the Plan are due by 4 p.m. on June 25,
2021, prevailing Eastern Time.
The Bankruptcy Court has entered an order fixing July 8, 2021 at 10
a.m., at the United States Bankruptcy Court, One Bowling Green, New
York, NY 10004, as the date, time and place for the hearing on
confirmation of the Plan and fixing 4 p.m. on June 25, 2021,
prevailing Eastern Time, as the last date for the filing and
serving of any objections to confirmation of the Plan.
On account of indebtedness and obligations owed by the Debtors to
LoanCore Capital Credit REIT LLC ("LoanCore") pursuant to the
LoanCore Mortgage and all loan documents related thereto (the
"LoanCore Loan Documents"), LoanCore holds a perfected first lien
on the 107 Properties securing the 107 Mortgage Claim, which is in
an amount of not less than $102,830,141.91 as of the Petition Date,
an amount in excess of the value of the 107 Properties.
On account of indebtedness and obligations owed by the 117 Street
Debtors to LoanCore pursuant to the LoanCore Mortgage and the
LoanCore Loan Documents, LoanCore holds a perfected first lien on
the 117 Properties securing the 117 Mortgage Claim, which is in an
amount not less than $100,245,624.57 as of the Petition Date, an
amount in excess of the value of the 117 Properties.
The Plan's key elements are as follows:
* The Debtors shall transfer title to the Properties and the
Assets (i.e., any property of the Estates for purposes of section
541 of the Bankruptcy Code, including Cash, Causes of Action
(including claims for outstanding rent under the Tenant Leases),
Tenant Leases as of the Confirmation Date, and incidental property
to which the Debtors ascribe de minimis value) directly to the
Successor Owners (entities designated, owned and controlled by
LoanCore), free and clear of all Claims, Liens, charges, interests
and encumbrances other than the Permitted Exceptions, the New
Mortgages, and governmental orders, applicable regulations
governing the regulatory status and rents of the units at the
Properties, and violations of record applicable to the Properties
and in effect as of the Effective Date.
* The Successor Owners shall pay the Allowed Administrative
Claims, Allowed Priority Tax Claims, Allowed Priority Claims, and
Allowed General Unsecured Claims (without pre-petition interest or
post-petition interest) provided, however, that the aggregate
amount of consideration to be distributed by the Successor Owners
on account of Allowed General Unsecured Claims shall not exceed
$670,000. If the aggregate of Allowed General Unsecured Claims
exceeds $670,000, holders of Allowed General Unsecured Claims will
receive their pro rata share of $670,000. To the extent necessary,
LoanCore will contribute sufficient funds to the Successor Owners
to ensure up to $670,000 is available for distribution to holders
of Allowed General Unsecured Claims.
* The Debtors are assuming the Tenant Leases and assigning them
to the Successor Owners. The Successor Owners are assuming all
obligations of the Debtors as landlord under all of the assigned
Tenant Leases from and after the Effective Date and shall pay all
Cure costs that may be due in connection with the assumption and
assignment of the Tenant Leases. See infra Section III.G.2 for a
discussion of the treatment of the Tenant Leases and the tenant's
claims thereunder.
* Under Section 10.5 of the Plan, LoanCore, the Successor
Owners, and the New Mortgage Lender are granting a release in favor
of the Debtors, the Mezzanine Borrowers, the Guarantor, the
Affiliated Property Manager, and their respective Related Persons.
Under Section 10.6 of the Plan, the Debtors, the Mezzanine
Borrowers, the Guarantor, and the Affiliated Property Manager are
granting a release in favor of LoanCore, the Successor Owners, the
New Mortgage Lender, and their respective Related Persons.
On a Distribution Date, the Successor Owners shall pay the amounts
to be paid to Claimants under the Plan. To the extent necessary,
LoanCore will contribute sufficient funds to the Successor Owners
to pay such amounts.
Claimants are receiving a substantial (and potentially 100%) cash
recovery on their Allowed Claims (without pre-petition interest or
post-petition interest on the Allowed Unsecured Claims)on or
promptly following the Effective Date (or promptly following
allowance of their Claim)and accordingly the requirements of
Section 1129(b) are satisfied.
Counsel for Debtors:
Mark A. Frankel
BACKENROTH FRANKEL & KRINSKY LLP
800 Third Avenue, 11th Floor
New York, New York 10022
Tel: (212) 593-1100
Fax: (212) 644-0544
A copy of the Fourth Amended Disclosure Statement is available at
https://bit.ly/3mYEtbg from PacerMonitor.com.
About 203 W 107 Street LLC
203 W 107 Street, LLC and 10 other entities affiliated with Emerald
Equity Group sought Chapter 11 protection (Bankr. S.D.N.Y. Lead
Case No. 20-12960) on Dec. 28, 2020.
The Debtors are single asset real estate entities that own
residential buildings on 107th Street and 117th Street in
Manhattan. There are several hundred tenants currently residing in
the properties.
203 W 107 Street disclosed total assets of $7,044,031 and total
liabilities of $102,929,476 in its petition signed by Ephraim
Diamond, chief restructuring officer. Mr. Diamond and Arbel
Capital Advisors LLC have been retained to assist the Debtors and
Emerald in complying with their obligations under a restructuring
support agreement with LoanCore.
Backenroth Frankel & Krinsky, LLP and Belkin Burden Goldman, LLP,
serve as the Debtors' bankruptcy counsel and special counsel,
respectively.
4F ITALIA: Seeks Approval to Hire Van Horn Law Group as Counsel
---------------------------------------------------------------
4F Italia, LLC seeks approval from the U.S. Bankruptcy Court for
the Southern District of Florida to employ Van Horn Law Group, PA
as its legal counsel.
Van Horn Law Group will render these legal services:
(a) advise the Debtor regarding its powers and duties and the
continued management of its business operations;
(b) advise the Debtor regarding its responsibilities in
complying with the U.S. trustee's operating guidelines and
reporting requirements and with the rules of the court;
(c) prepare legal documents;
(d) protect the Debtor's interest in all matters pending
before the bankruptcy court; and
(e) represent the Debtor in negotiation with its creditors in
the preparation of a Chapter 11 plan.
Prior to the petition date, Van Horn Law Group received a retainer
of $5,000, plus filing fee of $1,738.
The hourly rates of Van Horn Law Group's counsel and staff are as
follows:
Chad Van Horn, Esq. $450
Associates $350
Jay Molluso $250
Law Clerks $175
Paralegals $175
In addition, Van Horn Law Group will seek reimbursement for
expenses incurred.
Chad Van Horn, Esq., founding partner at Van Horn Law Group,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Chad T. Van Horn, Esq.
Van Horn Law Group, PA
330 N. Andrews Ave., Suite 450
Fort Lauderdale, FL 33301
Telephone: (954) 765-3166
Email: Chad@cvhlwgroup.com
About 4F Italia
4F Italia, LLC, doing business as Bufarella Genuine Italia Gourmet,
filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-13339) on April 8,
2021, listing under $1 million in both assets and liabilities.
Judge Scott M. Grossman oversees the case. Van Horn Law Group, PA,
led by Chad T. Van Horn, Esq., serves as the Debtor's legal
counsel.
730 OAKLAND: Seeks to Hire Buck & Associates as Real Estate Broker
------------------------------------------------------------------
730 Oakland LLC seeks approval from the U.S. Bankruptcy Court for
the Eastern District of Virginia to employ Buck & Associates, Inc.,
an Arlington, Va.-based real estate broker.
The Debtor requires a real estate broker to market and lease vacant
units within its apartment building located at 730 N. Oakland St.,
Arlington, Va.
Buck & Associates will be paid a commission of 75 percent of the
first month's rent for each unit leased.
Billy Buck, a partner at Buck & Associates, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Billy Buck
Buck & Associates, Inc.
2519 Wilson Blvd.
Arlington, VA 22201
Tel: (703) 528-2288/(703) 524-9000
Email: Billy@BuckRealtors.com
About 730 Oakland
730 Oakland LLC classifies its business as single asset real estate
(as defined in 11 U.S.C. Section 101(51B)).
730 Oakland filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. E.D. Va. Case No. 21-10040) on
Jan. 12, 2021. Raymond C. Schupp, managing member, signed the
petition. In its petition, the Debtor disclosed assets of between
$1 million and $10 million and liabilities of the same range.
Judge Brian F. Kenney oversees the case.
Steven B. Ramsdell, Esq., at Tyler, Bartl & Ramsdell, P.L.C. serves
as the Debtor's legal counsel.
ADVANCED POWER: Unsecured Creditors Will Recover 1.22% Under Plan
-----------------------------------------------------------------
Advanced Power Technologies, LLC, filed an Amended Chapter 11 Plan
of Reorganization and a corresponding Disclosure Statement.
The sources of consideration for distributions under the Plan
include the Debtor's cash on hand as of the Effective Date as well
the future profits of the Reorganized Debtor. In addition, upon
the Effective Date, the holder of the Debtor's Equity Interests
shall remit the $50,000 new value payment to the Debtor's general
bankruptcy counsel, Shraiberg, Landau & Page, P.A., for pro-rata
distribution to the holders of Allowed Class 8 General Unsecured
Claims.
As of the Petition Date, the Debtor was owned 100% by Devin
Grandis, who is the Debtor's President and CEO.
The Plan provides that:
* Class 3 Allowed Secured Claim of Ally Bank totaling $15,736.94
will recover 100% of their claims. The holder of the Allowed Class
3 Claim shall receive the following treatment upon the Effective
Date: (i) following the Effective Date, the Debtor shall remain
current on its obligations to Ally Bank under the Retail
Installment Sale Contract Simple Finance Charge, a copy of which is
attached to Proof of Claim No. 58; and (ii) the Debtor shall cure
100% of the monetary default under the Retail Installment Sale
Contract Simple Finance Charge as of the Petition Date. Class 3 is
impaired.
* Class 4 Allowed Unsecured Claim of Nesco totaling $2,015,533
cure payment will receive $300,000 (plus balance treated in Class
7) for a recovery of 14.88% (plus Class 7 pro rata payment).
* Class 5 Allowed Unsecured Claim of Truist Bank totaling
$2,180,740 will recover 100%.
* Class 6 Allowed Unsecured Claim of Iberia Bank totaling
$1,823,732 on account of a PPP Loan will either be forgiven or
repaid in full. Each holder of Allowed Class 8 Claim shall
receive a pro-rata distribution of $50,000 in cash provided by the
holder of the Allowed Equity Interests in the Debtor in exchange
for said holder retaining his Equity Interests in the Reorganized
Debtor.
* Class 7 Allowed Unsecured Priority Claims totaling $2,040 are
unimpaired and will recover 100%.
* Class 8 Allowed Other General Unsecured Claims and Rejection
Claims totaling $4,104,790 will recover 1.22% of their claims. The
Debtor estimates that Class 8 will consist of Allowed General
Unsecured Claims in the approximate amount of $4,104,790.25 plus
any damages resulting from the Debtor’s rejection of executory
contracts or unexpired leases, if any.
Attorneys for the Debtor:
Bradley S. Shraiberg, Esq.
Joshua B. Lanphear, Esq.
SHRAIBERG, LANDAU & PAGE, P.A.
2385 NW Executive Center Drive, Ste. 300
Boca Raton, FL 33431
Telephone: (561) 443-0800
Facsimile: (561) 998-0047
Email: bss@slp.law
Email: jlanphear@slp.law
A copy of the Amended Disclosure Statement is available at
https://bit.ly/3aiM0fO from PacerMonitor.com.
About Advanced Power Technologies
Advanced Power Technologies, LLC --
http://www.advancedpowertech.com/-- offers interior and exterior
lighting, signage, and electrical service needs throughout the
United States and Canada. It works with commercial, hospitality,
industrial, institutional, restaurant, and retail clients to save
energy and reduce operating costs.
Advanced Power Technologies, LLC, based in Pompano Beach, Fla.,
filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 20-13304) on
March 11, 2020. In the petition signed by Devin Grandis, president,
the Debtor was estimated to have $1 million to $10 million in both
assets and liabilities.
Judge Peter D. Russin Bradley replaced Judge Paul G Hyman Jr., who
previously oversaw the case. Bradley S. Shraiberg, Esq., at
Shraiberg Landau & Page PA, serves as the Debtor's bankruptcy
counsel.
The U.S. Trustee was not able to appoint an Official Committee of
Unsecured Creditors for the Debtor.
AFFINITY GAMING: New $70MM Note Add-on No Impact on Moody's B3 CFR
------------------------------------------------------------------
Moody's Investors Service said Affinity Gaming Corporation's
ratings are unaffected by the company's proposed $70 million add-on
to its 6.875% 1st lien senior secured notes due 2027. Affinity has
a B3 Corporate Family Rating, B3-PD Probability of Default Rating,
and stable outlook.
Proceeds from the proposed add-on will initially be placed on the
company's balance sheet and can be used for general corporate
purposes, including working capital, capital expenditures and
permitted acquisitions.
The add-on offering is credit negative because it increases debt,
cash interest and leverage with a lack of clarity on how the
proceeds will be used to enhance earnings. However, the B3 CFR and
stable outlook are not affected because leverage remains within
Moody's expectations for the rating and the additional cash
provides incremental liquidity until proceeds are deployed.
The $70 million senior secured add-on will be issued under the
indenture and have the same terms as the company's $475 million 1st
lien senior secured notes rated B3. Affinity's senior secured notes
represent the preponderance of debt in Affinity's capital structure
and have a subordinated lien on the collateral relative to the lien
pledged to the company's $50 million super senior revolver
(not-rated).
Pro forma for the add-on, Affinity's balance sheet cash will be
$143 million and total outstanding debt will be $545 million.
Moody's adjusted debt-to-EBITDA based on $545 million of
outstanding debt and EBITDA for the fiscal year ended Dec. 31, 2020
is very high at 11.5x. However, applying an annual run-rate based
on Affinity's March 31, 2021 EBITDA of $24 million, debt-to-EBITDA
is 6.1x, slightly above the 6.0x factor Moody's indicated could
lead to an upgrade, and consistent with what Moody's views as
appropriate for B3-rated gaming issuers with Affinity's asset
profile.
Affinity's B3 Corporate Family Rating reflects the company's
geographic diversity and ability to generate positive free cash
flow despite challenging operating conditions. Key concerns
included Affinity's relatively small scale in terms of revenue and
earnings, relatively high leverage, and historically aggressive
financial policy evidenced by payment of a leveraged dividend in
early 2018 by ownership, Z Capital Partners, LLC.
Moody's assumes in the ratings that debt-to-EBITDA is reduced to a
6x-7x range by the end of 2021. Affinity's ratings continue to
reflect that the coronavirus pandemic remains an overriding credit
concern for the company and other regional gaming issuers.
Affinity's casinos are still vulnerable to future closings and
capacity restrictions that create earnings uncertainty. Affinity's
reopened casinos are experiencing near-term earnings and margin
benefit from limited competition from other entertainment choices
that are more restricted due to the coronavirus. However,
competition for consumer discretionary spending from these
alternate and popular entertainment choices, including movie
theaters and restaurants, will eventually return once they increase
volume and open. Affinity and other regional casino issuers also
remain vulnerable to a challenging macroeconomic environment and
the increased possibility that gaming customers limit their
spending to more essential goods and services, leaving less for
casino-type gaming, which is a highly discretionary form of
entertainment.
Affinity filed a form S-1 in January 2021 to sponsor the formation
of Gaming & Hospitality Acquisition Corp. (GHAC), a special purpose
acquisition corporation. The company intends to merge into GHAC in
connection with an initial acquisition of gaming assets by GHAC,
but the identity of any such target is unknown. Because the
likelihood and details of any transaction are unknown, there is no
current effect on Affinity's rating or outlook. Moody's would
assess the effects of any transaction on Affinity's operating and
financial profile as well as the impact on Affinity's debt
structure to determine if the company's ratings are affected. GHAC
is a subsidiary of Affinity Gaming Holdings, who is also the
indirect parent of Affinity. GHAC is not part of Affinity's
borrowing group and not an obligor to the senior secured notes.
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
Affinity from the current weak US economic activity and a gradual
recovery for the coming year. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, the degree of uncertainty
around Moody's forecasts is unusually high. Moody's regard the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The gaming sector has been one of the sectors most significantly
affected by the shock given its sensitivity to consumer demand and
sentiment. More specifically, the weaknesses in Affinity's credit
profile, including its exposure to travel disruptions and
discretionary consumer spending have left it vulnerable to shifts
in market sentiment in these unprecedented operating conditions and
Affinity remains vulnerable to the outbreak continuing to spread.
Moody's views Affinity's liquidity as good, as it represents
slightly more than 12-months of the company's estimated no-revenue
scenario monthly cash burn (including debt service and maintenance
capital expenditures) of about $9 million. The covenant-lite nature
of the company's financial covenants is also a factor supporting
liquidity. Affinity is subject to a first-lien debt-to-EBITDA
coverage test that starts at 6.75x and eventually drops to 6.0x,
but the test is only required if the outstanding amount under the
revolver is greater than $10 million. The company has equity cure
rights, too. Pro forma cash is about $132 million, and Moody's
expects Affinity will generate $20 to $25 million of annual free
cash flow. As a result, Moody's expects that Affinity will not have
to draw on its $50 million revolver.
The stable outlook considers that although debt-to-EBITDA for the
latest 12-month period ended March 31, 2021 was very high at over
11x -- this figure includes the period beginning March 17, 2020
when all the companies gaming properties were temporarily closed
due to COVID-19 --- pro forma debt/EBITDA applying an annual
run-rate based on the March 31, 2021 quarter EBITDA results in much
lower debt-to-EBITDA at about 6.1x, a level Moody's expect the
company to stay through the end of this year.
While there is uncertainty regarding the level of sustainable
earnings when competing entertainment options reopen, the stable
outlook reflects that Affinity has aggressively managed costs and
stabilized performance in a challenging operating environment.
Affinity's pro forma debt structure does not have any pre-payable
debt, and as a result, any improvement in leverage will need to be
driven by higher EBITDA performance. The stable outlook also
reflects Affinity's good liquidity.
A ratings upgrade is unlikely given the weak operating environment
and continuing uncertainty related to the coronavirus. An upgrade
would require a high degree of confidence on Moody's part that the
gaming sector has returned to a period of long-term stability, and
that Affinity demonstrates the ability and willingness to generate
positive free cash flow, maintain good liquidity, and operate at a
debt/EBITDA level of 6.0x or lower.
Ratings could be downgraded if Moody's anticipates renewed weakness
in Affinity's earnings or cash flow generation because of
competition, actions to contain the spread of the virus, or
reductions in discretionary consumer spending. A deterioration in
liquidity or sustained high leverage could also lead to a
downgrade.
Affinity Gaming Corporation is a Nevada corporation, headquartered
in Las Vegas, which owns and operates 8 casinos, five of which are
located in Nevada, two in Missouri, and one in Iowa. Affinity is a
private company that is 100% owned by affiliates of Z Capital and
does not disclose its financial information. Net revenue for the
last twelve months-ended March 31, 2021 was $214 million.
AGD SYSTEMS: Court Extends Plan Exclusivity Thru June 18
--------------------------------------------------------
At the behest of Debtor AGD Systems Corporation, Judge Mindy A.
Mora of the U.S. Bankruptcy Court for the Southern District of
Florida, West Palm Beach Division extended the period in which the
Debtor may file a plan of reorganization through and including June
18, 2021, and to obtain acceptances of any such filed plan through
and including August 18, 2021.
A copy of the Court's Extension Order is available at
https://bit.ly/3a9oX79 from PacerMonitor.com.
About AGD Systems Corp.
AGD Systems Corporation is a registered U.S. Defense contractor
that provides services such as aircraft modernization, acquisition,
training, logistics, and sustainment.
AGD Systems Corp. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
20-18695) on August 12, 2020. AGD Systems President Mark Daniels
signed the petition. At the time of the filing, the Debtor
disclosed estimated assets of $1 million to $10 million and
estimated liabilities of $500,000 to $1 million.
Judge Erik P. Kimball oversees the case. Brian K. McMahon, P.A.,
and Kelley Fulton & Kaplan, P.L. is the Debtor's legal counsel.
AJC ATP: Bid to Use Bank's Cash Collateral Denied
-------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, has granted the motion filed by Spirit of
Texas Bank, SSB seeking to prohibit AJC ATP, LLC from using cash
collateral and has denied the Debtor's expedited motion to use cash
collateral as of March 16, 2021.
The Debtor is prohibited from using Spirit of Texas Bank's cash
collateral as such term is defined in 11 U.S.C. section 363(a),
absent further Order of the Court or the written consent of Spirit
of Texas Bank to pay any operating or business expenses, including
but not limited to, those expenses listed in the Budget.
The Debtor will request, in writing, approval from Spirit of Texas
Bank to make any payment required to operate the business, and
Spirit of Texas Bank will have two business days from the date of
such request within which to provide written consent or object.
The Debtor will provide Spirit of Texas Bank with an accounting of
all monies and daily receipts since the commencement of its
business operations on January 8, 2021 no later than the close of
business on Monday, April 19.
As adequate protection, Spirit of Texas Bank is granted, effective
as of the Petition Date, a replacement lien pursuant to 11 U.S.C.
section 361(2) on and in all assets of the Debtor that is acquired
or generated after the Petition Date, but solely to the same extent
and priority, and of the same kind and nature, as the Collateral
securing the pre-petition obligations to Spirit of Texas Bank under
the Loan Documents. The replacement liens granted to Spirit of
Texas Bank will not create a lien on or against any claims or
causes of action arising under Sections 542 through 550 of the
Bankruptcy Code or on or against the proceeds of the Avoidance
Actions. Further, any replacement liens granted to Spirit of Texas
Bank will be at all times subject and junior to all fees required
to be paid to the Clerk of the Bankruptcy Court and to the Office
of the United States Trustee under section 1930(a) of title 28 of
the United States Code.
Any and all replacement liens granted to Spirit of Texas Bank under
the Order will be deemed valid, binding, enforceable and perfected
upon entry of the Order. Spirit of Texas Bank will not be required
to file any UCC-1 financing statement or any similar document or
take any other action (including possession of any of the
collateral) in order to validate the perfection of the its liens.
If Spirit of Texas Bank will, in its discretion, choose to file any
such UCC-1 financing statements or other document, or take any
other action to validate the perfection of any part of its
replacement liens, the Debtor is directed to execute any documents
or instruments as Spirit of Texas Bank will reasonably request, and
all such documents and instruments will be deemed to have been
filed or recorded at the time and on the date of entry of the
Order. If the Chapter 11 case is dismissed or converted, then
neither the entry of the Order nor the dismissal or conversion of
the Chapter 11 case will affect the rights of Spirit of Texas Bank
and all of the respective rights and remedies thereunder of Spirit
of Texas Bank will remain in full force and effect as if the
Chapter 11 case had not been dismissed or converted.
The Debtor grants additional adequate protection to Spirit of Texas
Bank:
a) Within 48 hours of the Hearing, the Debtor will provide
proof of insurance and payment of insurance premiums to counsel for
Spirit of Texas Bank and 69th Street Properties LP;
b) The Debtor will maintain insurance coverage as required by
the Office of the United States Trustee on all insurable assets
(including both real and personal property) which serve as
collateral for repayment of indebtedness owed to Spirit of Texas
Bank and will be named as a loss payee on all applicable insurance
policies;
c) The Debtor will provide to Spirit of Texas Bank, from and
after the Petition Date, with any and all financial and other
reporting required under the Loan Documents or any other financial
and other reporting or information reasonably requested by Spirit
of Texas Bank within a reasonable time from request; and
d) The Debtor will not pay any pre-petition obligations
without prior Court approval.
A further hearing on the Spirit of Texas Motion is set for April
21, 2021, at 10 a.m. via video conference using the services of
Zoom Video Communications, Inc.
A copy of the order is available at https://bit.ly/3ao3xmN from
PacerMonitor.com.
About AJC ATP, LLC
AJC ATP, LLC is a Fort Lauderdale, Fla.-based company that operates
indoor trampoline parks. It conducts business under the name
Alpine Trampoline Park.
AJC ATP sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. S.D. Fla. Case No. 21-12503) on March 16, 2021. Anthony J.
Ciarrochi, president, signed the petition. In the petition, the
Debtor disclosed assets of $179,296 and liabilities of $1,705,774.
Judge Peter D. Russin oversees the case.
Van Horn Law Group, P.A. is the Debtor's legal counsel.
ALBANY MOLECULAR: S&P Ups ICR to 'B' on Improved Performance
------------------------------------------------------------
S&P Global Ratings raised its ratings on Albany Molecular Research
Inc.'s (AMRI) by one notch, including the issuer credit rating to
'B' from 'B-'. The outlook is stable.
S&P said, "The stable outlook reflects our expectation of
high-single-digit percentage revenue growth in 2021, steady EBITDA
margins of about 18%-20%, decent free cash flow generation and
adjusted debt to EBITDA sustained below 6.5x.
"COVID-19-related demand and cost savings contributed to a
meaningful improvement in credit measures that we expect will be
sustained over the next couple of years.AMRI has sustained strong
credit measures, including double-digit top-line growth and good
profitability through 2020, improving adjusted leverage
expectations going forward. The company has meaningfully improved
its earnings and cash flow generation through facility
optimization, productivity improvements, and growth-increased sales
across several of its segments, including products related to
COVID-19. The first few weeks of the pandemic were disruptive in
part because of supply chain constraints, reduction in medical
procedures and travel restrictions. However, the increased demand
from customers engaged in the development of COVID-19 treatments
and vaccines, particularly in the second half of 2020, more than
offset the initial adverse impact it had on earnings during the
second quarter. The company continued to increase its bookings
through 2020, achieving a book-to-bill ratio of about 1.29x, which
in our view provides good earnings visibility, at least in the near
term into the future revenue stream.
"We expect stronger demand and sales from COVID-19-related products
should continue over the next couple of years. These products
include the company's lipid production used in mRNA vaccine
technology and active pharmaceutical ingredients (API) for certain
anti-viral drugs used to treat the virus. Furthermore, as vaccines
continue to deploy and are administered globally, we expect there
to be a gradual return of elective procedures, contributing to
revenue growth, and see the company sustaining growth across its
segments.
"We expect the company to pursue modest-sized acquisitions as it
focuses on increasing its capacity and explores new product
development opportunities. The contract development and
manufacturing organization (CDMO) industry remains highly
fragmented, with many players looking to win business among a small
number of new drug approvals. We expect AMRI will continue to
realize modest improvement on its operating efficiencies over the
next few years and pursue potential acquisitions to expand its
fill-finish (final drug manufacturing step) capabilities to augment
its service offering and attract more business. Our assumptions
include a high level of capital expenditures (about 9% of revenue)
to support increased capacity in 2021, coming down modestly to
about 7%-8% of revenues thereafter.
"In addition, we expect the company could explore opportunities to
invest in research and development (R&D) and manufacturing assets,
including in biologics (involving large or small molecules). We
acknowledge that about half of the capital expenditures we assume
in our forecast are related to growth initiatives, which could
potentially be deferred or canceled if operating conditions
deteriorate. In our view, this provides some degree of financial
flexibility."
AMRI's business of providing development and manufacturing services
to the pharmaceutical industry is narrow in focus and small in
scale. The company's scale limits its negotiating power with much
larger pharmaceutical customers. Moreover, S&P believes it could
face a competitive disadvantage gaining new business relative to
larger competitors such as Catalent Inc. that provide a greater
array of capabilities often preferred by larger pharmaceutical
companies. In addition, AMRI remains exposed to some variability in
revenue because it, and other CDMOs with good manufacturing
practice (GMP) compliant facilities, face periodic shutdowns for
regular maintenance and potential customer-related delays. These
weaknesses are partially offset by the company's diverse products
(active pharmaceutical ingredients [APIs], development, and
manufacturing), customer base, and geographic presence. The
long-lived nature of its manufacturing contracts and a focus on
more advanced manufacturing processes also offset these
weaknesses.
S&P said, "The stable outlook reflects our expectations for
high-single-digit percentage revenue growth and steady EBITDA
margins of 18%-20%, resulting in adjusted debt to EBITDA sustained
below 6.5x.
"We could lower the rating within the next 12 months if we expected
FOCF to debt to fall below 3% and for debt to EBITDA to approach
7x. This scenario could occur if the company makes a debt-funded
distribution to its private equity owners or if it completes a
sizable debt-funded acquisition. Alternatively, this could occur if
intensified competition or operational disruptions result in
revenue declines or weaker profitability.
"We consider an upgrade to be unlikely within the next 12 months
based on our view of the company's financial policy. However, we
could raise the rating if we expect adjusted debt to EBITDA to
remain below 5x on a sustained basis, and we consider the risk of
leveraging above 5x to be low. In this scenario, the company would
also have adequate liquidity with adequate covenant headroom."
ALPHA AGRICULTURAL: Seeks Access to Cash Collateral
---------------------------------------------------
Alpha Agricultural Builders, Inc. asks the U.S. Bankruptcy Court
for the Northern District of Illinois, Western Division, for entry
of an order authorizing the estate to use cash collateral to
satisfy payroll and other obligations of the Debtor.
The Debtor requires the use of cash collateral in order to permit
the Estate to timely pay the normal operating expenses of the
Debtor.
The Cash Collateral is currently in possession of the Debtor, but
in partial control of Central Bank of Illinois, the Debtor's
pre-petition lender.
The Debtor has been unable to determine whether and to what extent
the Bank asserts an interest in the Cash Collateral. In addition,
the Debtor has requested that the Bank consent to the use of Cash
Collateral to the extent provided herein, without prejudice to any
interest that the Bank, or any other secured lender, may assert in
any other cash or other property of the Estate.
If the Bank does not consent to the Debtor's use of Cash
Collateral, the Debtor believes the Bank's interest in the Cash
Collateral is adequately protected by the other property of the
Debtor in which the Bank asserts an interest.
The Debtor owes the Bank approximately S40,000. The Debtor is
requesting permission to extend the loan beyond the maturity date
of May 1, 2021 for no less than six months. The Bank has also
requested that the loan be extended beyond the maturity date for no
less than six months with the same terms and conditions.
A copy of the motion is available for free at
https://bit.ly/2QFmvys from PacerMonitor.com.
About Alpha Agricultural Builders, Inc.
Alpha Agricultural Builders Inc. filed a Petition under Chapter 11
Subchapter V of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
20-81507) on August 25, 2020, listing under $1 million in both
assets and liabilities.
George P. Hampilos, Esq. at HAMPILOS & ASSOCIATES, LTD. is the
Debtor's counsel.
AMBERSON NATURAL: Unsecured Creditors Will Recover 5.6% in Plan
---------------------------------------------------------------
Amberson Natural Resources, LLC, submitted a Plan and a Disclosure
Statement.
As detailed in this Disclosure Statement and the Plan, the Debtor
negotiated the settlement of all the Debtor's, the Reorganized
Debtor's, the Estate's and any of their respective successors' and
assigns' potential claims and causes of action against the Lender,
in exchange for the Lender's financing of the Chapter 11 Case and
the Lender Contribution of $80,000.00 of exit financing to ensure a
distribution to creditors in the Case while simultaneously
preserving and maximizing the most significant asset in the
Debtor's Estate, the CG Interests, through the Plan.
The Plan treats claims as follows:
* Class 2 - Secured Claims. At the Debtor's option, receive one
of the following treatments: (i) surrender of the Collateral
securing such Allowed Secured Claim; or (ii) other treatment that
renders such Allowed Other Secured Claim unimpaired in accordance
with section 1124 of the Bankruptcy Code.
* Class 5 - General Unsecured Claims totaling $1,425,060 will
recover 5.6% of their claims. Payment of a Pro Rata share of the
Lender Contribution and (b) a share of Distributable Cash Pro Rata
both with Allowed General Unsecured Claims and Lender Subordinated
Claims.
* Class 6 - Lender Subordinated Claims totaling $68,000 will
recover 0% of their claims. Payment of a share of Distributable
Cash Pro Rata with Allowed General Unsecured Claims.
* Class 7 - Equity Interests we'll receive a payment of a pro
rata share of distributable Cash remaining after distributions to
holders of Allowed Claims and retention of Equity Interests. Class
7 equity holders are projected to recover 0% under the Plan.
The Plan provides for the settlement of all the Debtor's, the
Reorganized Debtor's, the Bankruptcy Estate's and any of their
respective successors' and assigns' potential claims and causes of
action against the Lender, in exchange for the Lender's financing
of the Chapter 11 case and the lender contribution of $80,000 of
exit financing to ensure a distribution to creditors in the Case
while simultaneously preserving and maximizing the most significant
asset in the Debtor's Estate, the CG Interests.
Counsel for the Debtor:
Jason M. Rudd
Scott D. Lawrence
WICK PHILLIPS GOULD & MARTIN, LLP
3131 McKinney Ave, Suite 500
Dallas, Texas 75204
Telephone: 214-692-6200
E-mail: jason.rudd@wickphillips.com
scott.lawrence@wickphillips.com
A copy of the Disclosure Statement is available at
https://bit.ly/3mTvM1T from PacerMonitor.com.
About Amberson Natural Resources
Amberson Natural Resources, LLC, a company based in San Antonio,
Texas, filed a Chapter 11 petition (Bankr. W.D. Tex. Case No.
20-51302) on July 20, 2020. In the petition signed by Jon
Christian Amberson, manager, Debtor was estimated to have $1
million to $10 million in both assets and liabilities. Judge Craig
A. Gargotta oversees the case. Wick Phillips Gould & Martin LLP
serves as the Debtor's bankruptcy counsel and Davis & Santos, P.C.,
as special counsel to the Debtor.
No trustee or committee has been appointed in the Case.
ANDINA GOLD: Widens Net Loss to $11.8 Million in 2020
-----------------------------------------------------
Andina Gold Corp. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $11.81
million on $781,455 of net sales for the year ended Dec. 31, 2020,
compared to a net loss of $3.06 million on $18,248 of net sales for
the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $7.80 million in total assets,
$4.19 million in total liabilities, and $3.61 million in total
shareholders' equity.
Lakewood, Colorado-based BF Borgers CPA PC, the Company's auditor
since 2020, issued a "going concern" qualification in its report
dated March 30, 2021, citing that the Company has suffered
recurring losses from operations that raises substantial doubt
about its ability to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1533030/000121390021018703/f10k2020_andinagoldcorp.htm
About Andina Gold
Englewood, Colo.-based Andina Gold Corp provides marketing, IP and
management services to two cannabis dispensaries and to a cannabis
grow facility, for which cannabis licenses are held by Andina Gold
Corp's principal business partner, CMI.
APRO LLC: Moody's Assigns B2 Rating to Upsized Term Loan B
----------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Apro, LLC's
("Apro", aka "United Pacific") upsized term loan B, following the
company's announcement that it intends to issue a $105 million
add-on to partially fund a dividend to its shareholders. The
company's other ratings are unchanged, including its B2 corporate
family rating, B3-PD probability of default rating, or existing B2
senior secured bank credit facility rating. The outlook remains
stable.
The proposed $105 million term loan B add-on along with $45 million
of cash on hand will be used to pay a $150 million dividend to its
shareholders and pay fees and expenses. Moody's views the planned
debt-financed dividend to be credit negative as it increases
leverage which Moody's already considers to be high for the rating
category. The transaction will increase the term loan B outstanding
to $550 million and raise leverage -- pro forma for a full year of
recent acquisitions -- to 6.8x from 6.5x, above the downgrade
factor of 6.5x. The dividend comes just two years after Phillips 66
agreed to acquire its interest in Apro for a cash consideration of
$260 million. Apro is owned by Phillips 66 (A3 negative), Fortress
Investment Group LLC -- each with 48% ownership and 50% voting
interests -- and others (4%).
Assignments:
Issuer: Apro, LLC
Senior Secured Term Loan, Assigned B2 (LGD3)
RATINGS RATIONALE
Apro's credit profile remains constrained by its small scale in
terms of number of stores, its smaller format stores that generate
less gross profit from inside sales relative to larger competitors,
and its earnings concentration in California. California has been a
successful market for the United Pacific locations and there are
some benefits to operating there including barriers to entry (high
real estate costs, strict permitting and environmental regulations)
for new operators, or operators looking to expand their fuel
footprint, and higher gross profit margins on fuel than other
states. However, United Pacific's concentration in this state
exposes the company to local, regional, and nationwide economic
swings as well as competitors' promotional activities from the
company's larger, more diversified peers. The credit profile is
also constrained by Apro's high leverage with pro forma debt/
EBITDA of 6.8x at the end of 2020 (metrics include Moody's standard
adjustments, the planned transaction and the June 2020 Platinum
acquisition). The company's credit profile benefits from its
partial ownership by Phillips 66 and the 20 year consignment
agreement between Apro and Phillips 66. The consignment agreement
provides Apro a fixed consignment payment (subject to a +/- 5%
volatility cap), which accounted for about 50% of the company's
reported gross profit in 2020. With approximately 80% of its
gallons sold subject to a hedging arrangement, Apro is less exposed
to the volatility inherent in fuel retail operations relative to
its peers but also limits the potential upside of lower crude
prices. Also supporting the company's credit profile is its strong
gross profit margin on its fuel sales that are not subject to the
hedging agreement and its very good liquidity.
The stable rating outlook reflects Moody's expectation that
following the debt-financed dividend, Apro will reduce its
debt/EBITDA to below 6.5x through earnings improvement as the
company benefits from its consignment agreement with Phillips 66.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Factors that could lead to an upgrade include leverage maintained
below 5.25x on a sustained basis with EBIT/interest expense above
1.75x. Higher ratings would also require the company to maintain at
least good liquidity. Factors that could lead to a downgrade
include debt/EBITDA remaining above 6.5x and EBIT/interest below
1.25x.
Apro is a convenience store operator based in Long Beach,
California. United Pacific, through several acquisitions, owns and
operates about 480 gas stations and convenience stores in southern
California, Washington, Oregon, Colorado and Nevada. The company's
store base is comprised of stores acquired by the company's private
equity owner from United Oil (acquired July 2014) and Pacific
Convenience & Fuels in (June 2015). The company generated revenue
of about $1.3 billion for the fiscal year ended December 31, 2020.
The principal methodology used in this rating was Retail Industry
published in May 2018.
APRO LLC: S&P Rates $105MM Incremental Sr. Secured Term Loan 'B'
----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '3'
recovery rating to Apro LLC's $105 million incremental senior
secured term loan due 2026. The '3' recovery rating indicates its
expectation for meaningful (50%-70%; rounded estimate: 55%)
recovery in the event of a default. The company plans to use the
incremental proceeds and cash on the balance sheet to fund a
dividend payment to the equity owners of the company and its direct
parent.
S&P said, "Our 'B' issuer credit rating and stable outlook on Apro
are unchanged. We believe Apro's steady cash flow generation,
supported by its long-term fuel consignment agreement, partially
mitigates the highly leveraged capital structure.
"Our existing issue-level rating on the company's senior secured
credit facilities, consisting of a $50 million revolving credit
facility due 2024 and a $445 million outstanding senior secured
term loan due 2026, is unchanged at 'B'. The '3' recovery rating is
also unchanged."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P considers a hypothetical default in 2024 that stems from a
steep drop in EBITDA because of an economic downturn and more
intense competition.
-- The default scenario assumes Apro would reorganize as a going
concern given its attractive store locations and fuel consignment
arrangement.
-- S&P uses a 5x multiple, lower than the 6x multiple applied to
other service station and convenience store peers, given the
company's lack of real estate ownership.
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA at emergence: $69 million
-- Implied enterprise value (EV) multiple: 5x
-- Estimated gross EV at emergence: $345 million
Simplified waterfall
-- Net EV after 5% administrative costs: $328 million
-- Valuation split(obligors/nonobligors/unpledged): 100%/0%/0%
-- Senior secured credit facility claims: $588 million
--Recovery expectations: 50%-70% (rounded estimate: 55%)
All debt amounts include six months of prepetition interest.
ASP LS: Moody's Assigns First Time B3 Corporate Family Rating
-------------------------------------------------------------
Moody's Investors Service assigned first-time ratings to ASP LS
Acquisition Corp. ("LaserShip") including a B3 corporate family
rating and a B3-PD probability of default rating. Moody's also
assigned B2 ratings to the company's proposed first-lien credit
facilities, consisting of a $75 million revolver expiring 2026 and
a $675 million term loan due 2028, and a Caa2 rating to the
proposed $205 million second-lien term loan due 2029. The rating
outlook is stable.
Proceeds from the first and second lien term loans along with cash
equity will be used to finance the purchase of a majority stake of
LaserShip by the private equity firm American Securities LLC.
The following rating actions were taken:
Assignments:
Issuer: ASP LS Acquisition Corp.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD5)
Outlook Actions:
Issuer: ASP LS Acquisition Corp.
Outlook, Assigned Stable
RATINGS RATIONALE
LaserShip's ratings reflect the company's modest scale in the
highly competitive e-commerce residential delivery space,
relatively limited track record operating at high delivery volumes
and elevated financial leverage. At less than $1 billion in
revenue, LaserShip is significantly smaller than national
deliverers UPS and FedEx, but maintains a strong regional network
focused on densely populated areas in the eastern US.
LaserShip has exhibited substantial growth in its e-commerce
delivery business, especially during 2020 and continuing into 2021
as the company shifted focus to the e-commerce space from its
traditional B2B business, with significant new customer wins and
very substantial throughput with delivery volumes more than
doubling. The number of new customers has increased rapidly of
late, and remains to be seen whether the company can service all of
its customers at the required service levels. Recent increases in
volumes have improved operating leverage, but sustainability of
network efficiencies at high volume and higher earnings margin have
yet to be demonstrated.
LaserShip's business model utilizes independent contractors for
deliveries that provides a cost advantage to offer lower rates to
customers for smaller, low-priced packages compared to traditional
large network competitors. It does offer LaserShip flexibility to
scale operations, dependent on its ability to attract and maintain
independent contractors as volumes increase. This should allow
LaserShip to maintain EBITDA margins in the mid-teens range, which
should lead to debt/EBITDA in the low-6x range by end of 2021. The
company's independent contractor model also exposes LaserShip to
potential shifts in the regulatory environment in regards to
classifying independent contractors that could negatively impact
its business. Further, LaserShip faces high turnover of its
independent contractors which could challenge the company's service
times and quality.
Moody's expects LaserShip to have adequate liquidity, with nominal
cash balances balanced by availability under the new $75 million
revolver and positive free cash flow, with at least low-single
digit free cash flow to debt. LaserShip exhibits seasonality with
its cash flows due to working capital swings. Cash collections
during the first quarter following the peak holiday season
represent a strong period of cash flow while the fourth quarter
typically represents weaker cash generation, at which time the
company may tap its revolver. The revolver will be subject to a
springing net leverage covenant (ratio to be determined), tested if
borrowings exceed 35% of the revolver commitment. The term loan is
not expected to have any financial maintenance covenants.
In terms of corporate governance, Moody's expects LaserShip's
financial policy to be relatively aggressive given its new private
equity ownership. Acquisition activity may be muted over the course
of 2021 as LaserShip delivers volume growth through its existing
network, but the company could look to expand geographically
through acquisitions.
The stable outlook reflects Moody's expectation for LaserShip to
generate earnings growth on substantially higher delivery revenues
to maintain debt/EBITDA below 6.5x and generate positive free cash
flow.
The B2 rating on the first lien senior secured credit facilities,
one notch above the company's B3 CFR, takes into account this
debt's priority position in the company's liability structure ahead
of the second lien term loan, which provides first-loss absorption
in the event of a default. The Caa2 rating on the second lien term
loan reflects its subordinated position to the first lien debt.
Following are some of the preliminary credit agreement terms, which
remain subject to market acceptance.
As proposed, the credit facilities are expected to contain covenant
flexibility for transactions that could adversely affect creditors,
including the ability to incur incremental term loan facilities in
an aggregate amount not to exceed the greater of EBITDA as of the
closing date and 100% of trailing four quarter EBITDA; plus an
unlimited amount so long as First Lien Leverage Ratio does not
exceed the greater of the ratio at the closing date or most
recently ended test period (if pari passu secured). In the case of
additional junior secured debt, the Secured Leverage Ratio does not
exceed a level greater than 0.25x the ratio at the closing date or
most recently ended test period. There are no express "blocker"
provisions that prohibit the transfer of specified assets to
unrestricted subsidiaries; such transfers are permitted subject to
carve-out capacity and other conditions. Only wholly-owned
subsidiaries are required to provide subsidiary guarantees, posing
risks of potential guarantee release if there were a partial change
in ownership. There is no explicit protective language limiting
such releases.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if LaserShip demonstrates improving
and sustainable operating leverage as delivery volumes increase,
such that EBITDA margins are maintained in at least the mid-teens
range and debt/EBITDA decreases toward 5x. Maintaining positive
free cash flow generation with free cash flow-to-debt in the high
single-digits range could also result in an upgrade.
The ratings could be downgraded if LaserShip loses a major customer
or there is rapid turnover of the customer base, especially among
the newer customers, inability to increase contribution margin per
package at higher volumes, increased competition that strains
revenue per package, or higher delivery costs. EBITDA margins
approaching 10% or financial leverage being sustained near 7x
debt/EBITDA would pressure the ratings down. Further, any
regulatory changes that negatively impact LaserShip's operating
model could also lower the rating. The ratings could also be
downgraded if LaserShip is unable to generate positive free cash
flow or availability on its revolving credit facility is materially
reduced.
Based in Vienna, Virginia, ASP LS Acquisition Corp. (d/b/a
LaserShip) is a regional last mile parcel delivery provider in the
eastern U.S. with a focus on business to consumer deliveries for
leading e-commerce retailers across apparel, health and beauty,
food, and mass merchandise markets. Actual revenue for the fiscal
year ended December 31, 2020 was approximately $613 million.
The principal methodology used in these ratings was Surface
Transportation and Logistics published in May 2019.
ATLANTICA SUSTAINABLE: S&P Raises ICR to 'BB+' on Increased Scale
-----------------------------------------------------------------
S&P Global Ratings upgraded Atlantica Sustainable Infrastructure
PLC issuer credit rating to 'BB+' from 'BB' and revised the
outlook to stable from positive. At the same time, S&P affirmed its
'BBB-' issue level rating and '1' (90%-100%; rounded estimate: 95%)
recovery rating on its secured debt.
S&P said, "The stable outlook reflects our view that Atlantica's
recently announced acquisitions will close later this year and due
to the highly contracted nature of its assets, will maintain
adjusted debt to EBITDA of 3.5x-3.75x and funds from operations
(FFO) to debt in the low- to mid-20% range.
On April 8, Atlantica Sustainable announced an agreement to acquire
a 49% interest in a 596 megawatt (MW) wind portfolio in the U.S.
Pro forma for the acquisition, Atlantica's average contract life
will be 16 years. Over the last two years, its scale has improved
significantly, both organically and through acquisitions. In
addition, its assets have operated in line with S&P's expectations
and we expect the company to maintain adjusted debt to EBITDA in
the 3.5x-3.75x area.
"We expect the company to continue to grow organically and through
acquisitions. Atlantica has increased its scale and diversity over
the last few years and more recently allocated over $400 million
for acquisitions. The most recently announced acquisition, a 49%
interest in a wind portfolio, further supports its financial policy
of growth focused on a highly contracted portfolio largely of
investment-grade counterparties. We expect the wind portfolio
acquisition to require an initial investment of approximately $200
million. The assets have power purchase agreements with
investment-grade off-takers with a five-year average remaining
contract life. By continuing to grow its portfolio, Atlantica's
diversity has improved as most of its assets make up less than 10%
of total cash flows. We expect the largest cash flow contributor,
ACT, to make up approximately 15% of total cash flows, which are
supported by a remaining contract life of approximately 12 years."
Atlantica's assets have been largely stable over the last few
years. Atlantica's portfolio is 100% contracted (or regulated in
the case of the solar assets in Spain) with mostly investment-grade
off-takers. Pro forma for the recently announced wind acquisition,
its weighted-average remaining contract life declines to 16 years
from 17. S&P said, "The company has a large number of solar assets,
which in our view have higher resource predictability compared to
wind assets. Two of its assets, Solana and Kaxu, have performed
lower than our expectations in 2020, though combined make up less
than 15% of total cash flows from distributions. With PG&E Corp.
having emerged from bankruptcy in 2020, we expect the Mojave asset
to continue paying steady distributions. Mojave is one of
Atlantica's largest assets, but we expect it to make up less than
10% of total cash flows."
Forecast leverage likely to remain at similar levels to 2020. S&P
said, "We forecast adjusted debt to EBITDA to remain in the
3.5x-3.75x range and FFO to debt in the low- to mid-20% range over
the next two years. In our calculation of leverage, we only include
corporate-level debt and do not include the nonrecourse
project-level debt." Some of Atlantica's projects have material
project-level debt and some sensitivity to solar and wind resources
and/or operating availability. Due to the structurally senior
project debt, moderate underperformance at the project level could
lead to lower-than-expected distributions to Atlantica. That said,
given its diversified portfolio, any material deterioration in
credit ratios would require the operating underperformance of
multiple assets.
Although not a controlling owner, Algonquin Power & Utilities Corp.
is the largest shareholder with a stake of over 44%. S&P believes
this ownership and Atlantica's partnership with AAGES could provide
further growth opportunities, including asset drop downs. However,
S&P does not factor in any additional drop downs in their
forecast.
S&P said, "The stable outlook reflects our view that Atlantica's
assets will continue to operate under long‐term contracts with
investment‐grade counterparties and generate fairly predictable
cash flows to support its holding‐company debt obligations. In
our base case, we expect FFO to debt in the low- to mid-20% range
and debt to EBITDA of 3.5x-3.75x during our forecast period."
Higher ratings are unlikely in the next few years unless Atlantica
maintains debt to EBITDA below 3x and FFO to debt remains above
30%. This could also occur if the company's business position
improves such that its scale and diversity grow similarly to that
of peers such as Clearway Energy Inc. or The AES Corp.
S&P could take a negative rating action if debt to EBITDA is
sustained above 4x and FFO to debt remains below 20%. This could
result from significantly reduced cash flows from the company's
projects following a decline in operating performance and asset
reliability, higher-than-expected operating costs, unfavorable
weather, or increased leverage at the corporate level.
ATLAS CC: S&P Assigns Preliminary 'B-' ICR, Outlook Stable
----------------------------------------------------------
S&P Global Ratings assigned a preliminary 'B-' issuer credit rating
to Atlas CC Holding LLC (doing business as Cubic Corp.), a
preliminary 'B+' issue-level and '1' recovery rating to the term
loan C, and a preliminary 'B' issue-level and '2' recovery rating
to the company's proposed first-lien credit facility. The
second-lien facility is unrated. S&P intends to finalize the
preliminary ratings if the proposed acquisition is approved by
shareholders and the deal's terms and financing substantially
mirror those initially presented.
S&P's preliminary ratings reflect the following key credit risks
and strengths.
Key risks:
-- High starting S&P Global Ratings-adjusted leverage of about 10x
and minimal consolidated free operating cash flow (FOCF) forecast
for fiscal 2021 (ending Sept. 30th), with financial sponsor
ownership.
-- Significant execution risk around the achievement of identified
cost savings.
-- Strong competition from large, well regarded competitors with
superior scale economies.
-- High service and customer concentration.
Key strengths:
-- Leading market position in transportation services and
incumbent relationships with major global transportation agencies
and the U.S. Department of Defense.
-- Long-term contracts, large revenue backlog, and secular
industry tailwinds support revenue visibility.
S&P said, "High S&P adjusted leverage, minimal consolidated FOCF,
and financial sponsor ownership restrain our preliminary ratings.
Following the leveraged buyout (LBO) we expect S&P Global
Ratings-adjusted leverage will increase to about 10x as of the last
12 months ended Dec. 31, 2020. Our ratings reflect the governance
and financial policy risks associated with financial sponsor
ownership as well as our expectation that adjusted leverage will
remain about 10x in the company's fiscal year ending Sept. 30, 2021
and above 9x in fiscal 2022. We also expect Cubic's consolidated
FOCF generation to remain weak over the next two fiscal years as
the result of working capital outflows at its Massachusetts Bay
Transit Authority (MBTA) variable interest entity (VIE), the
elevated interest expense from the proposed capital structure, and
elevated restructuring charges to achieve targeted cost savings.
"We believe the company's high debt burden in the proposed capital
structure will limit the company's room for operational error as it
executes against its significant cost-savings program designed to
improve profitability and FOCF generation."
The company's cost-savings initiatives carry operational and
execution risks. Cubic expects to achieve significant annual cost
savings over the next 18 months through its 'NextCUBIC'
transformation initiative. S&P said, "We believe this plan is a
large undertaking for Cubic and successful realization would
materially increase the company's EBITDA base through labor expense
reduction and procurement synergy opportunities provided by recent
mergers and acquisitions (M&A). Furthermore, in our opinion,
limited business and marketing overlap among Cubic's CTS and CMPS
business units will likely increase the complexity and time
required to achieve the full benefits of the proposed business
transformation. Our adjusted EBITDA and leverage forecast include
the benefit of these cost-savings initiatives as we expect them to
be achieved through fiscal 2023. While our forecast leverage is
about 10x in fiscal 2021 and above 9x in fiscal 2022, we expect
leverage to improve below 8x in fiscal 2023 as the company
completes the majority of these initiatives."
A meaningful component of the targeted savings relates to the
offshoring of operations to lower-cost locations. This includes the
relocation of significant domestic engineering functions to India,
and a manufacturing plant to Mexico. Successfully completing these
opportunities could result in lower costs and a more efficient
product development cycle, however S&P's ratings reflect the
potential risks to service quality. Furthermore, the company
targets significant savings from the consolidation of supplier
relationships and assumes the favorable renegotiation of certain
supplier contracts based on its increased scale following
completion of over $628 million in M&A in 2019 and 2020.
S&P said, "Our base-case forecast incorporates the operational
risks associated with a large-scale cost-savings program but
assumes solid execution such that most savings are realized by
year-end 2023, resulting in adjusted EBITDA margin expansion to the
mid-to-high teens percent area as the cash costs to achieve savings
decline. The company has successfully executed against recent
restructuring to deliver margin improvement, albeit on a smaller
scale, and we believe integrating prior acquisitions, streamlining
overhead costs, and optimizing its workforce provides an
opportunity to realize additional savings. However, the company has
limited room for operational error, and continued execution is
critical to lowering leverage, improving cash flows, and the
sustainability of the pro forma capital structure.
Strong market position and embedded relationships and long-term
contracts with major customers support our business risk
assessment. The company has 11.0% market share of the $7.6 billion
addressable market for its combined Cubic Transportation Solutions
(CTS) products and services, and it serves 11 of the 13 largest
public transportation systems in North America. Additionally, Cubic
has a 14.1% share of the $4.5 billion addressable market for its
Cubic Mission & Performance Solutions (CMPS) products and
services.
Recent CTS contract wins with major transit authorities including
New York, Boston, San Francisco, in the U.S., and Brisbane,
Australia, feature long-term multiyear contracts which, in our
view, represent a strong competitive moat and support visibility
into revenues. These contracts position the company to leverage
successful execution in major urban hubs to support its competitive
bid in other cities, and they provide an opportunity to grow more
profitable tolling and intelligent intersection services with
existing urban revenue management customers.
That said, Cubic's markets are highly competitive. Competition
comes from large, well-resourced providers including Accenture,
IBM, Thales S.A, and Conduent in CTS, and from Boeing, Raytheon,
L3Harris, and Lockheed Martin in CMPS. These larger providers often
have superior capital resources to fund the research and
development needed to maintain competitive offerings, and their
greater scale economies position them favorably to withstand
ongoing pricing pressure.
Secular industry tailwinds and a large revenue backlog support
revenue visibility. S&P asid, "We expect population growth and
increasing urbanization will support increased demand from
transportation agencies for solutions that reduce traffic
congestion. Additionally, Cubic's CTS customers rely on fare
revenue for over 30% of funding, while the associated expenses
comprise only 1%-2% of operating expense budget, and therefore
investment in revenue management infrastructure represents a
low-cost-to-value. This should support steady growth of the
company's $3.7 billion backlog resulting in healthy
mid-single-digit segment growth and margin expansion as recent
design and build contract wins transition to more profitable
operation and maintenance work. While federal defense spending may
moderate under the Biden administration, we expect investment will
remain sizable going forward supporting demand from the U.S.
Department of Defense (approximately 69% of CMPS revenues). Despite
pandemic-related stress on their finances, government and transit
agencies have maintained access to capital markets and will benefit
from stimulus including the recently passed American Rescue Plan,
which earmarks $350 billion for state and local governments. We
expect an increasing focus on infrastructure investment under the
Biden administration."
Cubic's predominantly fixed-rate contracts support its revenue
visibility and contributed to a more stable operating performance
through 2020 relative to competitors Verra Mobility and Conduent
Inc. Nevertheless, these contract structures reduce visibility into
earnings because cost overruns, project delays, or incorrect cost
estimation may affect project profitability. Additionally, the
company's high customer concentration may increase the lumpiness of
cash flows. In 2020, the company received about 54% of revenues
from its top five clients, and about 30% from its largest client,
the U.S. Department of Defense. That said, revenues from the U.S.
Department of Defense are well diversified by project.
S&P said, "We view the proposed issuance of $250 million of
preferred equity as debt which Cubic will ultimately look to
refinance, and we fully consolidate the financials of Cubic's VIE
associated with its MBTA contract, as done in the company's
consolidated financial statements. Despite the financial
flexibility of the preferred stock's payment-in-kind (PIK) interest
payments, we view the $250 million preferred equity security (not
rated) as debt given its structural features. This includes
interest rate step-ups (11% that steps up by 1% per year after
seven years) and Cubic's ability to call the security after two
years. We believe these features encourage redemption. We expect
Cubic to utilize the PIK feature in our forecast, causing dividends
to accrue and the liability to increase.
"While Cubic only owns 10% of the VIE and its related debt is
nonrecourse, we believe the MBTA contract is of meaningful
significance to Cubic, Cubic is the primary beneficiary of the VIE,
and the MBTA contract is integral to the group's reputation and
future growth strategy. In our view, these factors may encourage
Cubic to provide support to the VIE in a distress scenario despite
the debt being nonrecourse. The impact of full consolidation is
modestly deleveraging; however, we expect working capital
investment to fund the contracts' design and build outlays will
result in minimal FOCF generation in 2021 and 2022. The VIE is
self-funding if it meets required performance levels and milestones
as cash outflows are funded by draws under the VIE's long-term debt
facilities. We expect the VIE debt balance will increase through
the design and build contract phase, which will be complete in
2024, and will decrease thereafter as the MBTA begins making
monthly payments.
"The stable outlook reflects our expectation for mid-single-digit
percent organic revenue growth and expanding adjusted EBITDA
margins resulting in steady deleveraging and improved cash flow
generation over the next 12 months.
"We could lower the rating if cash flow deficits continue such that
we forecast the company will increasingly rely on its revolving
credit facility, or if we conclude the capital structure is
unsustainable." This could occur with:
-- Increasing competition and the failure to maintain project
win-rates resulting in revenue declines;
-- Operational missteps executing targeted cost savings resulting
in underperformance or delayed realization;
-- Unexpected cost overruns or project delays on design and build
projects resulting in EBITDA margin contraction;
-- A large divestiture without a commensurate level of debt
repayment; or
-- An aggressive financial policy consisting of leveraging
acquisitions or dividends.
Although unlikely over the next 12 months, S&P could raise the
ratings if Cubic sustains leverage beneath 7x and improves free
operating cash flow to debt to the mid-single-digit percent range.
In this scenario it would expect:
-- Demonstrated execution against targeted cost savings and
successful contract renewals drive margins to the high-teens
percent area;
-- Strong backlog growth and conversion resulting in market share
growth and revenue expansion that meaningfully outperforms our
base-case expectation; and
-- Financial policy remains reserved with respect to leveraging
M&A and shareholder returns.
AUTO RECYCLERS: Seeks to Tap Woods Rogers as Bankruptcy Counsel
---------------------------------------------------------------
Auto Recyclers, LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Virginia to employ Woods Rogers PLC as
its legal counsel.
Woods Rogers will render these legal services:
(a) advise the Debtor regarding its powers and duties in the
distribution of its property;
(b) prepare legal papers;
(c) prepare the Debtor's bankruptcy schedules and statement of
financial affairs;
(d) appear in the bankruptcy court; and
(g) perform all other legal services necessary to administer
the Debtor's Chapter 11 case.
The hourly rates of Woods Rogers' attorneys are as follows:
Michael E. Hastings $595
Justin Simmons $270
Lindsey Moore $210
In addition, Woods Rogers will seek reimbursement for expenses
incurred.
Michael Hastings, Esq., an attorney at Woods Rogers, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Michael E. Hastings, Esq.
Justin E. Simmons, Esq.
Woods Rogers PLC
10 S. Jefferson Street, Suite 1800
Roanoke, VA 24011
Telephone: (540) 983-7568
Facsimile: (540) 322-3417
Email: mhastings@woodsrogers.com
jsimmons@woodsrogers.com
About Auto Recyclers
Auto Recyclers, LLC -- http://www.autorecyclersllc.com-- is a
recycler of metals, automobile cores, batteries, paper, cardboard,
computers fiber, books and plastic.
Auto Recyclers filed a Chapter 11 bankruptcy petition (Bankr. W.D.
Va. Case No. 21-50158) on March 26, 2021. Paul Palma, managing
member, signed the petition. At the time of the filing, the Debtor
disclosed $1 million to $10 million in both assets and liabilities.
Judge Paul M. Black oversees the case. Woods Rogers PLC serves as
the Debtor's legal counsel.
AUTOMOTORES GILDEMEISTER: Unsecureds Unimpaired in Prepack Plan
---------------------------------------------------------------
Automotores Gildemeister SpA, et al., filed an Amended Disclosure
Statement for their Joint Prepackaged PLan of Reorganization.
As of Dec. 31, 2020, the Debtors had outstanding debt in the
aggregate principal amount of approximately US$566,690,000
consisting primarily of approximately US$509,806,002 in outstanding
principal amount under their 7.5% Notes due 2025 (as defined in the
Plan, or the "Secured Notes").
The Debtors are very pleased to report that after extensive, good
faith negotiations with certain of the holders of the 7.5% Notes
due 2025, the Plan embodies a settlement among the Debtors and
their key creditor constituencies on a consensual transaction that
will reduce the Debtors' debt service obligations and position the
Debtors for continued operations. To evidence their support of the
Debtors' restructuring plan, Senior Secured Noteholders
representing approximately 72.5% of the aggregate outstanding
principal amount of the 7.5% Notes due 2025 (the "Consenting
Noteholders") have executed the Restructuring and Plan Support
Agreement, dated as of March 31, 2021 (the "RSA"), which provides
for the implementation of the restructuring through an expedited
chapter 11 process and commits the Consenting Noteholders and the
Debtors to support the Plan subject to the terms and conditions of
the RSA. Additional holders of the 7.5% Notes due 2025, who, in the
aggregate hold approximately $36,388,618 in principal amount, or
approximately 7.1% of the outstanding 7.5% Notes due 2025,
subsequently executed joinder agreements to the RSA (the "Joining
Consenting Noteholders"). Together, the Ad Hoc Group of Consenting
Noteholders and the Joining Consenting Noteholders hold
approximately 79.6% of the outstanding 7.5% Notes due 2025. As part
of their obligations under the RSA, certain of the Consenting
Noteholders (the "DIP Lenders") have agreed to provide
post-petition financing to the Debtors, subject to the terms and
conditions set forth in the RSA, the DIP Term Sheet, and the
definitive documentation relaed to the DIP Credit Facility.
After giving effect to the following transactions contemplated by
the RSA and the Plan, the Debtors will emerge from chapter 11
appropriately capitalized to support their emergence and
going-forward business needs.
* On the Plan Effective Date, the Reorganized Debtors shall
issue: (i) a senior tranche of secured notes (the "New Senior
Tranche Secured Notes"), (ii) a junior tranche of secured notes
(the "New Junior Tranche Secured Notes", and together with the New
Senior Tranche Secured Notes, the "New Secured Notes"), and (iii) a
subordinated tranche of unsecured notes (the "New Subordinated
Notes" and together with the New Secured Notes, the "New Notes"),
which shall have the terms indicated in the RSA and as described in
Section VII.A(i). On the Plan Effective Date, the New Notes will be
distributed to the holders of DIP Claims, 7.5% Notes due 2025
Secured Claims, and Unsecured Notes and Related Party Claims in
accordance with the Plan.
* On or prior to the Plan Effective Date, a newly formed holding
company structured as a sociedad por acciones under the laws of
Chile shall be formed ("Chile Holdco" and together with the
Reorganized Debtors, the "Reorganized Business"). Upon
implementation of the Restructuring Transactions on the Plan
Effective Date, Chile Holdco shall hold all of the equity interests
in Reorganized Gildemeister (the "Reorganized Gildemeister Common
Stock") from and after the Plan Effective Date.
* On the Plan Effective Date, Chile Holdco shall issue (i) a
single class of common equity interests with 100% economic and
voting rights (the "Chile Holdco Stock") and having a paid in
capital value of $44.3 million, and (ii) bonds in an aggregate
principal amount of $132.8 million (the "Chile Holdco Bonds", and
together with the Chile Holdco Stock, the "Chile Holdco
Securities"). On the Plan Effective Date, the Chile Holdco
Securities will be distributed to USA Holdco in accordance with the
Plan.
* On or prior to the Plan Effective Date, a newly formed holding
company structured as a limited liability company under the laws of
Delaware shall be formed ("USA Holdco"), which, due to its
ownership of Chile Holdco, will indirectly hold 100% of the equity
interests in the Reorganized Business from and after the Plan
Effective Date. On the Plan Effective Date, USA Holdco shall issue
a single class of limited liability company units with 100%
economic and voting rights (the "USA Holdco LLC Units") to the
holders of the 7.5% Notes due 2025 Secured Claims in accordance
with the Plan.
On the Plan Effective Date:
* Each holder of an Allowed DIP Claim (including all principal,
accrued and unpaid interest, fees and expenses and non-contingent
indemnity claims) shall have their DIP Expenses paid in full in
Cash and, with respect to the remaining DIP Claims, at the
Reorganized Debtors' option, the Reorganized Debtors shall pay such
DIP Claims (i) dollar for dollar with New Senior Tranche Secured
Notes, or (ii) full Cash payment of the then unpaid balance of the
DIP Claims.
* Except as otherwise expressly provided in the Plan, each
holder of an Allowed Administrative Claim shall receive payment in
full in cash.
* Each holder of an Allowed Priority Tax Claim shall receive
treatment in a manner consistent with section 1129(a)(9)(C) of the
Bankruptcy Code.
* Each holder of an Allowed Other Secured Claim shall receive,
at the Debtors' option subject to the consent of the Required
Consenting Noteholders: (a) payment in full in cash; (b) the
collateral securing its Allowed Other Secured Claim; (c)
Reinstatement of its Allowed Other Secured Claim; or (d) such other
treatment rendering its Allowed Other Secured Claim Unimpaired in
accordance with section 1124 of the Bankruptcy Code.
* Each holder of an Allowed Other Priority Claim shall receive
treatment in a manner consistent with Section 1129(a)(9) of the
Bankruptcy Code.
* Each holder of an Allowed Prepetition Bank Financing Claim
shall have their claim Reinstated.
* The 7.5% Notes due 2025 Secured Claims shall be Allowed in an
amount of $409,300,000. On the Plan Effective Date (or as soon as
practicable thereafter), each holder of an Allowed 7.5% Notes due
2025 Secured Claim shall receive:
-- If such holder is not a Cash-Out Electing Holder (a
"Non-Cash-Out Electing Holder"), shall receive with respect to such
holder's Allowed 7.5% Notes due 2025 Secured Claims (i) $0.56046 in
principal amount of New Junior Tranche Secured Notes for each $1.00
of Allowed 7.5% Notes due 2025 Secured Claims held by such holder,
(ii) $0.19789 in principal amount of New Subordinated Notes for
each $1.00 of Allowed 7.5% Notes due 2025 Secured Claims held by
such holder, and (iii) its Pro Rata Share (based on the proportion
that such Non-Cash-Out Electing Holder's Allowed 7.5% Notes due
2025 Secured Claims bears to the sum of all Allowed 7.5% Notes due
2025 Secured Claims held by all Non-Cash-Out Electing Holders) of
100.0% of the USA Holdco LLC Units3; or
-- If such holder of an Allowed 7.5% Notes due 2025 Secured
Claim has affirmatively made a Plan Election on its Letter of
Transmittal to receive a Cash-Out Distribution on its Ballot (a
"Cash-Out Electing Holder"), shall receive with respect to such
holder's Allowed 7.5% Notes due 2025 Secured Claims Cash in an
aggregate amount equal to 18.6833% of such holder's Allowed 7.5%
Notes due 2025 Secured Claim (a "Cash-Out Distribution") and such
holder shall be deemed to have waived any distribution under the
Plan under Class 5 on account of its Allowed 7.5% Notes due 2025
Unsecured Deficiency Claims.
* The Unsecured Notes and Related Party Claims shall be Allowed
in the following amounts: (i) $111,796,081 of 7.5% Notes due 2025
Unsecured Deficiency Claims, (ii) $9,858,106 of 7.5% Notes due 2021
Claims, (iii) $23,205,373 of 8.25% Notes due 2021 Claims, and (iv)
$2,664,771 of 6.75% Notes due 2023 Claims, which, in each case, for
the Claims described in sub-clauses (ii) through (iv) includes the
aggregate principal amount of such Claims and any accrued and
unpaid interest through the Petition Date, (v) the Minvest Loan
Claim shall be allowed in the amount of $1,643,500, and (vi) the
Share Purchase Agreement Claim shall be allowed in the amount of
$300,000. On the Plan Effective Date (or as soon as practicable
thereafter), in full and final satisfaction, settlement, release,
and discharge of and exchange for each Allowed Unsecured Notes and
Related Party Claim, each holder of an Allowed Unsecured Notes and
Related Party Claim shall receive $0.20071 in principal amount of
the New Subordinated Notes for each $1.00 of Unsecured Notes and
Related Party Claims held by such holder.
* Each holder of an Allowed General Unsecured Claim shall be, at
the option of the applicable Debtor or Reorganized Debtor, (a)
Reinstated or (b) paid in full in cash.
* Each holder of an Allowed Intercompany Claim shall have its
Claim (a) Reinstated or (b) cancelled, released, and extinguished
and without any distribution, in each case, at the Debtors'
election subject to the consent of the Required Consenting
Noteholders.
* Each holder of an Existing Equity Interest other than in
Gildemeister shall have such Interest (a) Reinstated or (b)
cancelled, released, and extinguished and without any distribution,
in each case, at the Debtors' election with the consent of the
Required Consenting Noteholders and to the extent permitted under
local law.
* Each Existing Equity Interest in Gildemeister, including,
without limitation, each Existing Preferred Equity Interest in
Gildemeister, each Existing Common Equity Interest in Gildemeister,
and each Existing Series A Warrant and Existing Series B Warrant in
Gildemeister shall be redeemed, cancelled, and released.
A copy of the Amended Disclosure Statement filed April 14, 2021, is
available at https://bit.ly/3e8x8BH from PacerMonitor.com.
Proposed Counsel to the Debtors:
Jane VanLare
Adam Brenneman
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, New York 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
About Automotores Gildemeister
Headquartered in Santiago, Chile, Automotores Gildemeister SpA is
one of the largest car importers and distributors in Chile and Peru
operating a network of company-owned and franchised vehicle
dealerships. Its principal car brand is Hyundai, for which it is
the sole importer in both of its markets. For the last 12 months
ended June 30, 2020, AG reported consolidated net revenues of $770
million, of which 95.2% correspond to sales in Chile and Peru, its
key markets.
Automotores Gildemeister SpA and its affiliates sought Chapter 11
protection (Bankr. S.D.N.Y. Case No. 21010685) in New York on April
12, 2021. The Hon. Lisa G Beckerman is the case judge.
Automotores was estimated to have $500 million to $1 billion in
assets and liabilities as of the bankruptcy filing. CLEARY
GOTTLIEB STEEN & HAMILTON LLP, led by Jane VanLare, and Adam
Brenneman, is the Debtors' counsel, and PRIME CLERK LLC is the
claims agent.
BARINGS CLO 2019-I: S&P Affirms BB- (sf) Rating on Class E-R Notes
------------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to the class
A-R, B-R, C-R, D-R, and E-R notes replacement notes from Barings
CLO Ltd. 2019-I/Barings CLO 2019-I LLC, a collateralized loan
obligation (CLO) originally issued in March 2019 that is managed by
Barings LLC, a subsidiary of MassMutual. The replacement notes will
be issued via a proposed supplemental indenture.
The preliminary ratings reflect S&P's opinion that the credit
support available is commensurate with the associated rating
levels.
The preliminary ratings are based on information as of April 16,
2021. Subsequent information may result in the assignment of final
ratings that differ from the preliminary ratings.
On the April 22, 2021 refinancing date, the proceeds from the
issuance of the replacement notes are expected to redeem the
original notes. S&P said, "At that time, we anticipate withdrawing
the ratings on the original notes and assigning ratings to the
replacement notes. However, if the refinancing doesn't occur, we
may affirm the ratings on the original notes and withdraw our
preliminary ratings on the replacement notes."
The replacement notes are being issued via a proposed supplemental
indenture, which, in addition to outlining the terms of the
replacement notes, will also include the following provisions:
-- The replacement class A-R, B-R, C-R, D-R, and E-R notes are
expected to be issued at a lower spread than the original notes.
-- The stated maturity will be extended 4.0 years.
-- The reinvestment period will be extended 2.0 years.
-- The non-call period will be extended to April 2023.
-- The weighted average life test value will be extended.
-- 100.00% of the underlying collateral obligations have credit
ratings assigned by S&P Global Ratings.
-- 97.15% of the underlying collateral obligations have recovery
ratings assigned by S&P Global Ratings.
S&P said, "Our review of this transaction included a cash flow
analysis, based on the portfolio and transaction as reflected in
the trustee report, to estimate future performance. In line with
our criteria, our cash flow scenarios applied forward-looking
assumptions on the expected timing and pattern of defaults, and
recoveries upon default, under various interest rate and
macroeconomic scenarios. In addition, our analysis considered the
transaction's ability to pay timely interest or ultimate principal,
or both, to each of the rated tranches.
"We will continue to review whether, in our view, the ratings
assigned to the notes remain consistent with the credit enhancement
available to support them, and we will take further rating actions
as we deem necessary."
Preliminary Ratings Assigned
Barings CLO Ltd. 2019-I/Barings CLO 2019-I LLC
Class A-R, $315.00 million: AAA (sf)
Class B-R, $65.00 million: AA (sf)
Class C-R (deferrable), $30.00 million: A (sf)
Class D-R (deferrable), $30.00 million: BBB- (sf)
Class E-R (deferrable), 18.50 million: BB- (sf)
Subordinated notes, $53.05 million: not rated
BASIC ENERGY: S&P Lowers ICR to 'D' on Missed Interest Payment
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
oilfield services company Basic Energy Services Inc. to 'D' from
CCC-'. S&P also lowered its issue-level rating on the company's
senior secured notes due 2023 to 'D' from 'CCC-'.
S&P said, "The downgrade reflects our view that Basic Energy will
not make the interest payment on its 10.75% senior secured notes
due 2023 within the 30-day grace period. The company continues
discussions with its debtholders regarding strategic alternatives,
and we believe these will result in a comprehensive debt
restructuring or a bankruptcy filing."
BEACON ROOFING: Moody's Hikes CFR to Ba3 & Rates Unsecured Notes B2
-------------------------------------------------------------------
Moody's Investors Service upgraded Beacon Roofing Supply, Inc.'s
Corporate Family Rating to Ba3 from B1 and Probability of Default
Rating to Ba3-PD from B1-PD. Moody's also affirmed the Ba3 rating
on the company's senior secured notes and assigned a Ba3 rating to
the company's proposed senior secured term loan. In addition
Moody's assigned a B2 rating to Beacon's proposed senior unsecured
notes. Moody's expects the terms and conditions of the proposed
senior unsecured notes to be similar to Beacon's existing senior
unsecured notes due 2025. The outlook is changed to stable from
positive. Beacon's speculative grade liquidity rating remains
SGL-1.
Proceeds from the new term loan and notes issuance, in addition to
about $300 million in combined cash on hand and drawings under the
company's revolving credit facility, will be used to pay off
Beacon's existing senior secured term loan maturing 2025 and to
redeem the company's $1.3 billion senior unsecured notes due 2025.
The Ba3 on the existing term loan was affirmed and will be
withdrawn once this term loan is repaid., The rating on the
existing unsecured notes was upgraded to B2 from B3 but will be
withdrawn upon redemption. The proposed transaction removes the
wall of maturing debt coming due in 2025.
The upgrade of Beacon's CFR to Ba3 from B1 reflects confirmation
that Beacon will use all the net proceeds of about $750 million
from the sale of its interior business to reduce debt. Beacon
completed the sale of its interior products and insulation
businesses (approximately $1.2 billion in revenue) to Foundation
Building Materials, Inc. (B2 stable) on February 10, 2021. Further
supporting the ratings upgrade is extension of Beacon's $1.3
billion asset based revolving credit facility by three years to
2026, the same year in which the company's $300 million senior
secured notes come due. Beacon now has an improved maturity profile
with no maturities until 2026.
The change in outlook to stable from positive reflects Moody's
expectation that Beacon will uphold conservative financial policies
including reinvesting in the business with additional capital
expenditures, eschewing transformative acquisitions while using
some free cash flow for share repurchase if the company were to
initiate such a program. Very good liquidity, positive end market
dynamics and inelastic demand for roofing products further support
the outlook change to stable.
The following ratings are affected by the action:
Upgrades:
Issuer: Beacon Roofing Supply, Inc.
Corporate Family Rating, Upgraded to Ba3 from B1
Probability of Default Rating, Upgraded to Ba3-PD from B1-PD
Gtd. Senior Global Notes, Upgraded to B2 (LGD5) from B3 (LGD5)
Affirmations:
Issuer: Beacon Roofing Supply, Inc.
Senior Secured Term Loan B, Affirmed Ba3 (LGD4) from (LGD3)
Senior Secured Global Notes, Affirmed Ba3 (LGD4) from (LGD3)
Assignments:
Issuer: Beacon Roofing Supply, Inc.
Senior Secured Term Loan B, Assigned Ba3 (LGD4)
Senior Unsecured Global Notes, Assigned B2 (LGD5)
Outlook Actions:
Issuer: Beacon Roofing Supply, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Beacon's Ba3 CFR reflects Moody's expectation that the company will
benefit from ongoing demand for residential roofing repair, the
main driver of Beacon's revenue. Moody's forecasts good operating
performance with adjusted EBITDA margin sustained in the range of
9.0% - 9.5%. Moody's also projects declining leverage, with
adjusted debt-to-LTM EBITDA of 3.6x at year-end 2023 versus 4.9x at
Q1 2021 (quarter ended December 31, 2020) and adjusted free cash
flow-to-debt approaching 15.4% by late-2023. However, Beacon faces
strong competition. Also, Clayton, Dubilier & Rice LLC (CD&R),
through its equity ownership and board representation, and in
conjunction with other board members, will influence business
decisions including long-term deployment of capital and deployment
of cash. These factors pose the main credit risks to Beacon.
Beacon's SGL-1 Speculative Grade Liquidity Rating reflects Moody's
view that the company will maintain very good liquidity over the
next two years generating free cash flow throughout each year.
Moody's project Beacon will generate consistent free cash flow in
excess of $300 million in each of the next two fiscal years ending
September 30. Cash on hand (pro forma of about $360 million at
December 31, 2020) is more than sufficient to meet working capital
needs due to seasonal demands or to reduce debt. The revolver is
ample to meet any operational needs as well.
The Ba3 ratings on Beacon's proposed senior secured term loan and
existing senior secured notes, the same rating as the Corporate
Family Rating, result from their subordination to company's
revolving credit facility but priority of payment relative to the
company's senior unsecured notes. The term loan and secured notes
are pari passu. They have a first lien on substantially all
noncurrent assets and a second lien on assets securing the
company's revolving credit facility (ABL priority collateral).
The B2 rating on the company's proposed senior unsecured notes, two
notches below the Corporate Family Rating, results from their
subordination to Beacon's considerable amount of secured debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade:
Debt-to-LTM EBITDA is sustained near 3.5x
EBITDA margin sustained near 10%
Preservation of very good liquidity
Maintenance of conservative financial policies
CD&R reduces its ownership and influence in Beacon
Factors that could lead to a downgrade:
Debt-to-LTM EBITDA is sustained above 4.5x
Significant contraction in EBTDA margin
The company's liquidity profile deteriorates
Excessive usage of the revolving credit facility
Aggressive acquisition or shareholder return activity
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
Beacon Roofing Supply, Inc., headquartered in Herndon, Virginia, is
one of the largest wholesale distributors of roofing material and
other building products in the US. CD&R, through its affiliates,
controls about 30% of the company's total voting rights.
BEE COUNTY: Seeks to Hire D. William & Co. as Accountant
--------------------------------------------------------
Bee County Cooperative Association seeks approval from the U.S.
Bankruptcy Court for the Southern District of Texas to employ D.
William & Co., P.C. as its accountant.
The Debtor requires an accountant to assist in the preparation of
monthly operating reports, financial statements and cash flow
projections.
D. William & Co. will be paid at the rate of $300 per hour and
reimbursed for out-of-pocket expenses incurred.
Greg Taylor, a partner at D. William & Co., disclosed in a court
filing that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Greg Taylor
D. William & Co., P.C.
1500 Broadway, Suite 400
Lubbock, TX 79401
Tel: (806) 785-5982
Toll Free: (800) 288-1933
Fax: (806) 785-9381
Email: info@dwilliams.net
About Bee County Cooperative Association
Bee County Cooperative Association sought protection under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 21-21074) on
March 25, 2021. Aaron Salge, general manager and authorized
officer, signed the petition. At the time of the filing, the
Debtor had between $1 million and $10 million in both assets and
liabilities.
Judge David R. Jones oversees the case.
Mullin Hoard & Brown, L.L.P. and D. William & Co., P.C. serve as
the Debtor's legal counsel and accountant, respectively.
BEE COUNTY: Seeks to Hire Mullin Hoard & Brown as Legal Counsel
---------------------------------------------------------------
Bee County Cooperative Association seeks approval from the U.S.
Bankruptcy Court for the Southern District of Texas to employ
Mullin Hoard & Brown, L.L.P. as its legal counsel.
The firm's services include:
a. preparation of legal papers necessary to comply with the
requisites of the U.S. Bankruptcy Code and Bankruptcy Rules;
b. advising the Debtor regarding the preparation of operating
reports, motions for use of cash collateral and sale of assets, and
the formulation of a Chapter 11 plan; and
c. other legal services ordinarily associated with a bankruptcy
case.
Mullin Hoard & Brown will be paid at these rates:
Attorneys $150 to $450 per hour
Paralegals $80 to $165 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred. The retainer fee is $25,000.
David Langston, Esq., a partner at Mullin Hoard & Brown, disclosed
in a court filing that the firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
David R. Langston, Esq.
Mullin Hoard & Brown, L.L.P.
P.O. Box 2585
Lubbock, TX 79408-2585
Tel: (806) 765-7491
Fax: (806) 765-0553
Email: drl@mhba.com
About Bee County Cooperative Association
Bee County Cooperative Association sought protection under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 21-21074) on
March 25, 2021. Aaron Salge, general manager and authorized
officer, signed the petition. At the time of the filing, the
Debtor had between $1 million and $10 million in both assets and
liabilities.
Judge David R. Jones oversees the case.
Mullin Hoard & Brown, L.L.P. and D. William & Co., P.C. serve as
the Debtor's legal counsel and accountant, respectively.
BENSON PROPERTY: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------
The U.S. Trustee for Region 21, until further notice, will not
appoint an official committee of unsecured creditors in the Chapter
11 case of Benson Property Investment Corp., according to court
dockets.
About Benson Property Investment
Benson Property Investment Corp. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
21-00336) on March 17, 2021, listing under $1 million in both
assets and liabilities. Johnston Law, PLLC and Grasmeier Business
Consulting serve as the Debtor's legal counsel and accountant,
respectively.
BLACK DIRT: Seeks to Tap Paul Roop as Bankruptcy Counsel
--------------------------------------------------------
Black Dirt Farm, LLC seeks approval from the U.S. Bankruptcy Court
for the Southern District of West Virginia to employ Paul Roop, II,
Esq., an attorney at Roop Law Office, LC, to handle its Chapter 11
case.
Mr. Roop will render these legal services:
(a) advise the Debtor regarding its powers and duties and the
management of its properties;
(b) prepare legal papers; and
(c) perform all other legal services as may be necessary in
this case.
Mr. Roop will be billed at his hourly rate of $375. Paralegals
will be paid at the rate of $100 per hour.
The Debtor paid Roop Law Office a retainer in the amount of
$5,000.
Mr. Roop disclosed in a court filing that he is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The attorney can be reached at:
Paul W. Roop, II, Esq.
Roop Law Office LC
P.O. Box 1145
Beckley, WV 25802-1145
Telephone: (304) 255-7667
Facsimile: (304) 256-2295
Email: bankruptcy@rooplawoffice.com
About Black Dirt Farm
Black Dirt Farm, LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. W. Va. Case No.
21-50028) on April 11, 2021. At the time of the filing, the Debtor
disclosed between $1 million and $10 million in assets and up to $1
million in liabilities. The Debtor tapped Paul W. Roop, II, Esq.,
at Roop Law Office LC as legal counsel, Jonathan Bolen as manager,
and Kimberly Bolen as chief operating officer.
BLACKSTONE CQP: S&P Alters Outlook to Positive, Affirms 'B' ICR
---------------------------------------------------------------
S&P Global Ratings revised the outlook on Blackstone CQP Holdco
L.P. (BXCQP) to positive from stable and affirmed the 'B' issuer
credit rating.
S&P also affirmed its 'B+' issue-level rating on the company's
senior secured term loan. S&P's recovery rating remains '2',
indicating that it expects substantial (70%-90%; rounded estimate:
70%) recovery in the event of a payment default.
Completion of train 6 and further contractedness will support CQP's
business risk profile. CQP, through its subsidiary Sabine Pass
Liquefaction LLC (SPL), benefits from a strong contractual
structure with minimal volume risk. The cash flows are
approximately 85% contracted with investment-grade counterparties,
with an average remaining contract life of approximately 18 years
under contracts that provide an annual fixed fee.
In addition, CQP recently announced that based on the operation of
its existing trains and through maintenance and production
optimization, it anticipates that it will be able to increase the
overall production capacity of each train by approximately 12% to
4.9 million tonnes per annum (mtpa)-5.1 million mtpa. The increased
capacity will allow CQP to further increase the contractedness of
the facility. Cheniere expects that with the signing of some
medium-term contracts, overall contractedness will increase to
approximately 90%, which will further increase overall cash flow
while reducing cash flow variability. S&P believes this further
strengthens the company's business risk profile.
The 'B' issuer credit rating on BXCQP reflects the differentiated
credit quality between BXCQP and CQP. BXCQP owns approximately
40.5% of CQP. The rating differential reflects the structural
subordination of BXCQP's debt to CQP's underlying cash flows, which
BXCQP does not control. Other factors include cash flow stability,
BXCQP's influence on CQP's corporate governance and financial
policy, financial ratios, and ability to liquidate its investments
in CQP to repay debt. S&P said, "We assess these factors as either
positive, neutral, or negative. When viewing these factors
holistically, we arrive at a 'b' stand-alone credit profile (SACP)
for BXCQP, a three-notch differential from our 'bb' SACP on CQP."
S&P said, "We view CQP's underlying cash flows as stable because
the dividend stream to BXCQP is backed by highly contracted
long-term agreements with investment-grade counterparties. We do
not anticipate an adverse change to the dividend policy. In
addition, construction at SPL proceeds on time and within budget,
which we believe supports BXCQP's positive cash flow assessment. We
assess corporate governance and financial policy as positive given
the master limited partnership (MLP) structure of the investee
company, CQP. MLP unitholders strongly favor stable or increasing
dividends. In our opinion, BXCQP also benefits from a more robust
governance structure than conventional limited partners in an MLP
structure. These were affected as a precondition of Blackstone's
initial investment in CQP in 2012.
"We forecast stand-alone leverage in the high-4x area for 2021 and
2022. We expect CQP's quarterly distribution to be between
$2.6-$2.7 per unit in 2021 and to increase modestly thereafter. In
our view, because CQP's units do not have a relatively deep market,
if BXCQP tried to sell large stakes of the units it owns, it would
likely depress CQP's unit price. However, the price BXCQP can sell
its entire stake and repay its total debt by over 3x. Therefore, we
do not view BXCQP's likelihood to sell its stake in CQP as probable
in the near term.
"Additionally, with Trains 1-5 fully operational and Train 6 coming
online soon, the units will likely be more liquid, and its unit
price should appreciate gradually. Consequently, as CQP's market
liquidity improves, we could consider improving our negative
assessment of BXCQP's ability to liquidate investments.
"The positive outlook reflects our expectation of CQP's improving
credit quality CQP. We continue to expect stand-alone leverage in
the 4.5x-5x area for 2021 and in our forecast horizon."
S&P could revise the outlook to stable or lower the rating if:
-- Leverage increased to over 6x;
-- Interest coverage ratio fell below 1.5x over a sustained
period;
-- BXCQP's liquidity position materially deteriorated; or
-- CQP's credit quality deteriorated such that leverage was above
6.5x on a sustained basis prompting us to lower the SACP.
Such outcomes could occur in the unlikely scenario that the
projects currently under construction do not finish on time and
within budget or if the company experiences an unanticipated
interruption at its facility which results in a material reduction
in cash flow.
S&P could raise the rating on Blackstone CQP if CQP's credit
quality continues to improve as train 6 comes online and CQP lowers
its leverage. S&P could also raise the rating on Blackstone CQP if
leverage remains below 5x for a sustained period of time.
BLUE RIBBON: Moody's Hikes CFR to B2 & Rates New Secured Loans B2
-----------------------------------------------------------------
Moody's Investors Service upgraded the Corporate Family Rating for
Blue Ribbon LLC ("Blue Ribbon" or "Pabst") to B2 from Caa1 and the
Probability of Default Rating to B2-PD from Caa1-PD. At the same
time, Moody's assigned B2 ratings to the company's proposed new
senior secured 7-year term loan B and 5-year revolving credit
facility. The existing term loan and revolver instrument ratings
were unchanged at Caa1 and will be withdrawn when the new
facilities close. The rating outlook is stable.
The upgrade reflects materially better liquidity following the
refinancing, and an improved capital structure with lower leverage
after about $90 million of debt repayment, funded with proceeds
from the sale to an affiliate of equipment, rights and leaseholds
related to the Irwindale Brewery in California, as well as an
equity injection by the owners. Moody's estimates that debt to
EBITDA leverage (including Moody's adjustments) will be reduced
from 6.4x for the 12 months ended September 2020, to approximately
5.2x pro forma at closing and based on estimated year-end 2020
results. Furthermore, Moody's expects that the company will
generate modest positive free cash flow in 2021, and that a roughly
10% increase in EBITDA will reduce debt-to-EBITDA leverage to a
mid- 4x range by year end 2021. Moody's assumes that high single
digit revenue growth from a recovery in on premise beer sales,
pricing and mix benefits fueled by new product introductions, and
the company's cost savings initiatives will drive earnings growth
despite headwinds from restoring sales and marketing spending to
more normalized levels over time. Moody's also anticipates that the
supply contract with City Brewing will provide greater flexibility
to develop new products than existed under the Molson Coors
relationship, and that the economics of the brewing contracts will
be broadly similar. The refinancing of the secured revolver and
term loan, both of which were current and due in 2021, resolves
refinancing risk and meaningfully extends maturities.
Moody's took the following rating actions:
Ratings Assigned:
Issuer Blue Ribbon, LLC
$368M Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD3)
$52M Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Ratings Upgraded:
Issuer: Blue Ribbon, LLC
Corporate Family Rating, upgraded to B2 from Caa1
Probability of Default Rating, upgraded to B2-PD from Caa1-PD
Outlook Actions:
Issuer: Blue Ribbon, LLC
Outlook, changed to stable from negative
RATINGS RATIONALE
Blue Ribbon's B2 Corporate Family Rating reflects improved
financial leverage, a more conservative leverage target going
forward, a more sustainable supply chain arrangement, expanding
margins as the company shifts its mix to a more premium focus and
the expectation for positive free cash flow. The rating is
constrained by the company's small scale compared with much larger
brewing peers, and its heavy reliance on its largest brand, Pabst
Blue Ribbon (PBR), which accounts for nearly half of sales and has
seen consistent revenue and volume declines. After several years of
top line declines as the company downsized its hard soda portfolio
and exited the hard cider business, Blue Ribbon LLC experienced
further volume declines in 2020 as a result of the Coronavirus
pandemic. Sales were pressured in 2020 because 20% of the company's
business was typically derived from on-premise channels that were
largely shut down for much of the year. This was partially offset
by a surge in take home channels. In the face of these challenges,
Blue Ribbon cut costs including sales and marketing expenses,
enabling it to preserve cash and outperform its original budget
expectations. Still, the ongoing disruption related to the
coronavirus leaves some uncertainty about the pace of recovery.
Despite the challenging year, the company was able to lower
leverage organically during 2020. Moody's expect sales growth in
2021 as the on-premise establishments gradually reopen, and as new
partnership business comes on stream.
Moody's expects that the company will continue to face tough
competition from larger competitors. While operating margins have
improved in recent years, they are still thin relative to larger
beer producers partly because of the company's asset lite model.
The company expects margin improvement due to premiumization but
the success of the anticipated mix shift remains to be seen. Blue
Ribbon also has more limited geographic diversity and small scale
compared to other beer companies and to other beverage companies in
general. However, its US focus, where beer production and sales
were considered essential in most markets, led to a smaller revenue
decline during COVID than companies with more international
footprints. The rating is supported by Blue Ribbon's well-known,
iconic brands, the strong market position of its largest brand as
one of the most affordable beers in its category, success of
certain recent brand additions and partnerships, minimal need for
working capital and capital investment, and positive free cash flow
that will be modest in 2021 but grow to more than $50 million in
2022. Blue Ribbon's portfolio includes more than 30 active brands
some of which are helping to revitalize and premiumize its
portfolio and it has established important partnerships, including
an arrangement to produce and distribute Jack Daniels Country
Cocktails in the US for Brown Forman Corporation (A1, stable).
While the beer category has been in decline in the US for some
time, Blue Ribbon has successfully increased pricing which helps to
mitigate the volume declines in many of its beer brands. However,
the company needs a rationale pricing environment to continue to be
able to grow pricing. Blue Ribbon is seeking to reduce reliance on
its declining legacy beer brands over time, and to increase its
presence in premium beers and in the fast-growing premium flavored
malt beverage (FMB) space.
In November 2018 the company settled its lawsuit with Molson Coors
over contract brewing, extending the length of the co-packing
arrangement through 2024. In November 2019, Blue Ribbon announced
that it had reached an agreement to transition its production to
City Brewing (B1, stable). This removed the uncertainty surrounding
the phase out of the Molson Coors relationship.
As part of the settlement, Blue Ribbon entered into an agreement
with Molson Coors Beverage Company giving it an option to purchase
one of that company's brewing facilities located in Irwindale,
California. The company executed this agreement in Q4 2020. The
sale of the equipment and leaseholds to City Brewing (B1, stable)
in Q1 2021 resulted in a $45 million cash inflow that was used to
repay debt. However, as part of the proposed refinancing, any
remaining value in Irwindale, which was put in an unrestricted
subsidiary, will be carved out of the new transaction and borrowing
group. While this lowers management distraction, allowing it to
focus on running the beer business rather than negotiate land
sales, it does represent leakage of any potential value to the
extent that further monetization above the exercise price would
have accrued to Blue Ribbon and its lenders under previous
arrangements.
Liquidity will be improved by the refinancing which extends
maturities. Internally generated cash is expected to be sufficient
to cover cash needs including seasonal working capital. Moody's
does not expect the company to need to draw on its revolver.
External liquidity is considered adequate, but the $52 million
revolver is currently needed in part to support $30 million of L/Cs
that support the current co-brewing arrangement. This leaves modest
availability for future unexpected needs, such as one-time costs.
Moody's considers as a potential risk the fact that the company
does not have full external back up liquidity for these potential
obligations. As the company transitions to City Brewing over the
next 4 years, the need for L/Cs will diminish which will improve
liquidity. The revolving credit facility has a springing first lien
net leverage ratio of 6.0x. If outstanding letters of credit on the
revolver exceed $15mm then the covenant will be tested at the last
day of each quarter that revolver borrowings exceed $0. If
outstanding letters of credit are reduced to or below $15mm, the
financial covenant will be tested when RC borrowings plus drawn and
unreimbursed letters of credit are greater than 15% of the total
amount of commitments. Even if tested, Moody's expects that the
company will maintain plenty of cushion under the covenant.
Alternate liquidity is minimal given that its assets are pledged to
the secured facilities, and any remaining value in the Irwindale
brewery will not benefit the borrower or its lenders.
Environmental, Social and Governance considerations:
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
Blue Ribbon from the current weak global economic activity and a
gradual recovery for the coming year. Although an economic recovery
is underway, it is tenuous, and its continuation will be closely
tied to containment of the virus. As a result, the degree of
uncertainty around forecasts is unusually high. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Volatility can be still expected in 2021 due to uncertain demand
characteristics, channel disruptions, and supply chain
disruptions.
In terms of other social factors, Blue Ribbon faces the risk of
shifts in customer behavior as well as health and wellness
considerations including those around the responsible use of
alcohol, factors which can influence consumption of products it
produces. Like other alcoholic beverage companies, Blue Ribbon
monitors its social risks closely, including product quality and
safety, clean labeling and messages about alcohol content and
responsible consumption. While the alcoholic beverage industry is
subject to some risk due to health concerns and the impact of drunk
driving, Blue Ribbon, and the industry as a whole, have made
meaningful efforts to disclose the risks and promote moderate
consumption of alcoholic beverage products.
Blue Ribbon's environmental impact remains low and the associated
risks are limited. Environmental considerations are not a material
factor in the rating.
Blue Ribbon's governance is influenced by its private ownership.
Like many other private firms, Blue Ribbon has been comfortable
operating with high financial leverage, and recently with very
limited external alternate liquidity. As part of the refinancing,
the Blue Ribbon Partners, LLC, which is an investment platform led
by American beverage entrepreneur Eugene Kashper, has become the
sole owner. The exit of private equity firms should allow the
company to take a longer term view, while the issuance of equity to
further lower debt, and the commitment to a more conservative
leverage target (a stated target of under 4x going forward by the
company's definition) are positive governance factors.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The stable rating outlook reflects Moody's expectations that Blue
Ribbon will increase revenue and EBITDA by roughly 10% in 2021 and
that the company will generate sufficient cash flow. Moody's also
expects that Blue Ribbon will reduce debt-to-EBITDA to a mid 4x
range in 2021 through earnings growth, and that free cash flow will
exceed $50 million in 2022.
The ratings could be upgraded if the company improves its external
liquidity, generates good and predictable free cash flows,
successfully executes its growth strategies to support sustained
top line and operating profit expansion, and reduces leverage. An
upgrade would require that leverage is reduced such that debt to
EBITDA (including Moody's standard adjustments) is sustained below
3.5x.
The ratings could be downgraded if operating performance does not
improve as expected such that EBIT/interest falls below 2x,
debt/EBITDA is sustained above 5x, or free cash flow is low or
negative. In addition, leveraged acquisitions or dividend
distributions could also lead to a downgrade.
As proposed, the term loan and revolver are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity up to the greater of $87 million and
100.0% of Consolidated EBITDA , plus unused capacity reallocated
from the general debt basket, plus unlimited amounts so long as pro
forma Consolidated First Lien Net Leverage Ratio does not exceed
4.10: 1.00 (if pari passu secured).
Amounts up to the greater of (A) $43.5 million and (B) 50.0% 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 which: (i) restrict the company from transferring
material intellectual property to any unrestricted subsidiary; or
(ii) prohibit the company from designating a subsidiary as
unrestricted if it holds material intellectual property.
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 such
transaction is entered into for bona fide business purposes and not
for the primary purpose of causing such subsidiary to be released
from its guarantee.
The credit agreement provides some limitations on up-tiering
transactions, including a requirement that each directly affected
lender consents to amendments that subordinate the liens on all or
substantially all the value of the collateral to the liens securing
any other indebtedness or to contractually subordinate any
obligations under the credit documentation.
The proposed terms and the final terms of the credit agreement may
be materially different.
The principal methodology used in this rating was Alcoholic
Beverages Methodology published in February 2020.
Headquartered in San Antonio, TX, Blue Ribbon, LLC (parent company
of Pabst Brewing Company) markets and sells a portfolio of iconic
American beer brands. Major brands in the company's portfolio
include its flagship Pabst Blue Ribbon, Lone Star, Rainier, Old
Milwaukee, Colt 45 and Schlitz. The company also has Small Town's
Not Your Father's Root Beer (among other hard soda varieties), and
Jack Daniels Country Cocktails on its platform. The company is
owned by Blue Ribbon Partners, LLC, an investment platform led by
American beverage entrepreneur Eugene Kashper. Annual net sales are
approaching $500 million.
BLUE RIBBON: S&P Withdraws ICR 'B-' Rating on Refinance
-------------------------------------------------------
S&P Global Ratings raised the issuer credit rating on U.S. beer
marketer Blue Ribbon Intermediate Holdings LLC (BRIH) to 'B-' from
'CCC', which it subsequently withdrew.
S&P said, "At the same time, we assigned a 'B-' issuer credit
rating to Pabst, the operating company and issuer of the audited
financials. We also issued a 'B' rating to the proposed $420
million senior secured bank credit facility with a '2' recovery
rating, indicating creditors could expect substantial (70%-90%;
rounded estimate: 70%) recovery in the event of a payment
default."
U.S. beer marketer Blue Ribbon Intermediate Holdings LLC (BRIH) and
wholly owned subsidiary Blue Ribbon LLC (Pabst) used proceeds from
the sale of equipment related to the Irwindale brewery and an
equity contribution from owner Blue Ribbon Partners to reduce debt.
The debt paydown reduced leverage by almost two turns to 5.4x.
The upgrade reflects the company's improved financial flexibility
and liquidity following the refinancing, lower debt levels, and
less aggressive financial policy with the removal of financial
sponsor Oaktree as a minority owner. Pabst faced delays in
refinancing its senior secured capital structure primarily because
of the complexity around monetizing assets at the Irwindale
facility following a legal settlement with its current main
supplier, Molson Coors Inc. The company hasnow sold brewing
equipment at that facility to an affiliate for $45 million. The
company will use these proceeds and $45 million equity from its now
100% owner Blue Ribbon Partners (BRP, which is led by American
beverage entrepreneur and Eugene Kashper) to repay debt balances.
It is also refinancing its existing capital structure, thereby
extending its debt maturities to 2026 on the revolving credit
facility and to 2028 on the first lien term loan. S&P said, "We
estimate the asset sales and equity contribution will improve
Pabst's pro forma 2021 debt to EBITDA to about 5.4x from about 7x
as of year-end 2020. In addition to the lower leverage, Oaktree
Capital is no longer a minority investor. In our opinion, this
supports a less aggressive financial policy including a commitment
by BRP to primarily use cash flows for debt repayment rather than
large shareholder returns."
S&P said, "We expect the company's operating performance to benefit
from its recently announced strategic partnership with
Brown-Forman, product innovations, and a return in on-premise
volumes. In the fourth quarter of 2018, management implemented a
premiumization strategy to position strategic growth brand (PBR,
Lone Star, and Rainier) as a value option in the premium category,
which includes competitor brands such as Miller Light, Coors Light
and Bud Light. The higher pricing form this strategy resulted in
significant revenue declines due to loss of volumes, which the
company intended to offset with better margin per case with the
higher prices. Sales volume declined by 9.4% year-over-year in
2019, which was larger than historical rates, albeit with flat year
over year gross margins. Thereafter until the onset of pandemic,
top-line and volume declines started to slow while gross margin
started improving because of the better pricing. In fact, gross
profits had been growing year over year since 2014 until last year
when the pandemic significantly weakened on-premise sales. We
estimate revenue declines slowed to about 2% in 2020 (9.5% volume
decline) from 6.3% in 2019, even as on-premise, which makes up
about 20% of revenues, shut down. This, coupled with product
innovation and favorable product mix shift to higher margin
products such as PBR hard coffee and hard seltzer, enabled the
company to stabilize revenue and expand its adjusted EBITDA margins
to about 15% compared with 12% in 2018. We believe this will
continue into 2021 and 2022 as the on-premise channel becomes more
open and the company executes on its recently announced partnership
with Brown-Forman for the supply, marketing, sales, and
distribution of Jack Daniel's Country Cocktails.
"In addition, the company has aggressively cut costs over the past
two years, which should lead to better margins once sales
normalize. We also believe the company will benefit from
transitioning its Molson Coors manufacturing to City Brewing by the
end of 2024, which provides capacity to produce Pabst's products
and innovation at scale, control purchasing and shipping, and
improve customer service. These actions coupled with lower legal
expenses will result in EBITDA margins sustained in the 15% area
over the next two years, albeit with certain key risks to our
forecast, including continued volume decline in the company's
legacy brands, and increased competition in the
flavored-malt-beverage category."
The company will generate good cash flow and continue to reduce its
debt balances using its free operating cash flow (FOCF).Total
interest cost should decrease given lower debt balance and our
expectation for further debt repayment. Pabst also operates an
asset-light production and distribution network model; as a result
it has minimal capital expenditure requirements of less than 1% of
revenue. S&P said, "We expect Pabst will generate about $8 million
of free operating cash flow in 2021, after certain non-recurring
litigation settlement costs. We expect FOCF to increase to over $40
million in 2022 mainly due to EBITDA growth and the absence of
non-recurring costs. The company has stated it is committed to
repaying debt. We forecast its leverage will approach the mid-4x
area by 2022."
S&P said, "The upgrade and new ratings assigned to Blue Ribbon LLC
reflects a one-notch discount to our reassessed group credit
profile at Blue Ribbon Holdings (BRH). Pabst remains majority owned
by Blue Ribbon Partners, an investment platform led by American
beverage entrepreneur Eugene Kashper. Through its immediate parent
Blue Ribbon Intermediate Holdings LLC, Pabst ultimate parent
company is Blue Ribbon Holdings LLC, which also owns a controlling
stake in (B+/Stable). We have raised our group credit profile on
the BRH to 'b' from 'b-' because of the upgrade to group member
Pabst and the unchanged stronger 'b+' stand-alone credit profile
(SACP) at City Brewing. We consider Pabst to be highly strategic
but noncore to the overall group so its rating currently reflects
its SACP, which is one notch lower at 'b-'. Our rating on Pabst is
one notch below the group credit profile, in part reflecting a
still short track record in executing its growth strategy,
primarily because of the pandemic which hurt on-premise sales, but
also because of the refinancing delays, which took management
resources away from strategic execution.
"The positive outlook reflects our expectation for EBITDA
improvement and leverage reduction to below 5x over the next 12
months once the company laps its substantial certain no-recurring
costs later this year and realize cost savings and benefits from
on-premise reopening and portfolio mix shift to higher margin
products.
"We could raise our ratings on Pabst if it can sustain positive
organic revenue growth, increase its free operating cash flows, and
reduce leverage to the mid-4x area over the next 12 months. We
believe the mid-single-digit-percent top line and EBITDA can be
sustained by successfully growing and innovating around its core
growth brands to offset declines in its legacy brands, by
accelerating the distribution of Jack Daniel's Country Cocktails
under its new partnership with Brown-Forman. Achieving these
operating milestones would likely lead to sustained annual FOCF
approaching $40 million, enabling debt repayment and leverage to
approach the mid-4x area over the next 12 months.
"We could revise our outlook to stable on Pabst if its operating
performance is below our base-case expectations such that free cash
flow materially underperforms our base-case expectations. This
could occur if the company experiences increased volume declines in
its core Pabst Blue Ribbon brand while pricing comes under pressure
either from competitive promotional activity or a more price
conscious consumer while operating costs face significant
inflation. Although less likely, it could also occur if BRP decides
to take a large debt-financed dividend that could keep
discretionary cash flow negligible and leverage above 5x."
BMSL MANAGEMENT: Says Plan Disclosures Do Not Satisfy Sec. 1125(b)
------------------------------------------------------------------
Hillrich Holding Corp. a secured creditor of BMSL Management, LLC,
submitted an objection to the BMSL Management, LLC,'s Disclosure
Statement filed on April 6, 2021.
Hillrich points out that at the outset, the Debtor's Disclosure
Statement must be denied on a procedural basis since the Debtor has
clearly failed to provide the required notice period as set forth
in Bankruptcy Rule 2002(b).
Hillrich further points out the Debtor's Disclosure Statement
should be denied because it fails to satisfy the requirements of
Section 1125(b) of the Bankruptcy Code.
Hillrich has a significant claim against the Debtor which exceeds
$3,200,000. The Debtor's Plan purports to provide for payment in
full of Hillrich's claim. At Part VII, paragraph 4 of the
Disclosure Statement, the Debtor states the Hillrich claim will be
paid "from the proceeds of a sale or refinance of the real
property".
Hillrich asserts that with respect to refinancing, the Debtor had a
year to refinance the debt pursuant to the Stipulation, at a
significant discount of some $4MM to $5MM, yet they were unable to
refinance.
According to Hillrich, in order for Hillrich to determine whether
or not to vote in favor of the Debtor's Plan, the Debtor must
provide adequate information about the feasibility of the Plan.
However, Hillrich submits that the Disclosure Statement filed by
the Debtor is glaring in its lack of sufficient and material
financial information, including the most basic details regarding
the funding of the Debtor's Plan.
Hillrich points out that despite the "sale" to Zara 6 being the
entire basis of the Debtor's plan, the Disclosure Statement fails
to provide any information whatsoever regarding the "sale". Not
only does the Debtor not provide a term sheet or sales agreement
with Zara 9, it does not even provide a purchase price.
Hillrich further points out that the debtor asserts that Hillrich's
claim is $3,001,866.56. This despite having been provided a payoff
that indicates that as of March 31, 2021, Hillrich's claim is
$3,261,404.72, with interest and fees continuing to accrue.
Accordingly, the Debtor has not made provision to pay off the
Hillrich claim.
According to Hillrich ,the Debtor has not filed an operating report
since December 2020 and accordingly, creditors have no current
financial information regarding the Debtor.
Hillrich points out that despite counsel appearing at the March 3,
2021 hearing, the Debtor has only filed a motion to retain its
current counsel on April 2, 2021. It does not appear that Debtor's
proposed retention application has been noticed for hearing.
Hillrich asserts that notwithstanding the Debtor's assertion that
it continues to receive rental income, the Debtor has failed to
make any adequate protection payments to Hillrich, this despite
having represented to the Court at the March 3rd hearing that it
had a check in hand that was to be forwarded to Hillrich.
Attorneys for Hillrich Holding Corp.:
Ronald M. Terenzi, Esq.
TERENZI & CONFUSIONE, PC
401 Franklin Avenue, Suite 300
Garden City, New York 11530
About BMSL Management
BMSL Management LLC filed a Chapter 11 bankruptcy petition (Bankr.
E.D.N.Y. Case No. 20-43621) on Oct. 14, 2020, disclosing under $1
million in both assets and liabilities. The Debtor is represented
by Shiryak Bowman Anderson Gill & Kadochnikov, LLP.
BORINQUEN NATURAL: Seeks to Tap MRO Attorneys at Law as Counsel
---------------------------------------------------------------
Borinquen Natural, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Puerto Rico to employ MRO Attorneys at
Law, LLC as its legal counsel.
MRO Attorneys at Law will render these legal services:
(a) advise Borinquen Natural regarding its powers and duties
and the operation of its business; and
(b) perform all other legal services as may be necessary in
the reorganization of Borinquen Natural's business.
Myrna Ruiz-Olmo, Esq., the attorney who will work primarily in this
case, will be paid at her hourly rate of $200, plus reimbursement
of expenses incurred.
A retainer fee of $8,485 was paid by a non-debtor prior to
Borinquen Natural's Chapter 11 filing.
Ms. Ruiz-Olmo disclosed in a court filing that she is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Myrna L. Ruiz-Olmo, Esq.
MRO Attorneys at Law LLC
P.O. Box 367819
San Juan, PR 00936-7819
Telephone: (787) 404-2204
Email: mro@prbankruptcy.com
About Borinquen Natural
Borinquen Natural, LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 21-01058)
on March 31, 2021, listing under $1 million in both assets and
liabilities. Judge Mildred Caban Flores oversees the case. The
Debtor tapped MRO Attorneys at Law LLC, led by Myrna L. Ruiz-Olmo,
Esq., as legal counsel and Albert Tamarez-Vasquez, CPA, at Tamarez
CPA, LLC as accountant.
BORINQUEN NATURAL: Taps Albert Tamarez-Vasquez as Accountant
------------------------------------------------------------
Borinquen Natural, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Puerto Rico to employ Albert
Tamarez-Vasquez, a certified public accountant at Tamarez CPA,
LLC.
The accountant will render these services:
(a) reconcile financial information to assist the Debtor in
the preparation of monthly operating reports;
(b) assist in the reconciliation and clarification of proof of
claims filed and amount due to creditors;
(c) provide general accounting and tax services to prepare
year-end reports and income tax preparation; and
(d) assist the Debtor and its legal counsel in the preparation
of the supporting documents for the Chapter 11 reorganization
plan.
The hourly rates of Tamarez CPA's professionals are as follows:
Albert Tamarez-Vasquez $150
CPA Supervisor $100
Senior Accountant $85
Staff Accountant $65
In addition, the Debtor will reimburse out-of-pocket expenses
incurred.
Tamarez CPA received a pre-bankruptcy retainer in the amount of
$5,200 from the Debtor.
Mr. Tamarez-Vasquez disclosed in a court filing that he is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The accountant can be reached at:
Albert Tamarez-Vasquez, CPA, CIRA
Tamarez CPA LLC
First Federal Saving Building
1519 Ave. Ponce de Leon, Ste. 412
San Juan, PR 00909-1723
Telephone: (787) 795-2855
Facsimile: (787) 200-7912
Email: atamarez@tamarezcpa.com
About Borinquen Natural
Borinquen Natural, LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 21-01058)
on March 31, 2021, listing under $1 million in both assets and
liabilities. Judge Mildred Caban Flores oversees the case. The
Debtor tapped MRO Attorneys at Law LLC, led by Myrna L. Ruiz-Olmo,
Esq., as legal counsel and Albert Tamarez-Vasquez, CPA, at Tamarez
CPA, LLC as accountant.
BOY SCOUTS OF AMERICA: Files Two-Path Bankruptcy-Exit Plan
----------------------------------------------------------
Boy Scouts of America and Delaware BSA, LLC, submitted an Amended
Disclosure Statement for its Second Amended Chapter 11 Plan of
Reorganization.
A hearing on the Disclosure Statement is slated for May 19, 2021.
Disclosure objections are due May 6, 2021 at 4:00 p.m. (Eastern
Time). Ballots and objections are due July 30, 2021 at 4:00 p.m.
(Eastern Time).
The Plan provides for two paths to reorganize the Debtors. The
first plan of reorganization is a "Global Resolution Plan," which
provides the framework for global resolution of Abuse Claims
against the Debtors, Local Councils, Contributing Chartered
Organizations, and Settling Insurance Companies, in exchange for
contributions by such parties to the Settlement Trust for the
benefit of Abuse victims, including the contribution of substantial
insurance assets. The Global Resolution Plan has been designed to
maximize and expedite recoveries to Abuse victims. The Debtors
strongly encourage all holders of Direct Abuse Claims to vote in
favor of the Global Resolution Plan.
If the holders of Abuse Claims do not provide a sufficient number
of votes to accept the Plan (or the Bankruptcy Court otherwise
finds that the Global Resolution Plan is not confirmable), the
Debtors will be required to seek confirmation of the back-up to the
Global Resolution Plan, a "BSA Toggle Plan." The BSA Toggle Plan
provides for the resolution of Abuse Claims and other Claims
against only the Debtors, thereby reducing the potential recoveries
under the Plan for the holders of Direct Abuse Claims from as much
as 100% of their Claims under the Global Resolution Plan to as
little as 1% of their Claims. Holders of Direct Abuse Claims must
provide a sufficient number of votes in favor of the Plan in order
to ensure they will receive the treatment afforded by the Global
Resolution Plan and not the treatment provided in the default BSA
Toggle Plan.
If the conditions set forth in the Plan are not met and (a) the
Plan has not been accepted by a sufficient number of voters holding
Direct Abuse Claims (as determined by the Debtors in their sole
discretion), or (b) the Bankruptcy Court declines to approve the
provisions of the Plan relating to the Abuse Claims Settlement,
then the Plan will constitute a BSA Toggle Plan.
Through the Plan, the Debtors propose a Global Resolution Plan.
This Global Resolution Plan defaults to a BSA Toggle Plan if the
Class of Direct Abuse Claims does not provide a sufficient number
of votes in favor of the Plan or the Bankruptcy Court otherwise
determines that the Global Resolution Plan is not confirmable.
While the Debtors believe that either of these scenarios would
accomplish the Debtors' goals to some extent, the Debtors submit
that the Global Resolution Plan better realizes these goals and
offers a far more favorable treatment to holders of Abuse Claims.
The Global Resolution Plan contemplates a global settlement between
the BSA, Reorganized BSA, the Local Councils, Contributing
Chartered Organizations, and Settling Insurers, and involves
additional contributions from those parties to the Settlement
Trust. By contrast, as its name implies, the BSA Toggle Plan
contemplates a resolution with (and contributions to the Settlement
Trust from) only the BSA and the Reorganized BSA, forcing claimants
to chase after Local Councils and Chartered Organizations in costly
and time consuming litigation in the tort system. Additionally, the
Global Resolution Plan ensures that Scouting will continue in its
current form serving approximately 1 million youth members. The BSA
Toggle Plan, however, could lead to massive litigation of Abuse
Claims against the Local Councils, which would siphon off resources
from performing the mission and may force additional chapter 11 or
chapter 7 proceedings for those Local Councils.
While both alternatives channel Abuse Claims to the Settlement
Trust, there are significant differences. The Global Resolution
Plan provides a mechanism to channel the Abuse Claims asserted
against the Debtors, Local Councils and Contributing Chartered
Organizations, to the Settlement Trust established under section
105(a) of the Bankruptcy Code in accordance with Article X.F of the
Plan. In exchange for the Channeling Injunction, these parties will
make significant contributions to the Settlement Trust including
the BSA Settlement Trust Contribution, the Local Council Settlement
Trust Contribution, and the Contributing Chartered Organization
Contribution. These contributions include rights to substantial
insurance assets.
While the BSA Toggle Plan similarly provides a mechanism to channel
the Abuse Claims to the Settlement Trust, it only channels Abuse
Claims asserted against the BSA. As a result, the contributions to
be made by the Local Councils and Contributing Chartered
Organizations, including the ability to access substantial
insurance assets, will not be made, and the holders of Abuse Claims
will receive only a de minimis recovery from the Debtors' few
assets and potential and uncertain value of BSA's rights to
insurance policies.
In either scenario, the assets contributed to the Settlement Trust
will be administered by the Settlement Trustee and used to resolve
Abuse Claims in accordance with the Settlement Trust Documents,
including the Settlement Trust Agreement and the Trust Distribution
Procedures. The Trust Distribution Procedures will specify the
methodology for processing, liquidating, and paying Abuse Claims.
Thus, the Plan provides two alternative scenarios for the Debtors.
If the conditions set forth in the Plan are met, including that
holders of Class 8 Abuse Claims vote in favor of the Plan in a
sufficient number, the Plan shall constitute a Global Resolution
Plan and shall provide for the global resolution of Abuse Claims
against the Debtors, Local Councils, Contributing Chartered
Organizations, and Settling Insurance Companies. If the conditions
set forth in the Plan are not met, including that holders of Class
8 Direct Abuse Claims do not provide a sufficient number of votes
in favor of the Plan, the Plan shall constitute a BSA Toggle Plan
and shall provide for the resolution of Abuse Claims and other
Claims only against the Debtors. Holders of Class 8 Abuse Claims
must provide a sufficient number of votes in favor of the Plan to
receive the substantial recoveries provided for under the Global
Resolution Plan.
Generally, the features of settlements contemplated under both the
Global Resolution Plan and the BSA Toggle Plan are as follows:
* A proposed settlement by and among the BSA, JPM (the BSA's
senior Secured lender), and the Creditors' Committee, under which
JPM has agreed that, in full and final satisfaction of its Allowed
Claims and in exchange for the Creditors' Committee's agreement not
to pursue certain alleged estate causes of action, it shall enter
into the Restated Debt and Security Documents as of the Effective
Date. The Restated Debt and Security Documents will contain terms
that are substantially similar to the Prepetition Debt and Security
Documents except that, among certain other modifications, the
maturity dates under the Restated Debt and Security Documents shall
be the date that is ten (10) years after the Effective Date and
principal under the Restated Debt and Security Documents shall be
payable in installments beginning on the date that is two years
after the Effective Date;
* The proposed settlement referenced above provides for the
BSA's assumption of its prepetition Pension Plan and satisfaction
of Allowed Convenience Claims, Allowed General Unsecured Claims and
Allowed Non-Abuse Litigation Claims, which are held by creditors
who are core to the Debtors' charitable mission or whose Allowed
Claims were incurred in furtherance of the Debtors' charitable
mission;
* A term loan from the National Boy Scouts of America Foundation
(as defined in the Plan, the "Foundation"), in the principal amount
of $42.8 million, which will be used by Reorganized BSA for working
capital and general corporate purposes. This Foundation Loan will
permit the Debtors to contribute to the Settlement Trust a
substantial amount of consideration in Cash on the Effective Date;
and
* The BSA will contribute to the Settlement Trust, among other
things, (a) Net Unrestricted Cash and Investments; (b) the BSA's
right, title and interest in and to (i) Scouting University, (ii)
the Artwork, (iii) the Oil and Gas Interests, (iv) the Warehouse
and Distribution Center (subject to the Leaseback Requirement); (c)
certain of the Debtors' rights under applicable insurance; (d) the
Settlement Trust Causes of Action; and (e) the assignment of any
and all Perpetrator Indemnification Claims held by the BSA.
In addition to the features, the Global Resolution Plan also
provides the following substantial benefits to the holders of
Direct Abuse Claims:
* Local Councils will make a substantial contribution, which the
Debtors are committed to ensuring is not less than $425,000,000,
exclusive of insurance rights, to the Settlement Trust to resolve
the Abuse Claims that may be asserted against them in exchange for
being included as a Protected Party under the Global Resolution
Plan and receiving the benefits of the Channeling Injunction;
* The assignment and transfer to the Settlement Trust of
insurance rights of all of the BSA, Local Councils and Contributing
Chartered Organizations under insurance policies of the Debtors,
Local Councils and Contributing Chartered Organizations thereby
providing the potential for substantial insurance recoveries to
holders of Direct Abuse Claims.
* A mechanism by which Chartered Organizations can make
substantial contributions to the Settlement Trust to resolve Abuse
Claims that may be asserted against them in connection with Abuse
that arose in connection with their sponsorship of one or more
Scouting units in exchange for being included as a Protected Party
under the Global Resolution Plan and receiving the benefits of the
Channeling Injunction, thereby becoming "Contributing Chartered
Organizations" under the Plan; and
* A mechanism by which Insurance Companies may enter into
Insurance Settlement Agreements and provide sum-certain
contributions to the Settlement Trust in exchange for being
included as a Protected Party under the Global Resolution Plan and
receiving the benefits of the Channeling Injunction, thereby
becoming "Settling Insurance Companies" under the Plan.
Attorneys for the Debtors:
Jessica C. Lauria
WHITE & CASE LLP
1221 Avenue of the Americas
New York, New York 10020
Telephone: (212) 819-8200
E-mail: jessica.lauria@whitecase.com
Derek C. Abbott
Andrew R. Remming
Eric Moats
Paige N. Topper
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 North Market Street, 16th Floor
P.O. Box 1347
Wilmington, Delaware 19899-1347
Telephone: (302) 658-9200
E-mail: dabbott@morrisnichols.com
aremming@morrisnichols.com
emoats@morrisnichols.com
ptopper@morrisnichols.com
– and –
Michael C. Andolina
Matthew E. Linder
Laura E. Baccash
Blair M. Warner
WHITE & CASE LLP
111 South Wacker Drive
Chicago, Illinois 60606
Telephone: (312) 881-5400
E-mail: mandolina@whitecase.com
mlinder@whitecase.com
laura.baccash@whitecase.com
blair.warner@whitecase.com
A copy of the Disclosure Statement is available at
https://bit.ly/2OXt7aT from Omniagentsolutions, the claims agent.
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.
BOY SCOUTS OF AMERICA: Seeks August 18 Plan Exclusivity Extension
-----------------------------------------------------------------
Debtors Boy Scouts of America and Delaware BSA, LLC request the
U.S. Bankruptcy Court for the District of Delaware to extend the
exclusive periods during which the Debtors may file a Chapter 11
plan to and including August 18, 2021, and to solicit acceptances
until October 18, 2021.
During the four months since the Court last extended the Exclusive
Periods, the Debtors have made meaningful progress toward achieving
their restructuring objectives. It remains vitally important for
financial and other operational reasons that the Debtors maintain
their timeline of emerging from bankruptcy by the end of summer
2021.
Advancing these cases to the plan confirmation stage on the
Debtors' timeline will be challenging even if they retain the
exclusive right to file and solicit a plan. But, it would be
extremely difficult and if not impossible for the Debtors to
achieve the timely global resolution of Scouting-related abuse
claims if creditors were permitted to file competing plans.
The Debtors recently reached an important milestone in their
restructuring, which an agreement in principle with the official
committee of unsecured creditors and the Debtors' prepetition
secured lender, JPMorgan Chase Bank, N.A ("JPM"). This settlement,
which is detailed in the term sheet appended to the First
Mediators' Report, addresses the treatment of prepetition non-abuse
general unsecured claims and JPM's prepetition secured claims. The
JPM/ Creditors' Committee Settlement also resolves certain claims
that the Creditors' Committee could have sought to stand to assert
on behalf of the estates.
On March 1, 2021, the Debtors filed an amended plan of
reorganization, a related disclosure statement, and a motion to
approve solicitation procedures. In addition to incorporating the
terms of the JPM/Creditors' Committee Settlement, the amended plan
specifies certain of the assets that will be contributed to a
settlement trust for the benefit of abuse survivors.
The Debtors, their creditor constituents, insurers, and other
parties have made significant progress in mediation to date,
although they continue to face significant challenges and have not
yet merge around an approach to a global resolution.
The Debtors believe that the mediation will continue to produce
additional meaningful results. The mediators agree, having recently
stated that they "are confident that the Mediation will foster
additional constructive discussions between and among the Debtors
and other Mediation Parties" and that they "do not consider the
Mediation to be closed." The ongoing mediation should be permitted
to continue without undue disruption while the Debtors pursue
approval of the disclosure statement and confirmation of the
amended plan.
The Debtors are continuing to make timely payments of their
undisputed post-petition obligations and have sufficient liquidity
to continue to do so through the culmination of the extended
Exclusive Periods requested herein.
To confirm the Amended Plan, the Debtors must obtain broad-based
support from holders of abuse claims. Accordingly, the Debtors are
requesting these extensions of the Exclusive Periods because they
are necessary to finalize the undetermined elements of the Amended
Plan, resolve pending disputes, and ultimately garner overwhelming
support for the Amended Plan.
Without the requested extensions of the Exclusive Periods, the
Debtors could not continue to effectively engage in ongoing
mediated negotiations with their creditors, insurers, and other key
stakeholders due to the distraction and potentially irreparable
damage to the Debtors restructuring efforts that would be caused by
a competing plan process.
Certain key elements of the Amended Plan are presently unresolved.
Accordingly, the requested extensions of the Exclusive Periods are
warranted to permit the Debtors to reach an agreement with their
creditors regarding these remaining contingencies.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/2QwccfJ from Omniagentssolutions.com.
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
February 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.
CARBONLITE HOLDINGS: Niagara Bottling Resigns as Committee Member
-----------------------------------------------------------------
Niagara Bottling, LLC resigned from the official committee of
unsecured creditors in the Chapter 11 cases of CarbonLite Holdings,
LLC and its affiliates, according to a notice filed by the U.S.
Trustee for Region 3.
The remaining members of the committee are:
1. Everrank Investment Group, Inc.
Attn: David Ha
17450 Silica Drive
Victorville, CA 92395
Phone: (909) 974-2889
E-mail: davidha@everrankca.com;
2. 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;
3. 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;
4. rPlanet Earth Los Angeles LLC
Attn: Robert Daviduk
5300 South Boyle Avenue
Vernon, CA 90058
Phone: (213) 320-0612
E-mail: bob@rplanetearth.com;
5. Banyan Plastics LLC
Attn: Sloan Sherman
2393 South Congress Avenue
West Palm Beach, FL 33406
Phone: (401) 952-6261
E-mail: sloan@banyanplastics.com; and
6. Exact Staff, Inc.
Attn: Gordon Smith
23901 Calabasas Road, Suite 1085
Calabasas, CA 91302
Phone: (424) 249-0044
E-mail: gordonsmith17@yahoo.com
kgoodwin@exactstaff.com.
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.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP as bankruptcy
counsel, Reed Smith LLP as corporate counsel, and Jefferies LLC as
investment banker. Stretto is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors on March 23, 2021. The committee is
represented by Blank Rome, LLP and Hogan Lovells US, LLP.
CENTENNIAL RESOURCE: Moody's Hikes CFR to B2 on Improved Cash Flow
------------------------------------------------------------------
Moody's Investors Service upgraded Centennial Resource Production,
LLC's (CRP) Corporate Family Rating to B2 from Caa1 and Probability
of Default Rating to B2-PD from Caa1-PD. Concurrently, Moody's also
upgraded CRP's ratings on its senior unsecured notes to B3 from
Caa2. The Speculative Grade Liquidity rating was upgraded to SGL-3
from SGL-4. The outlook is stable.
CRP recently announced the placement of $170 million in senior
unsecured exchangeable notes due 2028 and full redemption at par of
its senior secured second lien notes due 2025. Moody's will
withdraw the rating on the secured notes.
"The upgrade of CRP's ratings reflects the company's improving cash
flow generation and leverage metrics, as well as better liquidity
position," said Elena Nadtotchi, Senior Vice President at Moody's.
Upgrades:
Issuer: Centennial Resource Production, LLC
Probability of Default Rating, Upgraded to B2-PD from Caa1-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4
Corporate Family Rating, Upgraded to B2 from Caa1
Senior Unsecured Notes, Upgraded to B3 (LGD5) from Caa2 (LGD5)
Outlook Actions:
Issuer: Centennial Resource Production, LLC
Outlook, Remains Stable
RATINGS RATIONALE
The upgrade of the CFR to B2 reflects CRP's improved liquidity and
refinancing profile following the placement of $170 million senior
unsecured exchangeable notes and full redemption at par of secured
notes issued in 2020, as well as Moody's expectation that the
company will generate higher earnings and be free cash flow
positive in 2021-22. Assuming a lower underlying production decline
rate and capital investment, Moody's expects the company to
maintain stable production at 60-65/Kboed and improve its leverage
profile with RCF/debt of 20-30% and EBITDA/interest greater than 5x
in 2021.
The ratings reflect CRP's low cost of operations, its high-quality
acreage in the core of the Delaware basin, as well as the
expectation of lower level of natural depletion, more in line with
established shale operators in the basin, that should allow CRP to
maintain production levels at the lower level of capital intensity.
The CFR further reflects the single basin exposure and earnings
volatility on its unhedged oil price exposure.
The stable outlook reflects CRP's improved financial flexibility
and Moody's expectation that the company will be able to internally
fund its operating and investment needs in 2021-22.
CRP maintains adequate liquidity, reflected in SGL-3 rating.
Following the refinancing of the secured notes, CRP's next maturity
will be in 2026.
CRP's liquidity position is supported by its senior secured ABL
facility, maturing in May 2023. The facility has $700 million
borrowing base and commitments. As of December 31, 2020, CRP had
$333.9 million in available borrowing capacity. The facility has
two financial covenants, including debt/EBITDAX and current ratio.
As part of the borrowing base redetermination in May 2020, the
lenders agreed to suspend the debt/EBITDA covenant through 2021 and
replace it with a first lien leverage covenant of first lien
debt/EBITDA below 2.75. Moody's expects the company to remain in
compliance with the amended covenants through 2021 and the
debt/EBITDA covenant in 2022 when that takes effect. The company
expects to use a portion of the proceeds from the placement of the
exchangeable notes to pay down outstanding borrowings on the
revolver.
CRP's senior unsecured notes are rated B3, one notch below the B2
CFR. The rating on the notes reflects significant size of the
senior secured revolving credit facility and the effective
subordination of the unsecured notes to the secured obligation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The upgrade of the CFR would require a return to modest profitable
growth amid a stable and supportive commodity price environment,
with LFCR sustained above 1.5x, while maintaining a solid leverage
profile with RCF/debt above 30% and debt/ production below
$15,000/boe.
The B2 CFR may be downgraded if leverage weakens with
debt/production exceeding $18,000/boe, the company generates
significant negative cash flow, or its liquidity position weakens.
Centennial Resource Production, LLC is a medium-sized independent
oil and gas producer in the Delaware Basin in West Texas and New
Mexico, which is a wholly-owned and fully consolidated subsidiary
of Centennial Resource Development, Inc (CDEV), a NASDAQ listed
holding company, and represents substantially all CDEV's
operations.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
CENTRAL GARDEN: Moody's Rates $400MM Unsecured Notes 'B1'
---------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Central Garden &
Pet Company's $400 million senior unsecured notes due 2031. All
other ratings are unaffected, including Central's Ba3 Corporate
Family Rating. The rating outlook is stable.
Net proceeds from the notes will be used to repay senior secured
asset-based revolving credit facility borrowings and for general
working capital purposes.
Central has completed three acquisitions since December 2020. The
company acquired DoMyOwn, an on-line retailer of professional grade
pest control products, for approximately $83 million on December
18, 2020 followed by the acquisition of Hopewell Nursery, a
wholesale nursery stock grower serving garden centers, retail
nurseries, and landscape contractors, for $81 million on December
31, 2020. Lastly, Central acquired Green Garden Products, a
provider of vegetable, herb and flower seed packets, seed starters
and plant nutrients, for approximately $532 million on February 16,
2021. The acquisition of Hopewell Nursery and Green Garden Products
occurred after Central's 1Q 2021 when it reported a cash balance of
$608 million. Borrowings under the company's senior secured
asset-based revolving credit facility were used to partially fund
the acquisition of Green Garden Products while the other two
acquisitions were funded with cash. As such, issuance allows
Central to repay its revolving credit facility as well as replace a
portion of its balance sheet cash that was used for these
acquisitions.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: Central Garden & Pet Company
Senior Unsecured Notes, Assigned B1 (LGD4)
RATINGS RATIONALE
Central Garden's Ba3 Corporate Family Rating reflects its moderate
leverage with debt to Moody's adjusted EBITDA of around 2.9x and
good operating performance. The rating is supported by the
company's strong market position in pet and lawn & garden, good
size with revenue around $2.8 billion, solid brand recognition
among consumers, and moderate financial policies. Moody's views
many of the company's products as consumer staples, which will
provide earnings resilience during an economic downturn. The
ratings are constrained by the seasonality of earnings and cash
flows, weather dependency, exposure to volatile raw materials
prices, the somewhat discretionary nature of its products, and by
its highly concentrated customer base. The company's long-term
growth plan also incorporates tuck-in acquisitions to expand its
product offerings, especially within the pet business.
The SGL2 speculative grade liquidity rating reflects Central's good
liquidity highlighted by cash and short-term investments of about
$608 million and approximately $198 million in LTM free cash flow
as of December 26, 2020.
ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
corporate assets 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.
Notwithstanding, Central and many other consumer products companies
are likely to be more resilient than companies in other sectors,
although some volatility can be expected through 2021 due to
uncertain demand characteristics, channel shifting, and the
potential for supply chain disruptions and difficult comparisons
following these shifts. Moody's regard the coronavirus outbreak as
a social risk under its ESG framework, given the substantial
implications for public health and safety.
Moody's view Central's governance risk as low. As a public company,
Central is subject to certain standards in terms of transparency,
disclosures, management accountability, and compliance. The company
is also committed to maintain disciplined financial policy. Central
does not currently pay regular dividends and does not expect to pay
regular dividends in the near future.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The stable outlook reflects Moody's view that Central will continue
to operate in a specialized niche market and continue its growth
strategy while maintaining disciplined financial policies. Moody's
also assumes in the stable outlook that the company can manage
through potential disruptions that may occur as a result of the
coronavirus.
The ratings could be downgraded if Central's operating performance
deteriorates or if debt to EBITDA is sustained above 3.0x (outside
of seasonal borrowings).
The ratings could be upgraded if the company is able to
meaningfully improve revenues, earnings, cash flow and credit
metrics. In addition, if debt to EBITDA is sustained below 2x and
there is a meaningful increase in revenues, the rating could be
upgraded.
The principal methodology used in this rating was Consumer Packaged
Goods Methodology published in February 2020.
Headquartered in Walnut Creek, California, Central Garden & Pet
Company manufactures branded products and distributes third-party
products in the lawn and garden and pet supplies industries in the
United States. Sales approximated $2.8 billion for the twelve
months ended December 26, 2020.
CENTRAL GARDEN: S&P Rates $400MM Senior Unsecured Notes 'BB'
------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating to Central
Garden & Pet Co.'s proposed $400 million senior unsecured notes due
2031. The recovery rating is '4', reflecting its expectation for
average (30%-50%, rounded estimate 45%) recovery in the event of a
payment default. The company intends to use the net proceeds from
this offering to repay all outstanding borrowings ($215 million as
of April 15, 2021) under its $400 million senior secured revolving
credit facility due 2024, with the remainder for general corporate
purposes.
S&P said, "We also affirmed our 'BB' issue-level ratings on Central
Garden's existing senior unsecured notes, consisting of its 5.125%
$300 million senior unsecured notes due 2028 and $4.125% $500
million senior unsecured notes due 2030, and revised the recovery
ratings to '4' from '3' because of the higher amount of debt
assumed to be outstanding in a default scenario. Total pro forma
debt outstanding is about $1.2 billion. Our 'BB' issuer credit on
Central Garden is unchanged and the outlook is stable.
"Our ratings on Central Garden continue to reflect the company's
No. 2 position in the lawn and garden products industry (in most
subcategories behind The Scotts Miracle-Gro Co., the dominant
player due to its solid brands) and several risks inherent to the
industry, namely the negative effects of potential extreme weather
conditions and moderate environmental risk. We also recognize
Central's defensible positions in the niche pet supply and garden
products sectors, which provide some beneficial cash flow diversity
since the businesses are not highly correlated. Moreover, Central's
pet business is relatively diversified across multiple segments.
Central Garden's historically moderate financial policies and
participation in businesses with low cyclicality should result in
stable credit ratios over the next few years and at least $100
million annual free operating cash flow. We forecast the company
will maintain adjusted leverage in the low-2x area, funds from
operations to debt in the mid-30% area, and EBITDA interest
coverage of about 7x-8x over the next few years."
CHARTER COMMUNICATIONS: Moody's Rates New Sr. Unsecured Notes 'B1'
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Charter
Communications, Inc.'s senior unsecured notes (maturing 2033)
issued at CCO Holdings, LLC and CCO Holdings Capital Corp.
Charter's Ba2 Corporate Family Rating, Ba2-PD Probability of
Default Rating, all instrument ratings and the stable outlook are
unaffected by the proposed transaction.
Moody's views the transaction as credit neutral. Moody's expects
the terms and conditions of the newly issued notes will be
materially the same as existing senior notes, ranking equally in
right of payments with all of Charter's existing and future senior
debt. Charter intends to use the net proceeds from the sale of the
Notes for general corporate purposes, including to fund potential
buybacks of Class A common stock of Charter or common units of
Charter Communications Holdings, LLC, to repay certain indebtedness
and to pay related fees and expenses. Moody's believe any
incremental leverage (net of repayment) will not materially change
the credit profile or the proportional mix of secured and unsecured
debt, or the resultant creditor claim priorities in the capital
structure.
Assignments:
Issuer: CCO Holdings, LLC
Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD5)
RATINGS RATIONALE
Charter's credit profile is supported by the Company's substantial
scale and share of the US pay-TV market which is protected by a
superior, high-speed network with limited competitive overlap.
Charter is the second largest cable company in the United States,
serving approximately 31.1 million residential and commercial
customers across 41 states, and generated approximately $48.1
billion in revenue for the year ended December 31, 2020. Strong and
sustained broadband demand drives growth and profitability,
providing an operating hedge to weakness in the secular decline in
video and voice services. The business model is also highly
predictable, with a largely recurring revenue base. Liquidity is
also very good, including free cash flows of $6-$7 billion annually
which provides significant financial flexibility.
The credit profile is constrained by governance risk, including a
financial policy that targets a net leverage ratio of 4.0-4.5x, but
has operated near or slightly above the top end of the range for a
sustained period. High absolute debt levels (over $82 billion,
Moody's adjusted at Q4 2020 and excluding completed and pending
transactions subsequent) can also represent a refinancing risk when
maturities are larger than internal sources of repayment, but
maturities will be balanced and insignificant relative to free cash
flows through 2024. During this time, and absent acquisitions,
Moody's expects most free cash flow will be used for share
repurchases rather than debt repayment. Charter is also exposed to
secular pressure in its voice and video services due to intense
competition and changes in media consumption, driving penetration
rates lower, despite recent growth. Additionally, Charter's growing
mobile wireless services uses a mobile virtual network operator
(MVNO) model that Moody's expect will have steady-state economics
that are less favorable than its existing cable model and is
currently producing negative cash flows. Regardless, Moody's expect
scaling the business will drive revenue growth and diversity in the
business, and allow Charter to participate in growth of high-speed
wireless broadband while improving customer retention rates. Over
the medium term, 5G wireless services could be a threat to compete
with the wireline internet growth engine.
The SGL-1 liquidity rating reflects good liquidity with positive
free cash flow, a fully undrawn $4.75 billion revolver facility,
and only incurrence-based financial covenants. However, alternate
liquidity is limited with a largely secured capital structure.
Moody's rates the senior secured 1st lien credit facilities and
senior secured 1st lien notes at Charter Communications Operating,
LLC, Time Warner Cable LLC, and Time Warner Cable Enterprises LLC
Ba1 (LGD3), one notch above the Ba2 CFR. Secured lenders benefit
from junior capital provided by the senior unsecured bonds at CCO
Holdings, Inc. (which have no guarantees). The senior unsecured
notes at CCO Holdings, Inc. are the most junior claims and are
rated B1 (LGD5), with contractual and structural subordination to
all other obligations.
Instrument ratings reflect the Ba2-PDR with a mix of secured and
unsecured debt, for which Moody's assume an average rate of
recovery of approximately 50% in a distressed scenario.
The stable outlook reflects Moody's expectation that debt,
revenues, and EBITDA will range between approximately $87-$88
billion, $49-$52 billion, and $19-20 billion. Moody's project
EBITDA margins of 38%-39%, producing average annual free cash flows
of $6-$7 billion. Key assumptions include capex to revenue
averaging 15%-16%, and average borrowing costs of approximately 5%.
Moody's expect video subscribers to fall by low to mid-single digit
percent on a long-term secular basis, and data subscribers to rise
by mid-single digit percent. Moody's expect leverage to remain near
the top end of Moody's leverage tolerance of 4.5x and free cash
flow to debt to be sustained in the high single digit percent
range. Moody's expect liquidity to remain very good.
Note: all figures are Moody's projected adjusted over the next
12-18 months unless otherwise noted.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's would consider an upgrade if:
Leverage (Moody's adjusted debt/EBITDA) is sustained below 4.0x,
and
Free cash flow-to-debt (Moody's adjusted) is sustained above 5%
An upgrade would also be conditional on maintaining very good
liquidity, a more conservative financial policy, limited event
risk, and stable operating performance.
Moody's would consider a downgrade if:
Leverage (Moody's adjusted debt/EBITDA) is sustained above 4.5x,
or
Free cash flow-to-debt (Moody's adjusted) is sustained below low
single digit percent
Moody's would also consider a negative rating action if liquidity
deteriorated, financial policy turned more aggressive, scale or
diversity lessened, or there were unfavorable and sustained trends
in operating performance or the business model.
The principal methodology used in this rating was Pay TV published
in December 2018.
Charter Communications, Inc., headquartered in Stamford,
Connecticut, provides video, data, phone, and wireless services to
57.9 million primary service units (PSU's), including both
residential and commercial (and 2.4 million mobile lines). Across
its footprint, which spans 41 states, Charter serves 31.1 million
residential and commercial customers under the Spectrum brand,
making it the second-largest U.S. cable operator. Revenue for the
year ended December 31, 2020 was approximately $48.1 billion.
CHG HEALTHCARE: Moody's Alters Outlook on B2 CFR to Stable
----------------------------------------------------------
Moody's Investors Service, affirmed the ratings of CHG Healthcare
Services, Inc. and changed the outlook to stable from negative.
Moody's affirmed the company's B2 Corporate Family Rating, B2-PD
Probability of Default Rating, and B2 ratings on the senior secured
first lien revolving credit facility and term loan.
The outlook change to stable reflects the recovery in demand for
locum tenens physician services in the second half of 2020 and
continuing in early 2021. The stabilization of the outlook further
reflects the company's profit margin recovery during the same
period due to CHG's cost management initiatives.
The affirmation of the B2 CFR reflects the company's good scale and
leading market position in locum tenens staffing. The affirmation
also reflects the company's good operating track record and history
of steady organic growth, which Moody's believes will continue.
While Moody's believes that the company will return to paying
shareholder dividends post-pandemic, solid earnings growth and
positive free cash flow will drive debt/EBITDA towards 6.0x over
the next 12-18 months.
Ratings affirmed:
Issuer: CHG Healthcare Services, Inc.
Corporate Family Rating at B2
Probability of Default Rating at B2-PD
$75 million senior secured first lien revolving credit facility
expiring in 2023 at B2 (LGD3)
$1.6 billion senior secured first lien term loan due 2023 at B2
(LGD3)
Outlook action:
Outlook changed to stable from negative
RATINGS RATIONALE
CHG's B2 CFR reflects its high leverage, aggressive financial
policies, and niche focus in the locum tenens business. The
company's debt/EBITDA for the 12 months ended September 30, 2020
was approximately 7.5 times. With improving business volumes,
Moody's expects that debt/EBITDA will decline towards 6.0 times by
year-end 2021 (primarily due to the exclusion of the weak second
and third quarters of 2020 which were heavily impacted by the
coronavirus). The company's CFR is also constrained by the
company's policy of paying frequent shareholder dividends.
The company's ratings benefit from good scale and leading market
position in the fragmented locum tenens market, positive long-term
fundamental demand trends in locum tenens, and a demonstrated track
record of good cash flow and earnings growth. CHG further benefits
from diversification of physician specialty and minimal
concentration across customers.
CHG's liquidity is very good, supported by $327.4 million of cash
and $41.4 million available under the $75 million revolver as of
September 30, 2020. Moody's expects $75-$100 million in cash flow
from operations in 2021, more than enough to cover $45-$55 million
in capex, and approximately $16 million in mandatory debt
amortization.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. Further, although CHG faces no direct reimbursement
risk, pricing pressure placed on its clients as a result of
regulatory changes could partially flow through to the company as
clients look to reduce costs. This could also lead to weakened
volume growth as providers may become more prudent in their use of
locum tenens. Additionally, the company's financial policies are
expected to remain aggressive reflecting its ownership by private
equity investors (Leonard Green & Partners, L.P, Ares Management
LLC and GIC).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be downgraded if CHG's financial policy becomes
more aggressive, liquidity deteriorates, demand for CHG's
services/supply of locum tenens physicians decline on a sustained
basis. While the historical level of dividend payout is already
incorporated in Moody's analysis, any outsized dividend payout will
pressure the company's ratings. Quantitatively, if the company's
debt/EBITDA is sustained above 6.0 times, the rating could be
downgraded.
Moody's could upgrade the rating if CHG reduces its leverage on a
sustained basis such that total debt/EBITDA is maintained below 5.0
times. An upgrade would also require the company to maintain strong
organic earnings growth and a good liquidity profile with growing
levels of free cash flow.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CHG is a provider of temporary healthcare staffing services to
hospitals, physician practices and other healthcare settings in the
United States. CHG derives the majority of its revenue from
temporary physician staffing but also provides travel nurse, allied
health, and permanent placement services. CHG reported $1.7 billion
of revenue for the twelve months ended September 30, 2020.
CLICK BIO: Gets Continued Access to Cash Collateral
---------------------------------------------------
The Honorable Bruce T. Beesley authorized Click Bio, Inc., to use
the cash collateral of the U.S. Small Business Administration on an
interim basis until the period up to and including the date of a
final order on the motion.
The approved budget projects $37,000 in total operating expenses.
A copy of the order and the budget is available free of charge at
https://bit.ly/3mU0RT7 from PacerMonitor.com.
About Click Bio
Click Bio, Inc., a specialist provider of laboratory ware and
plastic ware for laboratory automation, with offices in 200 South
Virginia Street #100, in Reno, Nevada, filed for protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case No.
21-50169) on March 9, 2021.
In the petition signed by Eugene Wong, chief executive officer, the
Debtor said estimated assets are between $100,000 and $500,000, and
liabilities between $500,000 to $1,000,000.
The Hon. Bruce T. Beesley is assigned to the case. The Debtor is
represented by:
Kevin A. Darby, Esq.
Tricia M. Darby, Esq.
Darby Law Practice, Ltd.
4777 Caughlin Parkway
Reno, NV 89519
Telephone: (775) 322-1237
Facsimile: (775) 996-7290
E-mail: kevin@darbylawpractice.com
tricia@darbylawpractice.com
COLLECTED GROUP: U.S. Trustee Appoints Creditors' Committee
-----------------------------------------------------------
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Chapter 11 cases
of The Collected Group, LLC and its affiliates.
The committee members are:
1. Brookfield Properties Retail, Inc.
Attn: Julie Minnick Bowden
350 N. Orleans St., Suite 300
Chicago, IL 60654
Phone: (312) 960-2707
Fax: (312) 442-6374
E-mail: julie.bowden@brookfieldpropertiesretail.com
2. Simon Property Group
Attn: Ronald Tucker
225 West Washington Street
Indianapolis, IN 46204
Phone: (317) 263-2346
Fax: 317-263-7901
E-mail: rtucker@simon.com
3. 108-114 Wooster Street Corp.
Attn: David Karlin
c/o Tom Hinckley
Tudor Realty
250 Park Ave. South
New York, NY 10003
Phone: (212) 813-3016
E-mail: tomh@tudorrealty.com
4. Concept Creator Fashion Limited
Attn: Peter Cheung
27/F., King Palace Plaza
55 King Yip Street
Kwun Tong, Kowloon
Hong Kong
Phone: 852-2273-7900
Fax: 852-2790-6802
5. Lloyd Industries Inc.
Attn: Sean Gu
c/o Brian Mitteldorf
17588 Rowland Street, Suite A246
City of Industry, CA 91748
Phone: (818) 238-9948
Fax: (818) 450-0446
E-mail: blm@cabcollects.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 Collected Group
The Collected Group and four affiliates filed for Chapter 11
bankruptcy (Bankr. D. Del. Lead Case No. 21-10663) on April 5,
2021. In the petitions signed by CRO Evan Hengel, the Debtors
estimated assets of between $50 million and $100 million and
liabilities of between $100 million and $500 million. The
Honorable Judge Laurie Selber Silverstein is the case judge.
Founded in 2001, The Collected Group, LLC is a designer,
distributor and retailer of three contemporary, consumer-inspired,
apparel lifestyle brands: Joie, Equipment, and Current/Elliott.
TCG, the ultimate parent company, wholly owns Debtors RBR, LLC and
The Collected Group Company, LLC. RBR wholly owns non-debtor The
Collected Group Holdings Manager, LLC, which, in turn, wholly owns
non-debtor The Collected Group Holdings, LLC.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison LLP and
Young Conaway Stargatt & taylor, LLP as attorneys. Stifel,
Nicolaus & Co. and affiliate Miller Buckfire & Co. serve as the
Debtor's investment banker while Berkeley Research Group, LLC is
the financial advisor. Epiq Corporate Restructuring LLC is the
claims agent.
CONN'S INC: S&P Upgrades ICR to 'B' on Recent Debt Reduction
------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Conn's Inc.
to 'B' from 'B-'. At the same time, S&P raised its issue-level
rating on the ABL facility to 'BB-'. The '1' recovery rating is
unchanged.
S&P also discontinued its rating on the senior unsecured notes, as
they were fully redeemed by the company.
S&P said, "Conn's ABL extension and unsecured notes redemption give
it more flexibility to absorb potential volatility, and we now
forecast leverage around 3x at fiscal 2022. The company recently
extended the maturity of the $650 million asset-based lending (ABL)
facility to March 2025 from May 2022, providing additional
operating flexibility over the next several years. Furthermore, on
April 15, 2021, Conn's redeemed the $141 million outstanding
balance of the senior notes. Following the redemption, the
company's only funded debt are the asset-backed notes (ABS) held by
the variable interest entity (VIE) as well as outstanding borrowing
under the ABL. The ABS debt is adjusted out of our debt metrics as
we view the VIE as a captive finance entity. However, our adjusted
debt does include the company's operating and finance lease
obligations, as well as any forecast borrowings under the revolver.
The debt paydown improves S&P Global Ratings-adjusted leverage by
roughly 0.8x, contributing to our expectation for deleveraging to
roughly 3x over the next 12 months. We then anticipate leverage
will improve to the mid-2x range due to EBITDA growth in fiscal
2023. We believe that leverage at this level provides the company
with sufficient headroom to absorb anticipated potential volatility
that could result from a lumpy recovery following the pandemic."
Conn's successfully maintained portfolio quality through its latest
fiscal year despite substantial negative economic impacts from the
pandemic. Relative to other peers that compete in home goods
retailing, Conn's top line did not benefit from the strong consumer
demand for these products due to tighter lending at the in-house
credit segment. This is evidenced by total applications approved
declining to 21.5% from 27% the year prior, despite a slight
increase in applications received. This reduced the total
receivables portfolio roughly 23%, hitting credit revenues.
However, the actions did allow the company to lower overall
portfolio risk to absorb potential unforeseen impacts from the
pandemic. As of year-end, customer accounts receivable of over 60
days past due shrunk 24.3% and remained roughly consistent with the
prior year as a percentage of the portfolio balance at 12.4%. S&P
believes these were prudent actions necessary to maintain the
health of the overall business and position the company for sales
recovery.
S&P said, "Historically, in-house financed sales make up roughly
70% of all sales, and we forecast a return to around 60% of sales
(from 52% at year-end). This will modestly expand the receivables
portfolio, continuing into fiscal 2023. Given the portfolio's
anticipated growth, we expect Conn's to access the ABS markets
within the next 12 months."
Negative impacts on retail sales from restricted credit lending
were partially offset by more transactions through other channels
including lease-to-own, prime credit offering, and cash and credit
card sales. Total consolidated revenues declined roughly 10%
through fiscal 2021 (the year ending Jan. 31, 2021), with retail
revenues down 9% and credit revenues down 15%. Cash and credit card
sales, which were not affected by the tighter underwriting, roughly
doubled as a percentage of total sales to 19%, which we attribute
to strong demand across retail for home goods including furniture,
mattresses, and appliances. S&P forecasts these demand tailwinds
will abate through fiscal 2022 (the year ending January 2022), and
sales will slowly shift back toward Conn's financing.
Given the risky nature of subprime lending, the company will need
to take a conservative approach to growing sales to avoid taking on
too much risk in the credit portfolio. S&P said, "In our view,
consumer demand for home goods and furnishings will remain healthy
through fiscal 2022, which along with improving macroeconomic
conditions--due in part to more vaccinations--will allow the
company to moderately loosen credit underwriting. As a result, we
forecast that retail revenues will return roughly to fiscal 2020
levels in 2022. Retail EBITDA will remain below fiscal 2021 levels
despite anticipated growth as a result of company investments in
selling, general, and administrative areas, declining moderately
from fiscal 2021."
There remains risk in the company's recovery from the pandemic.
Until herd immunity is achieved in the U.S., virus variants may
increase cases across the country. Future shutdowns or restrictions
would likely hurt Conn's sales.
The stable outlook reflects S&P's expectation that Conn's will take
a measured and conservative approach to sales growth, maintaining
portfolio quality and leading to positive same-store sales, with
leverage around 3x at fiscal 2022 year.
S&P could lower the rating on Conn's if:
-- S&P observes or anticipates a deterioration in the receivables
portfolio's credit quality, which could lead the company to
restrict lending and hurt retail sales performance. This could
occur due to aggressive lending practices to drive positive retail
sales or a protracted economic decline leading to leverage above 5x
in an operating trough.
-- The company cannot drive positive same-store sales, potentially
due to weaker demand than anticipated or increased competition,
leading S&P to believe its competitive position has weakened.
S&P could raise the rating on Conn's if:
-- It successfully executes its rapid growth strategy, while
generating sustainably positive same-store sales and maintaining
portfolio quality at the credit segment. Under this scenario S&P
would view the competitive position as improved.
-- S&P believes that the company has reduced risk in its
portfolio, evidenced by consistently lower delinquency rates,
leading it to believe the overall portfolio quality is less likely
to be hampered in a sustained economic contraction, with leverage
maintained below 4x in such an event.
CONNECTIONS COMMUNITY: Case Summary & 30 Top Unsecured Creditors
----------------------------------------------------------------
Debtor: Connections Community Support Programs, Inc.
Connections
CCSP
Addictions Coalition of Delaware Inc.
3821 Lancaster Pike
Wilmington, DE 19805
Business Description: Connections Community Support Programs
is a multifaceted not-for-profit 501(c)(3)
health and human services organization
operating and founded in Delaware with over
100 locations throughout the State of
Delaware. The Organization has five primary
lines of business: (i) psychiatric/
behavioral health services, (ii) substance
use disorder treatment, (iii) housing and
veterans' services, (iv) intellectual
disabilities services, and (v) operation
support services.
Chapter 11 Petition Date: April 19, 2021
Court: United States Bankruptcy Court
District of Delaware
Case No.: 21-10723
Debtor's Counsel: Mark L. Desgrosseilliers, Esq.
CHIPMAN BROWN CICERO & COLE, LLP
Hercules Plaza
1313 North Market Street, Suite 5400
Wilmington, DE 19801
Tel: (302) 295-0192
E-mail: desgross@chipmanbrown.com
Debtor's
Investment
Banke: SSG ADVISORS, LLC
Debtor's
Claims/
Noticing
Agent: OMNI AGENT SOLUTIONS
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Robert D. Katz, chief restructuring
officer.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at
A full-text copy of the petition is available for free at:
https://www.pacermonitor.com/view/C66AWQA/Connections_Community_Support__debke-21-10723__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. TD Bank, N.A. PPP Loan $12,000,000
2035 Limestone Road
Wilmington, DE 19808
Tel: (302) 351-4560
2. Wilmington Savings Fund Bank Loan Unknown
Society, FSB
500 Delaware Avenue
Wilmington, DE 19801
Tel: (302) 504-9857
3. BayHealth Medical Center Trade Debts $2,243,455
640 S. State Street
Dover, DE 19901
Tel: (302) 674-4700
4. Christina Care Health Trade Debts $1,990,314
Service
200 Hygeia Drive
Newark, DE 19713
Tel: (302) 623-0151
5. Gallagher Bassett Professional $533,403
Services Inc. Services
2850 Golf Road
Rolling Meadows, IL 60008
Tel: (800) 588-0619
6. Vistapharm, Inc. Trade Debts $360,080
630 Central Avenue
New Providence, NJ 07974
Tel: (205) 981-1387
7. Weiner Benefits Group Trade Debts $314,221
2961 Centerville Road, Suite 300
Wilmington, DE 19808
Tel: (302) 658-0218
Fax: (302) 998-4590
Email: info@weinerbenefitsgroup.com
8. Sysco Eastern Maryland Trade Debts $294,010
33239 Costen Road
Pocomoke, MD 21851
Tel: (410) 677-5799
9. Bayshore Ford Trade Debts $293,097
4003 N. Dupont Hwy
New Castle, DE 19720
Tel: (302) 656-3160
10. Arthur Hall Insurance Trade Debts $245,366
101 E Chestnut St
West Chester, PA 19380
Tel: (610) 696-2394
Fax: (610) 436-9675
11. Quest Diagnostics Trade Debts $203,353
500 Plaza Drive
Secaucus, NJ 07094
Tel: (800) 347-7741
12. Medical Oncology Trade Debts $176,798
Hematology Co.
4701 Ogletown Stanton Road
Ste 3400
Newark, DE 19713-2055
Tel: (302) 366-1200
Fax: (302) 366-1700
13. Caroll Properties, LLC Trade Debts $138,838
c/o Emory Hill Real Estate
Services, Inc.
10 Corporate Cir #100
New Castle, DE 19720
Tel: (302) 322-9500
Fax: (302) 322-9518
Email: emoryhill@emoryhill.com
14. Qualifacts Trade Debts $122,808
315 Deaderick St, Suite 2300
Nashville, TN 37238
Tel: (615) 386-6755
Fax: (615) 386-1225
15. Drummond Plaza Associates Trade Debts $117,829
c/o Fin. & Consulting Svcs. Inc.
2126 W Newport Pike, Ste 200
Wilmington, DE 19804
Tel: (302) 633-9134
16. First State Surgery Trade Debts $115,366
Center LLC
1000 Twin "C" Lane, Suite 200
Newark, DE 19713
Tel: (302) 683-0700
17. American Legion Ambulance Trade Debts $92,496
71 Omega Drive, Bldg. D
Newark, DE 19713-2063
Tel: (302) 283-3300
Fax: (302) 283-3321
Email: info@dmms.us
18. National Eye Care Trade Debts $91,190
2264 Saranac Avenue
Lake Placid, NY 12946
Mark R. Maxon, O.D. CEO
Tel: (518) 302-5578
Email: mmaxon@nationaleyecare.com
19. Medline Industries, Inc. Trade Debts $82,091
1 Three Lakes Dr.
Northfield, IL 60093
Tel: (800) 388-2147
Fax: (847) 837-2765
Email: finance@medline.com
20. Verizon Wireless Trade Debts $79,717
1095 Avenue of the Americas
New York, NY 10036
Tel: (212) 395-1000
21. Whisman, Giordano & Professional $72,836
Assocs, LLC Services
111 Continental Drive #210
Newark, DE 19713
Tel: (302) 266-0202
Fax: (302) 266-7070
22. PRE Holding II, LLC Trade Debts $72,832
1504 N. Broom Street, Suite 3
Wilmington, DE 19806
23. McKesson Medical Surgical Trade Debts $71,408
9954 Mayland Drive, Suite 4000
Richmond, VA 23233
Tel: (855) 571-2100
24. Beebe Medical Group Trade Debts $70,035
424 Savannah Rd
Lewes, DE 19958
Tel: (302) 645-3300
25. Elms Holding Company, LLC Trade Debts $68,045
1504 North Broom Street
Suite 3
Wilmington, DE 19806
26. Bayhealth Medical Group Trade Debts $67,697
640 South State Street
Dover, DE 19901
Tel: (302) 674-4700
27. Infinity Search Group Trade Debts $66,016
761 W. Sproul Road #103
Springfield, PA 19064
Tel: (610) 325-9461
Fax: (610) 325-0220
Email: info@infinitysg.com
28. DEL Lawn LLC Trade Debts $65,044
207 Jackson Blvd
Wilmington, DE 19803
Tel: (302) 475-1184
29. MobilexUSA Trade Debts $63,605
930 Ridgebrook Road
Sparks Glencoe, MD 21152
30. ITDATA Inc. Trade Debts $60,600
8 Penn Center
1628 J.F.K. Blvd. Ste 2110
Philadelphia, PA 19103
Tel: (800) 883-5413
CONNECTIONS COMMUNITY: Hits Chapter 11; Businesses Up for Sale
--------------------------------------------------------------
Delaware's largest outpatient drug and mental health care provider,
Connections Community Support Programs Inc., sought Chapter 11
protection late Monday, April 19, 2021.
Through the bankruptcy process, the Organization seeks to
restructure its operations through a sale of substantially all of
its assets as a going concern to:
(a) ensure the seamless continuation of critical healthcare
services the Organization provides to over 10,000 residents of
Delaware every year;
(b) preserve as many of the 1,100 essential jobs that the
Organization's employees perform every day to provide these
critical healthcare services;
(c) maximize the value of the Organization's assets;
(d) address the unanticipated and catastrophic impact that the
ongoing COVID-19 pandemic has had on the already struggling
Organization;
(e) address the Organization's ongoing and unsustainable
litigation;
(f) reduce the Organization's substantial overhead resulting
from the recent loss of contracts to provide health services to the
Delaware Department of Corrections (the "DOC") and certain
above-market leases; and
(g) resolve substantial billing and collection issues, which
have markedly decreased the Organization's liquidity.
Through the sale process in the Chapter 11 Case, CCSP hopes to
effectuate a going concern sale of its operations thereby
preserving the drug treatment and mental health services to a
decidedly undeserved segment of the population of Delaware and the
surrounding area. CCSP hopes that such a going concern sale will
preserve as many of the jobs of the Organization's approximately
1100 employees as possible in a manner that ensures the Debtor
realizes as much value as possible for its assets.
The Debtor has filed a number of First Day Pleadings in the Chapter
11 case seeking orders granting various forms of relief intended to
facilitate the efficient administration of this Chapter 11 Case and
pursue and consummate a going concern of its assets.
Road to Chapter 11
Despite the improvements made by the Organization in its operations
over the past year, due to the magnitude of the lawsuits, the loss
of $60 million of contract revenue, trailing overhead expenses in
conjunction with the lost contract, a United States Depart of
Justice (USDOJ) investigation, insufficient and subpar billing and
collection, system and processes and the Covid 19 Pandemic the
Organization seeks chapter 11 relief in an effort to sell its
assets as a going concern under Section 363 of the Bankruptcy Code
to one or more potential purchasers in accordance with
procedures, approval of which CCSP shall request form this Court.
Critically, the Chapter 11 process will permit the Debtors to
address and alleviate burdensome costs derived from:
(i) the COVID-19 pandemic that has negatively impacted the
Organization and its revenue,
(ii) the loss of contracts with the DOC that had accounted for
approximately $60 million in annual revenue for CCSP,
(iii) the inability of CCSP to adjust its overhead and exit
contracts and leases in a timely manner in connection with the loss
of the DOC contracts,
(iv) liquidity issues as a result of the loss of availability
under CCSP’s Prepetition Credit Facilities, and
(iv) ongoing and costly litigation with, among others, (x)
contract counterparties and (y) former clients, mostly arising in
connection with the former DOC contracts and an investigation by
the United States Department of Justice that resulted in the
recently filed DOJ Litigation.
About Connections Community Support Programs
Connections Community Support Programs Inc. is a multifaceted
not-for-profit 501(c)(3)
health and human services organization operating and founded in
Delaware with over 100 locations throughout the State of Delaware
and more than 1,100 employees.
Since its founding in 1985, CCSP has grown from providing
assistance to older adults with lifelong histories of psychiatric
hospitalization to one of Delaware's largest nonprofit
organizations that touches the lives of approximately 10,000 of
Delaware's most vulnerable citizens and their families, dealing
with behavioral health and substance use disorders, housing
challenges, and developmental and intellectual disabilities. The
Organization leases 408 properties (including 389 leased
facilities associated with housing and veterans' services) and owns
48 properties.
On April 19, 2021, Connections Community Support Programs Inc.
filed for Chapter 11 protection (Bankr. D. Del. Case No. 21-10723)
on April 19, 2021. The Debtor estimated assets and debt of $50
million to $100 million as of the bankruptcy filing.
CHIPMAN BROWN CICERO & COLE, LLP, led by Mark L. Desgrosseilliers,
is the Debtor's counsel. SSG ADVISORS, LLC, is the investment
banker. OMNI AGENT SOLUTIONS is the claims and noticing agent.
CORNERSTONE CHEMICAL: S&P Lowers ICR to 'CCC+', Outlook Negative
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
Cornerstone Chemical Co. to 'CCC+' from 'B-'. At the same time, S&P
lowered its issue-level rating on the company's senior secured
notes to 'CCC+' from 'B-' and revised the recovery rating to '4'
from '3'.
The negative outlook reflects S&P's belief that liquidity will be
constrained over the next few months and leverage will remain at
levels it views as unsustainable.
The downgrade follows Cornerstone's weaker-than-expected
performance in 2020 as the global pandemic had a negative impact on
demand and multiple events limited production (a dock collision and
Hurricane Zeta). The combination of these events raised 2020 debt
to EBITDA beyond our expectations to more than 10x. S&P said, "We
expect the company's EBITDA and credit measures to improve in 2021
as the economy strengthens, demand recovers, and pricing improves.
Although we expect earnings to strengthen in 2021, the company
still faces headwinds related to supply shortages and turnarounds
negatively affecting liquidity and delaying a full recovery to 2019
earnings and credit measures. We still forecast its credit metrics
will remain unsustainable on an S&P Global Ratings-adjusted
weighted-average basis, with debt to EBITDA between 8x and 9x."
S&P said, "The negative outlook reflects our expectation for
Cornerstone's absolute liquidity position to be constrained over
the next few months. The company completed two major turnarounds in
the first quarter, delaying production. We expect liquidity will be
tight as production ramps up as the company uses working capital as
a use of cash, further limiting availability under the asset-based
loan (ABL). Additionally, the company began construction on the new
dock, which will further tighten liquidity.
"We continue to assess Cornerstone's business risk as weak. Our
assessment incorporates a relatively narrow product mix, limited
scale, scope and diversity, single-site concentration, and risks
associated with operating in a cyclical industry. Geographic and
customer diversity is low; the company generates the overwhelming
majority of its revenues from the U.S. and more than 40% of
revenues from its top 10 customers. We perceive the company's
reliance on a single manufacturing site, located on the Mississippi
River and about 15 miles away from New Orleans, as a key risk
factor." While the site has not suffered any flood damage during
past hurricanes, it has experienced weather-related downtime of
several weeks that led to a moderate reduction in earnings. With
its single site in a hurricane-prone region, the company remains
susceptible to potential operating disruptions as exhibited with
Hurricane Zeta, which would lead to reductions in EBITDA and cash
flows. Cornerstone has property and business disruption insurance,
but it is exposed to losses in excess of the applicable limits and
for business disruptions shorter than required to file a claim.
S&P said, "The negative outlook reflects our view that Cornerstone
could experience tighter liquidity constraints over the next few
months than our base case causing liquidity sources to uses to fall
below 1.2x and cushion under covenants to tighten. In our base
case, we expect positive organic revenue growth in 2021 as the
global economy recovers. We expect modest margin expansion in 2021
as the company benefits from increased volumes and prices. Although
we expect credit metrics to improve from 2020 levels, we still
expect weighted average metrics will be unsustainable, with
weighted average debt to EBITDA nearing double digits.
"We could consider a negative rating action over the next 12 months
if Cornerstone experiences weaker-than-expected end-market demand
because of a slower or choppier global recovery that results in
higher total pro forma leverage. We could also lower the ratings if
liquidity weakens due to lower cash generation and a suppressed
borrowing base, and we believe it will be challenging for the
company to comply with covenants. We could consider a downgrade if
the ABL becomes current and we don't think it will be addressed in
a timely manner. We could also lower ratings if, against our
expectations, the company undertakes any large debt-funded growth
projects, acquisitions, or shareholder rewards, which could stretch
credit measures beyond what we would view appropriate for the
current rating.
"We could revise the outlook to stable or positive within the next
12 months if it appears evident that the company will be able to
generate enough free cash flow to improve its liquidity position
and addresses the upcoming ABL maturity. We could raise the rating
over the next 12 months if the company performs better than
expected due to a stronger recovery than our base case, favorable
market pricing, or a product mix shift toward more profitable
segments. This could lead to EBITDA margins exceeding expectations
by 100 basis points, causing weighted average debt to EBITDA to
fall below 8x on a sustained basis. To consider such a revision, we
need to believe that leverage at these levels will be sustainable
through a variety of market pricing environments."
CPV MARYLAND: Moody's Rates New $475MM Sr. Credit Facilities 'Ba3'
------------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to CPV Maryland,
LLC's ("CPV Maryland" or the "Borrower") proposed $475 million
senior secured credit facilities consisting of a $375 million
7-year term loan and a $100 million 6.5-year revolving credit
facility. The rating outlook is stable.
Proceeds from the term loan will be used to repay CPV Maryland's
existing financing, pay transaction costs of the issuance, and fund
a distribution to the sponsors. The proceeds from the revolving
credit facility will be used for general working capital purposes
and cash collateral, in addition to a backstop for letters of
credits. The existing loans being refinanced are expected to have
an aggregate balance of approximately $323 million at the time of
the transaction.
RATINGS RATIONALE
CPV Maryland's Ba3 rating reflects the asset's competitive
generating profile, strong operating history, manageable debt
profile, and sound sponsor group. The project's competitive
position is supported by its close proximity to the Washington DC
metro area and its high efficiency as a combined cycle plant
utilizing GE's new 7F.05 turbines. These factors have led to an
average capacity factor of approximately 65% with a sustained heat
rate of approximately 7,000 Btu/kWh since achieving commercial
operation in February 2017. The Borrower also benefits from the
asset's location in the capacity constrained SWMAAC region of PJM.
Capacity prices in SWMAAC typically clear at a premium relative to
the RTO clearing price (when RTO capacity prices are below $100,
providing down-side protection), and regional barriers to entry
limit the number of new fossil fuel entrants. Further supporting
the rating are typical project finance protections including a 1st
lien on assets, an initial 75% excess cash flow sweep, and a 1.1x
debt service coverage ratio ("DSCR") financial covenant.
The rating also considers the single asset operating risk,
refinancing risk, 'B' category financial metrics under the Moody's
Case and exposure to volatile merchant power markets. On the
latter, the project seeks to reduce merchant margin risk through an
active hedging strategy including participation in public utility
standard offer service auctions.
FINANCIAL METRICS
Under the management case, over the term loan tenor the Borrower
expects to achieve average DSCRs around 3.0x, project cash flow to
debt well above 10%, and debt to EBITDA below 6.0x. Under the
Moody's Case, over the next three years Moody's expect DSCR in a
range of 1.8x to 1.9x, project cash flow to adjusted debt around 5%
to 6%, and debt-to-EBITDA of around 8.3x. The Moody's Case
financial metrics fall in the 'B' category under the Power
Generation Projects methodology. Additionally, Moody's expect debt
at maturity at around 70% of the original balance under the Moody's
Case compared to around 50% under the management case with debt
reduction supported by the initial 75% of excess cash flow sweep.
STRUCTURAL FEATURES
The senior secured credit facilities will incorporate typical
project finance features including limitations on indebtedness and
asset sales, a 1.1x DSCR financial covenant requirement and a
quarterly 75% cash sweep, reducing to 50% if leverage is less than
4.0x debt to EBITDA.
LIQUIDITY
Liquidity at the Borrower is expected to include a six-month debt
service reserve backed by the project's $100 million, 1st lien
revolving credit facility, which matures 6 months prior to the term
loan. The $100 million revolving credit facility is primarily meant
to support letter of credit posting requirements and has a $25
million sublimit for working capital purposes.
RATING OUTLOOK
The stable outlook assumes that the project will continue to
exhibit strong operating performance, as well as engage and
maintain solid energy margins, resulting in sustained DSCR levels
above 1.5x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
FACTORS THAT LEAD TO AN UPGRADE
The rating is currently well-positioned and has limited prospects
for an upgrade. The rating could face upward pressure should the
Borrower repay substantially greater debt than expected or if it
generates stronger financial metrics than expected, including DSCR
levels consistently above 2.0x, project cash flow to debt above
10%, and debt to EBITDA below 6.0x on a sustained basis.
FACTORS THAT COULD LEAD TO A DOWNGRADE
The rating could be downgraded if the project incurs major
operational problems, if debt reduction is materially less than
expected or if its financial metrics are below expectations leading
to DSCR levels below 1.7x, project cash flow to debt below 5%, and
debt to EBITDA above 9x on a sustained basis. Additionally, the
rating could be downgraded if the Borrower incurs issues with its
hedging program.
PROFILE
CPV Maryland owns the St. Charles Energy Center, a 745 megawatt
natural gas-fired combined-cycle combustion turbine generating
facility located in Charles County, Maryland. The plant achieved
commercial operation on February 14, 2017.
CPV Maryland is owned equally by a sponsor group of four indirect
wholly owned subsidiaries of CPV Power Holdings, LP, Marubeni
Corporation (Baa2/stable), Osaka Gas Co., Ltd. (A1/stable), and
Toyota Tsusho Corporation (A3/stable).
METHODOLOGY
The principal methodology used in these ratings was Power
Generation Projects Methodology published in July 2020.
DUNTOV MOTOR: Seeks to Hire Rosen Systems as Appraiser
------------------------------------------------------
Duntov Motor Company, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Texas to employ Rosen Systems,
Inc. to conduct an appraisal of its properties.
The properties include the Debtor's machinery and equipment,
vehicles and trailers, raw materials, finished goods, inventory,
office furniture and equipment, certain collectibles and other
intangibles.
Rosen Systems will be paid the sum of $2,250.
J. Kyle Rosen, vice president of Rosen Systems, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
J. Kyle Rosen
Rosen Systems, Inc.
2323 Langford Street
Dallas, TX 75208-2122
Tel: (800) 527-5134 / (972) 248-2266
Fax: (972) 248-6887
Email: info@rosensystems.com
About Duntov Motor Company
Duntov Motor Company, LLC sought Chapter 11 protection (Bankr. N.D.
Tex. Case No. 21-40348) on Feb. 20, 2021, listing under $1 million
in both assets and liabilities. Judge Mark X. Mullin oversees the
case. The Debtor tapped Quilling, Selander, Lownds, Winslett &
Moser, PC as legal counsel and Andy D. Plagens, LLC as accountant.
ELI & ALI: Wins Cash Collateral Access Thru April 29
----------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York has
authorized Eli & Ali, LLC to, among other things, use the cash
collateral of Capital One, National Association on on a consensual
basis in accordance with the budget through April 29, 2021.
The Debtor requires the use of cash collateral to continue to
operate its business in the normal course, and preserve the value
of the estate for all stakeholders.
As of the Petition Date, the Prepetition Loan Parties were indebted
to CONA under the Prepetition Financing Documents, in the
approximate amount of (a) $561,223.95, plus (b) interest accrued
and accruing at the applicable annual contract rate under the
Prepetition Financing Documents, plus (c) costs, expenses, fees and
other charges and other amounts that would constitute Indebtedness
under the Prepetition Financing Documents, including, without
limitation, on account of cash management, credit card, depository,
investment, hedging and other banking or financial services secured
by the Prepetition Financing Documents.
The Debtor has acknowledged and stipulated that its cash on hand
and cash equivalents, excluding the proceeds of the Paycheck
Protection Program loan funded by TD Bank on February 22, 2021 in a
principal balance of $100,000 as of the Petition Date, constitute
proceeds, products and profits of the Prepetition Collateral, and
whether existing before, on, or after the Petition Date, is cash
collateral of the Prepetition Lender within the meaning of section
363(a) of the Bankruptcy Code.
As adequate protection for the Debtor's use of cash collateral, the
Prepetition Lender will be and is granted solely to the extent of
any diminution in value of the Prepetition Collateral, valid,
binding, continuing, enforceable, non-avoidable and
fully-perfected, first-priority postpetition security interests in
and liens on all of the Debtor's rights in tangible and intangible
assets, including, without limitation, the Prepetition Collateral
and all other prepetition and postpetition property of the Debtor's
estate and all proceeds, rents, and profits thereof, whether
existing on or as of the Petition Date or thereafter acquired, that
is not subject to (A) valid, perfected, non-avoidable and
enforceable liens in existence on or as of the Petition Date or (B)
valid and unavoidable liens in existence immediately prior to the
Petition Date that are perfected after the Petition Date as
permitted by section 546(b) of the Bankruptcy Code.
In consideration of the Debtor's continued use of Cash Collateral
in accordance with the Budget and/or the Debtor's use, sale,
depreciation, or disposition of the Prepetition Collateral, the
Prepetition Lender will receive (i) a payment of $750 per month,
with the first payment due on April 16, 2021 and commencing
promptly after the entry of the Interim Order such that each
additional monthly payment will be made no later the seventh day of
each of subsequent month and (ii) all proceeds payable upon a sale
or other disposition of Prepetition Collateral and/or Postpetition
Collateral, net of fundings required to make payments in accordance
with the Budget and such payments will be applied by the
Prepetition Lender as a permanent reduction of the Prepetition Debt
in accordance with the Prepetition Financing Documents.
The Prepetition Liens and Adequate Protection Liens are all
subordinate to the Carve-Out:
(a) any quarterly or other fees payable to the U.S. Trustee
pursuant to, inter alia, 28 U.S.C. section 1930(a) or interest, if
any, pursuant to 31 U.S.C. section 3717;
(b) professional fees of, and costs and expenses incurred
during the Budget period by, professionals or professional firms
retained by the Debtor and allowed by the Court in an amount not to
exceed the actual Allowed Professional Fees accrued and incurred by
each such Case Professional through the date of the Termination
Event, but in no event exceeding $50,000 in total for the Chapter
11 Case; and
(c) any cost and fees of a chapter 7 trustee, should one be
appointed if these Chapter 11 Cases are converted in an amount not
to exceed the amount of $20,000.
These events will constitute a "Termination Event":
(a) Entry of an order by the Bankruptcy Court converting or
dismissing the Chapter 11 Case;
(b) Entry of an order by the Bankruptcy Court appointing a
chapter 11 trustee in the Chapter 11 Case;
(c) The failure of the Debtor to perform or comply in any
material respect with any term or provision of the Interim Order,
including without limitation the Budget; provided that any failure
to perform or comply with obligations will be deemed material;
(d) Entry of an order that stays, reverses, vacates, amends,
or rescinds any of the terms of the Interim Order, or order
approving this Interim Order, without the consent of the
Prepetition Lender;
(e) Financing on a pari passu basis with the liens or claims
of the Prepetition Lender;
(f) Subject to and effective only upon entry of a Final Order,
the filing of a motion that seeks to obtain first priority
financing that does not pay the Prepetition Lender in full on
account of the Prepetition Debt and any postpetition indebtedness,
unless the Prepetition Lender otherwise consents to such
financing;
(g) The Court enters an order authorizing the sale of all or
substantially all assets of the Debtor that does not provide for
the payment in full to the Prepetition Lender of their claims in
cash upon the closing of the sale, unless otherwise agreed by the
Prepetition Lender in its sole and absolute discretion;
(h) The Court enters the Final Order without (i) providing for
any of the specific waivers with respect to "marshaling," "equities
of the case," and "surcharge" under section 506(c) of the
Bankruptcy Code, or (ii) granting the Prepetition Lender's Adequate
Protection Liens;
(i) The Debtor ceases operations without the prior written
consent of the Prepetition Lender, except to the extent
contemplated by the Budget;
(j) The entry of an order or judgment by the Court or any
other court: (i) modifying, limiting, subordinating, or avoiding
the priority of the obligations of the Debtor under this Interim
Order, the obligations of the Debtor under the Prepetition
Financing Documents, or the perfection, priority, validity or
enforceability of the Prepetition Liens or the Adequate Protection
Liens, (ii) imposing, surcharging, or assessing against the
Prepetition Lender's claims, or the Prepetition Collateral, any
costs or expenses, whether pursuant to section 506(c) of the
Bankruptcy Code or otherwise, except as expressly contemplated
under Paragraph 17 of the Interim Order, or (iii) impairing the
Prepetition Lender's right to credit bid under Section 363(k) of
the Bankruptcy Code;
(k) The occurrence of a material adverse change, including
without limitation any such occurrence resulting from the entry of
any order of the Court, or otherwise in each case as determined by
the Prepetition Lender in its sole and absolute discretion in: (1)
the condition (financial or otherwise), operations, assets,
business or business prospects of the Debtor; (2) the Debtor's
ability to repay the Prepetition Lender; and/or (3) the value of
the Collateral; and
(l) Any material and/or intentional misrepresentation by the
Debtor in the financial reporting or certifications to be provided
by the Debtor to the Prepetition Lender under the Prepetition
Financing Documents and/or the Interim Order.
A copy of the Order is available for free at https://bit.ly/3eho0e4
from PacerMonitor.com.
About Eli & Ali, LLC
Eli & Ali, LLC is a merchant wholesaler of farm product raw
materials. It sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. N.Y. Case No. 21-40920) on April 7,
2021. In the petition signed by Jeffrey Ornstein, managing member,
the Debtor disclosed $270,150 in assets and $1,427,375 in
liabilities.
Judge Jil Mazer-Marino oversees the case.
Heath S. Berger, Esq. at BERGER, FISCHOFF, SHUMER, WEXLER &
GOODMAN, LLP is the Debtor's counsel.
ENCINO ACQUISITION: Moody's Lowers CFR to B2 on Cash Flow Outspend
------------------------------------------------------------------
Moody's Investors Service downgraded Encino Acquisition Partners
Holdings, LLC's Corporate Family Rating to B2 from B1 and
Probability of Default Rating to B2-PD from B1-PD. Concurrently,
Moody's affirmed Encino's senior secured second lien term loan's B3
rating and changed the rating outlook to stable from negative.
"Encino's downgrade reflects the company's increased debt leverage
and the potential for cash flow outspend through 2021 which limits
the prospects for organic deleveraging," commented Sreedhar Kona,
Moody's senior analyst. "The company's B2 CFR and stable outlook is
supported by its strong reserve base, commodity hedge position, and
adequate liquidity."
Downgrades:
Issuer: Encino Acquisition Partners Holdings, LLC
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Corporate Family Rating, Downgraded to B2 from B1
Affirmations:
Issuer: Encino Acquisition Partners Holdings, LLC
Senior Secured Second Lien Term Loan, Affirmed B3 (LGD5)
Outlook Actions:
Issuer: Encino Acquisition Partners Holdings, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Encino's CFR was downgraded to B2 from B1 because of its increased
financial leverage and the potential that debt will rise to fund
planned capital expenditures in 2021 based on Moody's price
assumptions. The combination of weaker credit metrics and lower
production scale made Encino's rating more appropriately positioned
at a B2 CFR relative to other similarly rated natural gas and
natural gas liquids focused peers.
Encino's B2 CFR reflects the company's natural gas weighted
production profile which yields lower cash margins than an
oil-weighted production base on an equivalent unit of production,
notwithstanding the company's good cost structure with relatively
low operating expense (LOE). The company is constrained by its
single basin focus in the Utica Shale and significant firm
transportation (FT) commitments that, while providing flow
assurance, could prove burdensome if the company's production drops
further than anticipated. The company benefits from its strong
reserve base and a significant hedge position that mitigates cash
flow volatility. Although Encino's 2021 capital spending will not
allow the company to generate significant free cash flow, the
company's restrained drilling program points to the potential for
free cash flow generation in 2022 subject to commodity prices. The
company is supported by an experienced management team with a
proven operating track record and a long-term investor in Canada
Pension Plan Investment Board (CPPIB) that has a strong history in
natural resources investments.
Encino's stable outlook reflects the company's adequate liquidity,
and its ability to maintain production with capital investment that
is largely covered by cash flow.
Encino's $550 million senior secured second lien term loan due
October 2025 is rated B3, one notch below the CFR, reflecting the
priority ranking of the company's $900 million borrowing base
secured revolving credit facility ($485 million outstanding as of
December 31, 2020) due in October 2023. Given the substantial asset
coverage of debt from Encino's strong reserve base, Moody's views
the B3 rating to be more appropriate than the lower rating
suggested under Moody's Loss Given Default methodology. However, if
the company's borrowing base rises significantly or the utilization
of the revolver is more than expected the loan rating could be
downgraded.
Moody's expects Encino to maintain adequate liquidity. As of
December 31, 2020, Encino had $7 million of cash and $315 million
of availability under its $900 million borrowing base revolving
credit facility maturing in October 2023. Moody's expects Encino to
be able to meet its liquidity needs from its operating cash flow
and a modest draw on its revolver in 2021. Under the credit
agreement, Encino is required to maintain its current ratio of
greater than 1x and net debt/EBITDAX ratio below 4x. Moody's
expects Encino to maintain compliance with its financial
covenants.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Encino's ratings could be upgraded if the company can consistently
generate free cash flow while modestly growing production,
maintaining retained cash flow to debt ratio above 35% and adequate
liquidity. Leveraged Full Cycle Ratio would also need to be
maintained above 1.5x.
Encino's ratings could be downgraded if the company's absolute debt
increases substantially, production declines significantly or
liquidity deteriorates. Retained cash flow to debt ratio below 20%
could lead to a downgrade.
Encino is a private independent E&P company with operations in the
Utica Shale in Ohio. Encino is 100% owned by Encino Acquisition
Partners, LLC (EAP), which is owned by Encino Energy, LLC (2%) and
CPPIB (98%). There are no debt obligations at EAP.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
ENTEGRIS INC: Moody's Gives Ba2 Rating on New Sr. Unsecured Notes
-----------------------------------------------------------------
Moody's Investors Service rated Entegris Inc.'s new 8 year senior
unsecured notes at Ba2. Entegris' other ratings are unchanged. The
outlook remains stable.
Net proceeds of the New Notes, along with balance sheet cash and a
temporary draw on the Senior Secured Revolver (Revolver), will be
used to repay the outstanding Senior Unsecured Notes due 2026 (2026
Notes). The net result of the refinancing will be to both reduce
total debt and to extend the weighted-average maturity of the debt
by several years. Proforma for the refinancing and repayment of the
Revolver draw, Moody's expects that debt to EBITDA will decline by
over a quarter turn to about 1.8x debt to EBITDA (twelve months
ended December 31, 2020, proforma, Moody's adjusted). Given the
company's strong free cash flow (FCF) generation, Moody's expects
that the Revolver draw will be repaid by the end of June.
Entegris also announced that they are amending the Senior Secured
Credit Facilities, comprised of the Revolver and the Senior Secured
Term Loan (Term Loan), to increase the Revolver size to $400
million from $300 million and to extend the maturity to 2026 from
2023, improving Entegris' liquidity profile.
Assignments:
Issuer: Entegris Inc.
Senior Unsecured Notes, Assigned Ba2 (LGD4)
RATINGS RATIONALE
The Ba1 CFR reflects the company's niche position in certain market
segments (e.g., wafer handling equipment and filters), which have
limited competition from larger firms, and a conservative financial
policy, with leverage maintained below 2.5x debt to EBITDA (Moody's
adjusted). Entegris also benefits from consistent free cash flow
(FCF) generation due to modest capital expenditure requirements and
the longer life cycle of many of Entegris's products, which can
exceed five years on legacy production nodes, providing a base of
recurring demand. Although Moody's expects that Entegris will
periodically make debt-financed acquisitions, Moody's expects that
leverage will be returned to around 2x debt to EBITDA (Moody's
adjusted) within 12 to 18 months of the closing of such
acquisitions. Moody's expects the company to refrain from
debt-funded shareholder returns.
Nevertheless, demand can be volatile, driven by changes in
semiconductor industry production volume. Demand is also influenced
by the capital spending levels of Entegris's customers, which can
decline following the completion of a production node transition.
Moody's believes that Entegris has limited negotiating leverage due
to the large customer concentration.
Moody's regards the coronavirus outbreak as a social risk under
Moody's ESG framework due to the substantial implications for
public health and safety. Given the company's exposure to global
economies, Entegris remains vulnerable to shifts in market demand
and sentiment in these unprecedented operating conditions. Moody's
views the company's exposure to environmental risks as low given
the company's geographic diversity, with manufacturing in locations
across the United States, South Korea, Taiwan, Japan, and Malaysia,
which limits risk in a scenario in which production is impacted by
a local environmental event. Moody's also considers Entegris's
governance risk as low. Entegris is a public company with a broad
investor base and an independent board of directors. Although
Entegris's financial leverage has periodically increased due to
acquisitions, financial leverage is currently low. Given the
volatility of revenues due to the dependence on production volume
and capital spending of the company's semiconductor customers,
Moody's expects that Entegris's financial policy will remain
conservative. Moody's expects that outside of short-term spikes in
financial leverage following transformative acquisitions, the
company will maintain debt to EBITDA (Moody's adjusted) below 2.5x
over time.
The stable outlook reflects Moody's expectation that node
transitions, near-term secular growth drivers in the semiconductor
industry such as the ramp up of 5G smartphones, and a strengthening
global economy will all contribute to organic revenue growth of at
least upper-single digits percent over the next year. Operating
leverage on this growing revenue base and tight expense management
will expand EBITDA margin (Moody's adjusted) toward the low 30s
percent level, and improve FCF due to the modest capital intensity.
Over this period, Moody's expects that Entegris will deleverage
from profit growth such that the ratio of debt to EBITDA (Moody's
adjusted) will decline toward 1.5x and FCF to debt (Moody's
adjusted) will improve toward the low 30s percent level.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if:
Entegris increases scale and profit margins, and
Maintains conservative credit metrics and disciplined financial
policies
The rating could be downgraded if:
Revenue growth trails the company's key end markets, or
Liquidity meaningfully deteriorates, or
Entegris adopts more aggressive financial policies, which increase
leverage above 2.5x debt to EBITDA (Moody's adjusted) on a
sustained basis
The Speculative Grade Liquidity (SGL) rating of SGL-1 reflects
Entegris's very good liquidity profile. Moody's expects Entegris
will keep at least $250 million of cash and generate FCF of at
least $250 million over the next year. Moody's expects that absent
a large acquisition, the $400 million Revolver will generally
remain undrawn given the strong cash flows. The Revolver has a
single financial covenant (credit agreement-defined secured net
leverage ratio maximum of 3.75x), which is tested only upon 35%
facility utilization. There are no other financial covenants
governing Entegris's debt.
The Baa3 senior secured rating of the Term Loan reflects its
seniority in the capital structure, the collateral package, and the
large cushion of unsecured debt and liabilities. The Term Loan
collateral includes a first priority interest in Entegris's assets
and those of the domestic subsidiary guarantors, and a 65% stock
pledge of foreign subsidiaries. The Ba2 rating of the senior
unsecured notes (New Notes, 2026 Notes, and the Senior Unsecured
Notes due 2028) reflects the relatively higher expected loss in a
default scenario, from the subordinated position as an unsecured
claim.
Entegris, Inc., based in Billerica, Massachusetts, develops and
manufactures products, including filters, materials handling
equipment, and specialty chemicals used in the manufacture of
semiconductors and other microelectronic components.
The principal methodology used in this rating was Semiconductor
Methodology published in December 2020.
ENTEGRIS INC: S&P Rates $400MM Senior Unsecured Notes 'BB'
----------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '5'
recovery rating to Billerica, Mass.-based semiconductor device
products manufacturer Entegris Inc.'s new $400 million senior
unsecured notes due 2029. The '5' recovery rating on the notes
indicates its expectation of modest (10%-30%; rounded estimate:
10%) recovery of principal in the event of a payment default.
Entegris intends to use the net proceeds of the offering, together
with cash on hand and a partial $75 million draw on the revolver,
to redeem its $550 million senior unsecured notes due 2026 and to
pay certain fees and expenses related to the offering.
Entegris also plans to increase the size its revolver from $300
million to $400 million while extending the maturity to 2026. All
existing ratings including its 'BB+' corporate credit rating on
Entegris remains unchanged.
S&P said, "Our rating on Entegris reflects the company's operations
in the volatile semiconductor equipment manufacturing industry, its
significant customer concentration, and relatively modest size in
the sector's supply chain. The stable outlook on Entegris reflects
our expectation the company will outperform the overall
semiconductor industry and maintain stable EBITDA margins in the
mid-to high-20% area such that leverage will remain at or below the
2x area over the next 12 months.
"We could lower the rating if the company pursues a substantial
acquisition that causes leverage to rise above 3x for a sustained
period. We would also consider a downgrade if a slowdown in the
semiconductor industry or execution missteps hurt operational
performance, leading to significant revenue declines, share losses,
and margin pressure. An upgrade is unlikely over the coming year
given our view that Entegris will continue to pursue strategic
acquisitions that could absorb the cushion within its current
credit ratios. Over a longer horizon, we would look to factors such
as consistent operating performance, a sustained conservative
financial policy, and a commitment to maintaining leverage below
1.5x through an industry cycle as conditions for an upgrade."
Issue Ratings - Recovery Analysis
Key analytical factors:
S&P said, "Our 'BBB-' rating and '2' recovery rating on the
company's senior secured credit facilities indicates its
expectation for substantial (70%-90%; rounded estimate: 75%)
recovery in the event of a payment default. Our 'BB' rating on the
senior unsecured notes indicates our expectation for modest
(10%-30%; rounded estimate: 10%) recovery in the event of a payment
default. Our simulated default scenario assumes a default in 2026
due to a significant decline in wafer production and semiconductor
capital equipment spending impacting Entegris' operating
performance. A multiple of 5x is consistent with what we use for
other modest size semiconductor companies. We also assume
bankruptcy administrative expenses of 5%."
Simulated default assumptions:
-- Simulated year of default: 2026
-- Emergence EBITDA: $107 million
-- EBITDA multiple: 5x
Simplified waterfall:
-- Gross recovery value: $534 billion
-- Net enterprise value (after 5% administrative costs): $508
billion
-- Obligor/nonobligor valuation split: 25%/75%
-- Estimated first-lien claim: $493 million
-- Value available for first-lien claim: $374 million
--Recovery expectations: 70%-90%; rounded estimate: 75%)
-- Estimated senior unsecured notes claim: $816 million
-- Value available for senior unsecured notes claim: $133 million
--Recovery expectations: 10%-30%; rounded estimate: 10%
Note: All debt amounts include six months of prepetition interest.
ESTHER CORONA: May Continue Using Cash Collateral
-------------------------------------------------
Judge M. Elaine Hammond authorized Esther Corona, Inc., to continue
using cash collateral on an interim basis, pursuant to the budget
through the earlier of dismissal, conversion or confirmation in the
Debtor's case.
As adequate protection, First Home Bank is granted replacement
liens in all of the Debtor's assets (except avoidance action claims
arising post-petition), with said liens having the same validity,
priority, scope, extent and enforceability as FHB's pre-petition
liens.
The Court directed the Debtor to pay and deliver the regular
contractual payments to FHB by the first of each month.
About Esther Corona
Esther Corona, Inc. operates a day care business. It sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D.
Calif. Case No. 21-50088) on Jan. 25, 2021. At the time of filing,
the Debtor had between $50,001 and $100,000 in assets and between
$500,001 and $1 million in liabilities. The Debtor's assets
consisted of cash deposits in the amount of $7,984.04, furniture
and fixtures, and tools and equipment valued at $62,275.
Judge M. Elaine Hammond oversees the Debtor's Chapter 11 case.
The Debtor is represented by The Fuller Law Firm, PC in its case.
EVERI PAYMENTS: Moody's Affirms B2 CFR & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed EVERI Payments Inc.'s B2
Corporate Family Rating, B2-PD Probability of Default Rating, B1
rated senior secured revolver and term loan, and Caa1 rated senior
unsecured notes. The company's Speculative Grade Liquidity rating
was upgraded to SGL-2 from SGL-3. The outlook was changed to stable
from negative.
The change in outlook to stable from negative and affirmation of
the B2 CFR reflects the ongoing recovery in the company's games and
fintech segments because the bulk of customer gaming facilities
reopened following the Q1 and Q2 2020 shutdowns, and the company's
revenue and EBITDA have rebounded nicely. Moody's expects continued
sequential improvement in 2021, and although revenue will likely
remain below 2019 pre-pandemic levels, adjusted EBITDA could equal
or surpass 2019 levels as a result of the company's ability to
manage operating expenses and reduce costs, helping drive down
leverage and sustain positive free cash flow.
The following ratings/assessments are affected by the action:
Ratings Upgraded:
Issuer: EVERI Payments Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Ratings Affirmed:
Issuer: EVERI Payments Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured Bank Credit Facility, Affirmed B1 (LGD3)
GTD Senior Unsecured Global Notes, Affirmed Caa1 (LGD5)
Outlook Actions:
Issuer: EVERI Payments Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Everi's B2 CFR reflects the meaningful revenue and earnings decline
realized from efforts to contain the coronavirus and the potential
for an uneven recovery as its gaming customers' properties have
reopened. The rating further reflects the company's exposure to
what will likely be a soft slot machine replacement cycle in the US
gaming market in addition to the company's high debt level
resulting primarily from debt financing related to the December
2014 acquisition of Multimedia Games as well as the company's
incremental term loan in 2020. Revenues are largely tied to the
volume of gaming machine play and cash withdrawal transactions in
gaming facilities. The company can reduce spending on game
development and capital expenditures when revenue weakens, but the
need to retain a skilled workforce to maintain competitive
technology contributes to high operating leverage. The company
benefits from the demonstrated stability and growth of its Fintech
operating segment including growth in loyalty kiosks, with a
growing installed base and increased daily win per unit in its
gaming business, during normal operating periods.
The company's speculative-grade liquidity rating of SGL-2 reflects
good liquidity and was upgraded from SGL-3 because the company
increased its cash balance in part due to positive free cash flow.
The company additionally repaid amounts previously borrowed on its
revolver and amended its covenants in 2020 to provide covenant
relief. No maximum debt-to-EBITDA secured leverage ratio will be
tested until Q1 2021, where a max 5.5x threshold kicks in. The
company will be able to annualize Q1 2021 performance for that
test. The covenant steps down in subsequent quarters, although
Moody's believes the company will maintain compliance with its
covenant. As of year ended December 31, 2020, EVERI had cash of
approximately $252 million (cash was $139 million net of settlement
receivables/liabilities), and a $35 million undrawn revolving
credit facility. Moody's estimates the company could maintain
sufficient internal cash sources after maintenance capital
expenditures to meet required annual term loan amortization of
approximately $1.25 million and interest requirements over the next
twelve-month period. The expiration of the company's revolving
credit facility in May 2022 is a liquidity weakness, but the
company is not currently reliant on the facility given the sizable
cash balance and the term loan does not mature until 2024.
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
EVERI from the current weak US economic activity and a gradual
recovery for the coming year. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, the degree of uncertainty
around Moody's forecasts is unusually high. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The gaming and related sectors have been one of the sectors most
significantly affected by the shock given its sensitivity to
consumer demand and sentiment. More specifically, the weaknesses in
EVERI's credit profile, including its exposure to travel
disruptions and discretionary consumer spending have left it
vulnerable to shifts in market sentiment in these unprecedented
operating conditions and EVERI remains vulnerable to the outbreak
continuing to spread.
Governance risk is considered manageable for the company. While
leverage is elevated due to the impact of the coronavirus and
incremental term loan borrowings, the company has stated its intent
to utilize free cash flow to bolster liquidity and reduce their
leverage level. The company has a history of debt repayment and has
raised equity proceeds to facilitate debt reduction in the past.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects the partial recovery in the company's
business exhibited in the second half of 2020, and Moody's
expectation for continued sequential improvement in 2021. The
stable outlook also incorporates the company's good liquidity and
Moody's expectation for leverage to continue to come down from
current elevated levels as the business recovers and debt is
reduced. EVERI remains vulnerable to travel disruptions and
unfavorable sudden shifts in discretionary consumer spending and
the uncertainty regarding the pace at which consumer spending at
reopened gaming properties will recover.
Ratings could be downgraded if liquidity deteriorates or if Moody's
anticipates EVERI's earnings recovery will be more prolonged or
weaker than expected because of actions to contain the spread of
the virus or reductions in discretionary consumer spending. The
ratings could be downgraded if debt-to-EBITA leverage were
maintained over 6x or free cashflow is not comfortably positive.
The ratings could be upgraded if customer facilities remain open
and earnings recover such that the company maintains sustained
positive free cash flow and reinvestment flexibility and
debt-to-EBITDA is sustained near 4.5x. The company's financial
policies would also need to support sustained lower leverage.
The principal methodology used in these ratings was Busines and
Consumer Service Industry published in October 2016.
EVERI Payments Inc., a wholly owned subsidiary of Everi Holdings
Inc. (NYSE: EVRI), is a provider of video and mechanical reel
gaming content and technology solutions, integrated gaming payments
solutions, compliance and efficiency software, and loyalty and
marketing software and solutions. For the latest 12-month period
December 31, 2020, EVERI reported revenue of about $384 million.
FARR BUILDERS: Court OKs Deal on Cash Collateral Access
-------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Texas, San
Antonio Division, has approved the Stipulation Regarding Use of
Cash Collateral filed by Farr Builders, LLC, surety creditor
Berkley Insurance Company, and secured creditor Frost Bank.
The parties stipulate that the Debtor's authority to use cash
collateral pursuant to the Stipulation extends through June 30,
2021, and may be extended for successive months (not to exceed
three months) without further order of the Court, at the election
of the Debtor, with written notice being given at least one week
before the expiration of the current period. The provision,
however, is without prejudice to any party's right to file a motion
to terminate the Debtor's right to use cash collateral for the
period after June 30, 2021, and any party's right to seek, by
motion, immediate termination of the right to use cash collateral
premised upon the Debtor's breach of the terms of the Stipulation
and any party's right to seek relief from the automatic stay and/or
adequate protection.
Prior to the Petition Date, the Debtor entered into contracts for
which surety creditors issued surety bonds on behalf of the Debtor
as principal.
Prior to the Petition Date, the Debtor entered into a tripartite
agreement between Business Bank of Texas, the General Services
Administration, the Debtor, subcontractors, and suppliers for the
purpose of receiving and disbursing funds pertaining to GSA Fleet
Office Renovation R.E. Thomason US Courthouse.
Prior to and after the petition, the Debtor has or will enter into
other contracts for which no surety issued payment, performance, or
other surety bonds.
The Debtor may receive funds from sources other than contracts,
including leases or rentals of real property.
The proceeds of prepetition Bonded Contracts, Unbonded Contracts,
and the Miscellaneous Receipts together constitute the cash
collateral.
Frost has four, cross-defaulted and cross-collateralized loans to
Debtor with a combined principal balance of approximately
$672,515.89 as of February 23, 2021. Frost asserts its collateral
includes all bank accounts of the Debtor at Frost, the real
property where the Debtor conducts business at 3401 S. Gevers, San
Antonio, Texas 78210, all accounts and equipment, all inventory,
and all accounts receivable. Frost asserts its security interest in
proceeds from Unbonded Contracts and the Miscellaneous Receipts is
senior to the interest of any other party in the proceeds of such
contracts, leases and rentals. Frost holds a first-priority
security interest in the Collateral. However, Berkley contends it
has rights in the proceeds of projects it bonded that are superior
to the bank's first-priority security interest in that specific
collateral.
As adequate protection for use of assets in which Frost has a
security interest, the Debtor will make monthly payments, of $4,000
per month to Frost. First payment came due March 25, 2021, and
like payments on the same day of each succeeding month until
further Court order.
As partial adequate protection for any use of Berkley's cash
collateral, and to comply with the requirements of the Texas Trust
Fund Statute, any use of cash collateral from a Bonded Contract may
only be requested by Debtor in accordance with these priorities:
(i) Any proceeds must be used first to pay any subcontractor,
vendor, or supplier any amounts then due from Debtor on account of
goods or services supplied for that particular Bonded Contract;
(ii) second, to surety for the Bonded Contract for any amounts that
surety has paid to any subcontractor, vendor, or supplier for that
particular Bonded Contract; and (iii) third, to any project
payroll, burden, or other direct job cost for that particular
Bonded Contract documented by the Debtor.
As further adequate protection, Berkley and Frost will receive
post-petition liens in the Cash Collateral that is the
post-petition proceeds of the accounts in which they have a lien
and in the same type property of the Debtor, to the same validity,
extent, and priority, as existed as of the Petition Date, wherever
located, effective nunc pro tunc as of the Petition Date. In
addition, Berkley is granted a Replacement Lien in unencumbered
real property, or a junior lien on encumbered property of the
Debtor.
The lien against the real properties granted by the cash collateral
order in the case is limited to a maximum amount $100,000 and
Berkley must first look to any receivable in the remaining projects
that are Bonder by Berkley before asserting any right to payment
from adequate protection liens on the real properties. If a
building is sold the funds will be segregated until further order
of the Court.
As additional adequate protection, the Debtor will pay $4,000 per
month to Frost with the first payment coming due upon execution of
the Stipulation and subsequent payments coming due on the last day
of each month beginning April 30 until further Court order.
A copy of the order is available for free at https://bit.ly/2Qw9pmW
from PacerMonitor.com.
About Farr Builders, LLC
Farr Builders LLC is a private entity that performs government
contracts. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No. 21-50179) on
February 22, 2021. In the petition signed by Adrian Garcia,
president, the Debtor disclosed $1,000,373 in assets and $2,315,869
in liabilities.
Judge Ronald B. King oversees the case.
Heidi McLeod, Esq. at HEIDI MCLEOD LAW OFFICE, PLLC represents the
Debtor as counsel.
Frost Bank, as secured creditor, is represented by:
Robert Barrows, Esq.
WARREN, DRUGAN, & BARROWS, P.C.
800 Broadway, Suite 200
San Antonio, TX 78215
Tel: (210) 226-4131
Fax: (210) 224-6488
Berkley Insurance Company, as surety creditor, is represented by:
Chad L. Schexnayder, Esq.
JENNINGS, HAUG, & CUNNINGHAM, LLP
2800 N. Central Ave., Suite 1800
Phoenix, AZ 85014
Tel: (602) 234-7800
Fax: (602) 277-5595
FORD CITY CONDOMINIUM: Case Summary & 12 Unsecured Creditors
------------------------------------------------------------
Debtor: Ford City Condominium Association
4300 Ford City Drive Unit 105
Chicago, IL 60652
Chapter 11 Petition Date: April 20, 2021
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 21-05193
Judge: Hon. Carol A. Doyle
Debtor's Counsel: Shanita Q.T. Straw, Esq.
GOLDEN LAW
6602 Roosevelt Road
Qak Park, 60304
Tel: (708) 613-4433
E-mail: sstraw@goldenlawpc.com
Total Assets: $511,636
Total Liabilities: $1,266,643
The petition was signed by Wendy Watson, president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
A full-text copy of the petition containing, among other items, a
list of the Debtor's 12 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/ZZ3KDII/Ford_City_Condominium_Association__ilnbke-21-05193__0001.0.pdf?mcid=tGE4TAMA
FRESH ACQUISITIONS: Case Summary & 20 Top Unsecured Creditors
-------------------------------------------------------------
Fifteen affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Fresh Acquisitions, LLC (Lead Debtor) 21-30721
d/b/a Furr's, Furr's Fresh Buffet
2338 N. Loop 1604 W.
Suite 350
San Antonio, TX 78248
Alamo Fresh Payroll, LLC 21-30720
Alamo Ovation, LLC 21-30722
Buffets LLC (aka Ovation Brands) 21-30723
Hometown Buffet, Inc. 21-30724
Tahoe Joe's Inc. 21-30725
OCB Restaurant Company, LLC 21-30726
OCB Purchasing, Co. 21-30727
Ryan's Restaurant Group, LLC 21-30728
Fire Mountain Restaurants, LLC 21-30729
Food Management Partners, Inc. 21-30730
FMP SA Management Group, LLC 21-30731
FMP-Fresh Payroll, LLC 21-30732
FMP-Ovation Payroll, LLC 21-30733
Alamo Buffets Payroll, LLC 21-30734
Business Description: Prior to the COVID-19 pandemic, the Debtors
were a significant operator of buffet-
style restaurants in the United States with
approximately 90 stores operating in 27
states. The Debtors' concepts include six
buffet restaurant chains and a full service
steakhouse, operating under the names Furr's
Fresh Buffet, Old Country Buffet, Country
Buffet, HomeTown Buffet, Ryan's, Fire
Mountain, and Tahoe Joe's Famous
Steakhouse, respectively.
Chapter 11 Petition Date: April 20, 2021
Court: United States Bankruptcy Court
Northern District of Texas
Judge: Hon. Harlin Dewayne Hale
Debtors' Counsel: Jason S. Brookner, Esq.
Aaron M. Kaufman, Esq.
Amber M. Carson, Esq.
GRAY REED
1601 Elm Street, Suite 4600
Dallas, Texas 75201
Tel: (214) 954-4135
Fax: (214) 953-1332
Email: jbrookner@grayreed.com
akaufman@grayreed.com
acarson@grayreed.com
Debtors'
Financial
Advisor: B. RILEY ADVISORY SERVICES
3500 Maple Avenue, Suite 420
Dallas, TX 75219
Debtors'
Special
Counsel: KATTEN MUCHIN ROSENMAN LLP
2121 North Pearl Street, Suite 1100
Dallas, TX 75201
Debtors'
Claims &
Noticing
Agent: BMC GROUP, INC.
600 1st Avenue,
Seattle Washington 98104
Debtors'
Real Estate
Consultant: HILCO REAL ESTATE, LLC
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petitions were signed by Mark Shapiro, chief restructuring
officer.
A full-text copy of Fresh Acquisitions' petition is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/RPP4COA/Fresh_Acquisitions_LLC__txnbke-21-30721__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Dynamic Foods Food Inventory $4,030,009
Alamo Dynamic LLC
1001 East 33rd St
Lubbock, TX 79404-1899
Tel: (806) 723-5600
Email: temerson@dynamicfoods.com
2. Arthur N. Rupe Foundation Breach of Lease $1,781,107
c/o Katten Muchin Rosenman LLP
Jorge A. Solis/Michale J. Chiusano
2121 N. Pearl St Suite 1100
Dallas, TX 75201
Tel: (214) 765-3600
Fax: (214) 765-3602
Email: Jorge.solis@katten.com
Michael.Chiusano@katten.com
and
c/o Brady & Hamilton LLP
Zachary S Brady
1602 13 St
Lubbock, TX 79401
Tel: (806) 771-1850
Fax: (806) 771-3750
Email: zach@bhlawgroup.com
3. National Retail Properties LP Rent $684,851
PO Box 864205
Orlando, FL 32886-4205
Tel: (800) 666-7348
Email: ninibet.balladin@nnnreit.com
4. Comptroller of Public Accounts Sales Tax $438,195
State Comptroller
PO Box 149359
Austin, TX 78714-9359
Tel: 512-463-4660
5. AM Realty Capital OP Rent $339,723
Ptnrship
P.O. Box 29650
Dept 880044
Phoenix, AZ 85038-9650
Tel: (602) 778-8700
Email: lendicott@weitzmangroup.com
6. Segura Holdings Rent $316,182
c/o Segura Holdings
12400 Ventura Blvd #1129
Studio City, CA 91604
Tel: (310) 503-8839
Secondary Tel: (818) 509-0900
Email: tlister@sinvp.com
7. Holland Island LLC Rent $287,751
8938 Worchester Highway
Berlin, MD 21811
Tel: (410) 641-1101
Email: amanda@bergecpa.com
8. MCM Properties, Ltd and Leases $250,000
ICA Properties, Inc.
c/o Lynch, Chappell & Alsup, P.C.
Attn: Billy Blue Huatt
The Summit, Suite 700
Midland, TX 79701
Tel: (432) 683-3351
Fax: (432) 683-3351
Email: bhyatt@lcalawfirm.com
9. National Retail Properties, LP Breach of $248,931
c/o Doerner, Saunders, Danile & Lease
Anderson LLP
Attn: Elizabeth Salomone
210 Park Avenue Suite 1200
Oklahoma City, OK 73102
Tel: 405-319-3500
Fax: 405-319-3509
Email: esalomone@dsda.com
10. Stevens, Joe Workers Comp $248,260
135 Lakeview Dr
Streetman, TX 75859
Tel: 214-924-4191
11. Fishbowl Inc. Litigation $235,985
44 Canal Center Plaza Demand
Suite 500
Alexandria, VA 22314
Tel: 703-836-3421
Email: billing@fishbowl.com
12. Rogers Avenue Properties, LLC Breach of $210,320
c/o Jones, Jackson, Moll, Lease
McGinnis & Stocks, PLC
Attn: Mark Moll
401 North 7th St
PO Box 2023
Fort Smith, AR 7290-2023
Tel: (479) 782-7203
Email: mmoll@jjmlaw.com
Rogers Avenue Properties LLC
109 N 6 St
Fort Smith, AR 72901
Tel: 479-783-2792 Ext 206
Fax: 479-783-0028
13. NM Taxation and Revenue Sales Tax $193,936
Department
1100 South St. Francis Drive
Santa Fe, NM 87504-5128
Tel: (505) 827-0700
14. Alicia & Jeronimo LP Rent $187,737
DBA Wyoming NM LLC
1801 W. Olympic Blvd, File #1615
Pasadena, CA 91199-1615
Tel: (310) 820-5443
Email: DHowell@westfin.com
15. National Retail Eviction/ $185,422
Properties, LP Rent
c/o Cantey Hanger LLP
Attn: David K. Speed
600 W 6th St Suite 300
Fort Worth, TX 76102
Tel: (405) 319-3500
Fax: (405) 319-3509
Email: dspeed@canteyhanger.com
16. Coronado Center Station LLC Rent $160,242
P.O. Box 645414
Pittsburgh, PA 15264-5414
Tel: (800) 875-6585
Email: asmith@phillipsedison.com
17. BRE RC Las Palmas TX LP Rent $159,627
P.O. Box 206479
Dallas, TX 75320-6479
Tel: (210) 280-4067
Email: jvera@shopcore.com
18. MCM Properties Ltd Rent $146,714
DBA Music City Mall
4101 E 42nd St
Odessa, TX 79762
Tel: (432) 550-2483
Fax: 432-363-0161
Email: mdavis@musiccitymall.net
19. PNM Utility $126,527
PO Box 17970
Denver, CO 80217-0970
Tel: (505) 246-5700
20. San Juan Associates Rent $93,764
San Juan Plaza Partners
c/o Peterson Properties,
RE SVCS Inc.
2325 San Pedro Bldg NE 2A
FRESH ACQUISITIONS: Starts VitaNova-Backed Chapter 11 Case
----------------------------------------------------------
Fresh Acquisitions, LLC, which operates Furr's Fresh Buffet, and
several of its affiliates including Buffets LLC and its
subsidiaries, which operate Ryan's, Old Country Buffet, Tahoe Joes
Famous Steakhouse, and Hometown Buffet, filed for Chapter 11
bankruptcy protection on April 20, 2021, to strengthen their
operations and recapitalize their businesses.
The companies will have access to additional liquidity through a
post-petition debtor-in-possession loan being extended by VitaNova
Brands.
"As with almost every one of our peers, buffet restaurants took the
brunt of the loss of sales during the pandemic and as such, the
path to success requires hard choices to be made, including the
rationalization of our overall footprint," said Jason Kemp,
co-founder and CEO of VitaNova Brands.
Mr. Kemp continued, "The precipitous decline in sales at the
restaurants resulting from occupancy restrictions and the banning
of family-style buffet dining forced the companies to take
extraordinary steps, including the closing of multiple locations."
The companies expect to continue operating in the normal course
during their chapter 11 cases and believe that a number of the
brands -- including Furr's Buffet and Tahoe Joe's -- can take
advantage of the expected post-COVID recovery.
Mr. Kemp concluded, "We are looking forward to emerging from
bankruptcy as a stronger operator with a focus on the Tahoe Joe's
and Furr's AYCE Marketplace banners. These great brands serving
great food will create a platform for future growth."
The cases are pending in the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division. Documents filed in the
case may be found at www.bmcgroup.com/fresh. Gray Reed is acting as
legal counsel and B. Riley Advisory Services is the Chief
Restructuring Officer and Financial Advisor.
Road to Bankruptcy
Prior to the COVID-19 pandemic, the Debtors were a significant
operator of buffet-style restaurants in the United States with
approximately 90 stores operating in 27 states.
According to CRO Mark Shapiro, much like its competitors in the all
-you-can-eat (AY C E) and dine-in restaurant businesses, the
Debtors' recent history has been impacted by the uncertainty,
unexpected challenges, and ever-changing landscape resulting from
the COVID-19 pandemic. Despite the Debtors' efforts to right-size
their operations in the wake of a prior 2016 bankruptcy filing, the
unpredictable and unprecedented scale of the COVID-19 pandemic
significantly disrupted the Debtors' restaurant operations and
severely limited customer demand. As various federal, state, and
local governments instituted shelter-in-place orders and restricted
restaurant operations to delivery and takeout services, the Debtors
(like many other restaurant operators) experienced a significant
decline in customer spending and foot traffic. The shutdowns
delivered a sudden and significant blow to the business and the
Debtors' overall liquidity position. As such, the Debtors have
been forced to close all of their remaining AYCE restaurants; the
only locations currently open for business are six Tahoe Joe's
restaurants in California
About VitaNova Brands
VitaNova Brands (VNB) -- https://www.vitanovabrands.com/ --
is a multi-concept operator of independent restaurant brands, based
in San Antonio, Texas. VNB has built a unique and scalable model
designed to identify and acquire underperforming restaurant brands,
assume full control of operations and strategy, and rapidly improve
profitability. Currently, VNB manages all store-level and corporate
operations for Togokitchens.com, Zio's Italian Kitchen, Sushi
Zushi, Tahoe Joe's, and Furr's AYCE Marketplace.
About Fresh Acquisitions
Fresh Acquisitions LLC and Buffets, LLC, operate independent
restaurant brands and are based in San Antonio, Texas. Prior to
the COVID-19 pandemic, the Companies were a significant operator of
buffet-style restaurants in the United States with approximately 90
stores operating in 27 states. Their concepts include six buffet
restaurant chains and a full-service steakhouse, operating under
the names Furr's Fresh Buffet, Old Country Buffet, Country Buffet,
HomeTown Buffet, Ryan's, Fire Mountain, and Tahoe Joe's Famous
Steakhouse, respectively.
Fresh Acquisitions, LLC and 14 affiliates, including Buffets LLC
(a/k/a Ovation Brands), sought Chapter 11 protection (Bankr. N.D.
Tex. Lead Case No. 21-30721) on April 20, 2021.
Fresh Acquisitions was estimated to have $1 million to $10 million
in assets and $10 million to $50 million in liabilities.
The Hon. Harlin Dewayne Hale is the case judge.
The Debtors tapped GRAY REED as counsel; and B. RILEY ADVISORY
SERVICES as financial advisor. KATTEN MUCHIN ROSENMAN LLP is
special counsel. BMC GROUP, INC., is the claims and noticing
agent. HILCO REAL ESTATE, LLC is the real estate consultant.
FRESH ACQUISITIONS: Tahoe Joe's and Furr's Brands on the Block
--------------------------------------------------------------
Fresh Acquisitions, LLC, which operates Furr's Fresh Buffet, and
several of its affiliates including Buffets LLC and its
subsidiaries, which operate Ryan's, Old Country Buffet, Tahoe Joes
Famous Steakhouse, and Hometown Buffet, filed for Chapter 11
bankruptcy protection and said they are pursuing an expedited sale
process for their Tahoe Joe's and the Furr's brands and other
assets in the next few weeks.
According to CRO Mark Shapiro, despite the Debtors' prepetition
cost savings initiatives through store closings, the Debtors cannot
sustain their remaining operations with their dwindling liquidity.
The Debtors reached agreements with VitaNova, their proposed DIP
Lender, to borrow needed capital on a pre- and postpetition basis.
These funds are necessary to manage these bankruptcy cases,
including the ability to run a sale process.
A sale and auction process will ensure that the greatest value is
realized for Tahoe Joe's and the Furr's intellectual property.
Although Furr's locations are closed, selling its intellectual
property under this process provides flexibility to the buyer and
allows the brand to be reopened in the future, if desired. It also
allows for the possibility of monetizing or transferring leases for
certain closed stores that a buyer could use for future operations,
either for the Furr's brand or otherwise. Other than the revenue
generated by Tahoe Joe's, which itself has been insufficient to
sustain operations entirely, equity has had to infuse capital over
time to maintain the overall corporate family. Such capital
infusions have little, if any, chance of being repaid under the
current circumstances. In furtherance of orchestrating an orderly
chapter 11 filing, and to avoid conflicts (given the multiple hats
worn by the VitaNova management team), Vineet Batra was appointed
as Independent Director for the governing bodies of all of the
Debtors in January 2021, and Shapiro was appointed Chief
Restructuring Officer in February, 2021.
Proposed Sale Process
While the Debtors are not seeking emergency approval of bid
procedures, the proposed DIP financing arrangements contemplate an
expedited sale process to begin in the first few weeks of these
bankruptcy cases.
Specifically, the proposed DIP financing agreement and interim
order, if approved, will require the Debtors to file a bidding
procedures motion within 21 days of the Petition Date, with such
motion to include the proposed bidding procedures and process for
approving a stalking horse asset purchase agreement and
corresponding bid protections for any proposed stalking horse
bidder. The proposed DIP financing agreement and interim and final
orders, if approved, will also require approval of a Section 363
sale transaction within 75 days of the Petition Date.
The Debtors believe an expedited sale process is necessary to
preserve cash and maximize value of the Debtors' brands, while
ensuring a timely and efficient exit from bankruptcy to expedite
creditor recoveries.
About Fresh Acquisitions
Fresh Acquisitions LLC and Buffets, LLC, operate independent
restaurant brands and are based in San Antonio, Texas. Prior to
the COVID-19 pandemic, the Companies were a significant operator of
buffet-style restaurants in the United States with approximately 90
stores operating in 27 states. Their concepts include six buffet
restaurant chains and a full-service steakhouse, operating under
the names Furr's Fresh Buffet, Old Country Buffet, Country Buffet,
HomeTown Buffet, Ryan's, Fire Mountain, and Tahoe Joe's Famous
Steakhouse, respectively.
Fresh Acquisitions, LLC and 14 affiliates, including Buffets LLC
(a/k/a Ovation Brands), sought Chapter 11 protection (Bankr. N.D.
Tex. Lead Case No. 21-30721) on April 20, 2021.
Fresh Acquisitions was estimated to have $1 million to $10 million
in assets and $10 million to $50 million in liabilities.
The Hon. Harlin Dewayne Hale is the case judge.
The Debtors tapped GRAY REED as counsel; and B. RILEY ADVISORY
SERVICES as financial advisor. KATTEN MUCHIN ROSENMAN LLP is
special counsel. BMC GROUP, INC., is the claims and noticing
agent. HILCO REAL ESTATE, LLC is the real estate consultant.
FRONTIER COMMUNICATIONS: Shearman Updates on Debtholders Group
--------------------------------------------------------------
In the Chapter 11 cases of Frontier Communications Corporation, et
al., the law firm of Shearman & Sterling LLP submitted an amended
verified statement under Rule 2019 of the Federal Rules of
Bankruptcy Procedure, to disclose an updated list of Ad Hoc Group
of Subsidiary Debtholders.
On or about April 30, 2019, the Ad Hoc Group of Subsidiary
Debtholders retained S&S to represent their common interests in
connection with restructuring discussions related to the Notes.
From time to time thereafter, certain holders of Notes have joined
the Ad Hoc Group of Subsidiary Debtholders.
S&S does not represent or purport to represent any other entities
with respect to the Chapter 11 cases. In addition, no member of the
Ad Hoc Group of Subsidiary Debtholders purports to act, represent,
or speak on behalf of any other entities in connection with the
Chapter 11 cases.
On June 26, 2020, S&S filed the Verified Statement of Shearman &
Sterling LLP Pursuant to Bankruptcy Rule 2019 [Docket No. 601].
Since then, the members of the Ad Hoc Group of Subsidiary
Debtholders and the disclosable economic interests in relation to
the Debtors that such members hold or manage have changed. The
present members of the Ad Hoc Group of Subsidiary Debtholders hold
disclosable economic interests or manage or advise certain funds
and/or accounts that hold disclosable economic interests in the
Notes, as well as other economic interests relating to the
Debtors.
As of April 16, 2021, members of the Ad Hoc Group of Subsidiary
Debtholders and their disclosable economic interests are:
Saye Capital Management, L.P.
225 Avenue I, Suite 205
Redondo Beach, CA 90277
* Frontier Southwest due '31 (8.5%-Secured): $12,550,000.00
* Frontier North due '28 (6.73%): $3,680,000.00
Cross Ocean Partners Management LP
20 Horseneck Lane
Greenwich, CT 06830
* Frontier Southwest due '31 (8.5%-Secured): $8,033,000.00
* Frontier California due '27 (6.75%): $15,167,000.00
* Frontier West Virginia due '29 (8.4%): $23,111,000.00
Polygon Global Partners LP
399 Park Avenue, 22nd Floor
New York, NY 10022
* Frontier Florida due '28 (6.86%): $9,894,000.00
* Frontier California due '27 (6.75%): $3,007,000.00
* Frontier North due '28 (6.73%): $7,302,000.00
Sun Life Capital Management (U.S.) LLC
96 Worcester Street, SC1303
Wellesley, MA 02481
* Frontier West Virginia due '29 (8.4%): $5,000,000.00
Equitable Holdings, Inc.
Care of AllianceBernstein L.P.
Attn: Rob Hopper/Keith Hanauer
1345 Avenue of the Americas, 38th Fl
New York, NY 10104
* Frontier West Virginia due '29 (8.4%): $15,000,000.00
Counsel to the Ad Hoc Group of Subsidiary Debtholders can be
reached at:
SHEARMAN & STERLING LLP
Joel Moss, Esq.
Jordan A. Wishnew, Esq.
599 Lexington Avenue
New York, NY 10022
Telephone: (212) 848-4000
Facsimile: (212) 848-7179
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3tEgDny
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety
of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure digital
protection solutions.
Frontier Communications Corporation and 103 related entities sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on
April 14, 2020.
Judge Robert D. Drain oversees the cases. The Debtors tapped
Kirkland & Ellis LLP as legal counsel; Evercore as financial
advisor; and FTI Consulting, Inc., as restructuring advisor. Prime
Clerk is the claims agent, maintaining the page
http://www.frontierrestructuring.com/and
https://cases.primeclerk.com/ftr.
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' Chapter 11 cases. The committee
tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez
& Marsal North America, LLC as financial advisor; and UBS
Securities LLC as an investment banker.
FRONTIER COMMUNICATIONS: To Emerge from Chapter 11 Under New Team
-----------------------------------------------------------------
Alan Burkitt-Gray of Capacity reports that Frontier Communications
has passed the last hurdle in emerging from last 2020's bankruptcy,
after the support of Californian authorities.
The company, which went into chapter 11 bankruptcy protection on 14
April 2020, said the California Public Utilities Commission had
unanimously voted to approve its emergence.
The Federal Communications Commission (FCC) approved the plan in
January 2021.
"Having already received all other required state and federal
approvals, the company expects to successfully emerge from chapter
11 in the coming weeks," said Frontier, which will start its new
life with a refreshed management team.
Former Vodafone UK CEO Nick Jeffery (pictured) became CEO on 1
March, following the announcement of his appointment in December
2020.
Under the deal to come out of bankruptcy, bondholders with more
than $11 billion worth of outstanding unsecured bonds agreed a
restructuring support agreement. That will reduce debt by more than
$10 billion and cut $1 billion off annual interest payments.
As part of its post-bankruptcy reconstruction, last third week of
April 2021 the Frontier hired Veronica Bloodworth from AT&T to be
executive VP and chief network officer. She will report directly to
Jeffery and oversee all of Frontier's network operations, including
those related to its modernisation plan.
Bloodwort was senior VP of construction and engineering for AT&T,
leading the planning, design, construction and capital maintenance
of the wireline and wireless network infrastructure across a
national footprint.
Steve Gable, who was CTO, will take on the new role of chief
digital and information officer, leading Frontier's digital
transformation.
Jeffery said about Bloodworth: "With her wireline and wireless
network management expertise, she will strengthen our team and
improve our performance across the company."
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety
of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure digital
protection solutions.
Frontier Communications Corporation and 103 related entities sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on
April 14, 2020.
Judge Robert D. Drain oversees the cases. The Debtors tapped
Kirkland & Ellis LLP as legal counsel; Evercore as financial
advisor; and FTI Consulting, Inc., as restructuring advisor. Prime
Clerk is the claims agent, maintaining the page
http://www.frontierrestructuring.com/and
https://cases.primeclerk.com/ftr
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' Chapter 11 cases. The committee
tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez
& Marsal North America, LLC, as financial advisor; and UBS
Securities LLC as an investment banker.
GENESIS ENERGY: Moody's Alters Outlook on Ba3 CFR to Negative
-------------------------------------------------------------
Moody's Investors Service changed the rating outlook for Genesis
Energy LP (GEL) to negative from stable and affirmed its existing
ratings, including the Ba3 Corporate Family Rating, Ba3-PD
Probability of Default Rating and B1 ratings on the existing senior
unsecured notes. The SGL-3 Speculative Grade Liquidity Rating is
unchanged.
The ratings on the senior unsecured notes have not changed
following the announcement by GEL that it will issue $200 million
of add-on notes. Proceeds from the new notes issuance will be used
to partially repay borrowings under its revolving credit facility.
"Genesis Energy's proposed notes issuance will refinance existing
revolver debt, improving its liquidity," stated James Wilkins,
Moody's Vice President. "The financing will be largely leverage
neutral."
The following summarizes the ratings activity.
Affirmations:
Issuer: Genesis Energy LP
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Unsecured Shelf , Affirmed (P)B1
Senior Unsecured Notes, Affirmed B1 (LGD4)
Outlook Actions:
Issuer: Genesis Energy LP
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
The change in outlook to negative reflects the high leverage for
the Ba3 CFR and risks to a timely improvement in credit metrics.
Its leverage has been elevated following the 2017 soda ash business
acquisition, but steadily declined until 2020, when its earnings
deteriorated during the coronavirus pandemic and suffered from
hurricane related shutdowns of offshore US Gulf of Mexico
operations. Soda ash pricing remained depressed in the first
quarter 2021 due to the general slowdown in the global economy and
will remain weak under contracts with prices reset annually.
However, Moody's expects soda ash and midstream oil & gas volumes
to improve in 2021 over 2020 levels, but there remains considerable
uncertainty regarding the nature of the recovery in economic
activity and the level of GEL's overall profitability.
The add-on of senior unsecured notes to the existing notes due 2027
will not increase leverage or impact the B1 ratings on the senior
unsecured notes. The partial repayment of revolver borrowings with
the proceeds of the add-on notes will extend GEL's average debt
maturity, improve liquidity and decrease reliance on short-term
bank borrowings. The senior unsecured rating is one notch below the
Ba3 CFR and reflects the lower priority ranking compared to
obligations under the company's $950 million senior secured credit
facility (unrated) that has a first lien on all assets. The size of
the secured claims relative to the unsecured notes results in the
notes being rated one notch below the Ba3 CFR.
GEL's Ba3 CFR reflects its scale, meaningful proportion of
fee-based cash flow, and a high degree of business line
diversification for a company of its size with offshore pipelines,
sodium minerals and sulfur services, marine transportation, and
onshore facilities & transportation operations. The company is a
large US producer of natural soda ash, which enjoys cost advantages
over synthetic soda ash production and generates relatively steady
cash flow, despite depressed selling prices in 2020 and 2021. GEL
has high leverage (6.3x as of December 31, 2020) for the rating
following years of heavy capital spending in 2014 - 2019,
acquisitions and weak earnings in 2020-2021. However, the company
cut its distributions on common units in 2020, saving approximately
$200 million per year in cash, and allowing it to repay debt with
free cash flow. It has also shown a willingness to issue common
equity and preferred equity to fund acquisitions and projects,
limiting the impact of growth investments on its leverage.
The SGL-3 Speculative Grade Liquidity Rating reflects Moody's
expectation GEL will have adequate liquidity through mid-2022
supported by cash flow from operations and unused availability
under its $950 million credit facility due in March 2024, which
provides from a $650 million revolving credit facility and a $300
million term loan. The $300 million term loan and the $200 million
add-on notes reduce the need for short-term revolver borrowings.
Availability under the amended $650 million revolver as of April
15, 2021, pro forma for the $200 million of add-on notes was over
$400 million after accounting for $744.5 million of borrowings
under the credit facility, the outstanding $300 million term loan
and $1 million of letters of credit. The credit facility has three
financial covenants: (1) a maximum Debt to EBITDA ratio of 5.85x
for Q1 2021 and Q2 2021, 5.75x for Q3 2021 through Q1 2022 and 5.5x
thereafter; (2) a maximum Senior Secured Debt to EBITDA ratio of
2.5x; and (3) a minimum interest coverage ratio (EBITDA / Interest
Expense) of 2.5x. Moody's expects GEL to remain in compliance with
its financial covenants through year-end 2022. The company's next
debt maturity is the senior unsecured notes due 2024 ($341 million
outstanding as of year-end 2020). Substantially all of GEL's assets
are currently pledged as security under the revolver which limits
the extent to which asset sales could provide a source of
additional liquidity, if needed.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Debt/EBITDA remains above 5.25x
on a sustained basis or core business fundamentals do not improve.
An upgrade is unlikely at this time given the high leverage, but
the CFR could be upgraded if Moody's expects GEL's businesses to
exhibit steady earnings growth, Debt to EBITDA trends towards 4.0x
and liquidity is good.
Genesis Energy, L.P., headquartered in Houston, Texas, is a master
limited partnership (MLP) with midstream assets located in the US
Gulf Coast region and soda ash operations in Wyoming. The company
conducts a wide variety of operations through four different
business segments: offshore pipeline transportation, sodium
minerals & sulfur services, onshore facilities & transportation,
and marine transportation.
The principal methodology used in these ratings was Midstream
Energy published in December 2018.
GRIDDY ENERGY: State of Texas Objects to PR Firm in Chapter 11 Case
-------------------------------------------------------------------
Law360 reports that the state of Texas objected Monday, April 19,
2021, to bankrupt electricity provider Griddy Energy LLC's proposal
to retain a public relations outfit, saying that since the debtor
has no customers and is liquidating it would be a waste of estate
resources to hire the firm.
Texas Attorney General Ken Paxton opposed the hiring of Sitrick and
Company because the state could not determine the purpose of
retaining the firm in a situation where Griddy will not continue as
an operating company post-bankruptcy. "The need for a public
relations firm in this single-debtor liquidation is not readily
ascertainable," the objection said.
About Griddy Energy
California startup Griddy Energy is an American power retailer that
formerly sold energy to people in the state of Texas at wholesale
prices for a $9.99 monthly membership fee and had approximately
29,000 members. Griddy was a feature of Texas' unusual,
deregulated system for electric power. The vast majority of Texans
-- and Americans -- pay a fixed rate for electric power and get
predictable monthly bills. However, Griddy works by connecting
customers to the wholesale market for electricity, which can change
by the minute and is more volatile, for a monthly fee of $9.99.
During February 2021's winter storm in Texas, power generators
failed and demand for heating shot up. In response, ERCOT raised
the price of electricity to the legal limit of $9 per kilowatt-hour
and kept it there for several days. Griddy customers who didn't
lose power were hit with massive electric bills that were
auto-debited from their bank accounts.
State grid operator ERCOT at the end of February 2020 cut off the
Griddy's access to customers for unpaid bills following the Texas
freeze. The Texas attorney general also said it is suing Griddy,
saying it engaged in deceptive trade practices by issuing excessive
bills.
Griddy Energy filed a chapter 11 bankruptcy petition (Bankr. S.D.
Tex. Case No. 21-30923) on March 15, 2021.
Griddy estimated $1 million to $10 million in assets and $10
million to $50 million in liabilities as of the bankruptcy filing.
Griddy is represented by Baker Botts LLP as legal counsel. Griddy
is represented by Crestline Solutions, LLC and Scott Pllc as public
affairs advisors. Stretto is the claims agent.
GTT COMMUNICATIONS: Has Some Recovery for Shareholders in Ch. 11
----------------------------------------------------------------
Katherine Doherty and Allison McNeely of Bloomberg News report that
GTT Communications Inc. is closing in on a plan to hand ownership
of the telecommunications firm to lenders through bankruptcy, while
maintaining some value for shareholders, according to people with
knowledge of the matter.
Under the proposal, lenders would receive the majority of the
shares in the reorganized company while bondholders would get
equity plus warrants, according to people with knowledge of the
matter. Existing shareholders would also be entitled to some
warrants, according to one of the people, who asked not to be
identified discussing confidential matters.
About GTT Communications Inc.
Headquartered in McLean, Virginia, GTT Communications, Inc. --
www.gtt.net -- owns and operates a global Tier 1 internet network
and provides a comprehensive suite of cloud networking services.
* * *
As reported by the TCR on March 1, 2021, S&P Global Ratings lowered
all of its ratings on U.S.-based internet protocol network operator
GTT Communications Inc. by one notch, including its issuer credit
rating, to 'CCC-' from 'CCC', to reflect the increased likelihood
of a default or distressed exchange over the next six months.
In December 2020, Moody's Investors Service downgraded GTT
Communications, Inc's corporate family rating to Caa2 from B3. The
downgrade reflects the continued delays in the company reaching an
agreement with its lenders over a long-term cure of its reporting
requirements which GTT is in breach of due to recently discovered
accounting issues which have led to the company being unable to
file its Q2 and Q3 financial reports.
HECLA MINING: Moody's Raises CFR to B2 on Strong Performance
------------------------------------------------------------
Moody's Investors Service upgraded the Corporate Family Rating of
Hecla Mining Company to B2 from B3, the probability of default
rating to B2-PD from B3-PD and senior unsecured notes to B3 from
Caa1. The Speculative Grade Liquidity Rating was upgraded to SGL-2
from SGL-3. The outlook is stable.
"The upgrade is supported by a substantial improvement in Hecla's
credit metrics and liquidity, the Lucky Friday mine reaching full
production and Moody's expectations that Hecla's operating
performance will continue to strengthen over the next 12-18
months," said Botir Sharipov, Vice President and lead analyst for
Hecla.
Upgrades:
Issuer: Hecla Mining Company
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Senior Unsecured Regular Bond/Debenture, Upgraded to B3 (LGD4)
from Caa1 (LGD4)
Outlook Actions:
Issuer: Hecla Mining Company
Outlook, remains Stable
RATINGS RATIONALE
The upgrade acknowledges the meaningful improvement in the
company's credit profile in 2020 notwithstanding the impact of the
pandemic on its operations, and particularly, Casa Berardi mine in
Quebec, where mining and processing activities were suspended for a
few weeks in Q2 2020. The upgrade also recognizes the successful
ramp-up of the Lucky Friday mine to full production in Q4 2020,
continued strong performance at the company's flagship Greens Creek
mine and cost-reduction initiatives at Casa Berardi which are
expected to improve the operating performance in 2021.
Hecla's B2 CFR reflects its modest scale, exposure to volatile
gold, silver, zinc and lead prices, relatively high cost position
of its gold mine and moderate leverage. Hecla's credit profile is
supported by its good liquidity position and favorable geopolitical
footprint with assets located in the US, Canada and Mexico. The
rating also benefits from the long mine life at key operations,
ample organic growth opportunities, significant mineral reserves
and geologically attractive exploration portfolio of assets. The
rating is constrained by currently still high, albeit falling,
asset concentration risk, given that its Greens Creek mine in
Alaska generated most of the company's operating earnings and free
cash flow in 2020.
Hecla's gold all-in sustaining costs after by-product credits
(AISC) were $1,302/oz in 2020 and are expected to decline in 2021
with a significant room for improvement at the Casa Berardi mine.
The company's silver AISC remained low despite rising in 2020 to
$11.89/oz from $10.13 in 2019 on higher Green Creek costs and the
inclusion of operating costs at the Lucky Friday mine. While the
company is guiding for higher silver cash costs and AISC for the
Greens Creek mine in 2021, operating costs at Lucky Friday are
expected to decline as the company finally puts the # 4 Shaft that
was completed in 2016, to full use with the resulting full-year of
mine production estimated to exceed of 3.4moz silver in 2021. Lucky
Friday's silver production is expected to grow to above 5moz in the
next few years benefitting from higher silver grades as the mine
gets deeper. However, mining at depth poses some risk to operations
given the history of seismic events at the mine. The Greens Creek
mine is expected to deliver another year of strong operational
performance and substantial free cash flow in 2021.
Assuming gold price of $1,500/oz and silver price of $21/oz, the
top end of Moody's price sensitivity ranges which are notably below
spot prices, Moody's estimates that EBITDA, as adjusted by Moody's,
will reach $180 million and leverage could increase to 2.8x in
2021. Under this scenario, free cash flow is forecast to be around
$60 million in 2021. EBITDA could exceed $240 million and leverage
could stay below 2.4x in 2021 if the company realizes gold and
silver prices of or higher than $1,700/oz and $23/oz, respectively,
and assuming lead and zinc prices do not decline materially from
current levels. Hecla consistently hedges its longer dated zinc and
lead production and as of 2020, the company had hedged 33% of its
zinc production over 2021 and 2022 at $1.21/lb. and 39% of lead
production for 2021 at $0.88/lb. Moody's would also expect the
company to generate over $120 million in positive FCF under this
price scenario in 2021.
The stable outlook reflects Moody's expectations that Hecla will
reduce operating costs at the Casa Berardi mine and position the
Lucky Friday mine to safely grow silver production in the next few
years, improving the overall cost structure and strengthening the
company's ability to withstand, on a sustained basis, the
volatility in prices of precious and base metals. The outlook also
assumes that Hecla will maintain its good liquidity position.
Hecla faces a number of ESG risks, typical for a mining company,
including but not limited to environmental and asset retirement
obligations, water management and water rights, social risks and
litigation matters associated with Nevada operations.
Hecla's SGL-2 rating reflects the company's good liquidity profile
with $130 million in cash and cash equivalents as of 2020 year-end
and $230 million (net of L/Cs) available under the undrawn $250
million revolving line of credit (RCF). The company generated $93
million in free cash flow in 2020 and is expected to remain
substantially FCF positive in 2021. The RCF is secured by assets of
some of Hecla's Nevada subsidiaries, Casa Berardi mine, the
company's assets in the Greens Creek mine JV and equity interests
in certain domestic subsidiaries. Moody's does not expect the
company to draw on the revolver unless gold and silver prices
decline materially and sustain at low levels for an extended period
of time. Financial covenants include a senior leverage ratio (debt
secured by liens/EBITDA) of no more than 2.5x, a minimum interest
coverage ratio of 3x and a leverage ratio (total debt minus
unencumbered cash/EBITDA) of no more than 4x. Moody's expects the
company to remain in full compliance with the covenants.
Under Moody's Loss Given Default for Speculative-Grade Companies
methodology, the B3 rating on the senior unsecured notes, one notch
below the CFR, reflects their lower priority position in the
capital structure and their effective subordination to the RCF
(unrated). The notes will be guaranteed on a senior unsecured basis
by the majority of the company's subsidiaries. Non-guarantor
subsidiaries represented about 5% of Hecla's FY2020 sales and total
assets as of December 31, 2020.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would be considered if the company improves operating
performance and reduces costs at Casa Berardi mine as planned,
demonstrates stability in its credit metrics and solidifies its
ability to generate sustained positive free cash flow at various
commodity prices. Quantitatively, Moody's would consider an upgrade
if the company maintains an adjusted leverage of below 3.0x
(debt/EBITDA) and EBIT margin of at least 8%.
A negative rating pressure could develop if free cash flows are
expected to be negative on a sustained basis or if the company
experiences material operational issues at its mines which could
result in lowered production and higher costs. Quantitatively,
Moody's would consider a downgrade if the leverage ratio increases
to and is sustained above 4x and (CFO - Dividends)/Debt) declines
below 20% of outstanding debt. A significant reduction in borrowing
availability or liquidity could also result in a downgrade.
The principal methodology used in these ratings was Mining
published in September 2018.
Headquartered in Coeur d'Alene, Idaho, Hecla Mining Company
("Hecla") is primarily a silver and gold producer with zinc and
lead by-products. The company operates mines in Alaska (Greens
Creek), Idaho (Lucky Friday) and Quebec Canada (Casa Berardi) and
owns Mexico (San Sebastian) and Nevada mines as well as multiple
other exploration and pre-development properties, including the
geologically attractive Hatter Graben vein system on its Hollister
property in Nevada. For the twelve months ended December 31, 2020,
Hecla generated revenues of $692 million.
HERMITAGE OFFSHORE: Wins May 8 Plan Exclusivity Extension
---------------------------------------------------------
Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern
District of New York extended the periods within which the
Hermitage Offshore Services Ltd. and its affiliates have the
exclusive right to file a plan of reorganization through and
including May 8, 2021, and to solicit acceptances on the Plan
through and including July 7, 2021.
While the Debtors have efficiently utilized their time in chapter
11 thus far, the Debtors require additional time to propose and
confirm a plan. All creditor groups or their advisors have had an
opportunity to actively participate in discussions with the Debtors
throughout these chapter 11 cases. The Debtors are seeking an
extension of the Exclusivity Period to preserve and capitalize on
the progress made to date.
Also, since the Petition Date, the Debtors have paid their vendors
and other counterparties in the ordinary course of business or as
otherwise provided by Court order.
In addition to successfully consummating the sales of their
Offshore Support Vessel or OSVs, the Debtors have made substantial
progress toward their restructuring goals since commencing these
chapter 11 cases on August 11, 2020, including, among other
things:
(i) stabilizing their operations and ensuring a smooth transition
into chapter 11 through the approval of various first- and
second-day operational motions;
(ii) obtaining final approval of the use of cash collateral;
(iii) obtaining approval of bidding procedures, holding an auction,
and finalizing definitive documentation of the sales of their OSVs;
and
(iv) addressing numerous questions, concerns, and issues raised by
parties in interest.
In the period since the First Exclusivity Order was entered, the
Debtors have remained focused on developing a chapter 11 plan and
negotiating such a plan with their major stakeholders, with the
goal of obtaining a consensual, value-maximizing resolution to
these chapter 11 cases. The Debtors' progress to date has been
achieved in no small part due to the breathing room provided by
chapter 11.
The extension of the Exclusivity Periods will allow the plan
negotiation process to proceed, afford the Debtors time to obtain
confirmation of the plan, not prejudice any parties in interest,
and promote the Debtors' goal of maximizing value for their
stakeholders.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3uSW9HU from Primeclerk.com.
A copy of the Court's Extension Order is available at
https://bit.ly/2Ruk4Po from Primeclerk.com.
About Hermitage Offshore
Bermuda-based Hermitage Offshore Services Ltd. (previously Nordic
American Offshore Ltd.) -- http://www.hermitage-offshore.com/-- is
an offshore support vessel company that owns 23 vessels consisting
of 10 platform supply vessels, or PSVs, two anchor handling tug
supply vessels, or AHTS vessels, and 11 crew boats. The Company's
vessels primarily operate in the North Sea or the West Coast of
Africa.
The Debtors' OSVs are all focused on, and used primarily in, the
oil and gas business, including in the installation, maintenance,
and movement of oil and gas platforms. Demand for the Debtors'
services, as well as its operations, growth, and stability in the
value of the OSVs, depend on activity in offshore oil and natural
gas exploration, development, and production.
Hermitage Offshore Services Ltd. (Lead Debtor) (Bankr. S.D.N.Y.
Case No. 20-11850) and 20 affiliates sought Chapter 11 protection
on August 11, 2020. The cases are assigned to Judge Martin Glenn.
In the petitions signed by Cameron Mackey, director, the
consolidated cases estimated assets and liabilities in the range of
$100 million to $500 million.
The Debtors tapped Brian S. Rosen, Esq., and Joshua A. Esses, Esq.,
at Proskauer Rose LLP as counsel. The Debtors tapped Perella
Weinberg Partners L.P. as their Investment Banker. They tapped
Napdragon Advisory AB as their Professional Shipping Advisory Firm.
Prime Clerk LLC serves as the Debtors' claims, noticing, and
solicitation agent.
HERTZ CORPORATION: Morris, Glenn Represent Shareholders
-------------------------------------------------------
In the Chapter 11 cases of The Hertz Corporation, et al., the law
firm of Glenn Agre Bergman & Fuentes LLP and Morris, Nichols, Arsht
& Tunnell LLP submitted a verified statement under Rule 2019 of the
Federal Rules of Bankruptcy Procedure, to disclose that they are
representing the Ad Hoc Committee of Shareholders.
On or around March 29, 2021, the Ad Hoc Committee of Shareholders
retained Glenn Agre to represent certain shareholders in connection
with the Chapter 11 cases of the above-captioned debtors.
Subsequently, Glenn Agre arranged for the Ad Hoc Committee of
Shareholders to engage Morris Nichols as its local counsel.
As of April 15, 2021, members of the Ad Hoc Committee of
Shareholders and their disclosable economic interests are:
Discovery Capital Management
20 Marshall Street, Suite 310
South Norwalk, CT 06854
* Number of Shares: 3,500,000
FourSixThree Capital LP
520 Madison Avenue, Floor 19
New York, NY 10022
* Number of Shares: 500,000
Alta Fundamental Advisers LLC
1500 Broadway, Suite 704
New York, NY 10036
* Number of Shares: 1,000,000
Glenview Capital Management, LLC
767 Fifth Avenue, 44th Floor
New York, NY 10153
* Number of Shares: 4,506,849
* 6.250% Unsecured Notes due 2022: $1,000,000
* 5.500% Unsecured Notes due 2024: $9,000,000
Hein Park Capital Management LP
888 7th Avenue, 4th Floor
New York, NY 10106
* Number of Shares: 3,274,447
* 2021 Senior Notes: EUR18,661,000
* Term Loan: $17,570,523
* Revolver: $5,752,902.50
Hampton Road Capital Management LP
One Greenwich Plaza
Greenwich, CT 06830
* Number of Shares: 250,000
Rubric Capital Management LP
155 East 44th St, Suite 1630
New York, NY 10017
* Number of Shares: 650,000
Two Seas Capital LP
32 Elm Place, 3rd Floor
Rye, NY 10580
* Number of Shares: 1,445,343
Counsel to the Ad Hoc Committee of Shareholders can be reached at:
Robert J. Dehney, Esq.
Eric D. Schwartz, Esq.
Joseph C. Barsalona II, Esq.
Brett S. Turlington, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 N. Market St., 16th Floor
P.O. Box 1347
Wilmington, DE 19899-1347
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
E-mail: rdehney@morrisnichols.com
eschwartz@morrisnichols.com
jbarsalona@morrisnichols.com
bturlington@morrisnichols.com
- and -
Andrew K. Glenn, Esq.
Shai Schmidt, Esq.
Rich Ramirez, Esq.
Naznen Rahman, Esq.
GLENN AGRE BERGMAN & FUENTES LLP
55 Hudson Yards
20th Floor
New York, NY 10001
Telephone: (212) 358-5600
Email: aglenn@glennagre.com
sschmidt@glennagre.com
rramirez@glennagre.com
nrahman@glennagre.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/32w1A3u and https://bit.ly/3dy1DSv
About Hertz Corp.
Hertz Corp. and its subsidiaries -- http://www.hertz.com/--
operate a worldwide vehicle rental business under the Hertz,
Dollar, and Thrifty brands, with car rental locations in North
America, Europe, Latin America, Africa, Asia, Australia, the
Caribbean, the Middle East, and New Zealand. They also operate a
vehicle leasing and fleet management solutions business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court for
the District of Delaware (Bankr. D. Del. Case No. 20-11218).
Judge Mary F. Walrath oversees the cases.
The Debtors have tapped White & Case LLP as their bankruptcy
counsel, Richards, Layton & Finger, P.A., as local counsel, Moelis
& Co. as investment banker, and FTI Consulting as financial
advisor. The Debtors also retained the services of Boston
Consulting Group to assist the Debtors in the development of their
business plan. Prime Clerk LLC is the claims agent.
The U.S. Trustee for Regions 3 and 9 appointed a Committee to
represent unsecured creditors in Debtors' Chapter 11 cases. The
Committee has tapped Kramer Levin Naftalis & Frankel LLP as its
bankruptcy counsel, Benesch Friedlander Coplan & Aronoff LLP as
Delaware counsel, UBS Securities LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Ernst & Young
LLP provides audit and tax services to the Committee.
HIDALGO COUNTY EMS: Court Okays Pharr's Plan to Buy Assets
----------------------------------------------------------
Dave Hendricks of Progress Times reports that the bankruptcy judge
on Monday, April 19, 2021, approved a plan for the city of Pharr to
buy the assets of Hidalgo County EMS for $1 million.
The city agreed to pay $1 million for Hidalgo County EMS assets,
including ambulances and equipment. Pharr will not acquire the
company's debt, liabilities or accounts receivable.
U.S. Bankruptcy Judge David R. Jones approved the sale Monday,
April 19, 2021, afternoon, contingent upon Hidalgo County EMS
coming up with enough cash to close the transaction. Hidalgo County
EMS is about $153,000 short.
"In the scheme of things, that's not going to mess this deal up,"
said Chief Restructuring Officer Richard S. Schmidt. "It's going to
be solved. This sale is going to go forward."
The deal is expected to close within 30 days.
Hidalgo County EMS and Pharr will work together to avoid any
disruption in ambulance service during the transition, Schmidt
said. The city is already hiring paramedics, supervisors and other
personnel.
"We're maintaining good response times at the present time,"
Schmidt said.
Reached for comment, City Manager Edward M. Wylie said Pharr would
release a statement.
Hidalgo County EMS — a privately owned ambulance company that
responds to emergency calls in Pharr, Edinburg and rural parts of
Hidalgo County -- filed for bankruptcy in October 2019.
The company owed $2.6 million to the IRS, according to court
records, and hadn’t filed tax returns for 2017, 2018 or 2019.
Hidalgo County EMS filed for Chapter 11 bankruptcy, which protects
a company from creditors during the reorganization process. The
company, though, never submitted a reorganization plan.
Amid the coronavirus pandemic, Hidalgo County EMS became embroiled
in a dispute with the U.S. Small Business Administration over
whether or not the company qualified for a Paycheck Protection
Program loan.
Hidalgo County EMS applied for the loan in the midst of the
litigation, which prompted the U.S. Attorney’s Office for the
Southern District of Texas to accuse the company of fraud.
Schmidt, a retired bankruptcy judge, became chief restructuring
officer in the middle of the controversy.
He concluded that reorganization wasn't realistic. Hidalgo County
EMS needed to find a buyer.
Pharr submitted the only bid for "substantially all" Hidalgo County
EMS assets, according to documents filed with the bankruptcy court.
After reviewing the bid, Hidalgo County EMS negotiated a proposed
agreement with the city.
Schmit and Nathaniel Peter Holzer, an attorney for Hidalgo County
EMS, presented the agreement for approval on Monday.
The $1 million paid by the city will allow Hidalgo County EMS to
pay creditors. A breakdown filed with the court showed the
bankruptcy estate had a $153,000 cash shortfall.
"This is a situation — it’s a zero-sum game, right? There's no
one making money out of this. I haven't yet figured out how the
professionals are all going to get paid. This is a problem all the
way around," said Jones, the bankruptcy judge. "And we have been
focused on what this company did. And that is to provide a very
valuable service to folks who don't have alternatives."
Schmidt and Assistant U.S. Attorney Richard A. Kincheloe, who
represents the federal government in the bankruptcy case, said they
had discussed a potential solution to address the shortfall.
The court scheduled a follow-up hearing for Wednesday, April 21,
2021.
About Hidalgo County EMS
Edinburg, Texas-based Hidalgo County Emergency Service Foundation
d/b/a South Texas Air Med and d/b/a Hidalgo County EMS --
https://www.hidalgocountyems.org -- is a provider of emergency
ambulatory services.
Hidalgo County Emergency Service Foundation filed for Chapter 11
bankruptcy (Bankr. S.D. Tex. Case No. 19-20497) on Oct. 8, 2019,
listing between $1 million to $10 million in both assets and
liabilities. The petition was signed by Kenneth B. Ponce, sole
managing member. The Hon. David R. Jones presides over the case.
Lawyers at Jordan, Holzer & Ortiz, P.C., serve as counsel to the
Debtor.
On Sept. 29, 2020, the Court appointed of Richard S. Schmidt as the
Debtor's Chief Restructuring Officer.
HOLLINGSWORTH FARMS: Unsecureds' Payout Depends on Outcome of Sale
------------------------------------------------------------------
Hollingsworth Farms, LLC, filed with the U.S. Bankruptcy Court for
the Middle District of Alabama a Disclosure Statement describing
Chapter 11 Plan of Reorganization dated April 15, 2021.
The Debtor owned and operated approximately 1,102.30 acres in
Lowndes County, Alabama. The Debtor has continued to possess its
real and personal property thereafter by order of the Court and was
allowed to both manage its business affairs and continue oversight
of operations as, primarily, owner and operator of real estate used
for hunting, outdoor activities and conversation.
Class 2 consists of the 2 secured claims of Alabama Ag which are
understood to be secured by commercial real estate mortgages:
* Proof of Claim #1 represents a Petition Date principal
balance of $2,183,269.19 with a contract interest rate of 9.20%.
The Debtor will service interest-only payments on the estimated
principal balance of $2,299,933 for a period of 6 months from the
confirmation date to allow the Debtor a limited period of time to
secure a sale of the property in such a manner that the existing
principal balance in favor of Alabama Ag is fully satisfied. Should
the real property not sell within the specified time-frame, the
Debtor shall peacefully surrender the real property in full
satisfaction of the aggregate principal 1.
* Proof of Claim #2 represents a petition date principal
balance of $388,870 with a contract interest rate of 9.91%. The
Debtor will service interest-only payments on the estimated
principal balance of $411,253 for a period of 6 months from the
confirmation date to allow the Debtor a limited period of time to
secure a sale of the property in such a manner that the existing
principal balance in favor of Alabama Ag is fully satisfied. Should
the real property not sell within the specified time-frame, the
Debtor shall peacefully surrender the real property in full
satisfaction of the aggregate principal 2.
Class 3 shall consist of all unsecured creditors holding general,
unsecured claims. This Class consists of James W. Hollingsworth and
Toni G. Hollingsworth; and Port Royal Medical Investments, LLC.
Through April 16, 2021, it is estimated that Alabama Ag is owed a
total indebtedness of no less than $2,711,186 regarding its loans
secured by first and second mortgage positions. Pursuant said
indebtedness relative to the Lowndes County Tax Assessor's value of
the real property at $2,048,590, it would appear there is no equity
in the property for the benefit of the Debtor's unsecured
creditors. However, the Principals of the Debtor are confident
that there is significantly more value than the Tax Assessor's
valuation attributes to the real property.
The Debtor will be proposing to sell the real property by and
through 1 of the 2 following methods:
* Sale of Real Estate but retaining of mitigation banking
easement: this method involved the Debtor selling the underlying
real estate but retaining an easement with regard to any and all
mitigation banking development for the sale of credits in the
future. This method of sale is estimated to bring no less than
$4,000,000, which would be sufficient to fully satisfy any and all
outstanding principal indebtedness owed to Alabama Ag as well as
allow for a pro rata distribution to general unsecured creditors,
after applicable capital gain taxes and costs.
* Sale of Real Estate along with all mitigation banking
rights: this method involves the Debtor selling the underlying real
estate along with any and all present and future rights to
mitigation bankruptcy development for the sale of credits in the
future. This method of sale is estimated to bring no less than
$12,000,000, which would be more sufficient to fully satisfy any an
all outstanding principal indebtedness to Alabama Age as well as,
after applicable capital gain taxes and costs, allow for a full
distribution to not only general unsecured creditors but also
equity holders.
The Principals of the Debtor's efforts have been focused on
realizing the equity/value in the real property through some method
of sale. In order to have more time to do so, the Principals
affirm their willingness and ability to personally pay the $21,432
per month to Alabama Ag for a period of 6 months from the
confirmation date. If a sale does not occur within the stated
time-frame, the Debtor will peaceful surrender the real property to
Alabama Ag in full satisfaction of debt.
A full-text copy of the Disclosure Statement dated April 15, 2021,
is available at https://bit.ly/3gqNrMY from PacerMonitor.com at no
charge.
Attorney for the Debtor:
ESPY, METCALF & ESPY, P.C.
J. Kaz Espy (ASB-0122-A63E)
Post Office Drawer 6504
Dothan, Alabama 36302-6504
Tel: (334)793-6288
Fax: (334)712-1617
Email: kaz@espymetcalf.com
lynnia@espymetcalf.com
About Hollingsworth Farms
Hollingsworth Farms, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Ala. Case No. 20-31975) on Sept. 16,
2020. The petition was signed by James W. Hollingsworth, sole
member of Port Royal Medical Investments LLC. At the time of the
filing, the Debtor was estimated to have $1 million to $10 million
in both assets and liabilities. Judge William R. Sawyer oversees
the case. Espy, Metcalf & Espy, P.C., serves as the Debtor's legal
counsel.
INSULET CORP: Moody's Assigns B2 CFR & Rates Secured Loan Ba3
-------------------------------------------------------------
Moody's Investors Service assigned ratings to Insulet Corporation
including a B2 Corporate Family Rating, a B2-PD Probability of
Default Rating, a Ba3 senior secured rating and an SGL-1
Speculative Grade Liquidity Rating. The outlook is stable.
Proceeds of the term loan will be used for general corporate
purposes, including the retirement of existing debt and/or for
acquisitions or investments.
Ratings assigned:
Corporate Family Rating, assigned B2
Probability of Default Rating, assigned B2-PD
Senior secured term loan, assigned Ba3 (LGD2)
Senior secured revolving credit facility, assigned Ba3 (LGD2)
Speculative Grade Liquidity Rating, assigned SGL-1
Outlook actions:
Assigned, stable outlook
RATINGS RATIONALE
Insulet's B2 Corporate Family Rating reflects its strong
competitive position in insulin management due to the success of
the Omnipod wearable delivery system. Omnipod represents a
compelling choice for many patients with diabetes due to the
avoidance of multiple daily injections. The system is also tubeless
and waterproof, unlike several competing insulin pump systems on
the market. The pending launch of Omnipod 5 will represent a
technological advance because of its ability to integrate with
continuous glucose management (CGM) systems and to also offer
smartphone conrol. Moody's anticipates that this will drive further
Omnipod adoption in both Type I and Type II diabetes patients,
fueling a continuation of rapid revenue growth with a meaningful
enterprise valuation.
These strengths are tempered by a single product-line focus, which
exposes Insulet to competitive risks and more general business
execution risks. In addition, continued success over the long term
will be dependent on ongoing R&D and innovation. The company's
debt/EBITDA is very high, albeit tempered by rapidly growing EBITDA
as well as very high cash levels.
The SGL-1 Speculative Grade Liquidity Rating reflects very good
liquidity due to high cash and short term investments, which stood
at $948 million as of December 31, 2020. This is more than
sufficient to cover anticipated cash uses including capital
expenditures. Liquidity is enhanced by an anticipated revolving
credit agreement. There are no financial maintenance covenants in
the term loan.
The Ba3 rating on the senior secured credit facilities reflects
their position in the capital structure relative to several series
of unsecured convertible notes. The Ba3 rating on the senior
secured credit facilities reflects a one-notch negative override
compared to the rating indicated by Moody's Loss Given Default for
Speculative-Grade Companies methodology. This reflects the
potential that Insulet's capital structure may undergo further
changes over the next 12 to 18 months that could result in a higher
proportion of secured debt.
The proposed credit facility contains incremental facility capacity
up to the greater of a fixed dollar amount to-be-determined and 1x
Consolidated EBITDA, plus an additional amount subject to a 4.50x
pro forma First Lien Secured Net Leverage ratio. Incremental term B
loans amounts up to the greater of TBD and 50% of EBITDA may be
incurred with an earlier maturity than the initial term loans (also
permitted for qualifying term A facilities). There are no express
"blocker" provisions which prohibit the transfer of specified
assets to unrestricted subsidiaries; such transfers are permitted
subject to carve-out capacity and other conditions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
The credit agreement provides some limitations on up tiering
transactions, including the consent of each lender for amendments
that would (i) modify the prop rata sharing provisions or (ii)
subordinate the facilities in right of payment or lien to any other
indebtedness of the borrower or guarantors. The proposed terms and
the final terms of the credit agreement may be materially
different.
ESG considerations are relevant to Insulet's credit profile.
Although the company has a strong track record with respect to
compliance with environmental laws, the disposable, three-day
nature of the Omnipod is likely to present a growing waste
challenge over time. This may place more pressure on expansion of
take-back and recycle programs, or otherwise face a potential shift
in consumer preference towards systems with less waste. Social
considerations include payer pressure related to demographics and
societal trends, given rising healthcare spending. To date, Insulet
has benefited from these pressures because its system requires less
up-front costs by insurance companies. Social risk factors also
include responsible production, where Insulet has exposure to the
risks of product defects and recalls, as well as cyber-security
threats. Among governance considerations, the company's financial
policies include an appetite for high financial leverage on a gross
basis.
The stable outlook reflects Moody's expectation for continuation of
strong uptake in Omnipod, a successful introduction of Omnipod 5,
but several years of negative free cash flow due to manufacturing
investments for capacity expansion.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include improved diversity of
the company's business model, continuation of strong Omnipod
adoption and high earnings growth, and debt/EBITDA sustained below
5.0x.
Factors that could lead to a downgrade include erosion in
competitive position due to significant innovation advances by
competitors, unforeseen manufacturing or supply chain disruptions,
execution problems related to the pending launch of Omnipod 5, or a
declining likelihood of generating sustainably positive free cash
flow.
Headquartered in Acton, Massachusetts, Insulet Corporation is a
leading provider of wearable insulin management systems. Revenues
in 2020 totaled $904 million.
The principal methodology used in these ratings was Medical Product
and Device Industry published in June 2017.
INTEGRO PARENT: Moody's Withdraws Caa1 Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service has withdrawn the Caa1 corporate family
rating and Caa1-PD probability of default rating of Integro Parent
Inc. as well as its debt ratings.
The rating outlook for Integro has also been withdrawn.
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
US-based Integro is the holding company parent of Tysers Insurance
Brokers Ltd, a 200-year-old Lloyd's of London specialist broker
that generated revenues of $241 million for the 12 months through
September 2020. Tysers is largely a wholesale broker with local
offices in Asia, Middle East, Australia, Europe, Latin America and
Bermuda.
LIST OF AFFECTED RATINGS
Withdrawals:
Issuer: Integro Parent Inc.
Corporate Family Rating, Withdrawn, previously rated Caa1;
Probability of Default Rating, Withdrawn, previously rated
Caa1-PD;
Senior secured first-lien revolving credit facility, Withdrawn,
previously rated B3 (LGD3);
Senior secured first-lien term loan, Withdrawn, previously rated B3
(LGD3);
Senior secured second-lien term loan, Withdrawn, previously rated
Caa3 (LGD5).
Outlook Action:
Outlook, Changed to Withdrawn from Negative.
INVISTA EQUITIES: S&P Places 'BB+' ICR on CreditWatch Positive
--------------------------------------------------------------
S&P Global Ratings placed all ratings on INVISTA Equities LLC,
including the 'BB+' issuer credit rating, on CreditWatch with
positive implications.
The CreditWatch placement is the result of the company improving
its competitive advantages thanks to new technology investments
combined with our expectation for improved credit measures
following a weaker 2020 due to the COVID-19 pandemic. S&P believes
INVISTA will see operational improvements as the result of an
economic recovery as economies reopen with the rollout of vaccines
continuing globally. S&P Global Ratings now expects GDP growth in
both the U.S. and Asia (two key geographies for INVISTA) of 6.5% or
greater for 2021. In addition, the auto industry, to which INVISTA
has significant exposure, has rebounded, which should lead to
improved operating performance. Further, other than an unsecured
undrawn revolving credit facility due 2024 from its parent, the
company has no other material balance sheet debt. Its subsidiary
INVISTA Nylon Chemicals (China) Co. Ltd. entered into a 10-year
secured project financing facility for the company's world-scale
ADN project in the Shanghai Chemical Industry Park. This debt is
nonrecourse to INVISTA, although it is consolidated on its books as
it draws on it as it is a wholly-owned subsidiary within INVISTA's
legal entity structure. As of December 2020, there was $139 million
drawn on this facility. With the expanded ADN technologies deployed
across its facilities, combined with economic recovery and limited
debt, this should lead to improved business and financial measures
for INVISTA. S&P still expects S&P Global Ratings' weighted-average
funds from operations to debt of 30%-45% and expect it to remain
within that range.
S&P said, "The CreditWatch placement reflects at least a one-in-two
likelihood that we will raise the issuer credit rating by one notch
to investment grade within the next few months. We expect to
resolve the CreditWatch placement in the coming months as we have
further discussions with management and ownership surrounding
financial policies, Koch's future support plans, and the progress
of the China ADN project. In addition to improved ADN technologies
and sustainably stronger operating performance and credit measures,
we would need to expect that management's and ownership's financial
policies would support maintaining investment-grade ratings."
IPC CORP: S&P Lowers ICR to 'CCC-' as Bullet Maturity Gets Closer
-----------------------------------------------------------------
S&P Global Ratings lowered all of its ratings on Global trading
communication systems, compliance solutions, and networking
services provider IPC Corp. by one notch, including its issuer
credit rating, to 'CCC-' from 'CCC'.
The negative outlook reflects that S&P could lower the rating if
IPC announces its intention to undertake an exchange offer or
similar restructuring that it classifies as distressed.
It's highly likely the company will engage in a distressed
restructuring in the coming months given its $785 million of
first-lien debt maturing in August 2021. IPC has been proactively
working with its investors to reach a deal in light of its August
maturity. However, if investors receive less value than the
original promise, S&P would consider the restructuring as
tantamount to default.
S&P said, "We expect IPC's leverage to remain elevated at about
9.5x through 2021 as accruing paid-in-kind interest on its
second-lien debt offsets modest earnings improvement. While the
company's business conditions have been stabilizing as a result of
contract wins and cost-cutting initiatives, we expect leverage to
remain at about 9.5x, resulting in an unsustainable capital
structure. We project flat earnings as growth in IPC's
subscription-based Unigy business will likely be offset by lower
legacy services revenue. Like industry peers, IPC faces secular
pressure due to computer automation replacing the older voice
trading systems used by equity traders that will make deleveraging
with the current capital structure very challenging.
"The negative outlook reflects a high likelihood that we will lower
the rating further over the next few months due to the looming debt
maturity and high financial leverage that make refinancing
difficult."
S&P could lower its rating on IPC if the company announces a
default or a distressed exchange:
-- Upon announcement of a restructuring, S&P would lower the
issuer credit rating to 'CC'.
-- Upon completion of a distressed restructuring, S&P could lower
its rating on the affected issues to 'D' and the issuer credit
rating to 'SD' assuming IPC honors its other obligations, or 'D' if
the restructuring is more generalized.
Although highly unlikely, we could raise our rating on IPC by one
notch if:
-- It successfully extends its maturity profile beyond 2021; and
-- Lenders receive adequate compensation such that S&P does not
view the transaction as a distressed exchange.
JOSIAH'S TRUCKING: Trustee Hires John Mosley as Accountant
----------------------------------------------------------
Catherine Stone Curtis, the Chapter 11 trustee for Josiah's
Trucking, LLC, seeks approval from the U.S. Bankruptcy Court for
the Southern District of Texas to employ John Mosley, an accountant
practicing in Austin, Texas.
The trustee requires an accountant to assist in general tax
matters, prepare and file monthly operating reports, and prepare
federal tax forms and returns.
Mr. Mosley will be paid at the rate of $200 per hour and reimbursed
for out-of-pocket expenses incurred.
Mr. Mosley disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The accountant can be reached at:
John Mosley
3834 Spicewood Springs Road Suite 202
Austin, TX 78759
Tel: (512) 327-7777
About Josiah's Trucking
A group of creditors represented by Shelby A. Jordan, Esq., filed a
Chapter 7 involuntary petition against Josiah's Trucking, LLC on
Jan. 26, 2021. Shelby Jordan, Esq., represents the creditors.
Judge Eduardo V. Rodriguez converted the Chapter 7 case into one
under Chapter 11 (Bankr. S.D. Texas Case No. 21-70009) on Feb. 25,
2021, and approved the appointment of Catherine Curtis as
bankruptcy trustee in the Debtor's Chapter 11 case on March 10,
2021.
Ms. Curtis is represented by Pulman, Cappuccio & Pullen, LLP in the
Debtor's Chapter 11 case. The trustee also tapped Locke Lord, LLP
as her special litigation counsel and John Mosley as her
accountant.
JPW INDUSTRIES: S&P Alters Outlook to Stable, Affirms 'B' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative and
affirmed its 'B' issuer credit rating on specialty tools producer
JPW Industries Lux Acquisitions Holdings S.a.r.l. S&P also affirmed
its 'B' issue-level ratings on the company's senior secured notes.
S&P said, "The stable outlook reflects our expectation that
favorable demand conditions and internal growth investments will
support revenue growth and further earnings improvement over the
next 12 months. We believe modest EBITDA growth will allow JPW to
reduce its debt to EBITDA to the mid-5x area by the end of 2021."
JPW's decision to exit its European business precipitated its
profit improvement after years of operating losses, but reduces its
geographic diversity and scope of operations. In fourth-quarter
2019, in response to declining revenues and worsening operating
performance from its Europe business, JPW commenced a strategic
review to evaluate options to reduce costs and improve results in
Europe. In June 2020 JPW closed its service center in Switzerland,
and in July 2020 it sold its European headquarters and distribution
facility in France. This sale marked the completion of its exit
from distribution operations in Europe, and in the third quarter
operating results were reported as discontinued operations. JPW's
European operations accounted for approximately $13.3 million of
operating loss in 2020 and $19.7 million in 2019. The segregation
of these losses markedly improved the company's operating results
from continuing operations and accelerated its deleveraging, with
debt to EBITDA improving to around 5.8x at the end of 2020 compared
to almost 9x at the end of 2019 including results from the Europe
business. Nevertheless, we believe the disposal narrows the
company's geographic diversity and scope of operations. JPW now
generates around 90% of revenue from the U.S., with the remainder
from Asia.
S&P said, "We believe a favorable demand environment will drive
sales and earnings growth over the next 12 months, despite cost
inflation headwinds. JPW generated revenues of $276.1 million in
2020. Pro forma for the Baileigh acquisition and excluding
discontinued operations, revenue was flat compared to the prior
year. Strong wood product sales helped mitigate the demand decline
in industrial markets; JPW's wood product sales grew 30.2% driven
by heavy consumer spending, extended promotional pricing, and
increased sales through its e-commerce channel. This growth offset
a significant decline in Baileigh-branded product sales, which are
primarily metalworking products used in industrial applications. We
believe revenue will increase in the mid-single-digit area over the
next 12 months as demand for industrial products improves and wood
product sales grow, although at a slower pace. We expect e-commerce
sales will remain robust and believe recent investments in its
customer relationship management platform, new distributor portal,
and new product information database support further channel
expansion. In 2020, S&P Global Ratings-adjusted EBITDA margin
improved to 17.6% due to the disposal of the Europe business, lower
acquisition costs, temporary pandemic-related cost actions, and
reduced travel expense, partially offset by an unfavorable product
mix and higher freight costs. Given recent disruptions to the
global supply chain and material cost inflation, we expect upward
pressure on freight and direct materials to continue into 2021.
However, we expect JPW will manage these headwinds through its
long-standing and established relationships with its suppliers and
through pricing actions."
The company's asset-light business model supports steady positive
cash flow generation and its adequate liquidity position. JPW's
products are manufactured primarily by third-party suppliers in
low-cost countries, including Taiwan and China. As a result of
JPW's small physical footprint and largely outsourced
manufacturing, the company benefits from a variable cost structure
and minimal capital requirements. JPW reduced capital expenditure
(capex) to just $1.6 million in 2020, or around 1% of revenue.
Disciplined cost control, which included temporary salary
reductions when the pandemic began, along with focused efforts on
managing working capital, allowed the company to generate $19.7
million in reported free cash flow from continuing operations and
strengthen its balance sheet. JPW ended the year with liquidity at
a historical high, with approximately $68 million between cash and
availability under its asset-based lending (ABL) facility. S&P
said, "Although we expect investments in upgrading its enterprise
resource planning application and new product development to
increase capex in 2021, we believe the company can sustain positive
free cash flow around $20 million and maintain sufficient
liquidity."
S&P said, "The stable outlook reflects our expectation that
favorable demand conditions and internal growth investments will
support revenue growth and further earnings improvement over the
next 12 months. We believe modest EBITDA growth will allow JPW to
reduce its debt to EBITDA to the mid-5x area by the end of 2021."
S&P could lower its rating on JPW if its operating performance
deteriorates such that EBITDA margins contract 200 basis points and
free cash flow generation meaningfully declines, causing its debt
to EBITDA to rise above 6x on a sustained basis. This could occur
if:
-- The company cannot offset the negative impact of supply chain
disruptions and cost inflation pressure through pricing; or
-- It pursues a large, debt-funded acquisition or sponsor
dividend.
Although highly unlikely over the next 12 months given the
company's relatively small size, limited scale and scope of
operations, and financial sponsor ownership, S&P could raise its
rating on JPW if:
-- It significantly increases its scale and scope of operations
while maintaining above-average margins, such that it is comparable
to higher rated peers; and
-- Stronger-than-expected operating performance leads to improved
credit measures, including leverage approaching 4x, and the company
demonstrates less aggressive financial policies that support
sustaining this level of leverage.
K & W CAFETERIAS: Plan Exclusivity Extended Until July 1
--------------------------------------------------------
Judge Benjamin A. Kahn of the U.S. Bankruptcy Court for the Middle
District of North Carolina, Winston-Salem Division, extended the
periods within which Debtor K&W Cafeterias, Inc. has the exclusive
right to file a plan and disclosure statement to July 1, 2021, and
to obtain acceptances of the plan to September 1, 2021.
The Committee of Unsecured Creditors filed an objection to the
Second Motion, and the Debtor filed a response.
John A. Northen appeared at the hearing on behalf of the Debtor;
William P. Miller appeared at the hearing in his capacity as the
United States Bankruptcy Administrator; Stephen E. Gruendel
appeared at the hearing on behalf of Truist Bank; and Thomas
W.Waldrep, Jr. appeared at the hearing as counsel for the
Committee.
After considering the Second Motion, the Committee Objection, the
Debtor Response, the official file, and comments of parties wishing
to be heard, for good and sufficient reasons appearing, the Court
granted the Debtor's request of extending their exclusivity
periods.
A copy of the Court's Extension Order is available at
https://bit.ly/3sfPntZ from PacerMonitor.com.
About K&W Cafeterias
K&W Cafeterias, Inc., a company based in Winston Salem, N.C., filed
a Chapter 11 petition (Bankr. M.D.N.C. Case No. 20-50674) on
September 2, 2020. In the petition signed by Dax C. Allred,
president, the Debtor disclosed $30,085,274 in assets and
$22,189,229 in liabilities.
Judge Benjamin A. Kahn presides over the case. The Debtor tapped
Northen Blue, LLP as its bankruptcy counsel, Bell Davis & Pitt P.A.
and Constangy Brooks Smith & Prophete LLP as its special counsel,
and Leonard, Call at Kingston Inc. as its broker.
William Miller, a U.S. bankruptcy administrator, appointed a
committee to represent unsecured creditors in Debtor's Chapter 11
case. The committee is represented by Waldrep Wall Babcock &
Bailey, PLLC.
LCM INVESTMENTS: Moody's Assigns First Time Ba3 Corp Family Rating
------------------------------------------------------------------
Moody's Investors Service, Inc. assigned first time ratings to LCM
INVESTMENTS HOLDINGS II, LLC (dba "Morgan Automotive", "Morgan"),
including a Ba3 corporate family rating, a Ba3-PD probability of
default rating and a B2 rating to Morgan's proposed $650 million
senior unsecured notes issue. The outlook is stable.
Proceeds from the proposed notes will be used in addition to a
proposed unrated senior secured credit facilities to refinance
Morgan's existing debt, pay a dividend to shareholders, and
increase Morgan's cash balance . Moody's ratings and outlook are
subject to receipt and review of final documentation.
"Morgan is well-positioned in its core Florida market, with a
meaningful presence in the central part of the state, and has a
favorable operating and acquisition track record, resulting in a
reasonable quantitative profile, with debt/EBITDA of around 4.5
times and EBIT/interest of around 3.5 times, both of which are pro
forma for this proposed new financing," stated Moody's Vice
President Charlie O'Shea. "Premium and luxury mix is less-favorable
than the majority of our rated universe, however this represents an
opportunity for Morgan as it continues to expand, with a key credit
factor going forward a disciplined approach to potential
acquisitions," continued O'Shea. The rating also reflects
governance considerations particularly that Morgan's financial
strategies will support acquisitions and occasional special
dividends but only to the extent that leverage remains at moderate
levels.
Assignments:
Issuer: LCM INVESTMENTS HOLDINGS II, LLC
Probability of Default Rating, Assigned Ba3-PD
Corporate Family Rating, Assigned Ba3
Senior Unsecured Regular Bond/Debenture, Assigned B2 (LGD5)
Outlook Actions:
Issuer: LCM INVESTMENTS HOLDINGS II, LLC
Outlook, Assigned Stable
RATINGS RATIONALE
Morgan Automotive's Ba3 rating considers its favorable position in
the dynamic and competitive Florida market, its credit metrics,
with debt/EBITDA on a pro forma basis for the proposed transaction
and dividend payment of around 4.5 times and EBIT/interest of
around 3.5 times, experienced management team, improving brand and
used vehicle mix, and a cost structure that was rationalized during
the COVID-19 pandemic, which will yield permanent savings. Ratings
also consider its ownership by a family investment fund, and its
good liquidity. Ratings are constrained by its narrow geographic
focus and its financial strategies which are expected to support
acquisitions and occasional special dividends but only to the
extent that leverage remains moderate. The B2 rating on the
proposed senior unsecured notes recognizes its position in the
capital structure and follows application of Moody's Loss Given
Default methodology, which includes the floor plan facility as a
secured obligation.
The stable outlook reflects Moody's view that Morgan will remain
disciplined in its approach to sourcing, pricing, and integrating
future acquisitions, and that its future shareholder return
strategy will be relatively benign.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if operating performance continues its
positive trend resulting in debt/EBITDA being sustained below 4
times and EBIT/interest maintained above 4 times, while preserving
good liquidity, and an overall balanced financial strategy that
ensures maintenance of this profile no matter the industry
environment. An upgrade would also require increased brand
diversity, as well as continued increased geographic breadth.
Ratings could be downgraded if for any reason debt/EBITDA trended
towards 5 times or EBIT/interest fell below 3 times, or if
liquidity were to weaken.
Morgan Automotive, with headquarters in Tampa, Florida, operates 44
franchised dealerships representing 27 nameplates and 1 used
vehicle dealership in Florida. The company is supported by Redwood
Capital, which is considered a "family office." Revenues for the
year ended December 31, 2020 were about $3.2 billion.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
MAGENTA BUYER: Moody's Assigns First Time B3 Corp Family Rating
---------------------------------------------------------------
Moody's Investors Service assigned a B3 corporate family rating and
B3-PD probability of default rating to first time issuer Magenta
Buyer LLC ("McAfee Enterprise"). Moody's also assigned a B2 rating
to the proposed first lien credit facilities and a Caa2 rating to
the proposed second lien credit facility. The credit facilities,
along with sponsor equity will be used to fund the acquisition of
McAfee Corp.'s Enterprise business by a consortium of investors led
by private equity firm Symphony Technology Group ("STG") for
roughly $4 billion as part of a carve-out transaction. The outlook
is positive.
RATING RATIONALE
The B3 CFR reflects McAfee Enterprise's high initial leverage and
execution risks separating as a stand-alone company while also
restructuring operations amidst the evolving cyber-security
landscape. The rating also reflects the leading position the
company has across multiple product categories in the security
software industry. Pro forma leverage at closing is over 8x
excluding certain one-time costs, with the potential to drive
leverage toward 6.5x over the next 12 to 18 months driven by STG's
sizeable cost restructuring plan.
While McAfee Enterprise has a leading position in endpoint and
cloud security, it continues to face challenges from new market
entrants such as Crowdstrike, Zscaler, VMware's Carbon Black and
Forcepoint. Moody's expects growth to be flat over the next 12 to
18 months as the company continues its transition from a license to
subscription based model and focuses on growth from its existing
customer base.
The rating is supported by McAfee's large scale, supplemented by a
diverse customer base of enterprise customers with long-term
relationships and high retention rates. The company has made
important investments in recent years among its endpoint security
and cloud products which has offset declines from the certain
security operations and network products. Moody's expects flat to
modest growth over the next 18-24 months with continuing headwinds
from the transition to a subscription model.
McAfee Enterprises' environmental risks are low and in line with
other software peers. Social risks are low to moderate, in line
with the software sector, mainly stemming from social issues linked
to data security, diversity in the workplace and access to highly
skilled workers. Cyber security risks are moderate at McAfee and
arise from breaches on installed customer software as well as
internal McAfee systems. McAfee will be owned by a consortium of
investors led by private equity firm STG and will not have an
independent Board. Financial policies are expected to be aggressive
as highlighted by the high leverage at closing and significant
restructuring plans.
The positive outlook reflects McAfee's potential to make
significant progress under the company's restructuring program with
limited impact to revenues. Moody's also expects the company to
improve its run-rate EBITDA margin to the low-thirties percentage
level over the next two years.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
McAfee Enterprise's ratings could be upgraded if the company grows
revenues, maintains or improves market share, sustains leverage
below 7x (including Moody's adjustments) while producing free cash
flow to debt above 5%.
McAfee Enterprise's ratings could be downgraded if performance
deteriorates as a result of the separation or restructuring plan,
leverage remains over 8.5x (including Moody's adjustments), free
cash flow stays below breakeven on other than a temporary basis, or
if liquidity otherwise deteriorates.
Liquidity is good based on a pro forma cash balance of $100
million, with a portion of this cash balance earmarked for certain
one-time costs related to the cost savings plan and the costs
related to the carve-out. Moody's expects free cash flow will be
modestly positive over the next 12 to 18 months. The company will
also have a $125 million undrawn revolving credit facility at
closing.
Assignments:
Issuer: Magenta Buyer LLC
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD6)
Outlook Actions:
Issuer: Magenta Buyer LLC
Outlook, Assigned Positive
The first lien debt is rated B2, one notch above the CFR reflecting
its priority in the capital structure above the second lien debt
and Moody's forward expectations regarding the mix of debt. The
proposed secured debt facilities has flexibility that could be
detrimental to lenders, including a provision for incremental first
lien secured facilities up to the greater of $460 million or 1x
company defined EBITDA (with additional non disclosed baskets) and
provisions for additional debt based on certain leverage and
interest coverage tests. Asset sale proceeds are required to pay
down debt based on a leverage based test with 18 month reinvestment
provisions but subject to exclusion baskets that have not been
disclosed.
McAfee Enterprise is a security software company serving both
enterprise and government customers, with approximately $1.3
billion of revenue for the fiscal year ended December 31, 2020. The
company will be owned by a consortium of investors led by private
equity firm Symphony Technology Group at close of the transaction.
The principal methodology used in these ratings was Software
Industry published in August 2018.
MAGENTA BUYER: S&P Assigns 'B' Issuer Credit Rating, Outlook Neg.
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Magenta
Buyer LLC. S&P also assigned its 'B' issue-level and '3' recovery
ratings to Magenta Buyer's proposed first-lien credit facility, and
its 'CCC+' issue-level and '6' recovery ratings to the second-lien
term loan.
The negative outlook reflects Magenta Buyer's high S&P adjusted
leverage of about 10x at deal close. While the company has
well-laid-out plans to lower costs and improve profitability, these
plans could be disruptive over the near term and may keep leverage
above mid-7x in the 12 months after deal close.
The negative outlook on Magenta Buyer LLC (McAfee Enterprise)
reflects its high starting leverage, which S&P estimates to be
around 10x at deal close, falling to about 7x over the next 12-18
months. The negative outlook also captures the risk that the
company may not be able to reach its target leverage given a new
ownership and management team, as well as disruptions that may
result from its cost-cutting plans. The rating also reflects McAfee
Enterprise's multiple credit strengths: good recurring revenue
base, high customer retention rates, strong brand, and sticky
customer base. Challenges for the business include modest revenue
growth over the past few years, average profitability, and a strong
competitive landscape.
Leverage reduction will be driven by effective cost management.
S&P said, "We expect McAfee Enterprise's revenues to be flat--as
such, improvement of its credit metrics and margin profile will be
entirely driven by successful cost reduction initiatives. We expect
the company to execute most of its synergy plan within two quarters
of deal close, and expect profitability to improve starting in
2022. We expect EBITDA margins to improve to about 30%, entirely
driven by cost management." While these are aggressive targets, the
current EBITDA margins for the enterprise business are in the
low-20% area, which is lower than its security software peers. STG
does have a good track record with security software carve-outs.
McAfee Enterprise has a strong, cash-flow-generating business.
McAfee Enterprise has strong revenue visibility due to a strong
recurring revenue base accounting for more than 75% of the total
revenue. Net retention rates are over 98%. The metrics are even
better for its over 1,500 core customers, where the net retention
rate is above 100% and average relationship spans about 17.5 years.
S&P expects good free cash flow generation of about $200 million
annually after the company is done with its restructuring plans.
The company operates in competitive end markets, but with
tailwinds. McAfee Enterprise competes against other players such as
CrowdStrike, Microsoft, Zscaler, Palo Alto Networks, and Symantec
within its multiple product categories. While the company has been
recognized as a technology leader, it has underperformed the
industry over the past few years. Nonetheless, S&P expects
enterprise security spending to grow faster than software
information technology (IT) average spending and McAfee to benefit
from it.
The negative outlook reflects Magenta Buyer's high S&P adjusted
leverage of about 10x at deal close. While the company has
well-laid-out plans to lower costs and improve profitability, these
plans could be disruptive over the near term and may keep leverage
above mid-7x in the 12 months after deal close.
S&P will lower the rating to 'B-' if:
-- Magenta Buyer LLC fails to execute its cost-savings plan,
resulting in leverage above the mid-7x area; or
-- Free cash flow (FCF) to debt falls to 2%.
S&P will revise the outlook to stable over the next 12 months if
Magenta Buyer LLC:
-- Successfully executes its cost-savings plan;
-- Operates as an independent entity without major disruptions to
its business;
-- Lowers S&P Global Ratings-adjusted leverage to the mid-7x area;
and
-- Maintains FCF to debt of about 5%.
MALLINCKRODT PLC: Willkie, Morris Represent Attestor Claimants
--------------------------------------------------------------
In the Chapter 11 cases of Mallinckrodt PLC, et al., the law firms
of Willkie, Farr & Gallagher LLP and Morris, Nichols, Arsht &
Tunnell LLP submitted a verified statement under Rule 2019 of the
Federal Rules of Bankruptcy Procedure, to disclose that they are
representing Humana, Inc. and Attestor Limited.
As of April 19, 2021, members of the Ad Hoc Group and their
disclosable economic interests are:
Disclosable
Economic Interests
------------------
Humana, Inc. Unliquidated
500 West Main St.
Louisville, KY 40202
Attestor Limited Unliquidated
7 Seymour Street
London
United Kingdom, W1H 7JW
The Firm can be reached at:
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
Donna L. Culver, Esq.
Robert J. Dehney, Esq.
Matthew B. Harvey, Esq.
Nader A. Amer, Esq.
1201 North Market Street, 16th Floor
P.O. Box 1347
Wilmington, DE 19899-1347
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
E-mail: dculver@morrisnichols.com
rdehney@morrisnichols.com
mharvey@morrisnichols.com
namer@morrisnichols.com
- and -
Matthew A. Feldman, Esq.
Joseph G. Minias, Esq.
Matthew Freimuth, Esq.
Richard Choi, Esq.
Philip F. DiSanto, Esq.
WILLKIE FARR & GALLAGHER LLP
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 728-8000
E-mail: mfeldman@willkie.com
jminias@willkie.com
mfreimuth@willkie.com
rchoi1@willkie.com
pdisanto@willkie.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3n15U49 and https://bit.ly/3sCKpYu
About Mallinckdrodt PLC
Mallinckrodt -- http://www.mallinckrodt.com/-- is a global
business consisting of multiple wholly owned subsidiaries that
develop, manufacture, market and distribute specialty
pharmaceutical products and therapies. The company's Specialty
Brands reportable segment's areas of focus include autoimmune and
rare diseases in specialty areas like neurology, rheumatology,
nephrology, pulmonology and ophthalmology; immunotherapy and
neonatal respiratory critical care therapies; analgesics and
gastrointestinal products. Its Specialty Generics reportable
segment includes specialty generic drugs and active pharmaceutical
ingredients.
As of March 27, 2020, the Company had $10.17 billion in total
assets, $8.27 billion in total liabilities, and $1.89 billion in
total shareholders' equity.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve
opioid-related claims against the Company.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Latham & Watkins LLP, Ropes & Gray LLP and Wachtell, Lipton, Rosen
& Katz are serving as counsel to the Company, Guggenheim
Securities, LLC is serving as investment banker and AlixPartners
LLP is serving as restructuring advisor to Mallinckrodt. Hogan
Lovells is serving as counsel with respect to the Acthar Gel
matter. Prime Clerk LLC is the claims agent.
MARVEL INVESTMENTS: Seeks to Hire Freeman Law as Legal Counsel
--------------------------------------------------------------
Marvel Investments, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Texas to employ Freeman Law,
PLLC as its legal counsel.
The firm will provide legal services in connection with the
Debtor's Chapter 11 case, which include the preparation of a plan
of reorganization.
The firm will be paid at these rates:
Partners $475 per hour
Associates $225 to $300 per hour
Paralegals $75 to $125 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
Gregory Mitchell, Esq., a partner at Freeman Law, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Gregory W. Mitchell, Esq.
Freeman Law, PLLC
1412 Main Street, Suite 500
Dallas, TX 75202
Tel: (972) 463-8417
Fax: (972) 432-7540
Email: gmitchell@freemanlaw.com
About Marvel Investments
Marvel Investments, LLC filed a Chapter 11 bankruptcy petition
(Bankr. N.D. Texas Case No. 21-30625) on April 5, 2021, disclosing
under $1 million in both assets and liabilities. The Debtor is
represented by Freeman Law, PLLC.
MEZZ57TH LLC: Court OKs Continued Cash Access
---------------------------------------------
Judge of Sean H. Lane of the U.S. Bankruptcy Court for the Northern
District of New York authorized Mezz57th LLC to use cash collateral
on an interim basis, according to the approved budget pending final
hearing on the cash collateral request.
The budget provided for $629,431 in total disbursements for March
2021 through April 2021.
As of the Petition Date, the Debtor owes these creditors:
* Saw Investment Fund LLC under a Promissory Note dated November
1, 2018 for the principal sum of $1,050,720;
* Jeffrey Sellers under a promissory note for $400,000 in
principal amount; and
* Lawrence F. Flick IV Flick under (a) a promissory note for
$500,000 dated May 29, 2019, and (b) a promissory note dated
September 23, 2019 for the principal amount of $150,000.
The Debtor, pursuant to a security agreement, granted the Lenders a
first lien and security interest in the Debtor's inventory,
accounts receivable, money, and the proceeds thereof.
The Court ruled that the Lenders are granted replacement liens to
the extent that each Lender's liens in pre-petition cash collateral
were valid, perfected and enforceable to the extent of collateral
diminution, as adequate protection. The Replacement Liens shall be
first and senior security interests and liens in favor of the
Lenders in all of the Debtor's assets, subject only to existing
senior, valid and perfected liens, if any, on said property as of
the Petition Date.
Moreover, any claim resulting in the diminution in value of the
Lenders' collateral arising from the Debtor's use of cash
collateral shall have priority in payment over any of the Debtor's
obligations and over all administrative expenses allowable under
Sections 503(b), or 507(b) of the Bankruptcy Code, other than fees
owed to the U.S. Trustee.
The final hearing on the motion is set for April 29 at 10 a.m.
Objections must be received no later than seven days prior to the
final hearing.
A copy of the order and the budget is available for free at
https://bit.ly/32ndyfB from PacerMonitor.com.
About Mezz57th LLC
New York-based Mezz57th LLC, a provider of luxury beauty salon, spa
and related services under the name John Barrett, filed a Chapter
11 petition (Bankr. S.D.N.Y. Case No. 20-11316) on May 29, 2020.
In the petition signed by John Barrett, president and managing
member, the Debtor was estimated to have $1 million to $10 million
in both assets and liabilities.
The Hon. Sean H. Lane oversees the case. Ballon Stoll Bader &
Nadler, P.C., serves as bankruptcy counsel to the Debtor.
MIAMI-DADE COUNTY IDA: Moody's Lowers 2015A Revenue Bonds to B2
---------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of Miami-Dade
County Industrial Development Authority, FL Industrial Development
Revenue Bonds (NCCD - Biscayne Properties LLC Project), Series
2015A to B2 from Ba3. This action affects $53,535,000 of
outstanding Series 2015A Bonds. The outlook remains negative.
RATINGS RATIONALE
The downgrade to B2 incorporates a recent disclosure filing[1] by
NCCD - Biscayne Properties LLC (the borrower) announcing an
upcoming $1.3 million tap on the project's debt service reserve
(DSR) fund for the June 1, 2021 payment of principal and interest
due on the Series 2015A Bonds, and to fund a portion of the
project's operating expenses through fiscal year end (FYE) June 30,
2021. The upcoming draw on the DSR, which was initially funded at
$3.6 million or maximum annual debt service (MADS), reduces
liquidity to about $2.3 million or the equivalent of roughly eight
months of MADS. The project (Bayview Student Living at FIU) is
currently leased at a 48% occupancy rate that as of March 20, 2021
provides insufficient cash flow to meet basic loan payments.
The project's recent financial pressures are attributable to an
overall decline in student housing demand at Florida International
University (FIU or the university) due to the effects of the
Covid-19 pandemic. Future occupancy of the project will depend on a
variety of factors including the trajectory of Covid-19 cases and
vaccines. If the project does not achieve high occupancy over the
course of fiscal year 2022, additional draws on the DSR may be
needed.
Bayview Student Living at FIU is the only student housing available
on FIUs Biscayne Bay Campus (BBC) and enjoys a favorable
relationship with the university, which plays an integral role in
supporting the project. This includes the referral of students to
the project, its inclusion in all marketing materials for housing,
FIU's payment of subordinated utilities and the provision of
security and free transportation to its main campus located
approximately 30 miles away. Additionally, for FYE June 30, 2020
FIU allocated $485,000 in one-time student housing refunds to
students who were required to vacate the project during spring 2020
from its federal Coronavirus Aid, Relief and Economic Security
(CARES) Act award funds. However, the project is a stand-alone,
student housing project financing that is non-recourse to the
university.
Moody's regard the coronavirus outbreak as a social risk under its
ESG framework given the substantial implications for public health
and safety. Bayview Student Living at FIU is highly susceptible to
ongoing university decisions regarding campus utilization that
could influence the level of potential leases or cancellations at
the project.
RATING OUTLOOK
The outlook is negative due to the project's declining liquidity
position and continued near-term uncertainty related to the
pandemic that could impact Bayview Student Living at FIU's ability
to achieve self-supporting utilization.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
Significant and sustained increase in Bayview Student Living at
FIU's leasing rates at higher rent levels
Full replenishment of the DSR
Substantially higher support from the university that materially
improves cash flow and DSC
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
Continued leasing pressures leading to a rapid decline in
financial position
Further deterioration of revenue, or increased expense growth that
results in substantial draws on the DSR fund
LEGAL SECURITY
The bonds are special limited obligations of the issuer and are
secured by a leasehold mortgage, pledged revenues of the project
and other funds held with the Trustee and do not constitute
obligations of either Florida International University or the bond
issuer. The obligations are secured by payments made under the Loan
Agreement, a leasehold deed of trust, and amounts held by the
Trustee under the Indenture.
PROFILE
The Obligor and Owner, NCCD - Biscayne Properties LLC, is a single
member limited liability company organized and existing under the
laws of the State of Tennessee. The sole member of the Obligor is
National Campus Community Development Corporation, a 501(c)(3)
Texas non-profit corporation.
METHODOLOGY
The principal methodology used in this rating was Global Housing
Projects published in June 2017.
MIDCAP FINANCIAL: Moody's Assigns First Time Ba3 Long-Term CFR
--------------------------------------------------------------
Moody's Investors Service has assigned a first-time long-term
corporate family rating of Ba3 and a first-time long-term senior
unsecured rating of B1 to MidCap Financial Issuer Trust (MidCap
Financial), a wholly owned subsidiary of MidCap Finco Intermediate
Holdings Limited (MidCap), a commercial lender managed by Apollo
Global Management, Inc (Apollo). As of December 31, 2020, MidCap
had approximately $8 billion in gross loans outstanding.
The rating action follows MidCap's announcement that MidCap
Financial would issue $825 million in senior unsecured notes
maturing in 2028. The notes are guaranteed by MidCap.
Assignments:
Issuer: MidCap Financial Issuer Trust
LT Corporate Family Rating, Assigned Ba3
Senior Unsecured Regular Bond/Debenture, Assigned B1
Outlook Actions:
Issuer: MidCap Financial Issuer Trust
Outlook, Assigned Stable
RATINGS RATIONALE
MidCap Financial's Ba3 CFR reflects its ba3 standalone assessment,
which is supported by the firm's solid earnings profile stemming
from a diversified investment portfolio, adequate capitalization, a
history of low loan losses, and the capabilities and management
expertise of Apollo. These credit strengths are balanced by the
credit challenges stemming from a high reliance on secured sources
of funding, which carries refinancing risk. MidCap also maintains a
complex funding structure that includes a large number of bilateral
facilities with each facility financing particular assets. While
this arrangement creates inherent complexity, it offers some
diversity in funding sources that reduces the firm's reliance on
any one facility or lender, which compares favorably to other rated
finance company peers. The rating also consider the benefits to
creditors from the quality of MidCap's capital, which although
solid, consists of profit participating notes (PPNs), which are
debt instruments for financial reporting purposes with a maturity
in 2114. While PPNs offer going concern protection to senior
creditors, their legal status as debt instruments nonetheless
reduces the overall quality of capital relative to rated peers with
no such instruments.
The B1 long-term senior unsecured rating reflects the application
of Moody's Loss Given Default for Speculative-Grade Companies (LGD)
model and methodology, which considers the volume and priority of
unsecured notes with respect to other debt and non-debt obligations
in MidCap's liability structure, and the notes' asset coverage. The
one notch differential between the long-term unsecured rating and
the CFR reflects the obligations under the firm's recourse
bilateral bank facilities, which rank senior to the unsecured
notes.
The stable outlook reflects Moody's expectation that MidCap will
continue to report solid earnings and capitalization, along with
stable asset quality metrics and adequate liquidity in the next
12-18 months.
Like peers, MidCap has contended with the simultaneous supply and
demand shocks of the coronavirus pandemic. These shocks materially
slowed down economic activity in 2020 and the full extent of the
economic costs will be unclear for some time.
As for all finance companies, governance is highly relevant for
MidCap. However, Moody's does not have any particular concerns with
respect to the MidCap's governance.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if MidCap improves access to backup
liquidity, lowers reliance on secured forms of funding or operates
with a ratio of tangible common equity to tangible managed assets
(TCE/TMA) consistently above 20%, while maintaining solid
profitability and low loan losses.
MidCap's ratings could be downgraded if Moody's expect the firm's
TCE/TMA ratio to remain below 16% or if the firm experiences a
significant increase in credit losses, or a material operational
failure.
The long-term senior unsecured instrument rating could also be
downgraded as a result of changes to the capital structure,
specifically if Moody's expected the ratio of secured borrowings
outstanding on recourse facilities to unsecured obligations to
increase materially.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
MKJC AUTO: Court Extends Plan Exclusivity Until July 5
------------------------------------------------------
At the behest of Debtor MKJC Auto Group LLC d/b/a Hyundai of LIC,
Judge Jil Mazer-Marino of the U.S. Bankruptcy Court for the Eastern
District of New York extended by 92 days the periods in which the
Debtor may file a plan of reorganization through and including July
5, 2021, and to solicit acceptances through and including October
5, 2021.
Since the Petition Date, the Debtor and its professionals have
devoted significant effort to, inter alia:
(i) obtain the relief that enabled the Debtor to stabilize its
operations in chapter 11; and
(ii) continue its efforts to effectuate the sale of its assets
pursuant to section 363 of the Bankruptcy Code.
These negotiations have resulted in the Debtor filing on December
17, 2020, a motion seeking the entry of an Order approving bidding
procedures and scheduling a sale date for the sale of substantially
all of the Debtor's tangible and intangible assets in accordance
with a stalking horse agreement. The Court granted the Debtor's
motion by order dated February 17, 2021. Pursuant to the Court's
order an auction sale is scheduled for March 26, 2021, with a
closing likely to occur in late April or early May 2021. After the
sale of its assets has closed, the Debtor will be in the best
position to file a liquidating plan of reorganization.
The Debtor submits that in light of the facts and circumstances, as
set forth above, and in order to maintain the status quo, that good
cause exists to extend its Exclusivity and Acceptance Periods based
upon the current posture of the case.
Now granted, the Debtor believes that the brief extension will
continue to promote the orderly, and hopefully consensual,
reorganization of the Debtor, without the need to devote
unnecessary time, money, and energy to defending against or
responding to a premature competing plan filed by a third party.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/3thyjFt from PacerMonitor.com.
A copy of the Court's Extension Order is available at
https://bit.ly/3teHfLO from PacerMonitor.com.
About MKJC Auto Group, LLC
MKJC Auto Group, LLC owns and operates the automobile dealership
out of Long Island, New York, known as Hyundai of Long Island City,
selling and leasing new and pre-owned Hyundai automobiles to
consumers.
MKJC Auto Group, LLC, filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
20-42283) on June 8, 2020. The petition was signed by Ryan
Kaminsky, Executor of The Estate of Mitchell Kaminsky. At the time
of filing, the Debtor estimated $10,319,999 in assets and
$10,034,320 in liabilities.
Judge Jil Mazer-Marino replaced Judge Carla E. Craig as the
presiding judge of the Debtor's case.
The Debtor tapped Shafferman & Feldman LLP as its bankruptcy
counsel and the Law Offices of Paul J. Solda, Esq. and Paris
Ackerman, LLP as its special counsel. Citrin Cooperman serves as
the Debtor's accountant.
MOSS CREEK: S&P Upgrades ICR to 'B-' on Improved Credit Ratios
--------------------------------------------------------------
S&P Global Ratings raised our issuer credit rating on U.S.-based
oil and gas exploration and production (E&P) company Moss Creek
Resources Inc. to 'B-' from 'CCC+'. At the same time, S&P raised
its rating on the company's unsecured notes to 'B' from 'B-'
(recovery rating: '2').
The stable outlook reflects S&P's expectations that Moss Creek will
generate free cash flow while maintaining funds from operations
(FFO) to debt in the low to mid 20% range over the next two years.
S&P said, "We believe the company's credit measures will improve
relative to our prior expectations. Based on our higher oil price
assumptions and our expectation that Moss Creek will maintain a
modest capital spending budget, we expect the company's credit
measures to improve to a sustainable level. We expect the company's
FFO to debt to average over 20% in 2021, and estimate the company
will generate positive discretionary cash flow. Moreover, we
anticipate the company will have adequate liquidity despite its
recent Grenadier acquisition, which it partially funded by drawing
approximately $360 million on its $850 million reserve-based
lending (RBL) facility."
The likelihood of meaningful below-par debt repurchases is limited,
based on current bond trading levels. The trading prices of Moss
Creek's bonds have improved to 85 to 95 cents on the dollar, from
around 40 cents in March 2020, diminishing the likelihood of a debt
repurchase we would view as distressed. Moreover, the company has
no long-term debt maturing until 2026, has adequate liquidity, and
is generating positive discretionary cash flow, reducing the
likelihood of a conventional default over the near-to-medium term.
Moss Creek's reserve size and production base are small and it has
geographic concentration within the Permian basin. These business
risks somewhat offset the high proportion of oil in its reserves
and production mix that uplift profitability. Oil constitutes 72%
of Moss Creek's proved reserves and production, which typically is
more profitable than natural gas. Moreover, while its historical
per-unit cost structure has been high, the company has improved it
meaningfully through increasing volumes, multi-well pads, and its
infrastructure project, with lease operating expenses down to $3.85
per barrel of oil equivalent (boe) in 2020 from $8.7/boe in 2017.
Moss Creek faces more limited transparency given its international
ownership. S&P applies a negative one-notch modifier to reflect
Moss Creek's ownership structure.
S&P said, "The stable outlook reflects our expectations that Moss
Creek will generate positive free cash flow while maintaining FFO
to debt in the low- to mid-20% range over the next two years.
Additionally, it reflects our expectation that Moss Creek will
continue to modestly increase production and proved reserves as it
continues to develop its Permian acreage, while maintaining
adequate liquidity.
"We could lower the rating if the company's capital structure
become unsustainable. This would most likely occur if commodity
prices were to weaken and the company did not reduce capital
spending, or if the company materially misses our expectations for
production.
"We could raise the rating should Moss Creek's FFO to debt approach
45% for a sustained period. This would most likely occur if the
company increased production well above our current expectations
while keeping its capital expenditures (capex) low. Alternatively,
we could upgrade the company if it successfully increased
production and proved developed reserves to levels commensurate
with higher-rated peers, while maintaining current credit metrics."
NATIONAL RIFLE: Can Argue LaPierre Paid Back Extra Benefits
-----------------------------------------------------------
Law360 reports that the National Rifle Association Monday, April
19, 2021, turned back arguments from the New York Attorney General
that it has not offered enough proof to be allowed to claim that
CEO Wayne LaPierre has paid back all the excess benefits the
organization has paid him.
At a virtual hearing late Monday, April 19, 2021, afternoon U. S.
Bankruptcy Judge Harlin Hale ruled that as the NRA makes it case
this week to stay in Chapter 11 it can argue the benefits numbers
it has produced for LaPierre are correct despite New York Attorney
General Laticia James' arguments.
About National Rifle Association
Founded in 1871 in New York, 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, the 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. Norton Rose Fulbright US,
LLP, and AlixPartners, LLP, serve as the committee's legal counsel
and financial advisor, respectively.
NEELKANTH HOTELS: May Use Cash Collateral Thru June 30
------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
Atlanta Division, has authorized Neelkanth Hotels, LLC to use cash
collateral on an interim basis until June 30, 2021, in accordance
with a budget and subject to the terms and conditions of the Order
Allowing Continued Interim Use of Cash Collateral by Neelkanth
Hotels, LLC through December 31, 2020, as modified by the Unopposed
Order Allowing Continued Interim Use of Cash Collateral.
The Debtor was required to pay to Midland $13,485.83 on or before
April 13.
The Debtor is prohibited from paying to Midland as additional
adequate protection the greater of (1) the Debtor's total receipts
from operations in the Authorized Month less the amount of any
authorized expenses paid or actually incurred for the Authorized
Month (including amounts escrowed for real estate taxes and/or
property insurance), excluding any payment(s) to Midland; or (2)
the payment described by 11 U.S.C. section 362(d)(3)(B).
A copy of the order is available at from https://bit.ly/3ttPraY
from PacerMonitor.com.
About Neelkanth Hotels, LLC
Neelkanth Hotels, LLC is a privately held company in the traveler
accommodation industry. It is a single asset real estate (as
defined in 11 U.S.C. Section 101(51B)).
Neelkanth Hotels filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
20-69501) on Aug. 31, 2020. In the petition signed by Hemant
Thaker, member and manager, the Debtor estimated $1 million to $10
million in both assets and liabilities.
Judge Jeffery W. Cavender oversees the case.
Schreeder, Wheeler & Flint, LLP is the Debtor's legal counsel.
NEWSTREAM HOTEL: Seeks Cash Collateral Access
---------------------------------------------
Newstream Hotel Partners-Lit LLC asks the U.S. Bankruptcy Court for
the Eastern District of Texas, Sherman Division, for authority to,
among other things, use cash collateral on an interim and final
basis in accordance with the proposed budget, with a 15% variance.
The Debtor requires the use of cash collateral for working capital,
general corporate purposes, and costs of administering the Chapter
11 Case.
The Debtor entered into the Loan Agreement dated August 23, 2018,
by and between Debtor as Borrower and UC Funding, LLC as Lender. In
connection with the Loan Agreement, the Debtor executed the
Promissory, Mortgage, Assignment of Leases and Rents, Security
Agreement, and Fixture Filing, Assignment of Leases and Rents and
other collateral loan documents. Pursuant to the Loan Documents,
the Debtor borrowed $14,000,000. The amounts borrowed are secured
by liens on substantially all of the Debtor's assets.
On August 24, 2018, UC Funding executed an Assignment of Recorded
Documents, which purportedly assigned the Note and rights under the
Loan Documents to UC Four Points Little Rock Holder, LLC.
As of April 1, 2020, UC Four Points alleged that Debtor was liable
under the Loan Documents in an amount of $14,605,098.53, including
reserves, fees, costs, and interest, which the Debtor disputes.
As of the Petition Date, the total outstanding obligations due and
owing to vendors, suppliers, and other general unsecured creditors
are approximately $309,697. The Debtor's Restricted Cash on hand as
of the Petition Date is approximately $110,300.88, and the Debtor's
Unrestricted Cash on hand as of the Petition Date is approximately
$350,217.50. The primary uses of the Debtor's cash have been to
fund the Debtor's operating expenses in the ordinary course of
business.
As adequate protection for the Debtor's use of the Cash Collateral,
the Debtor proposes to provide UC Four Points continuing, valid,
binding, enforceable, fully perfected, replacement liens and first
priority security interests in the Debtor's presently owned or
hereafter acquired property and assets. The Adequate Protection
Liens will be granted only to the extent the prepetition liens of
UC Four Points are valid, enforceable, non-avoidable liens and
security interests that were perfected prior to the Petition Date ,
which are not subject to avoidance, reduction, disallowance,
impairment, or subordination pursuant to the Bankruptcy Code or
applicable nonbankruptcy law.
The use of Cash Collateral and replacement liens will be subject to
right of payment of these carved out expenses:
(a) unpaid post-petition fees and expenses of the Clerk of the
Court and statutory fees payable to the U.S. Trustee pursuant to 28
U.S.C. section 1930; and
(b) unpaid post-petition fees and expenses of Professionals of
the Debtor and any Statutory Committee (if appointed) but only to
the extent such fees and expenses are within the amounts set forth
in the Budget approved by UC Four Points for such Professional and
subsequently allowed by the Bankruptcy Court under sections 330,
331, or 363 of the Bankruptcy Code.
These events constitute Events of Default:
(a) the Debtor violates any term of the Interim Cash
Collateral Order;
(b) the Debtor's actual expenditures exceed the amounts set
forth in the line items to an Approved Budget by more than the
Permitted Variance, and the Prepetition Secured Lender did not
previously consent in writing to such variation from such Approved
Budget, or did not subsequently waive such unauthorized use of Cash
Collateral
(c) the consummation of the sale or other disposition of all
or substantially all of the assets of the Debtor;
(d) the entry of an order converting the Chapter 11 Case to a
case under Chapter 7 of the Bankruptcy Code or dismissing the
Chapter 11 Case.
A copy of the motion is available for free at
https://bit.ly/32DZgaN from PacerMonitor.com.
About Newstream Hotel Partners-Lit LLC
Newstream Hotel Partner-IAH, LLC, is a single asset real estate (as
defined in 11 U.S.C. Section 101(51B)). Newstream Hotel
Partner-IAH sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Tex. Case No. 20-41064) on April 28, 2020. At the
time of filing, the Debtor was estimated to have assets of between
$1 million and $10 million and liabilities of the same range.
Judge Brenda T. Rhoades oversees the case.
Spencer Fane LLP is the Debtor's counsel.
NINE POINT ENERGY: Bids Due June 11; Auction Set for June 15
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
bidding procedures for the sale of substantially all of the assets
of Nine Point Energy Holdings Inc. and its debtor-affiliates.
The deadline to submit a qualified bid is June 11, 2021, at 5:00
p.m. (prevailing Eastern Time), followed by an auction on June 15,
2021, at 10:00 a.m. (prevailing Eastern Time). Objections to the
sale, if any, must be filed no later than 4:00 p.m. (prevailing
Eastern Time) on April 30, 2021. A sale hearing to consider the
proposed sale will be on June 17, 2021, at 11:30 a.m. (prevailing
Eastern Time).
As reported by the Troubled Company Reporter on March 26, 2021, the
Debtors filed with the U.S. Bankruptcy Court for the District of
Delaware a notice of their proposed bidding procedures in
connection with one or more sales or dispositions of all or
substantially all of their assets to an entity to be designated by
AB Private Credit Investors LLC, subject to overbid.
According to TCR, the Stalking Horse Bidder's purchase price for
the Debtors' Assets, consists of:
i) a credit bid, on a dollar-for-dollar basis, in an aggregate
amount not less than $250 million;
ii) the assumption of certain liabilities;
iii) any liens or claims granted by the Debtors to the DIP
Lenders as adequate protection for any diminution in value of the
interests of the DIP Lenders in their collateral resulting from the
use of cash collateral or otherwise; and
iv) "Excluded Cash," for the Debtors to fund the wind-down of
their operations and payments following a closing of the Sale.
Any persons interested in making an offer to purchase the assets
must contact the Debtors' investment baker:
Perella Weinberg Partners LP
Attn: John Cesarz
Mark Admoanis
Jeff Knupp
Jake Boos
767 Fifth Avenue
New York, NY 10153
E-mail: jcesarz@pwpartners.com
madomanis@pwpartners.com
JKnupp@pwpartners.com
JBoos@pwpartners.com
About Nine Point Energy
Nine Point Energy Holdings, Inc. -- https://ninepointenergy.com/ --
is a private exploration and production company focused on value
creation through the safe, efficient development of oil and gas
assets within the Williston Basin.
Nine Point Energy Holdings, Inc., sought Chapter 11 protection
(Bankr. D. Del. Case No. 21-10570) as the Lead Case, on March 15,
2021. The three affiliates that concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code are
Nine Point Energy, LLC (Bankr. D. Del. Case No. 21-10571), Foxtrot
Resources, LLC (Case No. 21-10572), and Leaf Minerals, LLC (Case
No. 21-10573). The cases are assigned to Judge Mary F. Walrath.
In the petitions signed by Dominic Spencer, authorized signatory,
the Debtors estimated assets and liabilities (on a consolidated
basis) in the range $100 million to $500 million.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP and Latham
& Watkins LLP as counsel; AlixPartners LLP as financial advisor;
Perella Weinberg Partners L.P. as investment banker; and Lyons,
Benenson & Co., Inc. as compensation consultant. Stretto is the
claims and noticing agent and administrative advisor.
PPD INC: Moody's Puts Ba3 CFR Under Review for Upgrade
------------------------------------------------------
Moody's Investors Service placed the ratings of PPD, Inc. and its
subsidiaries (collectively "PPD") on review for upgrade. This
follows an announcement by PPD that it will be acquired by Thermo
Fisher Scientific Inc. ("Thermo Fisher," Baa1 stable). The ratings
being placed under review include the Ba3 Corporate Family Rating,
Ba3-PD Probability of Default Rating, Ba2 rating on existing senior
secured bank credit facilities, and B2 rating on the senior
unsecured notes. There is no change to the SGL-1 Speculative Grade
Liquidity Rating. The outlooks were revised to Ratings Under Review
from Stable.
On April 15, 2021, Thermo Fisher announced that it has entered into
a definitive agreement to acquire PPD for $17.4 billion plus $3.5
billion of net debt. Thermo Fisher intends to use proceeds from
debt financing and cash on hand to fund the transaction, and with
the debt of PPD to be assumed. The transaction was approved by
PPD's Board of Directors and a majority of shareholders and is
still subject to regulatory approvals. The companies expect the
deal to close by the end of 2021.
Moody's took the following action on PPD, Inc. and subsidiaries:
On Review for Upgrade:
Issuer: PPD, Inc.
Corporate Family Rating, Placed on Review for Upgrade, currently
Ba3
Probability of Default Rating, Placed on Review for Upgrade,
currently Ba3-PD
Senior Secured Bank Credit Facilities, Placed on Review for
Upgrade, currently Ba2 (LGD2)
Issuer: Jaguar Holding Company II, LLC
Senior unsecured notes, Placed on Review for Upgrade, currently B2
(LGD5)
Outlook Actions:
Issuer: PPD, Inc.
Outlook, Changed To Rating Under Review From Stable
Issuer: Jaguar Holding Company II, LLC
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Excluding the ratings review, PPD's Ba3 CFR is supported by its
significant scale, breadth of services and strong reputation as one
of the largest contract research organizations (CROs) globally. The
rating also reflects the risks inherent in the CRO industry, which
is highly competitive, has high reliance on the pharmaceutical
industry, and is subject to cancellation risk.
ESG considerations include a still high sponsor ownership of PPD's
equity, at around 70%, which could lead PPD to favor
shareholder-friendly initiatives. At present, sponsors, The Carlyle
Group and Hellman & Friedman, also represent a majority of seats on
the board of directors. Positive ESG considerations include PPD's
clinical trial work on the recently FDA approved COVID-19 vaccine
of pharmaceutical company, Moderna.
PPD's SGL-1 Speculative Grade Liquidity Rating is supported by
Moody's expectation for strong free cash flow in excess of $400
million annually. Cash at December 31, 2020 was $768 million. PPD
has a $600 million revolver that expires in January 2026. There are
no financial maintenance covenants on the term loan, with a
springing maximum 1st lien secured net leverage covenant on the
revolver (when more than 35% drawn).
The review for upgrade reflects Moody's expectation that, should
the acquisition by Thermo Fisher close, PPD's outstanding debt will
be assumed. It also takes into account that PPD will become part of
a larger company, benefitting from greater scale and diversity. The
review for upgrade also reflects that regulatory and shareholder
approvals are required for the deal to close.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
PPD is a leading global contract research organization. The company
provides Phase I through Phase IV clinical development,
post-approval services as well as laboratory services to
pharmaceutical, biotechnology and academic customers, among others.
PPD is a public company although sponsors, The Carlyle Group and
Hellman & Friedman, Blue Spectrum, and GIC, own approximately 70%
of the public float. Reported revenue for the twelve months ended
December 31, 2020 approximated $4.7 billion.
ROMANS HOUSE: Seeks to Obtain Up to $1.11M of DIP Loans
-------------------------------------------------------
Romans House, LLC seeks the approval of the U.S. Bankruptcy Court
for the Northern District of Texas to obtain between $700,000 and
$1.110 million in principal of post‐petition financing from FLL
Group Holdings, LLC, or its successor, designee, or assign, under a
Secured Promissory Note and DIP Loan.
The material terms of the DIP Loan are:
* Borrower: Romans House, LLC
* DIP Lender: FLL Group Holdings, LLC
* Loan Amount: Between $700,000 and $1,110,000 in principal loan
amount.
* Interest: 11% per annum on funded amount(s) compounded
annually. Interest paid monthly in advance.
* Maturity: 12 months from the initial funding of the DIP Loan,
subject to an extension of 12 months upon mutual written consent of
Debtor Romans and the DIP Lender, or confirmation of a plan of
reorganization, whichever occurs first.
* Liens: First priority liens on the New Personal Property (the
personal property purchased with the DIP Loan proceeds) and first
priority, senior priming liens on all of Debtor Romans' other
assets (i.e., the collateral)
* Origination Fee: 2% of loan amount ($14,000 for $700,000
loan/$22,200 for $1.11 million loan).
* Broker Fee: 4% of loan amount ($28,000 for $700,000
loan/$44,400 for $1.11 million loan) to be paid within two
business days of any funding to Romans. The 4% amount is an
agreed reduction from the 5% under contract. The broker is Citee
Capital, LLC.
* Management Fee: $750 per month, with the first 12 months paid
in advance and deducted from the loan proceeds.
* Events of Default: (i) Appointment of a trustee, (ii)
Conversion to Chapter 7, (iii) Change of Control of the Debtor,
(iv) Hostile Takeover of the Debtor, (v) Fundamental Change in the
Debtor, (vi) Removal of John Bryan as the Debtor's CEO, except as
consented to in writing by the DIP Lender, (vii) Breach of
covenants of the DIP Agreement, (viii) The filing by the Debtor,
or any other party with standing to do so, of any motion or other
pleading seeking additional financing secured by any lien or liens
that are equal or senior to the DIP Lender's DIP Liens on the
collateral, unless the new financing requires repayment of the DIP
Loan in full or the DIP Lender consents to the new financing, (ix)
Uncured payment defaults, or (x) Misuse of DIP Loan proceeds.
The Debtor proposes that the obligations under the DIP Loan be
deemed immediately secured by a valid, binding, continuing,
enforceable, fully perfected and unavoidable first priority
security interests and liens upon all of Debtor Romans' real, new
personal property, and other personal property without the DIP
Lender being required to record any mortgages, deeds of trust,
financing statements or other documents to perfect its DIP liens.
Cash Collateral Use
The Debtor also seeks permission to use the cash collateral to pay
the Debtor's expenses based on the cash collateral budget and
construction budget.
These secured creditors hold interest in the cash collateral:
* Pender West Credit 1 REIT, L.L.C,
* Natalie, LLC, an affiliate of the proposed DIP Lender,
* U.S. Bank Equipment Finance, and
* Internal Revenue Service.
Pender West Credit 1 REIT, L.L.C., is the Debtor's primary secured
creditor. Prior to the Petition Date, Pender purportedly acquired
loans that were made to Romans for $9,450,000 and made a loan to
Romans. The Pender Loan was purportedly secured by substantially
all of the assets of the Debtor and debtor affiliate Healthcore
Management System, LLC, including, first‐position liens on the
Tandy Village Property (operated by Debtor Romans House) and the
Vincent Victoria Property (operated by Debtor Healthcore), and both
Debtors' personal property.
Prior to the Petition Date, Pender foreclosed on the Vincent
Victoria Property and is now the fee simple owner of that property.
Subsequently, Healthcore entered into a lease agreement with
Pender, as lessor, and Healthcore, as the lessee. The Lease expired
on December 7, 2019, and Healthcore became a holdover tenant under
the lease. As of April 13, 2021, Pender claims to have a secured
claim in Debtor Romans' case for approximately $12 million. Given
that the assets owned by Debtor Romans only have a value of
approximately $3.92 million, Pender's claim is undersecured.
In addition, during the gap period the Debtors obtained a loan of
$75,000 from Natalie, LLC, an affiliate of the proposed DIP Lender.
Natalie was provided with a lien on the Debtors' assets to secure
the Gap Loan. While there may not be equity in Romans' assets
above the alleged claim of Pender, the Gap Loan is an
administrative claim under Section 503(b) of the Bankruptcy Code.
Debtor Romans currently owes approximately $91,920 in principal,
interest, and fees under the Gap Loan, which will be repaid and
refinanced under the DIP Loan.
In addition to Pender and Natalie, Debtor Romans believes U.S. Bank
Equipment Finance may have a lien on certain of Romans' assets for
a secured lease or purchase transaction, but that said lien does
not extend to cash collateral, and the IRS may have a lien on
Romans' assets.
The DIP Loan is essential to Romans' ability to execute on the
Improve and Transition Plan, Martin J. Brill, Esq., at Levene,
Neale, Bender, Yoo & Brill L.L.P., proposed counsel to the Debtors,
asserts. Pursuant to the Improve and Transition Plan, Debtor
Romans is able to make the primary improvements to the Tandy
Village Property and transition Healthcore's residents and staff to
the Tandy Village Property. Mr. Brill points out that both Debtors
will benefit from the Improve and Transition Plan, by having all of
their residents in one location, eliminating redundancies and being
able to streamline operations and paving the way for a joint plan
and exit from bankruptcy.
The Debtors believe the primary and secondary improvements in the
Tandy Village Property would cost approximately $1.11 million, but
that these would add value (estimated at $4.47 million) to the
Property, making it more rentable. Mr. Brill added that the
immediate increase in value alone, which greatly exceed the maximum
$1.11 million DIP Loan and related DIP Liens, demonstrate that
Pender and any other secured creditors will be adequately protected
through the increase in Romans' collateral values and continued
operations.
Accordingly, the Debtor seeks the Court's approval to obtain the
loan. By contracting the Loan, the DIP Lender is willing to (a)
lend Romans between $700,000 and $1.11 million to allow Romans to
repay the Gap Loan provided by Natalie (the Lender's affiliate) and
to make the primary improvements and secondary improvements and (b)
allow Romans to use cash collateral to continue paying normal
operating expenses, Mr. Brill told the Court.
A full-text copy of the motion and the budget is available at
https://bit.ly/3uXPmNa from PacerMonitor.com free of charge.
About Romans House
Based in Fort Worth, Texas, Romans House, LLC operates Tandy
Village Assisted Living, a continuing care retirement community and
assisted living facility for the elderly in Fort Worth, Texas.
Affiliate Healthcore System Management, LLC, operates Vincent
Victoria Village Assisted Living, also an assisted living facility
for the elderly.
Romans House, LLC, and Healthcore System sought Chapter 11
protection (Bankr. N.D. of Tex. Case No. 19-45023 and 19-45024) on
Dec. 9, 2019. Romans House was estimated to have $1 million to $10
million in assets and liabilities while Healthcore was estimated to
have $1 million to $10 million in assets and $10 million to $50
million in liabilities.
The Hon. Edward L. Morris is the case judge.
Demarco Mitchell, PLLC, is the Debtors' legal counsel. Levene,
Neale, Bender, Yoo & Brill L.L.P., serves as their co-bankruptcy
counsel.
Pender Capital Asset Based Lending Fund I, LP, has filed a
Disclosure Statement and Plan of Reorganization for Romans House,
LLC, dated March 1, 2021. Pender is represented in the case by:
Michael J. Barrie, Esq.
Gregory Werkheiser, Esq.
Kevin M. Capuzzi, Esq.
BENESCH, FRIEDLANDER, COPLAN & ARONOFF LLP
1313 North Market Street, Suite 1201
Wilmington, DE 19801
Telephone: (302) 442-7010
Facsimile: (302) 442-7012
E-mail: kcapuzzi@beneschlaw.com
- and -
Frances A. Smith, Esq.
ROSS AND SMITH, P.C.
Plaza of the Americas
700 N. Pearl Street, Suite 1610
Dallas, TX 75201
Telephone: (214) 377-7879
Facsimile: (214) 377-9409
E-mail: frances.smith@judithwross.com
The DIP Lender is FLL Group Holdings, LLC and is represented by:
The Law Offices of Marc L. Shapiro
720 Goodlette Rd N, Ste 304
Naples, FL 34102
Email: marc@attorneyshapiro.com
RUMBLEON INC: Lowers Net Loss to $25 Million in 2020
----------------------------------------------------
RumbleOn, Inc. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $25 million
on $416.43 million of total revenue for the year ended Dec. 31,
2020, compared to a net loss of $45.18 million on $840.63 million
of total revenue for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $76.98 million in total
assets, $72.41 million in total liabilities, and $4.57 million in
total stockholders' equity.
RumbleOn said, "The Company has incurred losses from inception
through December 31, 2020 and may incur additional losses in the
future. As the Company continues to expand its business, build its
brand name and awareness and continues technology and software
development efforts, it may need access to additional capital.
Management believes that current working capital, availability of
equity under its current shelf registration statement, results of
operations, and expected continued inventory financing are
sufficient to fund operations for at least one year from the
financial statement issuance date.
"The worldwide spread of the COVID-19 outbreak has resulted in a
global slowdown of economic activity which decreased demand for a
broad variety of goods and services, while also disrupting sales
channels, marketing activities and supply chains for an unknown
period of time until the outbreak is contained. This is impacting
the Company's business and the powersport, automotive and transport
industries as a whole. The Company has positioned its business
today to be lean and flexible in this period of lower demand and
higher uncertainty with the goal of preparing the Company for a
strong recovery as the crisis is contained. The Company believes
its online business model allows it to quickly respond to market
demand or changes in the businesses it operates as the COVID-19
pandemic continues."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1596961/000165495421003633/rmbl_10k.htm
About RumbleOn
Nevada-based RumbleOn, Inc. -- www.rumbleon.com-- is a technology
driven, motor vehicle dealer and e-commerce platform provider
disrupting the vehicle supply chain using innovative technology
that aggregates, processes and distributes inventory in a faster
and more cost-efficient manner.
SEADRILL LTD: Replaces Forbearance Agreement
--------------------------------------------
On April 19, 2021, Seadrill Limited (OSE:SDRL,OTCQX:SDRLF)
announces that Seadrill New Finance Limited (the "Issuer"), a
subsidiary of the Company, has agreed to replace the existing
forbearance agreement announced on Feb. 11, 2021, and extended on
Feb. 23, 2021, March 9, 2021 and March 23, 2021, with a new
forbearance agreement, with respect to the 12.0% senior secured
notes due 2025 (the "Notes") with certain holders of the Notes (the
"Note Holders").
Pursuant to the new forbearance agreement, the consenting Note
Holders have agreed not to exercise any enforcement rights with
respect to the Issuer and any subsidiary of the Issuer which is an
obligor under the Notes to, or otherwise take actions in respect
of, certain events of default that may arise under the Notes as a
result of, amongst other things, the Issuer not making the
semi-annual 4% cash interest payment due to the senior secured
noteholders on January 15, 2021, in respect of their Notes and the
filing of Chapter 11 cases in the Southern District of Texas by the
Company and certain of its consolidated subsidiaries (excluding the
Issuer and its consolidated subsidiaries) until and including the
earlier of 17 May 2021 and any termination of the forbearance
agreement.
The purpose of the new forbearance agreement is to allow the Issuer
and its stakeholders more time to negotiate on the heads of terms
of a comprehensive restructuring of its balance sheet. Such a
restructuring may involve the use of a court-supervised process.
About Seadrill Ltd.
Seadrill Limited (OSE:SDRL, OTCQX:SDRLF) --
http://www.seapdrill.com/-- is a deepwater drilling contractor
providing drilling services to the oil and gas industry. As of
March 31, 2018, it had a fleet of over 35 offshore drilling units
that include 12 semi-submersible rigs, 7 drillships, and 16 jack-up
rigs.
On Sept. 12, 2017, Seadrill Limited sought Chapter 11 protection
after reaching terms of a reorganization plan that would
restructure $8 billion of funded debt. It emerged from bankruptcy
in July 2018.
Demand for exploration and drilling has fallen further during the
COVID-19 pandemic as oil firms seek to preserve cash, idling more
rigs and leading to additional overcapacity among companies serving
the industry.
In June 2020, Seadrill wrote down the value of its rigs by $1.2
billion and said it planned to scrap 10 rigs. Seadrill said it is
in talks with lenders on a restructuring of its $5.7 billion bank
debt.
Seadrill Partners LLC, a limited liability company formed by
deep-water drilling contractor Seadrill Ltd. to own, operate and
acquire offshore drilling rigs, along with its affiliates, sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-35740) on
Dec. 1, 2020, after its parent company swept one of its bank
accounts to pay disputed management fees. Mohsin Y. Meghji,
authorized signatory, signed the petitions.
On Feb. 7, 2021, Seadrill GCC Operations Ltd., Asia Offshore
Drilling Limited, Asia Offshore Rig 1 Limited, Asia Offshore Rig 2
Limited, and Asia Offshore Rig 3 Limited sought Chapter 11
protection. Seadrill GCC estimated $100 million to $500 million in
assets and liabilities as of the bankruptcy filing.
Additionally, on Feb. 10, 2021, Seadrill Limited and 114 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the United States Bankruptcy Code with the Court. The lead case
is In re Seadrill Limited (Bankr. S.D. Tex. Case No. 21-30427).
Seadrill Limited disclosed $7.291 billion in assets against $7.193
billion in liabilities as of the bankruptcy filing.
In the new Chapter 11 cases, Kirkland & Ellis LLP is counsel for
the Debtors. Houlihan Lokey, Inc., is the financial advisor.
Alvarez & Marsal North America, LLC, is the restructuring advisor.
The law firm of Jackson Walker L.L.P. is co-bankruptcy counsel.
The
law firm of Slaughter and May is co-corporate counsel.
Advokatfirmaet Thommessen AS is serving as Norwegian counsel.
Conyers Dill & Pearman is serving as Bermuda counsel. Prime Clerk
LLC is the claims agent.
SEADRILL PARTNERS: Lenders, Committee Okay Cash Access thru May 7
-----------------------------------------------------------------
Seadrill Partners LLC and its debtor-affiliates agreed with the Ad
Hoc Committee of Term Loan B (TLB) Lenders, Alter Domus (US) LLC,
as administrative agent, collateral agent, and security trustee,
and the Official Committee of Unsecured Creditors on the Debtors'
continued use of cash and TLB collateral through the earlier of May
7, 2021, or five business days after the delivery of a written
notice of default, which default has not been duly cured.
The parties also agreed that the Debtors shall provide the
Committee's advisors with information on any authorized use of cash
or cash collateral within five business days of any such
expenditure, as a condition to the continued use of cash
collateral.
The parties further agreed that the Debtors shall have filed a
Chapter 11 Plan acceptable to the TLB Ad Hoc Committee and the TLB
Agent no later than 73 calendar days after the Petition Date, with
the accompanying disclosure statement to that Plan, and that no
later than 105 calendar days after the Petition Date, the Debtors
shall have filed all related exhibits and schedules.
As of the Petition Date, the Debtors owe the TLB Secured Parties at
least $2,713,787,257 in aggregate principal amount, including
approximately (a) $128,270,177 in outstanding principal amount of
revolving loans and (b) $2,585,517,080 in outstanding principal
amount of term loans. The Debtors each granted the TLB Agent, for
the benefit of itself and the other TLB Secured Parties, a
first-priority security interest in and continuing lien on
substantially all of their assets and property, including cash and
cash collateral.
A copy of the proposed amended interim cash collateral order and a
redlined version may be accessed free of charge at
https://bit.ly/32j6D74 from PacerMonitor.com.
Counsel to the TLB Agent:
Maja Zerjal Fink, Esq.
Arnold & Porter Kaye Scholer LLP
250 West 55th Street
New York, NY 10019-9710
Telephone: (212) 836-7131
Facsimile: (212) 836-8689
Email: maja.zerjalfink@arnoldporter.com
Counsel to the TLB Ad Hoc Committee
Abhilash M. Raval, Esq.
Milbank LLP
55 Hudson Yards
New York, NY 10001-2163
Tel: (212) 530-5123
Email: araval@milbank.com
Counsel to Official Committee of Unsecured Creditors
Omer F. Kuebel, III, Esq.
Bradley C. Knapp, Esq.
Locke Lord LLP
601 Poydras St., Suite 2660
New Orleans, LA 70130
Tel: (504) 558-5210
Fax: (504) 558-5200
Email: rkuebel@lockelord.com
bknapp@lockelord.com
- and -
Aaron C. Smith, Esq.
Locke Lord LLP
111 South Wacker Drive, Suite 4100
Chicago, Il 60606
Tel: (312) 443-0460
Fax: (312) 443-0336
Email: asmith@lockelord.com
- and -
Philip G. Eisenberg, Esq.
Simon Mayer, Esq.
Locke Lord LLP
600 Travis Street, Suite 2800
Houston, TX 77002
Tel: (713) 226-1200
Fax: (713) 223-3717
Email: peisenberg@lockelord.com
simon.mayer@lockelord.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.
About Seadrill Ltd.
Seadrill Limited (OSE:SDRL, OTCQX:SDRLF) --
http://www.seapdrill.com/-- is a deepwater drilling contractor
providing drilling services to the oil and gas industry. As of
March 31, 2018, it had a fleet of over 35 offshore drilling units
that include 12 semi-submersible rigs, 7 drillships, and 16 jack-up
rigs.
On Sept. 12, 2017, Seadrill Limited sought Chapter 11 protection
after reaching terms of a reorganization plan that would
restructure $8 billion of funded debt. It emerged from bankruptcy
in July 2018.
Demand for exploration and drilling has fallen further during the
COVID-19 pandemic as oil firms seek to preserve cash, idling more
rigs and leading to additional overcapacity among companies serving
the industry.
In June 2020, Seadrill wrote down the value of its rigs by $1.2
billion and said it planned to scrap 10 rigs. Seadrill said it is
in talks with lenders on a restructuring of its $5.7 billion bank
debt.
On Feb. 7, 2021, Seadrill GCC Operations Ltd., Asia Offshore
Drilling Limited, Asia Offshore Rig 1 Limited, Asia Offshore Rig 2
Limited, and Asia Offshore Rig 3 Limited sought Chapter 11
protection. Seadrill GCC estimated $100 million to $500 million in
assets and liabilities as of the bankruptcy filing.
Additionally, on Feb. 10, 2021, Seadrill Limited and 114 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the United States Bankruptcy Code with the Court. The lead case
is In re Seadrill Limited (Bankr. S.D. Tex. Case No. 21-30427).
Seadrill Limited disclosed $7.291 billion in assets against $7.193
billion in liabilities as of the bankruptcy filing.
In the new Chapter 11 cases, Kirkland & Ellis LLP is counsel for
the Debtors. Houlihan Lokey, Inc., is the financial advisor.
Alvarez & Marsal North America, LLC, is the restructuring advisor.
The law firm of Jackson Walker L.L.P. is co-bankruptcy counsel. The
law firm of Slaughter and May is co-corporate counsel.
Advokatfirmaet Thommessen AS is serving as Norwegian counsel.
Conyers Dill & Pearman is serving as Bermuda counsel. Prime Clerk
LLC is the claims agent.
SIGNIFY HEALTH: SGL-1 Liquidity Rating No Impact on Moody's B2 CFR
------------------------------------------------------------------
Moody's Investors Service assigned a speculative-grade liquidity
rating of SGL-1 to Signify Health, LLC, reflecting the health risk
assessment provider's very good liquidity after its February 2021
IPO. Signify's credit ratings, including the B2 corporate family
rating, B2-PD probability of default rating, and B2 instrument
ratings on its first-lien debt, are not affected by this action.
The outlook remains stable.
RATINGS RATIONALE
In its February 2021 IPO, Signify raised net cash proceeds of $610
million, giving the company a negative net funded debt position,
and prompting the assignment, now that Signify is a public company,
of the SGL-1 liquidity rating. The company has an exceptionally
strong cash position relative to its approximately $410 million of
funded debt -- Moody's estimates first-quarter 2021 cash of about
$680 million -- and full availability under its $80 million
revolving credit facility. However, Signify has disclosed little in
terms of its expected use of IPO proceeds, indicating that M&A
activity could be part of its plans. Even after the IPO, private
equity sponsor New Mountain Capital continues to have a majority,
62% ownership position in the company, implying that the risk of
aggressive financial strategy remains significant. Given that
Signify's ownership structure has changed, Moody's views ESG --
Governance as a key driver of this public liquidity-score
assignment.
Moody's could upgrade the ratings if free cash flow as a percentage
of debt holds above 5.0%; if the company maintains good revenue
growth while diversifying revenue sources across business lines and
away from CMS-associated (Centers for Medicaid and Medicare)
sources, and; if Moody's expects it will adhere to a conservative
financial policy.
Moody's could downgrade the ratings if expected revenue growth
fails to materialize; if Moody's adjusted debt-to-EBITDA leverage
holds above 5.0 times; if Moody's expect free cash flow to be
negative for a sustained period; or if there is a legislatively
imposed change to the scope of the HRA model.
Signify Health, domiciled in both Dallas, TX and Norwalk, CT, is a
leading provider of home-based care management services on behalf
of Medicare Advantage health plans in the U.S., including health
risk assessments ("HRAs") and chronic and post-acute-care
management. The company was formed by the late-2017 acquisition by
New Mountain Capital of both Censeo Health and Advance Health. In
November 2019, New Mountain contributed to the Signify Health
entity another of its portfolio companies, Connecticut-based Remedy
Partners, a provider of software and analytics that facilitate
large-scale bundled payment programs. The company undertook an IPO
in February 2021. Moody's expects Signify to generate 2021 revenue
of at least $700 million.
The methodology used in this rating was Business and Consumer
Service Industry published in October 2016.
SMG INDUSTRIES: Delays Filing of 2020 Annual Report
---------------------------------------------------
SMG Industries, Inc. filed a Form 12b-25 notification with the
Securities and Exchange Commission informing the delay in the
filing of its Annual Report on Form 10-K for the year ended Dec.
31, 2020.
The Company said the compilation, dissemination and review of the
information required to be presented in the Annual Report on Form
10-K for the year ended Dec. 31, 2020 could not be completed and
filed by March 31, 2021, "without undue hardship and expense to the
registrant." The Company anticipates that it will file its Annual
Report on Form10-K for the year ended Dec. 31, 2020 within the
applicable "grace" period provided by Securities Exchange Act Rule
12b-25.
About SMG Industries
SMG Industries Inc. -- www.SMGIndustries.com -- is a
growth-oriented company focused in logistics, midstream & oilfield
services market segments in the Southwest United States. The
Company's primary business objective is to grow its operations and
create value for its stockholder's through organic growth and
strategic acquisitions. We have a 'buy & build' growth strategy of
consolidating middle market companies and generating organic growth
post-acquisition when possible from removing business constraints
with strategic cross-selling of products and services across market
segments benefiting it with higher utilization and customers with
more efficient costs.
SMG reported a net loss of $3.98 million for the year ended Dec.
31, 2019, compared to a net loss of $1.14 million for the year
ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $32.13
million in total assets, $38.02 million in total liabilities, and a
total stockholders' deficit of $5.89 million.
Houston, Texas-based MaloneBailey, LLP, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
May 29, 2020, citing that the Company has suffered recurring losses
from operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going concern.
SOBR SAFE: Incurs $30 Million Net Loss in 2020
----------------------------------------------
SOBR Safe, Inc. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $29.98
million on zero revenue for the year ended Dec. 31, 2020, compared
to a net loss of $1.25 million on zero revenue for the year ended
Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $3.99 million in total assets,
$947,089 in total liabilities, and $3.04 million in total
stockholders' equity.
Irvine, CA-based Macias Gini & O'Connell LLP, the Company's auditor
since 2021, issued a "going concern" qualification in its report
dated March 31, 2021, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1425627/000147793221001930/sobr_10k.htm
About SOBR
Boulder, Colo.-based SOBR Safe, Inc. is a developer of the SOBRtech
platform and its latest proprietary application, the non-invasive
alcohol detection and screening system SOBRcheck.
SOFT FINISH: Has Deal on Cash Collateral Access
-----------------------------------------------
Soft Finish, Inc. asks the U.S. Bankruptcy Court for the Central
District of California, Los Angeles Division, for entry of an
order approving its stipulation with the U.S. Internal Revenue
Service regarding the Debtor's use of cash collateral through
September 15, 2021.
At the hearing on April 6, 2021, the Debtor's counsel noted the IRS
had requested some additional terms as a condition to consenting to
the use of cash collateral including payment of adequate protection
of $3,000 per month beginning on April 15. The IRS proposed a
Stipulation with the additional terms which was uploaded by the
Debtor on April 15. The Counsel for the Debtor reviewed the
Stipulation with counsel for Pacific City Bank and modified it
slightly based on that review. Once the terms of the IRS
Stipulation were agreed to, the Debtor proposed an Order approving
the use of cash collateral through September 15, which both the IRS
and Pacific City Bank accepted.
The Stipulation does not change the Order entered by the court on
April 15 other than to clarify the debt owed to the IRS by the
Debtor and certain other provisions such as application of the
payments and default provisions.
The Debtor requires use of Cash Collateral to operate and pay
reasonable ongoing expenses during the Chapter 11 case. Pursuant to
the Stipulation and subject to further Court Order, the IRS has
agreed to consent to the use of what it claims is its Cash
Collateral.
As adequate protection for the Debtor's use of cash collateral, the
Debtor will provide the IRS a replacement lien on all post-petition
accounts receivable and all other property acquired by the Debtor
up to the full extent of the value of its prepetition lien(s). This
lien will have priority pursuant to relevant law and will be in
addition to any other liens of the IRS against the assets and
property of the Debtor as of the petition date.
The Debtor must remain post-petition current on all filing
requirements and pay all post-petition taxes as they come due, this
includes timely making federal payroll tax deposits and estimated
income tax payments. To the extent the Debtor fails to timely pay
any post-petition tax, the IRS is granted relief from stay, upon
filing a declaration and lodging an order, to file a notice of
federal tax lien with the appropriate recording offices for the
delinquent post-petition period.
If the Debtor or the successor in interest fails to make any
payment of tax to the IRS required under this Stipulation or
failure to perform any provision under the Stipulation, within 10
days of the due date of such provision, then the United States
government may declare the Debtor in material default of the
Stipulation. Failure to declare a default does not constitute a
waiver by the United States of the right declare that the successor
in interest or Debtor is in default.
If the United States declares the Debtor or its successor in
interest to be in default of the Debtor's obligations under the
Stipulation, the United States must serve written notice of default
to the Debtor, and any attorney for Debtor.
If the Debtor fails to cure the default within 7 days after service
of such written notice, then the United States may file a
declaration of default with the Court and lodge an order dismissing
the case.
The Stipulation will be binding on Debtor, any committee, any
subsequent trustee, or their successors.
The obligations, replacement liens and super-priority claims will
continue in full force and effect in the event of a dismissal of
the case. The Court will retain jurisdiction for the purpose of
enforcing such claims and liens.
A copy of the motion and the Stipulation is available for free at
https://bit.ly/3mVWdnA from PacerMonitor.com.
About Soft Finish, Inc.
Soft Finish manufactures clothing, specifically denim product such
as jeans, denim jackets, skirts, shorts, shirts. Soft Finish
specializes in "distressing" garments, taking hard, rigid,
untreated denim fabric and washing the product to soften garments
and using techniques to "beat up" or "age" garments. Distressing
includes hand sanding garments to create natural wear areas, adding
holes to garments to make them look used or old, stone washing to
give the garment a softer feel and a lighter color as well as other
hand treatments.
Soft Finish is the successor in interest to US Garment LLC. In late
2017, US Garment LLC transferred its assets to Soft Finish and Soft
Finish assumed 100% of the US Garment debt. The owners of US
Garment were Jae K. Chung and a minority interest with her son
Wesley Chung. Jae K. Chung is the sole owner of Soft Finish.
Soft Finish sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Calif. Case No. 21-12038) on March 15,
2021. In the petition signed by Jae K. Chung, as president, the
Debtor disclosed $203,316 in assets and $1,404,553 in liabilities.
Judge Barry Russell oversees the case.
M. Jonathan Hayes, Esq., at Resnik Hayes Moradi, LLP, is the
Debtor's counsel.
SOLOMON EDUCATION: Seeks Cash Collateral Access
-----------------------------------------------
Solomon Education Group, LLC asks the U.S. Bankruptcy Court for the
Western District of Washington for authority to use cash collateral
on a final basis to pay operating expenses, including future
payroll and related taxes and other ongoing operating expenses in
accordance with the proposed budget.
As set forth in Supplemental Declaration of Richard Lee, the Debtor
owns and operates a school serving 7th through 12th grade
international students located in Everett, Wash. Prior to April
2021, the Debtor utilized the property located at 9506 7 Ave., SE,
Everett, WA, as its main campus. Beginning in 2018, due primarily
to world economic conditions, the Debtor's operation suffered a
downturn in student enrollment which was compounded by the Covid-19
pandemic in early 2020.
In response to the decrease in revenue, the Debtor changed its
curriculum and now provides instruction to students, on-line,
utilizing "1 on 1" or "1 on 2", in person instruction and has
elected to sell the property. In anticipation of selling the
property, the Debtor has entered into a short-term lease for cash
flow purposes and has vacated the property which is now being
occupied by the Lessee.
The Debtor disburses payroll monthly, with the next payroll set to
occur on May 15, 2021, which includes hours worked from April 1
through April 30. The Court approved payment of the April 15
payroll in its previous order which covered wages worked from March
1 through March 31, and included hours worked prior to the petition
date, from March 1 through March 18.
The Debtor has identified employees who are to be paid as well as
the estimated total payroll. None of the proposed wage payments
exceeds $13,650. All the claims are based on compensation earned
within 180 days of the petition date under the statutory cap,
entitling them to priority status pursuant to 11 U.S.C. section
507(a)(4). Pursuant to section 1129(a)(9), the wage claims would
normally be entitled to priority under any Chapter 11 plan,
therefore the Debtor does not believe payment at this time would
prejudice other creditors.
The Debtor also seeks authorization to pay all federal and state
withholding and payroll-related taxes resulting from this
pre-petition pay period including, but not limited to, all
withholding taxes. Social Security taxes, and Medicare taxes, as
well as all other withholdings such as life insurance and other
employee deductions, if any. The failure to make such payments may
subject the Debtor-in-possession to federal or state liability.
Pacific City Bank -- the senior secured creditor with a balance due
of approximately of $2.6 million -- asserts a security interest in
all accounts and personal property of the Debtor. Pacific City Bank
also asserts a security interest in the Debtor's commercial
building, including rents, located at 9506 7th Ave., SE, Everett WA
98208. The property is valued at approximately $7.5 million.
As of the petition date, the Debtor had cash on hand of
approximately $22,272; no accounts receivable; no inventory;
furniture and equipment valued at approximately $150,000;
intellectual property, including domain names valued at
approximately $2,000. Accordingly, on the date of the petition, the
total value of the Debtor's tangible personal property was
$174,272.
A copy of the motion is available for free at
https://bit.ly/3v4u3cD from PacerMonitor.com.
About Solomon Education Group, LLC
Solomon Education Group, LLC -- http://www.solomonschool.com-- is
a private day and boarding school for grades 7-12. The Debtor
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. W.D. Wash. Case No. 21-10539) on March 18, 2021. In the
petition signed by Richard Lee, managing member, the Debtor
disclosed up to $10 million in both assets and liabilities.
Judge Timothy W. Dore oversees the case.
Thomas D. Neeleman, Esq. at NEELEMAN LAW GROUP, P.C. is the
Debtor's counsel.
SPECTRUM GLOBAL: Incurs $17.7 Million Net Loss in 2020
------------------------------------------------------
Spectrum Global Solutions, Inc. filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing a net
loss attributable to the company of $17.71 million on $18.67
million of revenue for the year ended Dec. 31, 2020, compared to a
net loss attributable to the company of $5.83 million on $25.49
million of revenue for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $4.33 million in total assets,
$13.22 million in total liabilities, $1.22 million in total
mezzanine equity, and a total stockholders' deficit of $10.11
million.
Draper, Utah-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2014, issued a "going concern" qualification in its
report dated April 1, 2021, citing that the Company has incurred
losses since inception, has negative cash flows from operations,
and has negative working capital, which creates substantial doubt
about its ability to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1413891/000121390021019622/f10k2020_spectrumglobal.htm
About Spectrum Global Solutions
Boca Raton, Florida-based Spectrum Global Solutions Inc. --
https://SpectrumGlobalSolutions.com -- operates through its
subsidiaries ADEX Corp., Tropical Communications Inc. and AW
Solutions Puerto Rico LLC. The Company is a provider of
telecommunications engineering and infrastructure services across
the United States, Canada, Puerto Rico and Caribbean.
SPHERATURE INVESTMENTS: Wins Cash Collateral Access Thru May 3
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas,
Sherman Division, has authorized Spherature Investments LLC and its
debtor-affiliates to use cash collateral on an interim basis
through May 3, 2021, in accordance with the budget, with a 10%
variance.
The Debtors require cash collateral to fund working capital,
operating expenses, fixed charges, payroll, administrative expenses
of the Debtors' Chapter 11 cases, and other general corporate
purposes arising in the Debtors' ordinary course of business, each
as necessary for the orderly maintenance and operation of the
Debtors' businesses as a going concern.
Montgomery Capital Advisers, LLC serves as collateral agent on
behalf of secured parties. Montgomery asserts a claim in an
aggregate principal amount not less than $5,500,101 and that any
and all cash of the Debtors, including cash and other amounts on
deposit or maintained in any bank account or accounts of the
Debtors and any amounts generated by the collection of accounts
receivable, the sale of inventory, or other disposition of the
Collateral existing as of the Petition Date or arising or acquired
after the Petition Date. The Lender asserts the Cash Collateral
includes any rights to receive funds withheld from the Debtors in
reserve accounts established and maintained pursuant to merchant
services agreements the Debtors have with various credit card
processing providers.
As adequate protection for the Debtors' use of cash collateral, the
Debtor will pay $73,334 to the Lender no later than the first
business day of each month. In addition, the Lender is granted
replacement liens and security interests in any and all assets
acquired by the Debtors after the Prepetition Date of the same
kind, category and character that the Lender held a perfected lien
against as of the Petition Date. The Replacement Liens are valid,
binding and enforceable against any trustee or other estate
representative appointed in any Case or Successor Case or upon the
dismissal of any Case or Successor Case.
The Lender is also entitled to an allowed superpriority
administrative expense claim, subject to the Carve-Out. The
Carve-Out are fees pursuant to 28 U.S.C. section 1930(a)(6), if
any, fees payable to the clerk of the Bankruptcy Court and any
agent, and unpaid fees and expenses incurred by persons or firms
retained by the Debtors.
The Debtor is directed to maintain insurance coverage in compliance
with the terms of the Lender's pre-Petition Date loan documents and
on substantially the same basis as maintained prior to the Petition
Date.
A further hearing on the matter is scheduled for April 30 at 2:30
p.m.
A copy of the Interim Order and the Debtor's budget through the
week of May 2 is available at https://bit.ly/3v1otrH from Stretto,
the claims agent.
The Debtor projects operating cash receipts and total disbursements
for the following period:
Operating Total
Cash Receipts Disbursements
------------- -------------
3/15/2021 to 3/21/2021: $817,886 $1,119,169
3/22/2021 to 3/28/2021: $852,073 $1,003,217
3/29/2021 to 4/4/2021: $766,918 $695,545
4/5/2021 to 4/11/2021: $950,545 $955,199
4/12/2021 to 4/18/2021: $950,545 $4,034,959
4/19/2021 to 4/25/2021: $950,545 $879,199
4/26/2021 to 5/2/2021: $801,904 $616,910
About Spherature Investments LLC
Spherature Investments LLC and its affiliates, including
WorldVentures Marketing, LLC, sought Chapter 11 protection (Bankr.
E.D. Tex. Lead Case No. 20-42492) on Dec. 21, 2020. In the petition
signed by Michael Poates, chief operating officer, the Debtors
disclosed up to $10 million in both assets and liabilities.
WorldVentures Marketing -- http://worldventures.com-- sells travel
and lifestyle community memberships providing a diverse set of
products and experiences.
At the time of filing, Spherature Investments estimated $50 million
to $100 million in assets and liabilities.
The Hon. Brenda T. Rhoades is the case judge.
The Debtors tapped Foley & Lardner, LLP as counsel and Larx
Advisors, Inc. as restructuring advisor. Stretto is the claims
agent.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors on Jan. 22, 2021.
STAFFING 360: Widens Net Loss to $15.6 Million in 2020
------------------------------------------------------
Staffing 360 Solutions, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$15.64 million on $204.53 million of revenue for fiscal 2020,
compared to a net loss of $4.89 million on $278.48 million of
revenue for fiscal 2019.
As of Jan. 2, 2021, the Company had $86.88 million in total assets,
$102.90 million in total liabilities, $2.08 million in contingently
redeemable series E preferred stock, and a total stockholders'
deficit of $18.10 million.
New York-based BDO USA LLP, the Company's auditor since 2017,
issued a "going concern" qualification in its report dated April
16, 2021, citing that the Company has suffered recurring losses,
has a net capital deficiency, and faces uncertainty as to the
operational impact of the COVID-19 outbreak, that raises
substantial doubt about its ability to continue as a going
concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1499717/000149315221009047/form10-k.htm
About Staffing 360
Headquartered in New York, New York, Staffing 360 Solutions, Inc.
-- http://www.staffing360solutions.com.-- is engaged in the
execution of an international buy-integrate-build strategy through
the acquisition of domestic and international staffing
organizations in the United States and United Kingdom. The Company
believes that the staffing industry offers opportunities for
accretive acquisitions and as part of its targeted consolidation
model, is pursuing acquisition targets in the finance and
accounting, administrative, engineering, IT, and Light Industrial
staffing space.
SUNDANCE ENERGY: Court Okays Ch. 11 Debt Swap With Term Lenders
---------------------------------------------------------------
Law360 reports that bankrupt oil and gas driller Sundance Energy
received court approval from a Texas judge Monday, April 19, 2021,
to turn over ownership of the company to its secured term loan
lenders through a debt-for-equity swap plan.
During a virtual hearing, debtor attorney Annemarie V. Reilly of
Latham & Watkins LLP said the plan enjoyed the support of all of
the secured term loan and reserve-based loan lenders, who will
receive new equity in Sundance Energy and reissued secured loans,
respectively.
About Sundance Energy Inc.
Sundance Energy Inc. -- http://www.sundanceenergy.net/-- is an
independent energy exploration and production company located in
Denver, Colorado. The Company is focused on the acquisition and
development of large, repeatable oil and natural gas resource plays
in North America. Current activities are focused in the Eagle
Ford.
On March 9, 2021, Sundance Energy, Inc. and 3 affiliated debtors
each filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
21-30882). The Honorable David R. Jones is the case judge.
The Debtors tapped Latham & Watkins LLP and Hunton Andrews Kurth
LLP as counsel and Miller Buckfire & Co., LLC as investment banker;
and FTI Consulting Inc. as financial advisor. Prime Clerk LLC is
the claims agent.
Haynes & Boone LLP, and Opportune LLP advise Toronto Dominion
(Texas) LLC, which currently serves as successor administrative
agent under the Prepetition RBL Facility.
K&L Gates LLP, is counsel to ABN AMRO Capital USA, LLC. Luskin,
Stern & Eisler LLP, is counsel to Credit Agricole Corporate and
Investment Bank.
Morgan Stanley Capital Administrators, Inc., is advised by Simpson
Thacher & Bartlett LLP, Locke Lord LLP, and Houlihan Lokey Capital,
Inc.
TECOSTAR HOLDINGS: S&P Affirms 'B' ICR, Outlook Negative
--------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
TecoStar Holdings Inc. and its 'B' and 'CCC+' issue-level ratings
on its first- and second-lien debt, respectively.
The negative outlook reflects the uncertainty around the company's
operating performance, given the effects of the pandemic, and the
possibility that S&P will downgrade TecoStar if it believes it will
sustain leverage of over 8x and continue to generate negligible
cash flow beyond 2021.
S&P said, "We expect the headwinds from the COVID-19 pandemic to
dissipate gradually during 2021, which will enable the company to
achieve a more normalized operating performance in the second half
of the year.TecoStar Holdings Inc.'s total revenue declined by
about 15% year over year in 2020 due to the pandemic-related
decline in orthopedic and surgical procedure volumes as well as
weaker demand in its aerospace and defense segment. The company's
fourth-quarter revenue decreased sequentially to $110 million from
$116 million in the third quarter and $122 million in the second
quarter. However, we expect TecoStar's revenue to gradually improve
during 2021 because the operating performances of some of its
customers recovered to near pre-pandemic levels in the fourth
quarter of 2020. There is usually a delay between fluctuations in
the demand for the end products sold by medical device
manufacturers and the related change in the demand for the services
of their contract manufacturer suppliers, such as TecoStar. This
delay was well-pronounced amid the peak of the pandemic in the
second quarter of 2020 when the company's revenue declined less
severely than that of its customers.
"In our base-case scenario, we assume TecoStar's performance
continues to be negatively affected by the COVID-19 pandemic in the
first half of 2021 before improving to pre-pandemic levels in the
second half of the year as its longer-term growth trends realign
with those of its customers. We expect the company's 2021 revenue
to be about 10% below 2019 levels before fully recovering to those
levels in 2022. In addition, we project TecoStar's adjusted EBITDA
will decline by more than 10% from pre-pandemic levels in 2021, due
to inefficiencies created by its reduced level of operations,
before rebounding in 2022 as its production levels normalize.
"While we project TecoStar's leverage will decrease to 8.5x by the
end of 2021 and to about 7.0x by the end of 2022, we believe it has
limited capacity at the current rating for an additional
underperformance. In our base-case scenario, we assume the
company's leverage will gradually improve to 8.5x in 2021 and to
about 7.0x in 2022. We view the projected leverage of 8.5x in 2021
as still elevated for the current rating and believe that TecoStar
has little room for an additional underperformance. We also believe
its free cash flow generation may turn negative in 2021 because the
company benefitted from a significant inflow of working capital
during 2020 and we expect this to reverse in 2021. "In 2022, we
expect that TecoStar's demand will recover from the pandemic and
assume it will generate free cash flow of more than $20 million,
which would translate to free cash flow to debt of at least 2.5%.
"The negative outlook reflects the uncertainty around TecoStar's
operating performance, given the effects of the pandemic, and the
possibility that we will downgrade the company if we believe it
will sustain leverage of over 8x and generate negligible cash flow
beyond 2021."
S&P could lower our rating on TecoStar if we believe it will
sustain leverage of materially above 8x and generate negligible
cash flow beyond 2021 with limited prospects for improvement. This
could occur if:
-- The demand for the company's products remains suppressed for
longer than S&P currently projects; or
-- The company's financial policy becomes more aggressive than S&P
expects and it prioritizes acquisitions or shareholder returns such
that it sustains leverage of more than 8x.
S&P could revise its outlook on TecoStar to stable if it becomes
more confident that it will sustain long-term leverage of less than
8x and believe its free cash flow to debt will improve above 2.5%
in 2022.
TENNESSEE CLEAN: Seeks to Hire Richard Banks as Legal Counsel
-------------------------------------------------------------
Tennessee Clean, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Tennessee to employ Richard Banks &
Associates, P.C. as its legal counsel.
The firm's services include:
a) assisting the Debtor in the preparation of its bankruptcy
schedules, statement of affairs and periodic financial reports;
b) assisting the Debtor in preparation for the informal
conference with the Office of the U.S. Trustee and the Subchapter V
trustee, and preparation for the meeting of creditors;
c) representing the Debtor in negotiations and all other
dealings with creditors and other parties;
d) preparing pleadings, conducting investigations and making
court appearances incidental to the administration of the Debtor's
estate;
e) assisting the Debtor in the development and formulation of
a plan of reorganization; and
f) reviewing claims and filing objections to claims when
necessary.
Richard Banks & Associates will be paid at these rates:
Richard L. Banks, Attorney $300 per hour
R. Bradley Banks, Attorney $200 per hour
Rachel Fisher-Queen, Attorney $175 per hour
Cheryl Wilson, Legal Assistant $75 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred. The retainer fee is $3,000.
Richard Banks, Esq., a partner at Richard Banks & Associates,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Richard L. Banks, Esq.
Rachel Fisher, Esq.
Richard Banks & Associates, PC
393 Broad Street NW
Cleveland, TN 37364-1515
Tel: (423) 479-4188
Fax: (423) 478-1175
Email: rbanks@rbankslawfirm.com
rfisherqueen@rbankslawfirm.com
About Tennessee Clean
Tennessee Clean, LLC filed a Chapter 11 bankruptcy petition (Bankr.
E.D. Tenn. Case No. 21-10673) on March 31, 2021, disclosing under
$1 million in both assets and liabilities. Judge Nicholas W.
Whittenburg oversees the case. The Debtor is represented by
Richard Banks & Assoiates, P.C.
TJC SPARTECH: Moody's Assigns B2 CFR on Improved Credit Metrics
---------------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating and
a B2-PD Probability of Default Rating to TJC Spartech Acquisition
Corp. (Spartech). Moody's also assigned B2 (LGD4) ratings to the
company's $60 million senior secured revolving credit facility
expiring 2026 and $345 million senior secured first lien term loan
due 2028. The outlook is stable. The proceeds from the term loan
will be used to finance the acquisition of Spartech by The Jordan
Company, LP.
The assignment of the B2 Corporate Family Rating reflects Moody's
expectation that debt to LTM EBITDA will decline to 5.2x by the end
of 2022 from 6.0x at December 31, 2020 pro forma for the proposed
LBO financing and a small acquisition in December 2020. Moody's
also expects free cash flow to debt to be above 8.0% by the end of
2022.
The B2 rating on the 1st lien term loan and revolver is the same as
the Corporate Family Rating reflecting the benefit guarantees and
security from the material domestic subsidiaries and that they are
the only debt in the capital structure. The borrower is TJC
Spartech Acquisition Corp. The facility is guaranteed by the Parent
Holding Company and each of the borrower's present and future,
direct and indirect material domestic subsidiaries, subject to
customary exceptions and limitations. The facility is secured by a
first lien security interest on substantially all existing and
after-acquired assets and stock of the borrower and guarantors
subject to customary exceptions.
The stable outlook reflects Moody's expectation that Spartech's
credit metrics will improve as the company benefits from completed
cost saving initiatives, a continued recovery in the global economy
from the coronavirus pandemic and the elimination of various one
time costs.
The proposed new senior secured term loan is expected to contain
covenant flexibility for transactions that can adversely affect
creditors. This includes an ability to incur incremental
indebtedness up to the greater of $63m and 1.0x consolidated
EBITDA, plus amounts available under the Available Amount Basket
and the General Debt Basket, plus additional amounts so long as pro
forma: first lien net leverage ratio does not exceed 5.5x (for pari
passu secured indebtedness). Amounts (i) up to the greater of $63
million and 100% of TTM Consolidated EBITDA, or (ii) incurred in
connection with a Permitted Acquisition or other permitted
investments, may be incurred with an earlier maturity date than the
initial term loans.
The credit facilities are also expected to include provisions
allowing the transfer of assets to unrestricted subsidiaries,
subject to carve-out capacity; there are no express "blocker"
provisions limiting the transfer of specified assets to
unrestricted subsidiaries.
Only wholly-owned subsidiaries are expected to provide guarantees,
and guarantees may be released if subsidiary guarantors cease to be
wholly-owned; partial dividends of ownership interests of
subsidiary guarantors could jeopardize guarantees.
Assignments:
Issuer: TJC Spartech Acquisition Corp.
Probability of Default Rating, Assigned B2-PD
Corporate Family Rating, Assigned B2
Senior Secured First Lien Term Loan, Assigned B2 (LGD4)
Senior Secured First Lien Revolving Credit Facility, Assigned B2
(LGD4)
Outlook Actions:
Issuer: TJC Spartech Acquisition Corp.
Outlook, Assigned Stable
RATINGS RATIONALE
Weaknesses in Spartech's credit profile include a small revenue
base, much larger rated competitors and a high customer
concentration of sales. The company also has a high exposure to
cyclical industries. Spartech lacks long-term contracts with most
of its customers which lowers switching costs over the long term.
The company will need to continue to invest in R&D to maintain its
competitive position and margins over the long term given that the
packaging industry is fragmented with many private, unrated
competitors.
Strengths in Spartech's credit profile include the company's focus
on manufacturing higher margin products with proprietary resin
formulations and processes. Most products the company sells require
a lengthy qualification process and are sole sourced providing some
stability to revenue over the intermediate term. The company also
has good liquidity and is expected to maintain strong free cash
flow to debt.
Spartech's good liquidity encompasses Moody's expectation of strong
free cash flow over the next 12 months and full availability under
the $60 million revolver. Free cash flow is expected to be strong
as the company benefits from a recovery in the global economy, an
elimination of prior year one time cash outlays for an acquisition
and restructuring, and savings from cost cutting initiatives.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Spartech fails to improve credit
metrics or if there is deterioration in liquidity or the
competitive environment. Additionally, acquisitions that alter the
company's business and operating profile or may also prompt a
downgrade. Specifically, the ratings could be downgraded if:
Debt to EBITDA is above 6.0 times
EBITDA to interest expense is below 3.0 times
Free cash flow to debt is below 4.0%
An upgrade would require a significant increase in scale, continued
strong margins, and a sustainable improvement in credit metrics.
Additionally, any upgrade would also require a stable competitive
environment and continued good liquidity. Specifically, the ratings
could be upgraded if:
Revenue is above $650 million
Debt to EBITDA is below 5.0 times
EBITDA to interest expense is above 4.0 times
Free cash flow to debt is above 9.0%
Headquartered in Maryland Heights, MO, Spartech converts base
polymers or resins into extruded plastic sheet, rollstock,
thermoformed packaging, specialty film laminates, and cast acrylic.
Revenue for the 12 months ended December 31, 2020 was $364 million.
Spartech is a portfolio company of The Jordan Company, L.P.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
TRIBUNE CO: SC Justices Won't Review Chapter 11 Clawback Case
-------------------------------------------------------------
Law360 reports that the U.S. Supreme Court on Monday, April 19,
2021, declined to hear the appeal of a Second Circuit decision that
the Bankruptcy Code bars Tribune Co. creditors from clawing back
$8. 3 billion stockholders received in a 2007 leveraged buyout
ahead of the media company's bankruptcy filing about a year later.
The high court denied certiorari to the request by Tribune
pensioners and noteholders to hear their appeal of the Second
Circuit's 2019 affirmation of its 2016 decision that bankruptcy law
was specifically written to shield the securities market from the
uncertainty allowing claims like theirs would create.
About Tribune Co.
Chicago, Illinois-based Tribune Co. -- http://www.tribune.com/--
and 110 of its affiliates filed for Chapter 11 protection (Bankr.
D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors
proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel,
Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez
& Marsal North America LLC as financial advisors; and Epiq
Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the
Debtors listed $7,604,195,000 in total assets and $12,972,541,148
in total debts. Chadbourne & Parke LLP and Landis Rath LLP served
as co-counsel to the Official Committee of Unsecured Creditors.
AlixPartners LLP served as the Committee's financial advisor.
Landis Rath Moelis & Company served as the Committee's investment
banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in
Wilmington, Delaware, represented the Committee in connection with
the lawsuit filed against former officers and shareholders for the
2007 LBO of Tribune.
Protracted negotiations and mediation efforts and numerous proposed
plans of reorganization filed by Tribune Co. and competing creditor
groups delayed Tribune's emergence from bankruptcy. Many of the
disputes among creditors center on the 2007 leveraged buyout
fraudulence conveyance claims, the resolution of which is a key
issue in the bankruptcy case.
Judge Kevin J. Carey issued an order dated July 13, 2012,
overruling objections to the confirmation of Tribune Co. and its
debtor affiliates' Plan of Reorganization. In November 2012,
Tribune received approval from the Federal Communications
Commission to transfer media licenses, one of the hurdles to
implementing the reorganization plan. Aurelius Capital Management
LP failed in halting implementation of the plan pending appeal.
Tribune Co. exited Chapter 11 protection Dec. 31, 2012, ending four
years of reorganization. The reorganization allowed a group of
banks and hedge funds, including Oaktree Capital Management and
JPMorgan Chase & Co., to take over the media company.
TRIPLE J PARKING: Has Access to SBA Cash Collateral
---------------------------------------------------
Judge Joel T. Marker of the U.S. Bankruptcy Court for the District
of Utah authorized Triple J Parking, Inc., to use cash collateral
to pay current operating expenses including payroll, rent, and
other necessary expenses incurred in its business.
U.S. Small Business Administration, which holds secured liens on
all products, proceeds, and collections generated by the
collateral, consented to said use. Judge Marker authorized the
Debtor to pay the SBA in accordance with the loan agreement, as
provided for in their stipulation.
A copy of the order is available at https://bit.ly/3aezeyX from
PacerMonitor.com.
About Triple J Parking
Triple J Parking, Inc. has served customers of the Salt Lake
International Airport with off-site parking services for more than
30 years. It is a small, family-owned, customer-oriented business.
In addition, Triple J Parking offers services such as covered
parking spots, monthly parking programs, and car washing and
detailing services.
Triple J Parking sought protection under Chapter 11 of the U.S.
Bankruptcy Court (Bankr. D. Utah Case No. 21-20800) on March 5,
2021. In the petition signed by Elizabeth Woods, president, the
Debtor disclosed up to $10 million in assets and up to $1 million
in liabilities.
Judge Joel T. Marker oversees the case.
The Debtor tapped Cohne Kinghorn, P.C. as its bankruptcy counsel;
Jones, Waldo, Holbrook & McDonough, P.C. as special counsel; and
Hashimoto Forensic Accounting, LLC as accountant and financial
advisor.
U.S. GLOVE: Seeks Cash Collateral Access
----------------------------------------
U.S. Glove, Inc. asks the U.S. Bankruptcy Court for the District of
New Mexico for authority to use cash collateral on an emergency
basis pending a final hearing.
The Debtor explains use of cash collateral is necessary to make
payments in the ordinary course of the Debtor's business for, among
other things, payroll, payroll taxes, shipping, utilities,
insurance, the purchase of goods to continue manufacturing its
products, fixed monthly bills, and other expenses necessary to
continue its normal operations. The Debtor also requires use of
cash collateral pending a final hearing on the Motion. Without such
authority, the Debtor will be forced to halt its operations or risk
losing its employees if it does not make payroll, resulting in
immediate and irreparable harm to the estate.
The Debtor has suffered a severe decline in retail and online sales
due to the COV1D-19 pandemic and its impact on the industries that
utilize the Debtor's products. Gymnastic and cheerleading
competitions around the world have been delayed or outright
canceled due to the pandemic, resulting in a decline of orders
issues to the Debtor. Many of the athletes who depend on the
Debtor's products are prohibited from their usual training hours,
which has caused retail and online sales to decline. As a result of
the substantial decline in sales and uncertain future, the Debtor
has been unable to make principal and interest payments on Jacob's
Senior Note and other pre-petition obligations.
The Debtor is indebted to two parties on a secured basis. First,
the Debtor is obligated to the U.S. Small Business Administration
for an Economic Injury Disaster Loan in the amount of $150,000.
According to the Debtor's records, the SBA may have a first
position security interest in substantially all of the Debtor's
assets, including all inventory, equipment, accounts and other
depository accounts, rights to payment, intangibles, and all
products and proceeds of the foregoing.
The Debtor is also obligated to company co-owner Michael J. Jacobs
on account of a senior secured note. As of the Petition Date, the
balance owed on the Senior Note to Jacobs is approximately
$2,279,715. Jacobs, as an equity holder who owns 43% of the Debtor,
is also an "Insider," as that term is defined under the Code.
It appears that the security interests of the SBA and Jacobs are
perfected, although the Debtor has filed an adversary proceeding
(Adv. No. 21-01009-ta) against Jacobs to avoid the perfection of
the lien and the Debtor reserves all rights.
The Debtor also has certain unsecured debts owed: (a) the SBA is
owed approximately $50,000 pursuant to an outstanding and unpaid
PPP loan, (b) Jacobs is owed approximately $1,330,547 pursuant to
an outstanding and unpaid junior unsecured note, and (c) various
trade creditors and vendors are owed amounts totaling less than
$10,000.
As adequate protection, the Debtor proposes to continue making cash
payments to Jacobs of $5,000 per month, payable on the first day of
each month during the pendency of the proceedings, grant the SBA
and Jacobs a replacement lien in the same priority and to the same
extent and in the same collateral as the SBA and Jacobs had
pre-petition, provide financial reports, pay real and/or personal
taxes that accrue post-petition, and maintain general property and
liability coverage and will continue to maintain and protect all
Prepetition Collateral consistent with the Prepetition Loan
Documents.
A copy of the motion is available for free at
https://bit.ly/32E3wHj from PacerMonitor.com.
About U.S. Glove, Inc.
U.S. Glove, Inc. is a a New Mexico Corporation with its
headquarters located at 6801 Washington Street NE, Albuquerque, New
Mexico 87109. It manufactures hand and wrist support products for
gymnastics and cheerleading, as well as a variety of other
ancillary products, including wristbands, chalk, athletic tape, and
grip brushes designed to enhance athletic performance.
U.S. Glove sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.N.M. Case No. 21-10172) on February 14,
2021. In the petition signed by Randolph Chalker, authorized
person, the Debtor disclosed up to $500,000 in assets and up to $10
million in liabilities.
Judge David T. Thuma oversees the case.
The Debtor tapped Michael Best & Friedrich LLP as its bankruptcy
counsel and Walker & Associates, PC as its local counsel.
US RENAL CARE: S&P Assigns 'B-' Rating to New $150MM Term Loan
--------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '3'
recovery rating to U.S. Renal Care Inc.'s proposed $150 million
term loan. The '3' recovery rating indicates its expectation for
meaningful (50%-70%; rounded estimate: 55%) recovery in the event
of a payment default. The company intends to use the proceeds for
general corporate purposes and to pay related fees and expenses.
S&P expects the company to increase de novo capital expenditures
with the additional liquidity.
S&P said, "Our 'B-' issuer credit rating on U.S. Renal reflects the
company's modest scale, aggressive growth plan (as evidenced by the
proposed financing), which in our view may keep discretionary cash
flow (defined as operating cash flow minus total capital
expenditures and distribution to noncontrolling interests) as a
percentage of total debt below 2% range, or sometimes even negative
with high de novo capital expenditures (although we expect that the
company can dial back de novos in times of financial distress)."
US RENAL: Upsized Secured Term Loan No Impact on Moody's B3 CFR
---------------------------------------------------------------
Moody's Investors Service announced that there is no change to the
B2 rating on U.S. Renal Care, Inc's recently upsized senior secured
term loan B. There is also no change to U.S. Renal's existing
ratings, including its B3 Corporate Family Rating, B3-PD
Probability of Default Rating, and the Caa2 rating on its unsecured
notes. The outlook remains stable.
Proceeds from the $150 million incremental senior secured term loan
B add-on will be used for general corporate purposes and to add
cash to the balance sheet. This will be incremental to the more
than $300 million of cash the company had as of December 31, 2020.
The company's liquidity also benefits from near full availability
on a $150 million revolving credit facility. Despite improved
liquidity, Moody's views the transaction as being modestly credit
negative, as it will increase pro forma debt/EBITDA from 7.8 times
to 8.3 times.
U.S. Renal Care, Inc provides dialysis services to patients who
suffer from chronic kidney failure. U.S. Renal provides dialysis
services through 352 outpatient facilities in 32 states and the
territory of Guam. It also provides acute dialysis services through
contractual relationships with hospitals and home dialysis
services. Revenues are approximately $1.3 billion. U.S. Renal Care
is owned by private equity firms Bain Capital, Summit Partners, and
Revelstoke Capital Partners, along with other investors and
management.
USA COMPRESSION: S&P Affirms 'B+' ICR, Outlook Negative
-------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issuer credit rating on
Austin, Texas-based master limited partnership (MLP) USA
Compression Partners, LP (USAC). The outlook is negative.
S&P said, "At the same time, we affirmed our 'B+' issue-level
rating on the company's senior unsecured notes. Our recovery rating
on the notes remains '4', indicating our expectation of average
(30%-50%; rounded estimate: 35%) recovery in the event of a
default.
"The negative outlook reflects our expectation of tightening
relative to USAC's covenant requirement step-downs of 5.5x for the
quarter ending June 30, 2021; 5.25x for the quarters ending Sept.
30, 2021 and Dec. 31, 2021; and 5.0x thereafter, as well as reduced
demand for USAC's compression services. The negative outlook also
reflects our expectation of relatively high leverage, with adjusted
debt to EBITDA of about 6.1x (including the preferred equity) over
the next 12 months. We also expect the partnership to have adequate
liquidity under its credit facility and that the distribution
coverage ratio of about 1x will be under pressure."
Management's distribution policy favors equity investors at the
expense of bond investors. USAC's distribution policy (including
the dividend for the preferred units) has historically represented
a payout of over 50% of its adjusted EBITDA. As of Dec. 31, 2020,
USAC had $474 million outstanding under its unrated $1.6 billion
revolving credit facility. However, its covenant requirements
restricted its available borrowing capacity to $284 million. The
company lessened its covenant pressures in 2020 with an amendment
that increased the maximum leverage requirement to 5.75x in 2020
with step-downs starting in 2021 to 5.5x for the first two quarters
of 2021, 5.25x for the last two quarters of 2021, and 5.0x in 2022
and thereafter. S&P said, "However, if future demand for
compression services results in quarterly adjusted EBITDA of $100
million or less with the same levels of debt, we expect that USAC's
available borrowing capacity will decline to $220 million until
June 30, 2021; $120 million until Dec. 31, 2021; and $20 million in
2022. Our negative outlook incorporates the tightening of USAC's
liquidity and the increased likelihood that USAC may come close to
breaching its covenant if its cash flow generation results in
quarterly adjusted EBITDA below $100 million." USAC's decision to
keep its dividend payout over debt reduction will pressure its
covenant requirements until demand improves.
S&P said, "As a result of USAC's decision to maintain the
distribution, we expect leverage to remain elevated in 2021 at
about 6.1x before recovering to below 6.0x in 2022. Our calculation
of leverage includes our treatment of the $477 million preferred
units as 100% debt. Commodity price volatility affected the
partnership's cash flow generation in 2020, and we expect 2021
demand to take time to recover. USAC has several levers that it
could use to reduce leverage, including reductions in capital
expenditures and distributions. We view distribution cuts as highly
unlikely and expect that management would likely continue its
dividend policy even with little covenant headroom."
Short-term contract risk increases cash flow uncertainty despite
established counterparty relationships. USAC's contract tenures
generally span six months to five years. Despite the short contract
life, the company has built relationships of longer than five-years
with diverse counterparties that collectively account for about 50%
of revenue. Each of these counterparties individually account for
8% of revenue or less. S&P said, "We believe that this lack of
concentration protects the company from the risk from any single
counterparty departing. In addition, high switching costs aid the
partnership in retaining existing customers. We consider the
partnership's ability to renew or extend contracts as critical to
revenue recovery over the next 12 months."
S&P said, "The negative outlook reflects our expectation of
tightening relative to the company's covenant requirement stepdowns
of 5.5x for the quarter ending June 30, 2021; 5.25x for the
quarters ending Sept. 30, 2021 and Dec. 31, 2021; and 5.0x
thereafter, as well as reduced demand for USAC's compression
services. The negative outlook also reflects our expectation of
relatively high leverage, with expected adjusted debt to EBITDA of
about 6.1x over the next 12 months. We also expect the partnership
to have adequate liquidity under its credit facility and that the
distribution coverage ratio of about 1x will be under pressure.
"We could lower the rating if the company maintained a tight
cushion relative to its covenant requirements or if debt to EBITDA
exceeded 6x on a sustained basis and we did not see a clear path
for improvement or if liquidity became constrained. This could
occur if demand for compression services weakened, which would
likely stem from an industrywide decline in natural gas production
or slacking natural gas demand.
"We could revise the outlook to stable if USAC's financial risk
profile improved considerably, namely adjusted debt to EBITDA
trending toward 5x on a sustained basis, with more headroom under
its covenants and stronger distribution coverage above 1x. This
could occur if demand for natural gas increased, resulting in
increased production and demand for compression services."
VILLAS OF WINDMILL: Trustee Wins Cash Collateral Access
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
West Palm Beach Division, has authorized Leslie S. Osborne, the
Chapter 11 Trustee for Villas of Windmill Point II Property Owners
Association, Inc., to use cash collateral on a final basis.
In addition to the prior authorized use of cash collateral, the
Trustee is further authorized to use up to $122,810 of the cash
collateral to pay the Tax Liabilities.
Defendants Thomas Lesko, McDonald Storey, and Steven Goldfarb were
granted a post-petition security interest and lien in, to and
against the assessments, fines, or penalties collected by the
Trustee which are or have been acquired by the Trustee subsequent
to February 18, 2021, to the same extent and priority that the
Defendants held a properly perfected pre-petition security interest
in the cash collateral. These adequate protection liens will be
subject to the Carve Out.
The Adequate Protection Liens granted to the Defendants under the
preceding paragraph will be deemed attached, perfected, and
enforceable post-petition, to the same extent and priority that the
Defendants held a properly perfected pre-petition security interest
in the cash collateral, without the need for execution or filing of
any further documents or instruments otherwise required to be filed
or be executed or filed under non-bankruptcy law.
The Carve Out consists of:
(1) all fees owed by the Trustee to the Office of the United
States Trustee; and
(2) all fees owed to the Clerk of the Bankruptcy Court.
A full-text copy of the Final Order, dated April 16, 2021, is
available for free at https://bit.ly/3duN6XH from
PacerMonitor.com.
About Villas of Windmill Point II Property
Based in Port Saint Lucie, Fla., Villas of Windmill Point II
Property Owners Association, Inc., is a non-profit corporation with
volunteers that self manages 89 separately deeded, single-family
residential villa units that are attached in four and five-unit
clusters within a Planned Unit Development (PUD).
Villas of Windmill filed a Chapter 11 petition (Bankr. S.D. Fla.
19-20400) on Aug. 2, 2019. At the time of filing, the Debtor was
estimated to have $1 million to $10 million in assets and $1
million to $10 million in liabilities.
Judge Mindy A. Mora oversees the case.
The Debtor is represented by Brian K. McMahon, Esq., in West Palm
Beach, Fla.
Leslie S. Osborne was appointed as the Debtor's Chapter 11
trustee.
The Trustee is represented by Rappaport Osborne Rappaport.
VIP PHARMACY: Lender Seeks to Prohibit Cash Collateral Use
----------------------------------------------------------
Woori America Bank asks the U.S. Bankruptcy Court for the Eastern
District of Pennsylvania to prohibit VIP Pharmacy, Inc. from using
cash collateral. In addition, Woori America wants the Debtor to
provide accounting of all Cash Collateral received, possessed,
used, or expended since the Petition Date, and compelling the
Debtor to place all proceeds of the collection of accounts
receivable and other Collateral into escrow with the Bank until
further Court order.
Woori Amreica says it has not consented to the Debtor's use of its
cash collateral and is not adequately protected.
On July 19, 2016, the Debtor, KBS Pharmacy, Inc., Shri Santram
Corporation, and Big Oak Pharmacy Inc executed and delivered to the
Bank a Promissory Note in the original principal amount of $1.1
million.
As security for the repayment and performance of the Note, the
Debtor executed and delivered to the Bank a Security Agreement
dated July 19, 2016, which granted the Bank a lien on and
continuing security interest in all of the Debtor's Inventory,
Accounts, General Intangibles, and Equipment.
The Bank perfected its security interest in the Collateral by
filing a UCC-1 Financing Statement with the Pennsylvania Department
of State Corporation Bureau on July 19, 2016 to No. 2016071901441,
which was properly continued.
As of the Petition Date, the Debtor is indebted to the bank in the
amount of $627,225 under the Note.
Interest continues to accrue on the principal balance of the Note
at the rate of 5.00% per annum, and the Debtor remains responsible
for any late fees and collection costs incurred by Bank, including,
but not limited to, all attorneys' fees.
The Bank says it will suffer immediate and irreparable harm unless
the court prohibits the use of cash collateral.
A copy of the motion is available for free at
https://bit.ly/3tA5gwU from PacerMonitor.com.
About VIP Pharmacy, Inc.
VIP Pharmacy Inc. is a privately held company in the health care
business. It sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Penn. Case No. 1-10428) on February
23, 2021. In the petition signed by Kaushal Patel, president, the
Debtor disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Judge Eric L. Frank oversees the case.
Paul Winterhalter, Esq. at OFFIT KURMAN, P.A. is the Debtor's
counsel.
Woori America Bank, as Lender, is represented by:
Charles N. Shurr, Jr., Esq.
KOZLOFF STOUDT
2640 WestviEw Drive
Wyomissing, PA 19610
Tel: (610) 670-2552
ZAYAT STABLES: Trustee Says Lack of File Access Allows Manipulation
-------------------------------------------------------------------
Ray Paulick of Paulick Report, citing the Thoroughbred Daily News,
reports that the ongoing legal issues of Ahmed Zayat, breeder and
owner of Triple Crown Champion American Pharoah, took an
interesting turn on April 16, 2021. The court-assigned bankruptcy
trustee had recently been granted an extra month to determine
whether Zayat is hiding assets while seeking Chapter 7 bankruptcy
protection.
That trustee told the court in an April 16, 2021 filing that he
still does not have access to Zayat's documents held on the Cloud,
and he wants the court to both "compel turnover" of the files and
to "direct" Zayat to cooperate.
"Given the overwhelming allegations of fraud and expected
sought-after delay, the Chapter 7 Trustee simply cannot wait any
longer for access to the Cloud," the filing states. "Although Mr.
Zayat has represented that the Cloud is secure and that he is aware
of his obligations, the longer the information on the Cloud remains
in the hands of Mr. Zayat the more susceptible it is to
manipulation or destruction, and this ongoing and unreasonable
delay impedes the Chapter 7 Trustee's investigation."
About Zayat Stables
Headquartered in Hackensack, New Jersey, Zayat Stables owned 203
thoroughbred horses. The horses, which are collateral for the bank
loan, are worth $37 million, according an appraisal mentioned in a
court paper. Ahmed Zayat said in a court filing that he personally
invested $40 million in the business.
The Company filed for Chapter 11 bankruptcy protection (Bankr.
D.N.J. Case No. 10-13130) on Feb. 3, 2010. The Company estimated
$10 million to $50 million in assets and the same range of
liabilities as of the bankruptcy filing. The Debtor tapped Cole,
Schotz, Meisel, Forman & Leonard, P.A., as bankruptcy counsel.
[*] Oil Bankruptcies in U.S. Rose the Highest in First Quarter
--------------------------------------------------------------
Oilprice.com reports that the oil and gas sector is currently
enjoying a mini-boom cycle as economies gradually re-open and oil
demand begins to return to a semblance of normalcy. The oil markets
are in an upbeat mood once again, with oil futures trading sharply
higher on Wednesday after the U.S. government reported a
third-weekly drop in weekly inventories while the International
Energy Agency (IEA) issued a bullish oil report for 2021.
After declining 8.7 mb/d last year, the IEA now expects world oil
demand to expand by 5.7 mb/d in 2021 to 96.7 mb/d.
For many U.S. shale producers, however, there's still little to
cheer about, with record numbers filing for Chapter 11 bankruptcy
protection.
According to Energy and restructuring law firm Haynes and Boone,
bankruptcies by North American oil producers climbed to the highest
first-quarter level since 2016 as energy firms continue to struggle
to recover from the carnage of the oil price crash in 2020.
Haynes and Boone has reported there were eight bankruptcies by
North American oil and gas producers in Q1 2021, the second-highest
figure for a first-quarter ever since 17 were reported for Q1 2016,
the last time U.S. crude futures dipped under $30 a barrel over the
past decade.
Crude prices have bounced back from year-ago lows, with WTI trading
around $63 a barrel on Friday while Brent is changing hands at $67
a barrel.
Small firms in trouble
The big difference this time around is that smaller producers
appear to be the main victims, with just $1.8 billion in aggregate
debt for the quarter, the second-lowest Q1 total after $1.6 billion
in Q1 2019.
For some perspective, consider that last year, U.S. energy
companies that filed for bankruptcy held $53 billion in aggregate
debt, the second-highest total since 2016 when debt totaled $56.8
billion.
As expected, Texas continues to be well represented, with half of
the bankruptcy filers coming from that region.
*********
Monday's edition of the TCR delivers a list of indicative prices
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